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Corporate Governance Report (Updated on Nov. 30, 2017)

Sony Financial Holdings Inc.

The status of corporate governance of Sony Financial Holdings Inc. (hereinafter, the “Company”) is as follows:

I. Basic Stance on Corporate Governance, Capital Structure, Company Type and Other Basic Information

1. Basic Stance

Corporate Vision and Philosophy

The Sony Financial Group (hereinafter, the “Group”) positions its corporate vision and corporate philosophy as

the basic policy for formulating management strategies and decision making.

<Corporate Vision>

The Group seeks to become the most highly trusted financial services group by customers. To this end, the

Group will combine many different financial functions (savings, investment, borrowing, and protection) to

provide high-value-added financial products and high-quality financial services that meet every customer’s

financial needs.

<Corporate Philosophy>

Put the Customer First

We will provide financial products and services that satisfy customers by embracing their individual views, to

ensure that we help them lead prosperous lives with financial security.

Give Back to Society

We believe that a special commitment to the public good is demanded of a financial services company.

Conscious of this, we will realize our vision by upholding the highest level of ethics and a strong sense of

purpose, and thereby give back to society. In addition, we will fulfill our responsibilities as a good corporate

citizen and member of society.

Strive for Originality

We will constantly strive to come up with fresh ideas from basic principles as we pursue creativity and

innovation, instead of merely following customs and convention.

Foster an Open Corporate Culture

We believe that every employee’s contribution is important to develop our ideal of a financial services

company. We will thus foster an open corporate culture where employees can freely express their individuality

and demonstrate their abilities to the fullest.

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Basic Stance on Corporate Governance

The Company strives to meet the expectations and earn the trust of stakeholders, realize sustainable corporate

growth and increase corporate value over the medium- to long-term by making effective use of the Group’s

various management resources and by realizing its corporate vision and philosophy.

As a financial holding company, the Company is aware of the highly public nature of its financial business.

Accordingly, the Company has in place a governance structure that emphasizes ensuring of soundness and

appropriateness of the Group’s management.

The Company is a listed subsidiary of Sony Corporation, its parent company. As such, the Company maintains

managerial independence from its parent company and strives to ensure a highly transparent management.

[Reasons for not implementing the following principles of the Corporate Governance Code]

The Company has implemented all the principles of the Code.

[Disclosure based on each principle of the Corporate Governance Code]

[Principle 1.4] Policy on Business-related Shareholdings

The Company and its Group companies do not hold shares for the purpose of business-related investment

(hereinafter, “Business-related Shareholdings”). However, this excludes investments having a recognized

strategic significance, such as business tie-ups, that contribute to enhancing the corporate value of individual

Group companies.

In the event that the Company and its Group companies hold Business-related Shareholdings, they regularly

consider the objectives of such holdings and the effect of investment, and report these results to their

respective Boards of Directors. Based on these reports, the companies’ Boards of Directors consider the

liquidation of such holdings through such methods as sale or transfer in the event the significance of holding

them has been lost.

With regard to the exercise of voting rights in relation to Business-related Shareholdings, the Company and its

Group companies make comprehensive decisions to vote for or against individual proposals from the

perspective of whether appropriate governance structures are in place at investee companies, whether

appropriate decisions are being made to enhance corporate value over the medium- to long-term, and from the

perspective of enhancing the corporate value of individual Group companies.

[Principle 1.7] Ensuring the Appropriateness of Group Management

The Company requires resolution by the Board of Directors in the event of any competitive and

conflict-of-interest transactions by directors. Furthermore, in the event of internal Group transactions (including

transactions with its parent company, Sony Corporation and other Sony Group companies) that have the

potential for individual Group companies to affect Group management, after the appropriateness and legality of

such transactions are confirmed, they are resolved by or reported to the Board of Directors.

[Principle 3.1]

(i) Corporate Philosophy and Business Plans

The Group’s Corporate Vision and Corporate Philosophy are as written in “I. 1. Basic Stance” of this report.

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The Company has disclosed the medium-term corporate strategy on the Company’s website.

http://www.sonyfh.co.jp/en/company/mid_term.html

(ii) Basic Stance and Policies on Corporate Governance

The Company’s basic view is as written in “I. 1.Basic Stance” of this report.

The Company has disclosed Basic Policy on Corporate Governance on the Company’s website.

http://www.sonyfh.co.jp/en/company/data/governance_policy.pdf

(iv) Board Policies and Procedures in the Nomination of Director and Statutory Auditor Candidates

The Company has formulated the Basic Policy on the Selection of Director and Statutory Auditor Candidates.

Reflecting this policy, the Company selects as director and statutory auditor candidates people who have

suitable knowledge, experience, capacity for judgment and other characteristics suiting them to conduct decision

making and perform management oversight in relation to overall Group management. To reinforce the

transparency and objectivity of the process of selecting director and statutory auditor candidates, the Nomination

Advisory Committee deliberates on candidates in response to inquiries by the Board of Directors. After receiving

the committee’s reports, the Board of Directors decides on candidates to propose at the General Meeting of

Shareholders.

The Company has disclosed Basic Policy on the Selection of Director and Statutory Auditor Candidates on the

Company’s website.

http://www.sonyfh.co.jp/en/company/data/nomination_policy.pdf

(v) Explanations with Respect to the Individual Appointment and Nomination of Director and Statutory

Auditor Candidates based on (iv)

The Company has disclosed reasons for appointment on reference materials of the General Meeting of

Shareholders.

http://www.sonyfh.co.jp/en/financial_info/shareholder/meeting/

The reasons for appointment of statutory auditors are as follows:

Yasuyuki Hayase, Standing Statutory Auditor (Outside)

See “II.1. [Directors] Relationships with the Company (2)” of this report.

Yoshimichi Makiyama, Statutory Auditor (Outside)

See “II.1. [Directors] Relationships with the Company (2)” of this report.

Hirotoshi Korenaga, Statutory Auditor

Mr. Korenaga has extensive knowledge about finance and accounting acquired over many years of working in

accounting at Sony Corporation and Sony Corporate Services (Japan) Corporation. Accordingly, the Company

has determined that Mr. Korenaga will use his professional experience to fulfill his role of statutory auditor.

See individual executives’ biography on reference materials of Convocation of the General Meeting of

Shareholders.

http://www.sonyfh.co.jp/en/financial_info/shareholder/meeting/

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[Principle 4.1 (1)] Summary of Scope of Delegation to Management

In addition to items stipulated in laws and regulations and the Articles of Incorporation, the Board of Directors

makes important decisions regarding management of the Group such as (i) formulation of Group corporate

strategies and business plans, (ii) appointment and dismissal of directors, statutory auditors and other executives

of subsidiaries in which the Company holds shares directly, (iii) entry into new businesses and withdrawal from

businesses, and (iv) organizational restructuring. The Board of Directors sets up an Executive Committee, to

which it delegates the execution of important routine business of the Company.

[Principle 4.8] Effective Use of Independent Directors

To reinforce its supervisory function and receive general advice on the management of the Group, the Company

has appointed multiple highly independent outside directors, with two such directors in place as of July 2017. In

addition, to increase management transparency the Company has established the Nomination Advisory

Committee and the Compensation Advisory Committee as advisory bodies to the Board of Directors, and the two

outside directors are members of both committees.

[Principle 4.9] Independence Standards and Qualification for Independent Outside Directors

In addition to the independence requirements of the Companies Act and the standards for independent directors

provided by the Tokyo Stock Exchange, outside directors are people who satisfy the independence standards

provided in the Company’s Basic Policy on the Selection of Director and Statutory Auditor Candidates. Outside

statutory auditors are people who satisfy the independence standards provided in the Company’s Basic Policy on

the Selection of Director and Statutory Auditor Candidates.

The Company has disclosed Basic Policy on the Selection of Director and Statutory Auditor Candidates on the

Company’s website.

http://www.sonyfh.co.jp/en/company/data/nomination_policy.pdf

[Principle 4.11 (1)] Composition of the Board of Directors

The Board of Directors comprises 12 or fewer members (with one-year terms of office). The Board of Directors is

composed of members who have a broad range of knowledge and experience. To promote efficient Group

management, in principle, the representative directors of principal Group subsidiaries serve concurrently as the

Company’s directors. To reinforce the supervisory function and obtain general management advice for the Group,

the Company appoints multiple highly independent outside directors.

The current composition is as written in “II. 1. 1. Board Composition and Operations of Organizational Structure”

of this report.

[Principle 4.11 (2)] Status of Concurrent Positions at Other Organizations of Directors and Statutory

Auditors

With regard to the status of concurrent positions at other organizations of directors and statutory auditors, the

Company discloses the information on reference materials of the General Meetings of Shareholders.

http://www.sonyfh.co.jp/en/financial_info/shareholder/meeting/

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[Principle 4.11 (3)] Evaluation of Effectiveness of the Board of Directors

According to the Company’s Basic Policy on Corporate Governance, the Board of Directors conducts

self-evaluations, evaluating the effectiveness of its own decision-making and oversight, as well as its operation of

meetings at least once a year.

For the fiscal year ended March 31, 2017, an independent third-party evaluation company evaluated the

effectiveness of the Board of Directors by questionnaire all directors and statutory auditors.

Principal content of the questionnaire:

• Composition of the Board of Directors

• Quality and volume of the discussions on the Group’s businesses, risks, strategies, etc.

• Degree of understanding, opportunities for training

• Operating practices of Board of Directors’ meetings

• Incentive Compensation

• Advisory Committee

• Support system for outside directors and statutory auditors

• Dialogue with shareholders

In addition, an evaluation was conducted regarding response to items raised in the previous year’s evaluation of

effectiveness.

Summary of the results of evaluation:

• As a whole, a high level of effectiveness was achieved.

• The Board of Directors consists of members with a wide variety of experience.

• The members of the Board of Director agree in recognizing never to be satisfied with current conditions and that

further improvement and enhancement of the Board’s function are necessary. The Board of Directors is united in

an effort to improve its function.

• The agendas of the Board of Directors’ meetings were properly selected in terms of their quality and volume.

There was an atmosphere where all members, including outside directors, could speak in a free and active

manner. The meetings proceeded smoothly under the leadership of the chairman. Members of the Board of

Directors are provided regular opportunities for communication, and mutual trust is high.

• Comments from shareholders are appropriately provided as feedback to the Board of Directors.

While various improvements have been made with respect to the issues raised in the previous year’s evaluation

of effectiveness (discussion of medium- to long-term Groupwide business strategies and executive development

strategies), the Board of Directors agrees that continuous discussion is needed. In addition, some members

expressed a desire for more opportunities for study or training sessions related to the Group’s management and

businesses.

Issues to Address and Responses to Make Based on the Results of Evaluation

Based on the results of this evaluation, the Company’s Board of Directors judges itself to be wholly effective at

this time. That said, the Board will strive to further enhance its effectiveness through improving its understanding

of the Group’s management and business environment and continuous discussions on the Group’s medium- to

long-term business strategies.

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[Principle 4.14 (2)] Training Policy for Directors and Statutory Auditors

Upon their appointment, the Company provides opportunities for directors and statutory auditors to acquire

knowledge related to laws and regulations, corporate governance and other areas necessary for appropriately

fulfilling their roles and responsibilities. In particular, when outside directors and statutory auditors are newly

appointed, the Company creates opportunities to provide the information necessary to promote an understanding

of the Group’s businesses, management strategy, management issues and other areas. The Company also has

created such opportunities as necessary following their appointment.

[Principle 5.1] Policy for Constructive Dialogue with Shareholders

The Company conducts sincere and proactive IR activities, led by the president and representative director, to

forge trust-based relationships with shareholders, investors and other parties. Useful opinions and requests

obtained from shareholders, investors and other parties through IR activities are regularly provided as feedback

mainly to the Board of Directors. The Company has established its IR Policy based on this stance.

IR Policy is as written in “V. 2. Other Corporate Governance Structures” of this report.

Capital Structure (updated)

Ratio of shares owned by foreign shareholders: 20% or more and less than 30%

[Major Shareholders] (updated)

Name Number of

shares held

Percentage of

ownership (%)

Sony Corporation 274,050,000 62.99

Japan Trustee Services Bank, Ltd. (Trust Account) 11,943,400 2.74

STATE STREET BANK AND TRUST COMPANY 11,390,205 2.61

The Master Trust Bank of Japan, Ltd. (Trust Account) 10,695,000 2.45

Trust & Custody Services Bank, Ltd. (Securities Investment Trust Account) 4,083,100 0.93

Japan Trustee Services Bank, Ltd. (Trust Account 5) 3,060,100 0.70

JP MORGAN CHASE BANK 380055 3,021,623 0.69

THE BANK OF NEW YORK 133972 2,822,000 0.64

STATE STREET BANK WEST CLIENT – TREATY 505234 2,727,306 0.62

BBH FOR FIDELITY LOW-PRICED STOCK FUND (PRINCIPAL ALL

SECTOR SUBPORTFOLIO)

2,719,800 0.62

Parent company: Sony Corporation

(Listed on the Tokyo Stock Exchange, and Overseas) (Code: 6758)

3. Company Type

Stock Exchange: The First Section of the Tokyo Stock Exchange

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Fiscal Year End: March

Industry: Insurance

Number of employees (consolidated): more than 1,000

(Updated) Sales (consolidated): more than ¥1 trillion

Number of subsidiaries: Fewer than 10

4. Policy Concerning the Measures to Protect Minority Shareholders in Transactions with the Controlling

Shareholder

The Sony Financial Group’s policy is to develop its business while maintaining a cooperative ties with the

Sony Group. However, the Sony Financial Group believes that it has secured a certain degree of

independence from the Sony Group, because it conducts independent business activities in line with its

own management policies and strategies, and operates in different business fields than the Sony Group.

When entering into transactions with Sony Corporation (the controlling shareholder), the Sony Financial

Group adequately confirms the necessity for such transactions, and ensures that the conditions of such

transactions do not differ markedly from the terms of ordinary transactions with third parties.

5. Other Special Issues That May Significantly Influence Corporate Governance (updated)

(1) Capital relationships with Sony Corporation

Sony Corporation holds 62.99% of Sony Financial Holdings’ shares outstanding (common stock). As a

result, regardless of the intentions and interests of other shareholders, Sony Corporation may have an

impact on all matters requiring shareholder approval such as the appointment and dismissal of Sony

Financial Holdings directors and statutory auditors, mergers and other organizational restructuring,

material asset and business transfers, amendments to the Articles of Incorporation, and the payment of

dividends.

(2) Senior management’s concurrent positions with the Sony Group

Sony Financial Holdings has assigned Mr. Shiro Kambe (EVP, Corporate Executive Officer of Sony

Corporation) as its director and has assigned Mr. Hirotoshi Korenaga (Corporate Executive, Senior

General Manager, Global Accounting Division of Sony Corporate Services (Japan) Corporation) as its

statutory auditor.

If the relationships between the Sony Financial Group and the Sony Group change due to such reasons

including changes in the ratio of Sony Financial Holdings’ shares held by Sony Corporation, such

personnel relationships may change. (Sony Corporate Services (Japan) Corporation is a subsidiary of

Sony Corporation).

(3) Use of the “Sony” trade name and trademark

Sony Financial Holdings and Group companies have entered into royalty agreements with Sony

Corporation to use the “Sony” trade name and trademark. However, these agreements can be rescinded

by Sony Corporation under certain conditions, such as Sony Corporation’s share of voting rights in Sony

Financial Holdings falling below a majority, or Sony Financial Holdings’ percentage ownership of the voting

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rights of Sony Financial Group companies dropping. Based on these agreements, the Sony Financial

Group Companies pays royalty fees to Sony Corporation and Sony Corporation retains pre-approval rights

with respect to, among other things, any use of the relevant trademarks for purposes other than those

expressly provided for in the agreements.

Sony Financial Holdings believes the “Sony” name has contributed to the Sony Financial Group’s brand

recognition and its growth. The termination of these royalty agreements to use the “Sony” trade name and

trademark led primarily by a decrease in Sony Corporation’s equity ownership in Sony Financial Holdings

could adversely affect its business operations, marketing and operating results.

If reputations of other Sony Group Companies excluding Sony Corporation and Sony Financial Group

Companies were damaged due to loses of creditworthiness or drop in earnings, operating results of Sony

Financial Group Companies may be affected by worsening corporate image.

II. Management Control Structure Pertaining to Management Decision Making,

Execution and Supervision and Other Corporate Governance Structure

1. Board Composition and Operations of Organizational Structure;

Type of structure: Company with Board of Auditors

[Directors]

Number of members of the Board of Directors stipulated in the Articles of Incorporation: 12

Term of members of the Board of Directors stipulated in the Articles of Incorporation: One year

Chairman of the Board of Directors: President

Number of the Board of Directors: Nine

Election of Outside Directors: Yes

Number of Outside Directors: Two

Number of Outside Directors who are appointed as Independent Directors: Two

Relationships with the Company (1)

Name Attribute Relationship with the Company*

a b c d e F g h i j k

Isao Yamamoto From another company

Shiro Kuniya

Attorney

*Choices relating to relationships with the Company

*○ indicates the relevant item that the person falls under as of “today or recently” △ indicates the relevant item that the person

falls under as of “previously.”

*● indicates the relevant item that the person’s close family member falls under as of “today or recently” ▲ indicates the relevant

item that the person’s close family member falls under as of “previously.”

(a) A person who is an executive or employee of the Company or its subsidiary

(b) A person who is an executive, employee or non-executive director of the Company’s parent company

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(c) A person who is an executive or employee of a subsidiary of the Company’s parent company

(d) A person who is an entity or, if that entity is a corporation, etc., its executive or employee for which the

Company is a major client

(e) A person who is a major client or if that client is a corporation, etc., its executives or employees

(f) A person who in addition to executive compensation is receiving significant amounts of money or other

property from the Company as consultant, accounting specialist or legal specialist

(g) A person who is a major shareholder of the Company (or if that major shareholder is a corporation, etc., its

executives or employees)

(h) A person who is an executive or employee of an entity which is a client of the Company (does not fall

under d, e and f) (only with respect to the person)

(i)

(j)

A person who is an executive or employee of a company whose outside director assumes the post on a

reciprocal basis with the Company (only with respect to the person)

A person who is an executive or employee of an entity receiving contributions from the Company (only

with respect to the person)

(k) Other

Relationships with the Company (2)

Name Independent

Director

Supplementary

Information Reason for appointment

Isao

Yamamoto ○ ―

Mr. Yamamoto possesses many years of

experience as a securities analyst and an

advisor for corporate finance and M&As, and has

no conflict of special interest with the Company.

Accordingly, the Company determined that Mr.

Yamamoto can properly fulfill the duties of an

outside director and an independent director.

Shiro

Kuniya ○ ―

Mr. Kuniya works as a Managing Partner at

Oh-Ebashi LPC & Partners and has specialized

knowledge and experience as a lawyer, and has

no conflict of special interest with the Company.

the Company has determined that Mr. Kuniya

can properly fulfill the duties of as an outside

director and independent director.

Establishment or non-establishment of an optional committee which corresponds to the

Nominating Committee or Compensation Committee: Established

Status of the Establishment of a Discretionary Committee, Composition and Attributes of

Chairperson

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Committee’s

name

All

committees

members

Full-time

members

Internal

Directors

Outside

Directors

Outside

Experts Others

Chair-per

son

Committee

corresponding to

Nomination

Committee

Nomination

Advisory

Committee

4 0 2 2 0 0 Outside

Director

Committee

corresponding to

Compensation

Committee

Compensation

Advisory

Committee

3 0 1 2 0 0 Outside

Director

Supplementary Explanation

Role of Nomination Advisory Committee:

This committee deliberates the appointment and dismissal of directors and statutory auditors of the

Company, as well as the presidents of Group subsidiaries, and deliberates succession planning and other

activities with regard to the Company and Group subsidiary presidents in response to inquiries by

individual companies’ Boards of Directors or requests by committee members and reports to the

respective Boards of Directors, if necessary.

Role of Compensation Advisory Committee:

This committee deliberates compensation and other payments to directors of the Company and the

representative directors of Group subsidiaries in response to inquiries by the individual companies’ Boards

of Directors and reports to the respective Boards of Directors.

[Statutory Auditors]

Existence of a Board of Statutory Auditors: Yes

Number of Statutory Auditors stipulated by the Articles of Incorporation: Five

Number of Statutory Auditors: Three

Cooperation between Statutory Auditors, Independent Auditors and the Internal Audit Division

Statutory auditors receive regular reports on audit plans and audit results from the Company’s

independent auditor (PricewaterhouseCoopers Aarata LLC) and exchange information with the

independent auditor in a timely and appropriate manner. Statutory auditors of the Company receive regular

reports of internal audit plans and internal audit results from the internal audit division (Audit Department)

and exchange information with this division in a timely and appropriate manner. The statutory auditors also

receive reports on each subsidiary’s internal audit results from subsidiaries’ internal audit divisions.

Election of Outside Statutory Auditors: Yes

Number of Outside Statutory Auditors: Two

Number of Outside Statutory Auditors who are appointed as Independent Directors: Two

Relationships with the Company (1):

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Name Attribute Relationship with the Company*

a b c d e f g h i j k m

Yasuyuki

Hayase

From another company

Yoshimichi

Makiyama

Attorney

*Choices relating to relationships with the Company

*○ indicates the relevant item that the person falls under as of “today or recently” △ indicates the relevant item that the person

falls under as of “previously.”

*● indicates the relevant item that the person’s close family member falls under as of “today or recently” ▲ indicates the relevant

item that the person’s close family member falls under as of “previously.”

(a) A person who is an executive or employee of the Company or its subsidiary

(b) A person who is a non- executive director or accounting advisor of the Company or its subsidiary

(c) A person who is an executive, employee or non-executive director of the Company’s parent company

(d) A person who is a statutory auditor of the Company’s parent company

(e) A person who is an executive or employee of a subsidiary of the Company’s parent company

(f) A person who is an entity, if that entity is a corporation, etc., its executive or employee for which the

Company is a major client

(g) A person who is a major client of the Company or if that client is a corporation, etc., its executives or

employees

(h)

A person who is in addition to executive or compensation is receiving money or other property as a

consultant, accounting specialist or legal specialist from the Company

(i) A person who is a major shareholder of the Company (or if that major shareholder is a corporation, etc.,

its executives or employees)

(j) A person who is an executive or employee of an entity which is a major client of the Company (does not

fall under f, g and h) (only with respect to the person)

(k)

(l)

(m)

A person who is an executive or employee of a company whose outside director assumes the post on a

reciprocal basis with the Company (only with respect to the person)

A person who is an executive or employee of an entity receiving contributions from the Company (only

with respect to the person)

Other

Relationships with the Company (2):

Name

Independent

Statutory

Auditor

Supplementary

Information Reason for appointment

Yasuyuki

Hayase

○

―

Mr. Hayase possesses many years of

experience at a financial institution, and as a

standing statutory auditor there. Accordingly, the

Company has determined that Mr. Hayase will

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use his professional experience to fulfill his role

as an outside statutory auditor as well as an

independent statutory auditor.

Yoshimichi

Makiyama

○

―

Mr. Makiyama qualified as an attorney and

patent attorney in Japan and as an attorney in

the U.S. state of New York, with expertise in

many areas including information security and

compliance, and has a breadth of professional

experience both at home and abroad.

Accordingly, the Company has determined that

Mr. Makiyama will draw on his professional

experience to fulfill his role as an outside

statutory auditor as well as an independent

statutory auditor.

[Independent Directors and Independent Statutory Auditors]

Number of independent directors and independent statutory auditors: Four

The Company has appointed all qualified outside directors and outside statutory auditors as

independent directors / or independent statutory auditors.

[Incentive-related Matters]

Status of incentives granted to directors:

Implemented a results-linked compensation and Introduced a stock-type compensation stock options

program.

Supplementary explanations:

Compensation of executive directors comprises a fixed portion depending on the position, a results-linked

portion depending on the entire Group’s performance and individual responsibilities, and a medium- to

long-term incentive portion in the form of a stock-type compensation.

The results-linked portion could range from 0% to 200% of the standard amount subject to achievement of

management targets of the Group and fulfillment of responsibilities.

The medium- to long-term incentive portion is based on restricted stock compensation and stock-type

compensation stock options. The stock-type compensation stock options, in principle, account for 20% of

total annual compensation.

Eligible persons for stock options:

Executive directors of the Company and executive directors of principal subsidiaries

Supplementary explanations:

In the aims of sharing with shareholders the benefits and risks of stock price fluctuations and enhancing

the motivation to contribute to sustainable increases in the corporate value of the Group, grantees shall be

the executive directors of the Company and its principal subsidiaries (Sony Life, Sony Assurance and

Sony Bank).

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Note: With regard to restricted stock compensation, guarantees shall be executive directors and executive

officers of the Company and its principal subsidiaries.

[Compensation of Directors]

Disclosure for compensation of individual directors: Partial disclosure only of individual amounts

Supplementary explanations:

Although the Company does not disclose the compensation of individual directors, the compensation of

one director who received ¥100 million or more for the fiscal year ended March 31, 2017 is disclosed in

Yukashoken Hokokusho

Policy on compensation amount or calculation method: Yes

Disclosure of policy on determining compensation amount and its calculation method:

■Policy for Determining the Compensation of Directors

The compensation of directors is determined according to the following policy within the limit set by a

General Meeting of Shareholders.

[General Provision]

Compensation of individual directors is determined by the resolution of the Board of Directors, based on a

report from the Compensation Advisory Committee. Directors with no executive duties, except outside

directors, are paid no compensation.

(1) Executive Directors

A balance between a fixed portion, a results-linked portion and a medium- to long-term incentive portion

shall be considered. The objective of this is to secure talented executives for business execution and

ensure that compensation serves as an effective incentive for improving the business performance and

corporate value of the entire Group.

a. Compensation

• Compensation comprises a fixed portion depending on the position, a results-linked portion depending

on the entire Group’s performance for the year and individual responsibilities, and a medium- to

long-term incentive portion in the form of a stock-type compensation stock options program.

• The results-linked portion could range from 0% to 200% of the standard amount subject to achievement

of management targets of the Group and fulfillment of responsibilities.

• The medium- to long-term incentive portion shall comprise restricted stock compensation and

stock-type compensation stock options, and stock-type compensation stock option, in principle,

account for 20% of total annual compensation.

b. Level

• A suitable level of compensation shall be paid in order to secure talented individuals. The level of

compensation is determined in consideration of the results of third-party surveys on the compensation

levels of corporate managers and other relevant information.

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(2) Outside Directors

The main responsibility of outside directors is to enhance the transparency and objectivity of corporate

management through the oversight and supervision of executive directors’ execution of duties.

Consequently, compensation shall be fixed with the objective of securing talented individuals and ensuring

that the supervisory and oversight function is working effectively.

a. Compensation

• A fixed amount is paid according to the role.

b. Level

• A suitable level of compensation shall be paid in order to secure talented individuals. The level of

compensation is determined in consideration of the results of third-party surveys on the compensation

levels of corporate managers and other relevant information.

■Policy for Determining the Compensation of Statutory Auditors

The compensation of statutory auditors is determined according to the following policy within the limit set

by a General Meeting of Shareholders.

The main responsibility of statutory auditors is to ensure the transparency and objectivity of

corporate management by conducting operational and accounting audits. Consequently, compensation for

statutory auditors is determined as fixed compensation with a focus on securing talented individuals and

ensuring that the audit function is working effectively.

a. Compensation

• A fixed amount is paid according to the respective role of standing statutory auditors and non-executive

statutory auditors.

b. Level

• A suitable level of compensation shall be paid in order to secure talented individuals. The level of

compensation is determined through discussion of statutory auditors by giving consideration to the

results of third-party surveys of the compensation levels of statutory auditors and other relevant

information.

[Support Structure of Outside Directors/Statutory Auditors]

The Corporate Planning Department of the Company provides information to outside directors and outside

statutory auditors and distributes Board of Directors meeting materials prior to the meetings.

2. Functions on Execution of Operation, Audits and Supervision, Nomination,

Determining Compensation and Other (updated)

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The Company has adopted the statutory auditor system. The Company appoints outside directors who

work with the statutory auditors to strengthen corporate governance. An overview of the current corporate

governance system is provided below.

(1) Board of Directors

a. The Company is a pure holding company that owns direct subsidiaries, Sony Life Insurance

Co., Ltd., Sony Assurance Inc., Sony Bank Inc. and Sony Lifecare Inc. From the perspective of

group-wide efficiency in business operations, one representative director and two of the

Company’s executive directors out of nine directors serve as directors of its subsidiaries.

Furthermore, the three representative directors of its subsidiaries (Sony Life Insurance Co.,

Ltd., Sony Assurance Inc. and Sony Bank Inc.) serve as non-executive directors of the

Company.

b. The Company has appointed two highly independent outside directors out of nine directors to

introduce external perspectives and to protect minority shareholders’ interests. These outside

directors are deemed as independent directors based on the Tokyo Stock Exchange

regulations.

c. The Board of Directors of the Company delegates to the Executive Committee the authority to

deliberate and determine the execution of certain daily activities. The Executive Committee is

composed of standing directors as well as executives and employees who are selected by

resolution of the Board of Directors. This committee meets twice a month, in principle.

Non-executive directors and statutory auditors may also attend meetings of the Executive

Committee.

(2) Statutory Auditors

a. The Board of Statutory Auditors of the Company has three members, two of whom are outside

statuory auditors and deemed as independent directors based on Tokyo Stock Exchange

regulations. We elect one substitute statutory auditor in case of a vacancy.

b. The standing statutory auditor of the Company cooperates with outside directors (independent

directors), the corporate executive in charge of its Audit Department and employees in the

Audit Department to enhance the supervisory function in corporate management.

(3) Internal Audits

The Company has established an Audit Department, which is independent of the Company’s operating

divisions and is composed of dedicated internal audit personnel.

(4) Accounting Audits

The Company has appointed PricewaterhouseCoopers Aarata as its independent auditor.

(5) Establishment of Optional Committees

To increase management transparency, the Company has established the Nomination Advisory

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Committee and the Compensation Advisory Committee as advisory bodies to the Board of Directors. The

composition of these committees is described in this report in “II. 1 [Directors] Status of the Establishment

of a Discretionary Committee, Composition and Attributes of Chairperson”

3. Reason for choosing current corporate governance structure (updated)

As the Company is a pure holding company, the Group believes that the current structure, in which

directors and statutory auditors hold concurrent positions in the parent company and subsidiaries, is

efficient from the perspective of Group management. As the Company is also a subsidiary of a listed

parent company, Sony Corporation, the Company has appointed highly independent two outside directors

and two outside auditors (These outside directors and outside auditors are deemed as independent

directors and independent auditors based on Tokyo Stock Exchange regulations, respectively) to ensure

an outside perspective and to protect the interests of minority shareholders. Furthermore, the Company

also has established a Nomination Advisory Committee and a Compensation Advisory Committee as

advisory bodies to the Board of Directors to increase management transparency. In addition to protecting

the interests of minority shareholders, the Company believes that the current structure is optimal from the

standpoints of ensuring Group management efficiency and enhancing corporate value.

III. Implementation of Measures for Shareholders and Other Stakeholders

1. Efforts Towards Activation of Shareholders’ Meeting and Facilitation of Exercising Voting Rights

(1) Early Delivery of Notice of Convocation for the General Meeting of Shareholders

The Company sent the Notice of Convocation for the General Meeting of Shareholders 22 days before the

meeting.

(The Company held its General Meeting of Shareholders on June 21, 2017, and sent the Notice of

Convocation on May 31, 2017, for the fiscal year ended March 31, 2017.)

(2) Setting the Date for the General Meeting of Shareholders on a Date That Avoids the Day

When General Meetings Tend to be Concentrated

The Company held its General Meeting of Shareholders on June 21, 2017 and avoided the day when

general meetings tend to be concentrated.

(3) Exercise of Voting Rights via Electronic Means

a. The Company has introduced the exercise of voting rights over the Internet.

b. The Company has introduced the exercise of voting rights via the electronic voting platform for

institutional investors operated by ICJ, Inc.

(4) Participation in a Platform for the Electronic Exercise of Voting Rights and Other Initiatives to

Enhance the Environment for the Exercise of Voting Rights by Institutional Investors

The Company participates in a platform for the electronic exercise of voting rights in order to enhance the

environment for the exercise of voting rights by institutional investors. Furthermore, a portion of the

convocation notice is translated into English, and the convocation notice is disseminated early.

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(5) Provision of a Convocation Notice (Summary) in English

A portion of the convocation notice is translated into English.

2. IR Activities (updated)

(1) Disclosure Policy

The Company has established the “IR Policy” which indicates the Purpose of IR Activities,

Basic Approach to IR Activities, Disclosure of IR Information, Framework for Disclosure of

IR Information and Quiet Period for IR Activities. The Company has also disclosed the IR Policy onto its

website.

(2) Regular Meetings for Individual Investors

Explanations by representatives: Yes

The Company holds a conference for individual investors correspondingly. Furthermore, the Company will

continue to hold meetings for individual investors.

(3) Regular Meetings for Analysts and Institutional Investors

Explanations by representatives: Yes

Every quarter, the Company holds a teleconference with analysts and institutional investors on the day it

announces quarterly financial results. The teleconference is hosted by a director of the Company and

subsidiaries’ senior executives in charge of finance. In addition, Sony Financial Holding holds a Corporate

Strategy Meeting once a year, hosted by the Group top managements.

(4) Regular Meetings for Overseas Investors

Explanations by representatives: Yes

The Company top managements visit overseas investors in each region once a year to hold one-on-one

meetings in Europe, North America and Asia.

(5) Uploading IR Materials onto Website

The Company uploads earnings releases, annual reports and other disclosure materials onto its website.

The Company has also enhanced disclosure in English to ensure there are no material disclosure gaps

between the English and Japanese languages.

(6) IR-related Division

The Company has established the Investor Relations Department.

3. Efforts to Adopt a Stakeholder Standpoint

(1) Provisions within Internal Regulations for Respecting the Standpoint of Stakeholders

The Group recognizes that taking stakeholders’ concerns into account in management decision making is

an important part of ensuring sound business operations. Accordingly, the Group has established an

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activity charter that it endeavors to follow in its operations.

(2) Environmental Protection and CSR Activities

The Company has established a CSR Basic Policy. Each of the companies in the Group conducts

voluntary and fund-raising activities, has acquired ISO 14001 certification (the international standard for

environmental management systems), has introduced a Green Power Certification system and

participates in various other social contribution and environmental activities.

IV. Basic Stance on Internal Control System and the Status of Establishment

1. Basic Policy on an Internal Control System

The Company’ Board of Directors formulated a Basic Policy on Establishing an Internal Control System in

compliance with Companies Act of Japan and associated enforcement regulations to ensure the

appropriateness of the Group company business activities. The Company has implemented and operates an

internal control system in line with this policy.

[Basic Policy on Establishing an Internal Control System]

(1) System to ensure that the execution of duties by directors and employees complies with laws and the

Articles of Incorporation

i. The Board of Directors establishes a code of conduct as a basic policy for compliance and makes this

code clear to the Company' executives, employees and subsidiaries.

ii. The Board of Directors creates a compliance manual that provides specific compliance guidelines and a

compliance program that defines specific plans.

iii. The Board of Directors creates a compliance supervisory department to promote its compliance program.

The compliance supervisory department regularly reports to the Board of Directors on the progress of the

compliance program.

iv. The Board of Directors formulates the Basic Group Policy on Eradicating Anti-social Forces. This policy

describes the firm stance the Group takes to counter anti-social forces and build the structure necessary

to fulfill this policy.

v. The Board of Directors establishes an internal hotline system and informs the Company' executives,

employees and subsidiaries about the system. This system allows employees or others who become

aware of corporate strategies, operations or other activities that contravene (or are in danger of

contravening) laws and regulations to report directly to a hotline desk. The system prohibits any action

from being taken against employees or others who provide such notification.

vi. The Board of Directors creates the Group Information Security Policies and streamlines a structure to

properly control Group information assets, including customer information.

vii. The Board of Directors creates the Conflicts of Interest Policy within the Group and ensures that the

necessary formats are in place to properly control transactions which have the potential to harm the

interests of customers.

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viii. The Board of Directors establishes an internal audit supervisory department, which is independent from

other operating departments. The internal audit supervisory department liaises and cooperates with the

statutory auditors and the accounting auditor; monitors and verifies, from an independent and objective

viewpoint, the implementation and operational status of the internal control system; and reports regularly

to the Board of Directors the status of internal audits.

ix. The Board of Directors formulates the Basic Policy related to Group’s Internal Audits as well as

Regulations on Internal Audit, and informs the Company’s executives and employees and subsidiaries of

these.

(2) System for storing and managing information related to the execution of duties by directors

The Company establishes the Record-keeping Regulations to ensure that documents pertaining to the

execution of duties by directors, such as records of decisions at Board of Directors and Executive Committee

meetings, are appropriately stored and managed in accordance with these laws and regulations.

(3) Systems of regulations related to risk management

i. The Board of Directors formulates the Fundamental Principles for Risk Management Activities as a

basic policy on Group risk management and informs the Company’s executives, employees

and subsidiaries of these.

ii. The Board of Directors establishes a risk management supervisory department to manage risks

appropriately for the Company and its subsidiaries, in accordance with each entity's scale,

characteristics and business model. This department reports regularly to the Board of

Directors on the status of risk management.

iii. The Board of Directors evaluates the capital adequacy of subsidiaries to ensure that their levels of

capitalization are sufficient in light of the risks the Group directly faces and to

implement appropriate capital allocations. If necessary, the Board of Directors takes measures

designed to strengthen capital bases.

iv. The Board of Directors creates the Basic Policy Related to Group Business Continuity Risk Management,

as well as contingency plans, to build a system that enables the Group to respond rapidly to a crisis and

put in place measures to minimize the impact of these risks. The Board of Directors makes these plans

known to the Company’s executives, employees and subsidiaries.

(4) Systems to ensure the efficient execution of duties by directors

i. The Board of Directors establishes approval regulations, organizational and task-sharing regulations

and other internal rules, and creates an appropriate structure for the efficient execution of duties.

ii. The Board of Directors sets up an executive committee and delegates to this committee the discussion

and decision-making authority regarding execution of important corporate day-to-day business activities.

iii. The Board of Directors establishes the Business Plan Control Regulations, formulates and executes

non-consolidated and consolidated medium-term business plans and annual business plans, and

regularly confirms progress on business plans.

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(5) System to ensure reliability of financial reporting

The Company maintains the necessary system to ensure reliability of financial reports, in accordance with

the Basic Policy Regarding Group Financial Reporting.

(6) System to ensure the appropriateness of operations by the Company and the corporate group,

including the Company’s parent company and subsidiaries

i. In addition to exercising shareholder rights as a financial holding company, the Company makes

management control agreements with its subsidiaries, under which the Company manages subsidiaries by

requiring them to comply with the Groupwide Basic Policy and to report and obtain prior approval of the

Company on matters necessary for ensuring the appropriateness of operations of the Group, including

subsidiaries.

ii. Based on its Basic Policy on Management of Transactions within the Group, the Company

deliberates and examines the appropriateness and compliance of intra-Group transactions with

subsidiaries that have the potential to significantly impact the operations of the Group before

commencement of those transactions. Such issues are resolved at or reported to the Board of

Directors. In addition, to protect minority interests, when conducting transactions with parent

company Sony Corporation (controlling shareholder) and its group companies, Sony Financial

Holdings and its subsidiaries duly confirm that these transactions are necessary and that they are

entered into under conditions that are not conspicuously divergent from those of typical transactions

with third parties.

iii. The Company’s Audit Department takes responsibility for ensuring that subsidiaries have

appropriate internal control systems in place and monitors and verifies the results of internal and

third-party audits of subsidiaries.

iv. The Company and its subsidiaries submit management information about the Group as

needed to the Company’s parent company and interact with the parent company's internal

audit supervisory department.

(7) Items pertaining to employees who are requested to assist statutory auditors in their duties

If directors receive requests from statutory auditors for employees to be allocated to assist them in their duties,

the directors assign such personnel without delay.

(8) Independence from directors of employees assigned to assist statutory auditors referred to in (7)

above

i. Statutory auditors must agree to the appointment, removal and evaluations of employees assigned to

assist them in their duties.

ii. Employees assigned to assist statutory auditors in their duties must exclusively follow the instructions

and directives of statutory auditors, once they are given.

(9) System for directors and employees to report to statutory auditors, and other reporting system

i. If directors or employees are requested to provide reports regarding the execution of their business to

statutory auditors, they must do so immediately.

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ii. If directors or employees discover facts that could significantly affect the operations or financial condition

of the Company or its subsidiaries, they must report such discovery to the statutory auditors immediately.

No actions may be taken against persons providing such reports, while the information provided via such

report shall be shared among the Company’s executives, employees and subsidiaries.

iii. If directors or employees receive notification via the internal hotline system, they must report immediately

to the statutory auditors.

(10) Other systems to ensure the effectiveness of audits by statutory auditors

i. Representative directors endeavor to forge and deepen relationships with statutory auditors based on

mutual understanding and trust by creating the environment that facilitates audits by statutory auditors.

ii. When statutory auditors request, the Company shall pay expenses or discharge obligations attendant to

requests for counsel, studies, expert opinion or other activities by attorneys, certified public accountants or

other outside specialists for the execution of statutory auditors’ duties, unless the Company proves that

such activities were not necessary to the execution.

2. Basic Policy on Eradicating Anti-social Forces

[Basic Group Policy on Eradicating Anti-social Forces]

The Group recognizes the importance of strictly avoiding any association with anti-social elements from the

perspectives of social responsibility, compliance and corporate defense. Accordingly, the Group has formulated

this basic policy to enforce its initiatives to shut out anti-social forces.

(1) Organizational response

Rather than at the individual or departmental level, the Group responds to anti-social forces at an

all-organizational level, from top management downward, and ensures the safety for all executives and

employees who respond.

(2) Cooperation with external organizations

To obtain appropriate counsel and cooperation, the Group collaborates closely on an ongoing basis with outside

specialists, including the police, centers for the elimination of violent groups and attorneys.

(3) Refusal of all relationships, including transactions

The Group refuses to have any relationships with anti-social forces, including transactional relationships.

(4) Civil and criminal legal approaches to emergency situations

The Group strictly rejects unfounded demands by anti-social forces. Furthermore, the Group takes both civil and

criminal legal approaches, as necessary.

(5) Prohibition on backroom deals and provision of funds

The Group conducts absolutely no backroom deals with nor provides funds to anti-social forces.

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[Structures for Eradicating Anti-social Forces]

・The Company sets up a department for dealing with anti-social forces

and appointed a person responsible for thwarting unreasonable demands.

・The Company collects information on anti-social forces by cooperating with specialized external organizations.

V. Other

1. Takeover Defense: No

2. Other Corporate Governance Structures (updated)

The Company’s IR Policy is as follows:

[Purpose of IR Activities]

The Company strives to provide members of the investment community, including its shareholders, investors,

securities analysts and other market participants, with information related to the assessment of corporate value

in a timely, accurate and fair manner, as well as to facilitate sufficient dialogue. By enhancing disclosure of

management strategies and financial position, the Company makes efforts to gain the trust of the investment

community and obtain a fair corporate valuation from stakeholders. Furthermore, the Company feeds market

dialogue, evaluations and other information back to its senior management and makes use of this information in

its management in the aim of increasing corporate value.

[Basic Approach to IR Activities]

1. The Company will clearly disclose the information necessary to assess its corporate value based on the

principles of promptness, accuracy, fairness and consistency.

2. The Company will engage with members of the investment community such as its shareholders, investors,

securities analysts and other market participants, in a sincere and direct manner in order to establish

relationships of trust.

3. The Company will promote IR activities led by the president and representative director, based on the

concerted effort of the entire the Group. The Company places importance on constructive dialogue with its

shareholders, investors, securities analysts and other market participants, and will strive to take advantage

of various opportunities to engage in dialogue, centered on senior management.

In addition to holding individual meetings, the Company will participate actively in events targeting investors

and securities analysts (including Company briefings, financial results briefings and IR fairs) and enhance

its disclosure of information through various IR tools (including corporate website and annual reports),

thereby promoting efforts to deepen their understanding of the Company. Furthermore, the Company will

seek to expand opportunities for dialogue, taking into consideration the medium- to long-term interests of

its shareholders, investors, securities analysts and other market participants.

4. The Company will periodically feed requests and evaluations from shareholders, investors, securities

analysts and other market participants through its IR activities back to its senior management by reporting

this information mainly to the Board of Directors.

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[IR Organizational Structure]

The Company assigns a corporate executive to oversee IR activities and has established the Investor Relations

Department as the department in charge of IR activities. Through this structure, the Company seeks to

enhance its disclosure of information and dialogue. The department in charge of IR activities shares information

appropriately with the Company’s operating departments, as well as Group companies.

[Disclosure of IR Information]

(1) Basic Stance

The Company will engage in timely disclosure in accordance with the Securities Listing Regulations approved

by the Tokyo Stock Exchange. The Company will also proactively disclose other information of substantial

interest to shareholders, investors, securities analysts and other market participants, as well as information

intended to promote an understanding of the Group. Furthermore, the Company will maintain continuity and

consistency in the information it discloses.

(2) Method of Disclosure

The Company will provide timely disclosure based on the Securities Listing Regulations through the Timely

Disclosure network (TDnet) of the Tokyo Stock Exchange, and will promptly make such information

available on the Company corporate website.

The Company strives to provide fair disclosure worldwide by making a full range of information available on

its corporate website, including information that is not required under disclosure regulations.

(3) Framework for Disclosure

In order to promote timely disclosure, the Company has established the Rules and Regulations Related to

Timely Disclosure, and set up a Disclosure Committee (DC).

In the event that material information comes to light, the Company has a framework in place whereby the

Company’s corporate executives and employees, as well as managers responsible for the disclosure of

material information (hereinafter, the “Disclosure Managers”) of its subsidiaries, promptly report on this

information to the DC.

Furthermore, material corporate information that the Company must disclose is set forth in the Group

Guidelines for Reporting Important Information. These guidelines are made known to the Company’s corporate

executives and employees, as well as the Disclosure Managers of its subsidiaries.

Notes:

Roles of the DC

1. Assist the President and Representative Director in desiring, introducing, evaluating and maintaining of the timely

disclosure system.

2. Promptly and comprehensively collect material corporate information of Group companies; discuss the

necessity of timely disclosure along with the accuracy, completeness, clarity and level of internal approval of

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the content of timely disclosure, as well as the fairness and proactiveness of the announcement; and assist the

President and Representative Director in understanding timely and appropriate disclosure as an advisory body for the

material matters and recommended the Company the filing the Company’s reports and other filings as appropriate.

[Quiet Period for IR Activities]

In order to ensure fair disclosure of information and prevent the leak of material information regarding the

Group’s financial results prior to earnings announcements, the Company has established a quiet period for IR

activities. The Company observes a quiet period for IR activities from the second Monday of the month

following the end of every quarter until the earnings announcement. During this period, the Company shall not,

in principle, hold individual meetings, presentations about the Company and other such events, and shall

refrain from answering inquiries regarding the financial results.

[Control of Insider Information]

The Company has formulated the Basic Group Policy on Prevention of Insider Trading for the Group to prevent

leaks of information for timely disclosure. In addition, when engaging in dialogue individually with shareholders,

investors, securities analysts and other market participants, the Company has a policy of always engaging

multiple members to ensure thorough control in the handling of information. The Company has also established

the above-mentioned quiet period for IR activities, during which to prevent disclosing selectively unannounced

material information only to a specific number of people.