Policy Regarding Mizuho Financial Group's Cross–shareholdings of Other Listed Companies

Mizuho Financial Group and our Three Core Companies^* have established and published a Policy Regarding Cross–shareholdings of Other Listed Companies and Standards Regarding the Exercise of Voting Rights Associated with Cross–shareholdings.

*   "Three Core Companies" refers to Mizuho Bank, Ltd., Mizuho Trust & Banking Co., Ltd. and Mizuho Securities Co., Ltd.
 

Policy Regarding Mizuho Financial Group's Cross–shareholdings of Other Listed Companies

• As a basic policy, unless we consider these holdings to be meaningful, Mizuho Financial Group and the Three Core Companies will not hold the shares of other companies as cross–shareholdings. This reflects factors including the changes in the environment surrounding Japan's Corporate Governance Code and the potential impact on our financial position associated with stock market volatility risk.
• We consider cross–shareholdings to be meaningful if they contribute to the maintenance and improvement of the corporate value of issuers and the Mizuho group based on their growth potential, outlook, or revitalization perspectives or as a result of studies on present and future economic feasibility and profitability.
• We will regularly and continually examine whether shares held as cross–holdings are meaningful, and we will dispose of holdings determined to be deficient in meaning with due regard to the impact on the market and other matters. Through dialogue with the issuing companies, we will also reduce even those holdings we consider to be meaningful.
   

Standards Regarding the Exercise of Voting Rights Associated with Cross–shareholdings

• Mizuho Financial Group and the Three Core Companies will exercise voting rights after comprehensive consideration of whether an issuing company has established effective corporate governance and is making appropriate decisions to improve its corporate value over the medium to long term. We will also consider any impact to our own corporate value. Further, if we are unable to agree on proposals made by issuing companies, we may consider disposing of our share holdings.
• We will consider specific proposals through dialogue with the issuing companies and studies conducted by our own specialized departments. In particular, when proposals such as those listed below could affect corporate value or shareholder interests, we will decide on the exercise of voting rights after comprehensive consideration of the purposes of the proposals and the issuing company's approach to improving corporate value.
  • Proposals to re–elect directors and auditors, grant retirement benefits, pay bonuses and increase compensation amounts when an issuing company has posted a loss or paid no dividends for a certain period of time, or a corporate scandal has occurred.
  • Proposals to re–elect representative directors when profit on capital is going through a long–term slump, when after convening a general meeting of shareholders a company has less than the required number of independent directors or no female directors, or when a company holds excessive cross–shareholdings.
  • Proposals to appropriate retained earnings when there are ongoing low dividend distributions or when such proposals, if resolved, may adversely affect financial soundness.
  • Proposals to adopt or continue anti–takeover measures.
  • Proposals for reorganization such as through a merger.
  • Proposals for capital strategies, including issuing new shares.
  • Proposals to grant stock options to dilute overall shares.
  • Proposals to change articles of incorporation that may impact shareholder value.
  • Proposals based on shareholder proposals.
     

Process for assessing whether cross–shareholding is meaningful

Taking into account our Policy Regarding Mizuho Financial Group's Cross–shareholdings of Other Listed Companies, we assess whether cross–shareholding is meaningful using the process outlined below.

• We will continue to hold the shares of clients if those shares meet certain profitability standards based on a quantitative assessment. However, in light of factors including the changes in the environment surrounding Japan's Corporate Governance Code and the potential impact on our financial position associated with stock market volatility risk, we are working to reduce our cross–shareholdings through dialogue with our clients.
• For those shares that also fall short of profitability standards based on a comprehensive assessment, we will draw on our relationship of trust with the client in order to engage with them in constructive dialogue. If improvements in profitability can be made as a result, we will continue to hold the shares, but if improvement is not possible, we will negotiate with the client regarding the sale of the shares.
• We periodically confirm the status of negotiations for the sale of cross–shareholdings, client efforts to improve profitability, and other matters. Additionally, once per year at a meeting of the Board of Directors, we conduct an assessment of whether it is meaningful to maintain shares of each of the domestically listed stocks that we are holding.
• In our assessment of cross-shareholdings as of the end of March 2023, of domestically listed stocks that we are holding (JPY 997.3 billion in total on a consolidated acquisition cost basis as of the end of March 2023), around 30% did not meet the standards for continued holding.
• The results of the assessment may vary based on our business relationship with the client, the market environment, and other factors at the time of assessment, but we will continue to work steadily to reduce our cross–shareholdings.
• Note that we also conduct a similar assessment for deemed holdings of shares.

Reduction of cross–shareholdings
 

• The reduction target for FY2023 – 2025 is JPY 300 billion, and we will continue to engage in careful negotiations with our clients through dialogue to reduce the impact of stock market volatility risk.
• We have achieved a divestment of JPY 82.1 billion during FY2023, showing steady progress.
• Deemed holdings of shares were also reduced by nearly the entire 3-year target of JPY 200 billion in just the first year.