REPORT ON CORPORATE GOVERNANCE

Masahiko Oshima

Mr. Masahiko Oshima retired from Sumitomo Mitsui Banking Corporation (“SMBC”) in July 2024, with which TMC has business relationships. However, TMC has determined that there are no conflicts of interest with general shareholders as the business relationships between TMC and SMBC are immaterial, with the amount of our borrowings from SMBC being less than 2% of our total consolidated assets in any of the last three business years. Furthermore, TMC is not among the top 10 companies in terms of shareholding in SMBC (as of March 31, 2025, TMC’s shareholding balance in the holding company of SMBC is zero), nor is SMBC among the top 10 companies in terms of shareholding in TMC.

Mr. Masahiko Oshima was appointed as an Outside Member of the Board of Directors because TMC expects him to contribute to the increase of TMC’s corporate value by fulfilling his role of providing advice on sustainable growth and improvement of capital efficiency by utilizing his insights into financial markets as well as his experience of leading sustainability initiatives and IR activities, developed as a manager of a global financial group.
Mr. Masahiko Oshima is designated as an independent Member of the Board of Directors of TMC as there is no risk of a conflict of interest with general shareholders of TMC as described on the left although he falls under item h above.

Hiromi Osada

Ms. Hiromi Osada worked for the Chunichi Shimbun as its executive, with which TMC has business relationships. However, as the amount of the transactions is immaterial, accounting for less than 1% of the consolidated sales of both companies in any of the last three business years, TMC has determined that there are no conflicts of interest with general shareholders.

Ms. Hiromi Osada was appointed as an Outside Member of the Board of Directors because TMC expects her to contribute to the increase of TMC’s corporate value, as she has extensive knowledge and networks gained through her experience as a journalist covering a wide range of fields, including society, economics, politics, and international affairs, which can be leveraged to guide TMC in communicating messages to a diverse group of stakeholders and to help TMC accurately collect and analyze information in organizational audits conducted by the Audit and Supervisory Committee. Ms. Osada is designated as an independent Member of the Board of Directors of TMC as there is no risk of a conflict of interest with general shareholders of TMC as described on the left although she falls under item h above.

This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the Japanese original shall prevail.

(Translation)

June 18, 2025

TOYOTA MOTOR CORPORATION

Koji Sato, President

Contact: +81 565 28 2121

Corporate governance at Toyota Motor Corporation (“TMC”) is as follows:

I. TMC’s Basic Policy on Corporate Governance and Capital Structure, Business Attributes and Other Basic Information

1.	Basic Policy

TMC has positioned the sustainable growth and the stable long-term growth of corporate value as priority management issues.

Believing that in carrying this out, it is essential that it both builds positive relationships with all stakeholders, including shareholders and customers as well as business partners, local communities and employees, as well as continues to supply products that will satisfy its customers, TMC has been working to enhance corporate governance.

[Reason not to implement each principle of Corporate Governance Code]

TMC implemented all of the principles of its Corporate Governance Code.

[Disclosure based on each principle of Corporate Governance Code]

1.	Vision and Philosophy [Principle 3.1 (i)]

TMC, since its formation till today, has been following the “Toyoda Principles,” which captures the spirit of Sakichi Toyoda, the founder of the Toyota Group, and his insights into research, inventions and business management, as the foundation for its management. TMC has established the “Toyota Philosophy,” “Guiding Principles at Toyota” and other principles based on the “Toyoda Principles.”

Toyoda Principles (https://global.toyota/en/company/vision-and-philosophy/philosophy/)

Toyota Philosophy

In order to advance its transition to a mobility company, TMC has reflected on the path it has taken thus far and has formulated the “Toyota Philosophy” as a roadmap for the future.

TMC’s mission is “Producing Happiness for All” by expanding the possibilities of people, companies and communities through addressing the challenges of mobility as a mobility company. In order to do so, TMC will continue to create new and unique value with various partners by relentlessly committing towards monozukuri (manufacturing), and by fostering imagination for people and society. Please see the end of this report for details.

Guiding Principles at Toyota (https://global.toyota/en/company/vision-and-philosophy/guiding-principles/?padid=ag478_from_header_menu)

In addition to the above Vision and Philosophy, in January 2024, TMC announced its group vision, “Inventing our path forward, together,” that reflects the origin of TMC’s foundation and shows the future direction that the Toyota Group should take. TMC also set forth five attitudes to be embraced by Toyota employees. Under this vision, the Toyota Group should all embrace the spirit of invention within us, think of others, hone our skills, and continue to make the right things. In doing so, the Toyota Group will build a culture of mutual gratitude, and ensure we are needed in the future.

Toyota Group Vision (https://toyotatimes.jp/en/toyota_news/toyota_group_vision/)

2.	Business strategies and business plans [Principle 3.1 (i), Supplementary Principle 3.1.3]

Under the initiative of “making even better cars” that it has been engaged in since the 2008 global financial crisis, TMC is moving forward with product-centered management under the in-house company system to offer a common platform called TNGA (Toyota New Global Architecture) with enhanced driving basic performance and product appeal and to provide a full lineup of products with “good quality yet affordable prices” globally at the right place at the right time, as well as under the region-based system to offer products and services that are sympathetic towards customers in each country and region. Furthermore, having grasped the business situation based on its key businesses (vehicles, financial, others) and business regions (Japan, North America, Europe, Asia, others), TMC has established a medium-term management plan for each region, taking into consideration the prospect of markets and exchange rates, its production and supply system on a global basis and other factors.

In order to address climate change and take on challenge globally to realize carbon neutrality by 2050, TMC will respond deftly to changes in customer demand trends by providing a diverse set of product options, taking into consideration region-specific electric power conditions. Due to a once-in-a-century transformation brought about by the CASE* revolution, cars of the future will be connected to communities and people’s lives through information, becoming part of our social systems. Amid this changing landscape, TMC is striving to completely redesign ourselves as a mobility company and ambitiously working to create an “ever-better mobility society” in which people can live happily, with smiles on their faces.

*	CASE is an acronym for Connected, Autonomous/Automated, Shared, and Electric.

TMC has disclosed in the “Integrated Report” its long-term strategy for enhancing its corporate value and the ways that it is contributing to the sustainable development of society in order to communicate them to stakeholders. In addition, as for TMC’s initiatives related to sustainability, it has developed the Sustainability Fundamental Policy and various other individual policies, and is striving to implement them to contribute to the sustainable development of society through corporate activities, which has been TMC’s objective since its founding. TMC has disclosed information such as its policies and the status of initiatives in the “Sustainability Data Book.”

For information about TMC’s initiatives regarding investment in human capital, etc., please read this report, the Integrated Report, the Sustainability Data Book, the Japanese annual securities report and the 20-F.

For information about TMC’s initiatives regarding investment in intellectual property, please read the Integrated Report, the Sustainability Data Book and the 20-F.

TMC has disclosed its initiatives regarding climate-change related risks and opportunities based on the Task Force on Climate-related Financial Disclosures (TCFD) framework recommendations in the Integrated Report, the Sustainability Data Book, the Japanese annual securities report and the 20-F.

In order to convey top management’s aspirations and the company’s direction to all stakeholders of TMC, TMC communicates what TMC is really like through “Toyota Times.”

“Integrated Report” (https://global.toyota/en/ir/library/annual/)

“Sustainability Data Book” (https://global.toyota/en/sustainability/report/sdb/)

“Japanese annual securities report” (https://global.toyota/jp/ir/library/securities-report/)

“20-F” (https://global.toyota/en/ir/library/sec/)

“Toyota Times” (https://toyotatimes.jp/en/)

3.	Basic views and guidelines on corporate governance [Principle 3.1 (ii)]

Please see 1. “Basic Policy” of this report under the section entitled “I. TMC’s Basic Policy on Corporate Governance and Capital Structure, Business Attributes and Other Basic Information.”

4.	Roles and duties of the Board of Directors and senior management

The scope of delegation to the management [Supplementary Principle 4.1.1]

By specifying matters to be resolved at its Board of Directors and matters to be reported to its Board of Directors in the Regulations of the Board of Directors, TMC delegates management to executive officers and carries out “acceleration of decision-making” and “appropriate supervision.”

To provide a full lineup of products with “good quality yet affordable prices” globally at the right place at the right time, and offer products and services that are sympathetic towards customers in each country and region, through the initiative of “making even better cars” that we have been engaged in since the 2008 global financial crisis, following the introduction of “region-based management” in 2011, the “business unit system” in 2013, and the “in-house company system” in 2016, in April 2017, TMC further clarified that Members of the Board of Directors are responsible for decision-making and management oversight and that operating officers are responsible for operational execution for purposes of further accelerating decision-making and operational execution.

Furthermore, in 2018, TMC brought forward the timing of executive changes from April, when it used to take place, to January, in order to further accelerate management oversight that is fully coordinated with the workplace. In addition, TMC transformed the company structure into one that enables decision-making that is both close to the needs of customers and close to where the action takes place, by taking measures such as reviewing the corporate strategy function and restructuring the Japan Sales Business Group into a group based by regions rather than sales channels.

In 2019, to further advance its “acceleration of management” and the development of a diverse and talented workforce, TMC made executive and organizational changes as follows.

•

Executives are composed of only senior managing officers and people of higher rank.

•

A new classification called “senior professional/senior management” (kanbushoku) grouped and replaced the following titles or ranks: managing officers, executive general managers, (sub-executive managerial level) senior grade 1 and senior grade 2 managers, and grand masters

From the perspective of appointing the right people to the right positions, senior professionals/senior management were positioned in a wide range of posts, from those of chief officer, deputy chief officer, plant general manager, senior general manager to group manager, regardless of age or length of employment, to deal with management issues as they arise and to strengthen their development as part of a diverse and talented workforce through genchi genbutsu (on-site learning and problem-solving).

In April 2020, TMC consolidated the post of executive vice president and the post of operating officer into the post of operating officer and in July 2020, clarified the responsibilities of operating officers. TMC redefined the role of operating officer to be members who, together with the president, have cross-functional oversight of the entire company. Furthermore, in-house company presidents, regional CEOs and chief officers, as on-site leaders of business implementation elements, were given authority while being consolidated into the rank of senior professionals/senior management. The roles of operating officers and senior professionals/senior management were determined where and as needed, and persons appointed as operating officers and senior professionals/senior management changed in accordance with the challenges faced and the path that should be taken, as the company exercises greater flexibility than ever in appointing the right people to the right positions.

However, because of the rapidly changing business environment, TMC now recognizes that there is an increasing need for such executives to fulfill management roles (related to people, goods, and money) together with the President. Therefore, in April 2022, TMC reorganized the roles of operating officers and reestablished the position of “executive vice president,” defining it as an operating officer who is focused on the business from a management perspective. In April 2023, the role of operating officers was revised to a management team that implements “product-centered (manufacturing ever-better cars) and region-centered (best-in-town) management” under the theme of “inheritance and evolution,” and the executive vice presidents were selected upon their extensive knowledge and experience from the two pillars of products and regions.

Upon transitioning to a company with Audit and Supervisory Committee in June 2025, TMC reviewed the composition of the Board of Directors to enable more participatory management decision-making and oversight. In addition to appointing internal Members of the Board of Directors who can implement “product-centered and region-centered management,” TMC has also appointed independent Outside Members of the Board of Directors who can provide advice on new value creation and governance from a broad perspective.

In accordance with its basic policy of appointing the right person to the right position, TMC is implementing reforms in an agile and continuous manner. In an era of rapid change and uncertainty, TMC will continue to flexibly review and optimize its governance structure to ensure swift decision-making, while further strengthening its oversight functions and delegating authority to the executive management.

Views on the balance, diversity and size of the Board of Directors [Supplementary Principle 4.11.1]

The Members of the Board of Directors are selected based on comprehensive consideration of their responsibilities to ensure TMC’s sustainable growth and to enhance its corporate value over the medium- to long-term. TMC believes that it is critical to appoint individuals who are capable of contributing to decision-making aimed at sustainable growth into the future by practicing “product-centered and region-centered management” based on the “Toyota Philosophy.” Moreover, these individuals should be able to play a significant role in transforming TMC into a “mobility company” through responding to electrification, intelligence, and diversification and external partnerships based on trust and friendship and internal two-way interactive teamwork, while working towards solutions for social challenges such as the climate change issue.

In addition, TMC expects the Outside Members of the Board of Directors to utilize their extensive and rich experience and knowledge in TMC’s management from an independent standpoint.

To ensure our Outside Members of the Board of Directors participate in decision-making from an independent standpoint and to reflect the opinions of more diverse stakeholders in management, TMC has disclosed the “Roles of and Expectations for Outside Members of the Board of Directors and Outside Members of the Board of Directors who are Audit and Supervisory Committee Members” and the “Independence Assessment Criteria.”

The Board of Directors shall consist of persons with a balance of abilities and consideration given to diversity in order to make important business decisions and supervise management appropriately, and the knowledge, experience, and abilities, etc. of the Members of the Board of Directors are listed in our skills matrix.

5.	System to appropriately perform roles and duties of the Board of Directors and senior management

Policy and procedures for determining remuneration for top-level executives and Members of the Board of Directors [Principle 3.1 (iii), Supplementary Principle 4.10.1]

TMC believes that it is critical to appoint individuals who are capable of contributing to decision-making aimed at sustainable growth into the future by practicing “product-centered and region-centered management” based on the “Toyota Philosophy.” Moreover, these individuals should be able to play a significant role in transforming TMC into a mobility company based on trust and friendship and internal two-way interactive teamwork, while working towards the solutions of environmental issues, including climate change, as well as social challenges related to TMC and its value chain. TMC’s director compensation system is an important means through which to promote various initiatives and is determined based on the following policy.

•

It should be a system that encourages Members of the Board of Directors to work to improve the medium- to long-term corporate value of TMC

•

It should be a system that can maintain compensation levels that will allow TMC to secure and retain talented personnel

•

It should be a system that motivates Members of the Board of Directors to promote management from the same viewpoint as our shareholders with a stronger sense of responsibility as corporate managers

Remuneration and other payments to Members of the Board of Directors (excluding Members of the Board of Directors who are Audit and Supervisory Committee Members) are paid within the total amount of remuneration as resolved at the 121st Ordinary General Shareholders’ Meeting held on June 12, 2025. The Board of Directors decides by resolution the policy for determining remuneration for and other payments to each Member of the Board of Directors (excluding Members of the Board of Directors who are Audit and Supervisory Committee Members). Remuneration for Members of the Board of Directors (excluding Members of the Board of Directors who are Audit and Supervisory Committee Members) is effectively linked to corporate performance while reflecting individual job responsibilities and performance. Remuneration for Outside Members of the Board of Directors (excluding Members of the Board of Directors who are Audit and Supervisory Committee Members) and Members of the Board of Directors who are Audit and Supervisory Committee Members consists only of fixed payments. As a result, this remuneration is not readily impacted by business performance, helping to ensure independence from management.

The amounts of remuneration for the Company’s Members of the Board of Directors (excluding Members of the Board of Directors who are Audit and Supervisory Committee Members) and the remuneration system are decided by the Board of Directors and the “Executive Compensation Meeting,” a majority of the members of which are Outside Members of the Board of Directors, to ensure the independence of the decisions. The Executive Compensation Meeting consists of Yoichi Miyazaki, Member of the Board of Directors (Chairman of the Executive Compensation Meeting), and Shigeaki Okamoto and Kumi Fujisawa, each an Outside Member of the Board of Directors.

The Board of Directors resolves the policy for determining remuneration for and other payments to each member of the Board of Directors (excluding Members of the Board of Directors who are Audit and Supervisory Committee Members) and the executive remuneration system as well as the total amount of remuneration for a given fiscal year. The Board of Directors also resolves to delegate the determination of the amount of remuneration for each Member of the Board of Directors (excluding Members of the Board of Directors who are Audit and Supervisory Committee Members) to the Executive Compensation Meeting. The Executive Compensation Meeting reviews the remuneration system for Members of the Board of Directors (excluding Members of the Board of Directors who are Audit and Supervisory Committee Members) and senior management on which it will consult with the Board of Directors and determines the amount of remuneration for each Member of the Board of Directors (excluding Members of the Board of Directors who are Audit and Supervisory Committee Members), taking into account factors such as corporate performance as well as individual job responsibilities and performance, in accordance with the policy for determining remuneration for and other payments to each member of the Board of Directors (excluding Members of the Board of Directors who are Audit and Supervisory Committee Members) established by the Board of Directors. The Board of Directors considers that such decisions made by the Executive Compensation Meeting are in line with the policy on determining remuneration and other payments for each member of the Board of Directors (excluding Members of the Board of Directors who are Audit and Supervisory Committee Members).

Remuneration for Members of the Board of Directors who are Audit and Supervisory Committee Members is determined by the Members of the Board of Directors who are Audit and Supervisory Committee Members within the scope determined by resolution of the shareholders’ meeting.

Policy and procedures for appointing/dismissing top-level executives and nominating candidates for Members of the Board of Directors [Principle 3.1 (iv), Supplementary Principle 4.10.1]

TMC comprehensively considers the system regarding Members of the Board of Directors in order to fulfil the responsibility to work towards sustainable growth and to enhance the corporate value of TMC over the medium- to long-term. TMC believes that it is critical to appoint individuals who are capable of contributing to decision-making aimed at sustainable growth into the future by practicing “product-centered and region-centered management” based on the “Toyota Philosophy.” Moreover, these individuals should be able to play a significant role in transforming TMC into a “mobility company” through responding to electrification, intelligence, and diversification and external partnerships based on trust and friendship and internal two-way interactive teamwork, while working towards solutions for social challenges such as the climate change issue.

In addition, TMC expects the Outside Members of the Board of Directors to utilize their extensive and rich experience and knowledge in TMC’s management from an independent standpoint.

With the aim of ensuring independence, members of TMC’s “Executive Appointment Meeting,” of which a majority of the members are Outside Members of the Board of Directors, discuss recommendations to the Board of Directors concerning appointment/dismissal of Members of the Board of Directors. The Executive Appointment Meeting consists of Yoichi Miyazaki, Member of the Board of Directors (Chairman of the Executive Appointment Meeting), and Shigeaki Okamoto and Kumi Fujisawa, each an Outside Member of the Board of Directors.

With respect to Audit and Supervisory Committee Members, TMC believes that it is necessary to have individuals who have broad experience and insight in their respective fields of expertise and can advise management from a fair and neutral perspective, as well as audit the execution of business. Members of TMC’s “Executive Appointment Meeting” discuss recommendations concerning appointment/dismissal of Members of the Board of Directors who are Audit and Supervisory Committee Members to the Audit and Supervisory Committee.

If there is any event where a Member of the Board of Directors or a Member of the Board of Directors who is an Audit and Supervisory Committee Member is unable to fulfill his or her duties, the Executive Appointment Meeting considers whether he or she should be dismissed.

Explanations with respect to individual appointments/dismissals and nominations [Principle 3.1 (v)]

The Notice of Convocation of General Shareholders’ Meeting contains the individual profiles and professional histories of candidates nominated or elected for Members of the Board of Directors and Members of the Board of Directors who are Audit and Supervisory Committee Members as well as the reasons for the elections of such individuals.

Effective use of Independent Outside Members of the Board of Directors [Principle 4.8], Criteria for assessing the independence of Independent Outside Members of the Board of Directors and their quality [Principle 4.9]

Out of the ten Members of the Board of Directors, five Outside Members of the Board of Directors are registered with the Tokyo Stock Exchange as Independent Members in accordance with the requirements for outside directors set forth in the Companies Act and the “Roles of and Expectations for Outside Members of the Board of Directors and Outside Members of the Board of Directors who are Audit and Supervisory Committee Members” and the “Independence Assessment Criteria”, which we formulated in accordance with the independence standards set forth by financial instruments exchanges.

TMC has set forth the “Roles of and Expectations for Outside Members of the Board of Directors and Outside Members of the Board of Directors who are Audit and Supervisory Committee Members” and the “Independence Assessment Criteria” to ensure our Outside Members of the Board of Directors participate in decision-making from an independent standpoint and to reflect the opinions of more diverse stakeholders in management.

Concurrent positions of Members of the Board of Directors [Supplementary Principle 4.11.2]

Concurrent service of each of the Members of the Board of Directors as officers of listed companies is noted each year in the Notice of Convocation of General Shareholders’ Meeting.

Policy on training for Members of the Board of Directors [Supplementary Principle 4.14.2]

TMC provides Members of the Board of Directors with opportunities to participate in practical activities going beyond theoretical learning, such as factory inspections, in order to improve their understanding and practice of the core ideals of “the manufacturing of ever-better cars” and problem solving based on the actual situation on-site (Genchi Genbutsu), and from the perspective of necessity for developing human resources to contribute to decision-making aimed at sustainable growth into the future.

Further to the above, TMC provides Outside Members of the Board of Directors with opportunities to participate in on-site inspections, including visits to subsidiaries, in order to deepen their understanding of TMC’s principles and initiatives. TMC ensures that Outside Members of the Board of Directors will provide appropriate advice regarding each business challenge by explaining agenda items directly to them prior to a meeting of the Board of Directors. TMC also ensures that Outside Members of the Board of Directors have a deeper understanding of business strategies and other corporate matters by holding meetings between Outside Members of the Board of Directors and executive management as necessary where they can discuss such topics.

Analysis and evaluation of the effectiveness of the Board of Directors [Supplementary Principle 4.11.3]

In order to improve the effectiveness of the Board of Directors, TMC has conducted an analysis and evaluation of the Board of Directors as below.

(1)	Analysis and evaluation

In preparation for the transition to a company with Audit and Supervisory Committee and changes to the Board of Directors at the 121st Ordinary General Shareholders’ Meeting held on June 12, 2025, TMC conducted a survey and interviews about the composition, operation and exercise of the supervisory function of the Board of Directors. The views and proposals regarding the background and causes of the identified issues, as well as the improvement trajectory for such issues, were compiled and reported to the Board of Directors.

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Method of evaluation: Self-evaluation through surveys and interviews

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Subject of evaluation: Members of the Board of Directors and Audit & Supervisory Board Members

•

Implementation period: February to May 2025

•

Matters evaluated: Matters including (1) composition and operation of the Board of Directors; (2) matters and support related to the execution of duties; (3) role and deliberation methods of the Board of Directors, and other related matters

(2)	Review of fiscal 2025

At the Board of Directors meetings, overall corporate strategies were discussed before submitting specific proposals, thereby promoting discussions from a medium- to long-term perspective. The transition to a company with Audit and Supervisory Committee was resolved after repeated and thorough discussions to ensure that opinions from outside directors were taken into consideration. In addition to the above, to further invigorate discussions, relevant decision-making bodies were utilized, and Outside Members of the Board of Directors and Outside Audit and Supervisory Board Members were invited to participate in important meetings such as the Product and Design Decision Meeting. Through their participation in these meetings, Outside Members of the Board of Directors and Outside Audit and Supervisory Board Members have gained a deeper understanding of TMC’s management and have been able to discuss proposals at the Board of Directors meetings with a full understanding of the deliberation process.

(3)	Specific efforts for improvement

Through discussions based on last year’s initiatives, the Board of Directors have come to the conclusion that it will continue to make improvements centered around three main themes: “sowing the seeds for the future,” “management with an awareness of stakeholder awareness,” and “ensuring all Members of the Board of Directors fulfill their roles.” As concrete measures for these themes, the Board of Directors will enhance follow-up on strategic topics and previously submitted agenda items, submit topics of high public interest, and further strengthen collaboration between the Board of Directors and the Audit and Supervisory Committee.

[Major agenda items discussed at the Board of Directors meetings (fiscal 2025)]

Management strategy: Alliance projects, and telecommunications-related projects, etc.

Financial results and finance: Financial results, dividends/treasury shares, loans to subsidiaries, and follow-up on strategically held-shares, etc.

Governance and internal control: Transition to a company with Audit and Supervisory Committee, Status of development and execution of internal control and its disclosure, evaluation of effectiveness of the Board of Directors, and internal audit policy, etc.

Risk management: Responses to certification issues, etc.

Sustainability: Sustainability Data Book, etc.

Others: Change of officers and those at managerial positions, remuneration for officers, disclosure of information (Annual Securities Report, Integrated Report, etc.), monthly production, shipments and sales results, and athlete support, etc.

6.	Dialogue with shareholders [Principle 5.1]

(1)	Basic concepts

TMC believes that, in order to achieve sustainable growth and improvement of its medium-and long-term corporate value it is of crucial importance to have the understanding and support of shareholders and investors. It engages in constructive dialogue to furnish shareholders and investors with accurate information on a fair basis in order to build long-term relationships of trust.

(2)	IR organization

Under the supervision of the accounting group chief officer, the Accounting Group and the Public Affairs Division are in charge of investor relations and IR staff members are stationed full-time in New York, U.S.A. and London, U.K.

(3)	Method of dialogue

TMC holds briefings on management strategy, business and products as appropriate, including (quarterly) results briefings for the press, analysts and institutional investors. With respect to dialogue with shareholders and institutional investors, representatives of TMC, including among others, senior management, Members of the Board of Directors, including Outside Members of the Board of Directors, and IR staff members hold meetings with shareholders and institutional investors, as appropriate, depending on the nature of the request and the main interests in having such a meeting. In addition, it has a dedicated page for individual investors on its website that contains easy-to-understand information about results, business and management policy, as well as explains its efforts directly through means such as participation in briefing sessions organized by stock exchanges.

In fiscal 2025, in addition to four financial results briefings and seven small meetings, TMC held more than 900 dialogues with shareholders and institutional investors. We also participated in more than 40 conferences organized by securities companies. The dialogues with shareholders and institutional investors were also held, involving Outside Members of the Board of Directors, Outside Audit and Supervisory Board Members, the Chief Executive Officer, Chief Financial Officer, Chief Risk Officer, Chief Human Resources Officer, and/or other senior management members, with themes such as revenue structure, capital strategy, electrification strategy, software strategy, and governance. Overseas roadshows and SR interviews with the senior management were held as well.

Since April 2025, we have held a briefing session with the theme of TMC’s unique management and initiatives by the Chief Executive Officer and the Chief Risk Officer, a “governance briefing session” by Outside Members of the Board of Directors and Outside Audit & Supervisory Board Members, and a financial results press briefing by the President and the Executive Vice Presidents.

(4)	Feedback to the organization

Feedback regarding the content of dialogues with shareholders and investors is provided as necessary to the Board of Directors and executives’ meetings.

(5)	Insider information and quiet periods

No insider information (material nonpublic information) is communicated to shareholders or investors in dialogues. TMC also has a “quiet period” from the day after the close of the quarter until the day on which results are announced during which it refrains from dialogues regarding results.

7.	Securing of shareholders’ rights and equality

Strategically-held shares [Principle 1.4]

(1)	Criteria for and view on classification of investment shares

TMC only holds investment shares for purposes other than pure investment (strategically- held shares). TMC does not hold any investment shares the purpose of which is solely to profit from changes in the value of shares or dividends on shares.

(2)	Investment shares for purposes other than pure investment (strategically-held shares)

Shareholding policy, method of verifying the rationality of shareholding, and the description of assessment of the propriety of holding of individual shares at the Board of Directors, etc.

Policies on strategic shareholdings

It is our policy that TMC does not hold strategically-held shares except for in the cases where such holdings are deemed to be meaningful. The case where such holdings are deemed to be meaningful refers to the case where it is determined that, in the business of manufacturing of automobiles, in which it is essential to keep a variety of cooperative relationships throughout the entire process of development, procurement, production, distribution and sales, such holdings contribute to the improvement of corporate value from the medium- to long-term perspective, based on a comprehensive consideration of business strategy, the establishment, maintenance and strengthening of relationships with business partners, and contribution to and cooperation in the development of society.

Assessment of the propriety of TMC’s strategic shareholdings

When necessary, TMC engages in constructive dialogue with the issuers of shares to encourage them to improve corporate value and achieve sustainable growth. These dialogues provide opportunities to share and address business challenges. TMC reviews whether its individual shareholdings are meaningful in light of the changes in business environment, specifically examines whether the benefits and risks from such holdings are commensurate with the cost of capital, etc., and assesses the propriety of TMC’s strategic shareholdings at the Board of Directors every year.

If TMC determines a shareholding is no longer meaningful or the meaning of a shareholding has been diluted due to changes in business environment or other reasons, TMC will proceed with the sale of such shares once it obtains consent from the issuer through a dialogue with the issuer.

Consequently, the number of companies whose shares TMC strategically holds has reduced to 115 (including 34 listed companies) as of March 31, 2025 from 200 (including 80 listed companies) as of March 31, 2015.

Standards on the exercise of voting rights with respect to strategically-held shares

In principle, TMC exercises its voting rights for all items on the agenda.

TMC does not exercise voting rights as a mechanical yes or no decision based on formalized, short-term standards. Rather, decisions are based on a fulsome examination of the business policies and strategies of the issuer and are made for each item on the agenda from the perspective of whether corporate value and shareholder profit will be improved over the medium- and long-term.

TMC also engages in dialogue with the issuer before determining whether or not it will support an item on the agenda that may have significant impact on shareholder profit (increase in authorized capital, anti-takeover measures, realignment of businesses etc.).

For the “Business-strategy Reasons for Holding, and Shareholding Status of, Strategically-held Shares and the Breakdown by Issue,” please see the end of this report.

8.	Transactions with related parties [Principle 1.7]

TMC complies with the procedures set forth in the Companies Act regarding conflict-of-interest transactions with officers, and all transactions with non-director executive officers require reporting to and approval of the Board of Directors.

With regard to procurement and sales transactions, the Toyota Code of Conduct requires compliance with all relevant laws and ordinances, as well as transactions with fairness and integrity based on mutual trust and mutual benefit for TMC and the counterparty, and fair competition. These principles apply to transactions even if the counterparty is a major shareholder.

All relevant business units formulate their own guidelines and other procedural documents based on this policy, and take care to ensure that transactions with related parties do not harm the interests of the company or the common interests of all shareholders.

9.	Roles of corporate pension funds as asset owners [Principle 2.6]

Because the management of corporate pension funds may impact stable asset formation for employees, etc., and our own financial standing, TMC has provided support to establish a system to realize proper operation of the corporate pension funds from perspectives of human resources and operational practices, including an assignment of persons having expertise and knowledge with respect to asset management and other matters required for corporate pension funds as well as establishment of the management advisory committee, in order to increase the investment management expertise of corporate pension funds, thus making sure that corporate pension funds perform their roles as asset owners.

In addition, TMC ensures that conflicts of interest which could arise between pension fund beneficiaries and companies are appropriately managed, and gives consideration not to harm the benefits of beneficiaries, by leaving decisions entirely to management companies in the case where TMC exercises its voting rights of shares of the companies which TMC invests in, and other cases.

10.	Ensuring diversity, including active participation of women [Principle 2.4.1]

TMC promotes a workplace environment where all of its members can play an active role, regardless of differences such as gender, age or nationality, disability, sexual orientation, gender identity, etc. to help enhance its competitiveness through new ideas brought and issues recognized from diverse perspectives. TMC’s human capital initiatives are detailed in this report, the Integrated Report, the Sustainability Data Book and the Japanese annual securities report.

(1)

Women

Stronger hiring efforts are being made, including mid-career hires, to achieve employment and manager position ratios for women in office and technical positions that are equivalent to the ratio in the relevant labor market over the medium- and-long term (office: 40%, technical: 10%). The ratio of female skilled workers hired is also steadily rising due to the enhanced efforts to hire such employees. New graduate hiring results in the fiscal year ended March 31, 2025 were 40% for office positions, 12% for technical positions and 25% for skilled positions. Since TMC began full-scale hiring of women for office and technical positions, it has focused on various actions aimed at enhancing and strengthening support for working mothers. As an action plan under the Act on Promotion of Women’s Participation and Advancement in the Workplace, TMC is currently promoting initiatives with the following targets: (i) To increase the number of females in managerial positions in 2014 fivefold by 2030; and (ii) To increase the ratio of users of the teleworking system to more than 50% of all employees (except for production workers and managers) by 2025, irrespective of whether teleworking for childcare or nursing purposes.

Since 2016, TMC has been focusing on such initiatives as “work style reform (expanding the number of employees eligible for teleworking),” “improving the childcare environment (increasing the number of in-house childcare facilities and expanding childcare services such as shuttle bus for pick-up/drop-off at childcare facilities, child care for sick children and daycare services,” and “raising awareness in the workplace and among supervisors (management training).” In recent years, TMC has introduced a mentor program to support career development, held roundtable discussions with internal and external role models and global women’s conferences, promoted male employees’ participation in childcare (by, for instance, including such topic in career interviews and identifying concerns and difficulties felt by the superiors and subordinates of male employees who provide childcare), enhanced the reduced working hours system for employees with children (up to the age of 18), and introduced a zero-hour work system, to create an environment in which each employee can pursue a diverse life and career path envisioned by them.

(2)	Foreign nationals

TMC hires, trains and promotes employees regardless of nationality and does not set targets for management positions with respect to foreign nationals. TMC develops human resources by accepting members of its overseas entities at TMC so that they can acquire skills, knowledge, and awareness of monozukuri (manufacturing) and when they return to their country, take the lead in various field activities and reforms in their local entity. In addition, TMC is working to create an environment that takes religion, lifestyle, and other factors into consideration when accepting members of the overseas entities.

(3)	Mid-career hires

The current mid-career hires account for approximately 50% of the total number of employees hired each year. To secure diverse talent, TMC is continuously considering more flexible recruitment activities such as hiring individuals with distinctive expertise, experience, and backgrounds, regardless of age or educational background. In addition, to support the success of new employees after joining the company, TMC is promoting onboarding support measures that contribute to each individual’s sense of fulfillment and growth. TMC also provides development and promotion opportunities regardless of the form of employment.

(4)	Persons with Disabilities

TMC offers a variety of support to enable people with disabilities to work energetically, utilizing their abilities to the full. For example, TMC has assigned a job consultant to each office, created a consultation hotline, and introduced a special holiday system that can be used by employees when going to the hospital or other clinics. In terms of facilities, TMC creates workplaces with improved accessibility as needed, such as through, providing handicapped parking spaces and universally accessible toilets. TMC distributes guidebooks to those workplaces hiring employees with disabilities in order to help other employees better understand disabilities and gain the knowledge necessary to provide support if needed. In addition, to cultivate a workplace-wide ethos, TMC has implemented “Emotional Barrier-free Training” which targets all employees to promote the understanding of and show empathy towards people with disabilities. As of June 2024, the number of persons with disabilities employed was 1,447 accounting for approximately 2.51% of the entire workforce (including special-purpose subsidiaries), which is above the legal requirement of 2.5% as of June 2024.

(5)

LGBTQ+

TMC has launched initiatives with the aim of creating workplaces with an appropriate understanding and acceptance of LGBTQ+ individuals. At TMC, prohibition on discrimination or harassment of LGBTQ+ individuals has been incorporated into the employee behavioral guidelines, and TMC no longer requires new graduates to fill in their sex on their job application sheets. In addition to that, TMC has also established an internal harassment consultation hotline, and has systems in place for same-sex marriages and common-law marriages that are equivalent to those of legal marriages with respect to such matters as holidays and other employee benefits. In terms of corporate culture, TMC provides information to ALLYs (persons who align with and support LGBTQ+) on a regular basis and has made video content (basic knowledge edition) available to all employees to promote understanding of LGBTQ+. Additionally, TMC offers experiential training using VR for those who wish to participate.

[Action to implement management that is conscious of cost of capital and stock price]

To meet the expectations of its stakeholders, TMC strives to achieve sustainable growth over the medium- to long-term and to improve capital efficiency while maintaining sufficient financial security to ensure a return on capital that exceeds the cost of capital on a consistent and stable basis. Details of these initiatives are disclosed in our Integrated Report and financial results press briefing materials.

Toyota will continue the dialogue with its stakeholders and monitoring of our cost of capital and return on capital to sustainably enhance our corporate value.

Integrated Report 2024 - “Value Creation Story” on P30-80 and “Business Foundations for Value Creation / Message from the CFO” on P97-100 (https://global.toyota/pages/global_toyota/ir/library/annual/2024_001_integrated_en.pdf)

FY2025 Financial Results Press Briefing, Presentation Material, “Transformation into a Mobility Company: ROE 20%” on P16, “(Ref.) Transition of ROE” on P30

(https://global.toyota/pages/global_toyota/ir/financial-results/2025_4q_presentation_en.pdf

[Status of holding dialogue with shareholders and other related matters]

For the status of holding dialogue with shareholders and institutional investors and other related matters, please see “6. Dialogue with shareholders [Principle 5-1]” above, “III. Implementation of measures for shareholders and other stakeholders / 2. IR activities” in this report, and the Integrated Report.

Integrated Report (https://global.toyota/en/ir/library/annual/?padid=ag478_from_header_menu)

2.	Capital Structure


Percentage of Shares Held by Foreign Investors		Greater than or equal to 20%, less than 30%

[Description of Major Shareholders]


Name of Shareholders	Number of Shares Held (Shares)		Ownership Interest (%)
The Master Trust Bank of Japan, Ltd.		1,805,604,740		13.84
Toyota Industries Corporation		1,192,330,920		9.14
Custody Bank of Japan, Ltd.		811,647,360		6.22
Nippon Life Insurance Company		633,220,965		4.85
State Street Bank and Trust Company (standing proxy: Settlement & Clearing Services Division, Mizuho Bank, Ltd.)		572,148,234		4.38
JPMorgan Chase Bank, N.A. (standing proxy: Settlement & Clearing Services Division, Mizuho Bank, Ltd.)		549,099,385		4.21
DENSO CORPORATION		449,576,225		3.45
The Bank of New York Mellon as Depository Bank for Depository Receipt Holders (standing proxy: Sumitomo Mitsui Banking Corporation)		335,787,795		2.57
Toyota Fudosan Co., Ltd.		249,754,115		1.91
Mitsui Sumitomo Insurance Company, Limited		204,171,835		1.56


Name of Controlling Shareholders (Excluding Parent Company)		None


Name of Parent Company		—
Stock Exchange Where the Parent Company is Listed		—

Supplementary Information

•

The information set forth in this Description of Major Shareholders section is dated as of March 31, 2025. In addition to the above, TMC owns 2,746,058 thousand of its own shares as treasury stock.

•

The Bank of New York Mellon as Depository Bank for Depository Receipt Holders is a registered stockholder of the Bank of New York Mellon which is a depository for American Depositary Receipts.

3.	Business Attributes


Stock exchange and market segment		Tokyo: Prime, Nagoya: Premier
Fiscal year end		End of March
Line of business		Transportation equipment
Number of employees at the end of the previous fiscal year (consolidated)		Greater than 1000 persons
Sales during the previous fiscal year (consolidated)		Greater than JPY 1 trillion
Number of consolidated subsidiaries at the end of the previous fiscal year		Greater than 300 companies

4.	Guidelines for measures to protect minority shareholders in the event of transactions with controlling shareholders

—

5.	Other particular conditions that may materially affect corporate governance

[Cementing our work foundation and addressing certification issues]

In fiscal 2025, as the foothold for sustainable growth, we have made steady progress in creating an environment in which we can demonstrate the “competitiveness of a company with the capacity to produce over 10 million cars” and our “ability to take on various challenges,” in other words, initiatives to cement our “work foundation.” We have been making company-wide efforts to create reserve capacity to develop human resources and ensure safety and quality. In particular, we have focused on improving the foundations of our production sites.

The environment surrounding manufacturing is becoming increasingly severe. Japan’s working-age population is expected to decline by 20% over the next 15 years. Buildings and facilities are aging, leading to more frequent impacts on operations. Based on our awareness of the issue that if we are unable to improve the productivity and comfort of our workplaces, we will risk losing the foundations of manufacturing, we have been working to improve plant environments through initiatives such as heat mitigation measures and create employee-friendly production lines that accommodate diverse individuals from all walks of life. [For details on TMC’s response to certification issues, please see “Cementing our work foundation and addressing certification issues” at the end of this report.

Based on the correction order dated July 31, 2024 from the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), we have made three quarterly reports on our progress on the recurrence prevention measures so far and have been making improvements. Through our response to these certification issues, we feel that this initiative itself is an effort to improve the overall culture, structure, and systems of TMC. We will continue to enhance the effectiveness of this initiative and work to further strengthen governance in a way that is unique to TMC.

[Group management]

The automobile business is a business in which a company’s collective strengths, ranging from materials to new technologies, are tested. To succeed in competition at a global level and maintain sustainable growth, it is essential for TMC to have steady partners in activities such as development, procurement, production, distribution and sales. Moreover, TMC must further collaborate with its group companies towards accelerating CASE technologies and achieving carbon neutrality, which are both focus areas of TMC. With the basic stance of friendship and partnership, which is to establish long-lasting collaborative relationships as a partner that shares values and pursues the development of society, TMC endeavors to improve the corporate value of its corporate group from a medium- to long-term perspective.

(Listed subsidiaries)

While TMC and its listed subsidiaries share visions and business strategies, the listed subsidiaries manage their businesses so as to improve their own corporate value based on their own independent business judgment in the common interest of their shareholders. The listed subsidiaries ensure independence of their boards of directors so that there are no conflicts of interest with general shareholders by having independent directors oversee executive officers.

TMC lays out its guiding principles and code of conduct and shares Vision and Philosophy with its subsidiaries, including listed subsidiaries. At the same time, TMC exchanges people and information with those subsidiaries. Any material management matters of the subsidiaries must be approved in advance by or reported to TMC in accordance with rules agreed upon by TMC and each subsidiary. Through these measures, TMC ensures the effectiveness of the governance system of its corporate group.

TMC has Hino Motors, Ltd. (“Hino Motors”) (listed on the Prime Market of the Tokyo Stock Exchange and the Premier Market of the Nagoya Stock Exchange) as a listed subsidiary. By combining the capabilities of the commercial vehicle business of Hino Motors and the CASE technologies of TMC, TMC will accelerate the spread and social implementation of CASE and aim to contribute to the achievement of a carbon neutral society and to address challenges that the transportation industry faces. At the same time, in its operating businesses, Hino Motors works to enhance its corporate value in a balanced and disciplined manner while considering the interest of TMC as well as general shareholders. Four out of seven directors of Hino Motors are independent outside directors. For important transactions with TMC, the Board of Directors of Hino Motors determines the appropriateness of the transactions after consulting with and receiving reports in advance from a special committee consisting solely of independent outside directors, which was established in the fiscal year ending March 31, 2023, in an effort to ensure independence so there are no conflicts of interest with general shareholders. In addition, Hino Motors is expected to no longer be classified as a consolidated subsidiary of TMC as a result of a series of transactions related to the business integration between Hino Motors and Mitsubishi Fuso Truck and Bus Corporation. The business integration is scheduled to take effect on April 1, 2026, subject to approval at the shareholders’ meetings of both companies and regulatory approvals from relevant authorities.

(Listed affiliated companies)

TMC has a diverse range of listed affiliated companies, including the Toyota Group, and operates globally. TMC and its group companies that are listed affiliated companies are engaged in various industries, including software and energy, as well as automotive manufacturing. Among them, major companies such as DENSO CORPORATION and AISIN CORPORATION have their own expertise and market positions, which enhance synergies with TMC and its group companies.

In January 2024, TMC announced the “Toyota Group Vision,” primarily to reaffirm the founding origins with the Toyota Group and to present the major direction the Toyota Group should aim for. By deepening collaboration with the companies that share this vision, TMC will work to transform ourselves into a mobility company and enhance the corporate value of the entire group, including subsidiaries and affiliated companies. In these efforts, the top management of Toyota Group companies work closely with each other and at all levels to share the major directions and promote mutual understanding.

TMC maintains a highly transparent governance structure in its relationship with listed affiliated companies. Specifically, TMC respects the uniqueness of each company and gives due consideration to the interests of general shareholders in its business collaborations and exchanges of opinions.

We will continue to strive to build a better management structure together with our group companies that share the same vision. TMC will continue to consider and review its relationships with each of the group companies that are listed affiliated companies based on factors such as business portfolio, shareholding ratios, and personnel exchanges, including members of the Board of Directors and the Audit and Supervisory Committee.

II. Corporate Governance System of Management Business Organization, Etc. for Management Decision-making, Execution of Duties and Management Audit

1.	Organization structures and organizational operations


Organizational form		Company with an Audit and Supervisory Committee

[Members of the Board of Directors]


Number of Members of the Board of Directors pursuant to the Articles of Incorporation		20 persons
Term of Members of the Board of Directors pursuant to the Articles of Incorporation		1 year
Term of Members of the Board of Directors who are Audit and Supervisory Committee Members pursuant to the Articles of Incorporation		2 years
Chairperson of the Board of Directors		Chairman (excluding concurrently serving as President)
Number of Members of the Board of Directors		10 persons
Number of Members of the Board of Directors who are Audit and Supervisory Committee Members among Members of the Board of Directors		4 persons
Election of Outside Members of the Board of Directors		Elected
Number of Outside Members of the Board of Directors		5 persons
Established number of Independent Members of the Board of Directors within the Outside Members of the Board of Directors		5 persons

Relationship with the Company (1)

Name

Attribution

Relationship with the Company (*)

Shigeaki Okamoto

From another company

Kumi Fujisawa

From another company

George Olcott

Academic

Masahiko Oshima

From another company

Hiromi Osada

From another company

*1	Selected the relevant “Relationship with the Company”

a.	A management executive officer of the listed company or its subsidiary

b.	A management executive officer or non-management executive director of a parent company of the listed company

c.	A management executive officer of a subsidiary of a parent company of the listed company

d.	A person who has a significant business relationship with the listed company or who is a management executive officer of entity which has such significant business relationship

e.	A person with whom the listed company has a significant business relationship or who is a management executive officer of entity with whom the listed company has a significant business relationship

f.	A consultant, accounting expert or legal expert who receives significant remuneration or other assets from the listed company other than remuneration as a director or executive officer

g.	A principal shareholder of the listed company (if a principal shareholder is a legal entity, a management executive officer of such legal entity)

h.	A management executive officer of entity with whom the listed company has a business relationship (does not fall under d, e, and f) (only with respect to the person)

i.	A management executive officer of a company whose outside director assumes the post on a reciprocal basis with the listed company (only with respect to the person)

j.	A management executive officer of an entity to whom the listed company makes a donation

Other

Relationship with the Company (2)


Name	Independent Member of the Board of Directors	Supplementary Information	Reason for election as Outside Member of the Board of Directors (and the reason for designation as an Independent Member of the Board of Directors if so designated)
Shigeaki Okamoto	^¡	None	Mr. Shigeaki Okamoto was appointed as an Outside Member of the Board of Directors because TMC expects him to contribute to the increase of TMC’s corporate value, as he has a high level of expertise and extensive knowledge cultivated during his career as a government official, as well as experience in corporate oversight, which can be leveraged to guide TMC in navigating the complex social climate and its journey to enhance corporate governance. Mr. Okamoto is designated as an independent Member of the Board of Directors of TMC as he does not fall under any of the above items a through k as shown on the left, and there is no risk of a conflict of interest with general shareholders of TMC.
Kumi Fujisawa	^¡	None	Ms. Kumi Fujisawa was appointed as an Outside Member of the Board of Directors because TMC expects her to contribute to the increase of TMC’s corporate value, as she has extensive knowledge and a broad perspective cultivated through diverse experience, including as an entrepreneur, outside director, and in numerous public roles, which can be leveraged to give inputs to help create new value and build new networks for TMC. Ms. Fujisawa is designated as an independent Member of the Board of Directors of TMC as she does not fall under any of the above items a through k as shown on the left, and there is no risk of a conflict of interest with general shareholders of TMC.

George

Olcott

^¡

None

Mr. George Olcott was appointed as an Outside Member of the Board of Directors because TMC expects him to contribute to the enhancement of TMC’s corporate value, as he has outstanding insight into corporate management based on his experience in international financial markets and academic research, as well as deep understanding of the Toyota Group, which can be leveraged to guide TMC in its global business operations and journey to enhance corporate governance.

Mr. Olcott is designated as an independent Member of the Board of Directors of TMC as he does not fall under any of the above items a through k as shown on the left, and there is no risk of a conflict of interest with general shareholders of TMC.

[Audit and Supervisory Committee]

Composition of the Committee and Attributes of the Chairperson

All committee
members

Full-time members

Internal
members of the
Board

Outside members of
the Board

Committee
chairperson

Audit and Supervisory Committee

Outside member of the Board

Appointment of Directors and/or Staff to Support the Supervisory Committee

Appointed

Matters concerning the independence of the above Members of the Board of Directors and employees who are Members of the Board of Directors

To assist the duties of the Audit and Supervisory Committee, the Audit and Supervisory Committee Office has been established, where dedicated employees are assigned. These employees must comply with the instructions and orders of the Audit and Supervisory Committee, and any changes in its personnel will require prior consent of the Audit and Supervisory Committee or a member of the Audit and Supervisory Committee designated by the Audit and Supervisory Committee.

Status of Coordination among the Audit and Supervisory Committee, Accounting Auditor, and Internal Audit Department

The Audit and Supervisory Committee regularly receives reports from the accounting auditor regarding audit plans, audit methods, and audit results. In addition, meetings are held as necessary to discuss matters related to audits in general, allowing for thorough exchanges of opinions. With respect to internal audits, the Internal Audit Department, which is an independent and dedicated organization, evaluates the effectiveness of internal controls related to financial reporting. The Audit and Supervisory Committee aims to enhance organizational audits through close coordination, including receiving reports from the Internal Audit Department on audit plans and results, as well as providing instructions to the Internal Audit Department.

[Voluntarily Established Committees]


Voluntary Establishment of Committees equivalent to Nomination Committee or Remuneration Committee				Established

Status of Voluntarily Established Committees, Attributes of Members Constituting the Committee and the Committee Chairperson

Committees equivalent to Nomination Committee


Committee Name				Executive Appointment Meeting


Total number of committee members	Full-time members		Internal members of the Board		External members of the Board		Internal experts		Other		Committee chairperson
6		0		1		2		0		0	Internal member of the Board

Committees equivalent to Remuneration Committee

Committee Name

Executive Compensation Meeting

Total number of committee members

Full-time
members

Internal
members
of the
Board

External
members
of the
Board

Internal
experts

Other

Committee
chairperson

Internal
member of
the Board

Supplementary Information

Members of the Executive Appointment Meeting discuss recommendations to the Board of Directors concerning appointment/dismissal of Members of the Board of Directors. The Executive Compensation Meeting reviews the remuneration system for Members of the Board of Directors and senior management and determines the amount of remuneration for each Member of the Board of Directors, taking into account factors such as corporate performance as well as individual job responsibilities and performance. In order to ensure independence, the majority of the members at both meetings are Outside Members of the Board of Directors.

The members of both meetings are Yoichi Miyazaki, Member of the Board of Directors and Vice President, and Shigeaki Okamoto and Kumi Fujisawa, each an Outside Member of the Board of Directors.

[Independent Members of the Board of Directors / Members of the Board of Directors who are Audit and Supervisory Committee Members]


Number of Independent Members of the Board of Directors/Members of the Board of Directors who are Audit and Supervisory Committee Members				5 persons

Other matters relating to Independent Members of the Board of Directors / Members of the Board of Directors who are Audit and Supervisory Committee Members

All Outside Members of the Board of Directors / Outside Members of the Board of Directors who are Audit and Supervisory Committee Members that qualify as Independent Members of the Board of Directors / Independent Members of the Board of Directors who are Audit and Supervisory Committee Members have been designated as Independent Members of the Board of Directors / Independent Members of the Board of Directors who are Audit and Supervisory Committee Members.

Based on the Toyota Philosophy, TMC is working to strengthen corporate governance with the aim of achieving sustainable growth, increasing corporate value over the medium- to long-term, and resolving social issues. To ensure our Outside Members of the Board of Directors and Outside Members of the Board of Directors who are Audit and Supervisory Committee Members participate in decision-making from an independent standpoint and reflect the opinions of more diverse stakeholders in management, TMC has clarified the unique roles of and expectations for TMC’s Outside Members of the Board of Directors and Outside Members of the Board of Directors who are Audit and Supervisory Committee Members and revised the Independence Assessment Criteria.

The details were discussed at the Executive Appointment Meeting in which a majority of the participants are Outside Members of the Board of Directors, and have been approved by the Board of Directors with the consent of all Members of the Audit & Supervisory Board before the transition to a company with Audit and Supervisory Committee.

(1)	The Roles of and Expectations for Outside Members of the Board of Directors and Outside Members of the Board of Directors who are Audit and Supervisory Committee Members (Outside Members of the Board of Directors)

•

To believe in and uphold the Toyota Philosophy, have a high interest in our company’s business and people, and understand our company and its surrounding environment by having close dialogues with top management

•

To contribute to decision-making for our company’s sustainable growth and medium- to long-term enhancement in our corporate value as well as to solutions to social issues

•

To contribute to greater added value of the Board of Directors’ decision-making while supervising business execution, utilizing their abundant experience and advanced expertise based on their recognition of diverse stakeholders’ opinions

•

To provide advice and support on key issues and business strategies, etc., in addition to matters presented to the Board of Directors

(Outside Members of the Board of Directors who are Audit and Supervisory Committee Members)

•

In addition to the above, to conduct audits from a fair and neutral standpoint, utilizing their abundant experience and advanced expertise

(2)	Independence Assessment Criteria

Outside Members of the Board of Directors and Outside Members of the Board of Directors who are Audit and Supervisory Committee Members who satisfy the requirements stipulated by the Companies Act and do not fall into any of the following categories are deemed to be independent.

History of belonging to affiliated companies

Persons who are currently functioning as executive directors, Members of the Board of Directors who are Audit and Supervisory Committee Members (excluding Outside Members of the Board of Directors), Audit and Supervisory Board members, operating officers, or employees of our company and its consolidated subsidiaries. Or those who functioned as executive directors, Members of the Board of Directors who are Audit and Supervisory Committee Members (excluding Outside Members of the Board of Directors), Audit and Supervisory Board members, operating officers, or employees of our company and its consolidated subsidiaries at any time during the last ten years.

Major business partners

Persons who are executing business in companies, etc. (executive directors, executive officers, operating officers, employees, or any equivalents; the same shall apply hereunder) where the amount of the transaction with our company and its consolidated subsidiaries is more than 2% of the consolidated net sales of their company or our company and its consolidated subsidiaries in any of the last three business years.

Major lenders

Persons who are executing business in companies from which our company and its consolidated subsidiaries borrowed funds amounting to more than 2% of the consolidated total assets of our company and its consolidated subsidiaries in any of the last three business years.

Highly paid experts

Consultants, accountants, or jurists who earned more than US$120,000 a year directly from our company and its consolidated subsidiaries as remuneration (excluding that for the function of Outside Members of the Board of Directors and Outside Members of the Board of Directors who are Audit and Supervisory Committee Members) in any of the last three business years.

Large contribution

Persons who (or persons belonging to organizations that) received contributions amounting to more than US$120,000 a year from our company and its consolidated subsidiaries in any of the last three business years.

Major shareholders

Persons who are executing business in companies, etc., that are ranked tenth or higher in terms of the holding ratio of our company’s shares or for which our company is ranked tenth or higher in terms of the holding ratio of their shares.

Affiliated audit firms

Persons who currently belong to or belonged to, at any time during the last ten years, the audit firms serving as accounting auditors of our company and its consolidated subsidiaries

Close relatives

Spouses, or relatives within the second degree of kinship, either of Members of the Board of Directors, Audit and Supervisory Board Members, operating officers or key employees of our company and its consolidated subsidiaries, or of persons falling into the above 1 to 6 (excluding non-key persons).

Mutual executive dispatch

Persons who are executing business in companies that are accepting one or more member(s) of the Board of Directors or the Audit and Supervisory Board from our company and its consolidated subsidiaries.

10.

Term of office

Persons whose term of office as an outside executive is longer than 12 years.

Persons who fall within any of the above-listed categories may be determined as independent, under the condition that our company discloses the reason for the determination when such persons satisfy the requirements for Outside Members of the Board of Directors and Outside Members of the Board of Directors who are Audit and Supervisory Committee Members stipulated in the Companies Act and are substantially independent, and thus, a conflict of interest with general shareholders is deemed not to emerge.

[Incentives]


Implementation of measures on incentive allotment to Members of the Board of Directors				Adoption of performance-based compensation plan

Supplementary Information

For the policy and procedures of the performance-based compensation plan, please refer to “TMC’s Basic Policy on Corporate Governance and Capital Structure, Business Attributes and Other Basic Information/1. Basic Policy/Disclosure based on each principle of Corporate Governance Code.” For the method of determining performance-based remuneration, please refer to the end of this report.

In connection with the transition to a new corporate governance structure, based on the resolution at the 121st Ordinary General Shareholders’ Meeting held on June 12, 2025, the Company established a new maximum amount of compensation for Members of the Board of Directors (excluding Members of the Board of Directors who are Audit and Supervisory Committee Members) and a new maximum amount of compensation for granting of restricted share compensation to Members of the Board of Directors (excluding Outside Members of the Board of Directors and Members of the Board of Directors who are Audit and Supervisory Committee Members). Furthermore, at the Board of Directors meeting held on June 12, 2025, the Company resolved the policy for determining compensation for Members of the Board of Directors for fiscal 2026 and beyond.

Persons Eligible for Stock Options

Supplementary Information

—

[Remuneration for Members of the Board of Directors]


Disclosure Status (of individual Member of the Board of Directors remuneration)				Only a portion of remuneration is individually disclosed.

Supplementary Information

Names and details of those who receive, in aggregate, consolidated remuneration of one hundred million Japanese yen or more will be disclosed on an individual basis in annual securities reports.

Annual securities reports are made available for public inspection on TMC’s Internet website.


Existence of guidelines for the amount and calculation method of remuneration				Yes

Information regarding guidelines for the amount and calculation method of remuneration

Based on the resolution of the 121st Ordinary General Shareholders’ Meeting held on June 12, 2025 concerning remuneration for the Members of the Board of Directors of TMC, the maximum cash compensation was set at 3.0 billion yen per year (of which, the maximum amount payable to Outside Members of the Board of Directors is 0.3 billion yen per year), and the maximum share compensation was set at 4.0 billion yen per year. The number of Members of the Board of Directors as of the conclusion of the 121st Ordinary General Shareholders’ Meeting was six (including two Outside Members of the Board of Directors).

In addition, the amount of remuneration for Members of the Board of Directors who are Audit and Supervisory Committee Members was set at 0.36 billion yen or less per month, pursuant to the resolution of the 121st Ordinary General Shareholders’ Meeting, held on June 12, 2025. The number of Members of the Board of Directors who are Audit and Supervisory Committee Members as of the conclusion of the 121st Ordinary General Shareholders’ Meeting was four (including three Outside Members of the Board of Directors). Specific details such as the amount of compensation to be paid to Members of the Board of Directors who are Audit and Supervisory Committee Members and the timing of payment will be determined upon consultation among Members of the Board of Directors who are Audit and Supervisory Committee Members.

For basic policy on remuneration, please refer to “TMC’s Basic Policy on Corporate Governance and Capital Structure, Business Attributes and Other Basic Information/1. Basic Policy/Disclosure based on each principle of Corporate Governance Code.”

[Support System for Outside Members of the Board of Directors]

Members of the Board of Directors and others disclose adequate information to Outside Members of the Board of Directors, such as by giving prior explanations on agenda items to be proposed to the Board of Directors. In addition, the Audit and Supervisory Committee Office has been established as a specialized independent organization to assist the Audit and Supervisory Committee Members.

2. Matters pertaining to functions relating to the execution of duties, audit and supervision, appointment and decisions regarding remuneration, etc. (Outline of the current corporate governance system)

[System regarding Members of the Board of Directors]

With respect to the system regarding Members of the Board of Directors, TMC has comprehensively considered with the aim to satisfy its responsibilities in achieving sustainable growth and medium- to long-term enhancement of corporate value. TMC believes that it is critical to appoint individuals who are capable of contributing to decision-making aimed at sustainable growth into the future by practicing “product-centered and region-centered management” based on the Toyota Philosophy. Moreover, these individuals should be able to play a significant role in transforming TMC into a mobility company based on trust and friendship and internal two-way interactive teamwork, while working towards solutions of environmental issues, including climate change, as well as social challenges related to TMC and its value chain. Members of TMC’s “Executive Appointment Meeting,” a majority of which are Outside Directors, discuss recommendations to the Board of Directors concerning appointment/dismissal of Members of the Board of Directors.

Furthermore, five Outside Members of the Board of Directors have been appointed in order to adequately reflect the opinions of those from outside the company in management’s decision-making process, and all of them are registered as independent officer with the relevant financial instruments exchanges in accordance with requirements for Outside Members of the Board of Directors set forth in the Companies Act and independence standards established by the relevant financial instruments exchanges. To ensure our Outside Members of the Board of Directors participate in decision-making from an independent standpoint and reflect the opinions of more diverse stakeholders in management, TMC has defined and disclosed the unique roles of and expectations for TMC’s Outside Members of the Board of Directors and Outside Members of the Board of Directors who are Audit and Supervisory Committee Members and the Independence Assessment Criteria. TMC’s Outside Members of the Board of Directors advise it in its management decision-making process based on their broad experiences and insight in their respective fields of expertise, independently from management structure.

The Board of Directors met 16 times in total in fiscal 2025. The Board of Directors actively deliberates a wide range of agenda items related to business strategies in addition to ordinary agenda items such as financial results and personnel.

[Execution of operations and supervision]

Together with the business units (in-house companies and Business Planning & Operation Units), operating officers, mainly consisting of the president, vice presidents and chief officers, to whom authority is delegated by the Board of Directors, will realize prompt decision-making through meetings among operating officers and move forward with initiatives toward sustainable growth and medium- to long-term improvement of corporate value. The “Sustainability Meetings,” in which Outside Members of the Board of Directors also participate, contributes to the enhancement of corporate value through deliberating, making decisions, and promoting activities with respect to important sustainability-related issues.

In addition, TMC deliberates on and monitors management and corporate activities based on views of various stakeholders through bodies for deliberations, including the “Product and Design Decision Meeting,” which grants company approval for commercialization of products, the “Governance Risk Compliance Meeting,” which was newly established to enhance governance and management foundations in response to the certification issues found at TMC and its group companies and subsidiaries, and the “Labor-Management Council, the Joint Labor-Management Round Table Conference.”

To enhance the system for internal audits, an independent and dedicated organization under the direct control of management (Internal Audit Department staffed with 39 members) has been established, which reports TMC’s internal audit policies and audit results for each fiscal year to the Board of Directors and makes regular reports on internal business audits to the President and the Audit & Supervisory Committee. The Internal Audit Department evaluates the effectiveness of the system to secure the appropriateness of documents regarding financial calculation and other information in accordance with Section 404 of the U.S. Sarbanes Oxley Act and Article 24-4-4 (1) of the Financial Instruments and Exchange Law of Japan.

In order to enhance the reliability of the financial reporting of TMC, the three auditing functions — audit by Audit and Supervisory Committee, internal audit, and accounting audit by Independent External Auditors — aid in conducting an effective and efficient audit through meetings held periodically and as necessary to share information and come to understandings through discussion on audit plans and results.

[System regarding auditing]

The status of auditing is as follows.

Name of auditor: PricewaterhouseCoopers Japan LLC

Duration of auditing service: From 2006

Also note that the auditors after the merger with Toyota Motor Sales Company in July 1982 were as follows.

Ito Accounting & Consultancy Office: until fiscal year ended March 2000

ChuoAoyama PricewaterhouseCoopers: from fiscal year ended March 2001 until fiscal year ended March 2006

Note 1:

ITOH AUDIT CORPORATION was merged with ChuoAoyama PricewaterhouseCoopers to become ChuoAoyama PricewaterhouseCoopers as of January 1, 2001.

Note 2:

ChuoAoyama PricewaterhouseCoopers belonged to the same network as PricewaterhouseCoopers Aarata LLC

Note 3:

PricewaterhouseCoopers Aarata LLC merged with PricewaterhouseCoopers Kyoto and was renamed PricewaterhouseCoopers Japan LLC on December 1, 2023.

Certified public accountants who provided auditing service

Hitoshi Kiuchi

Koji Sugimoto

Naoko Mori

Shuichi Hiraiwa

Composition of assistants relating to auditing

Certified public accountants: 54

Persons who passed the accountant exam etc.: 40

Others: 74

[Audit and Supervisory Committee]

TMC has transitioned from a Company with Audit and Supervisory Board to a Company with Audit and Supervisory Committee following approval at the 121st Annual General Meeting of Shareholders held on June 12, 2025. The Audit and Supervisory Committee consists of four Members of the Board of Directors who are Audit and Supervisory Committee Members (including three Outside Members of the Board of Directors). In order to appropriately conduct audits at TMC, which aims to achieve sustainable global growth into the future through its transformation into a mobility company, Audit and Supervisory Committee Members not only audit the execution of duties by Members of the Board of Directors but also participate in discussions at Board of Directors meetings as voting members and oversee the appropriateness of business execution. The Audit and Supervisory Committee will continue to conduct on-site audits and will further enhance organizational audits through close coordination, including receiving reports from the Internal Audit Department, an independent and dedicated organization under the direct control of the management consisting of 39 members, on audit plans and results, as well as providing instructions to the Internal Audit Department. TMC believes that it is essential to appoint individuals who can conduct audits of management from a fair and neutral standpoint, drawing on their wealth of experience and a high level of expertise, in addition to playing roles as Members of the Board of Directors. TMC’s Executive Appointment Meeting, a majority of the members of which are Outside Members of the Board of Directors, formulates recommendations to the Audit and Supervisory Committee regarding the candidates for Members of the Board of Directors who are Audit and Supervisory Committee Members.

TMC has appointed three Outside Members of the Board and registered all of them as independent officers with the Tokyo Stock Exchange in accordance with requirements for Outside Members of the Board of Directors who are Audit and Supervisory Committee Members set forth in the Companies Act and the “Roles of and Expectations for Outside Members of the Board of Directors and Outside Members of the Board of Directors who are Audit and Supervisory Committee Members” and the “Independence Assessment Criteria”, which we formulated in accordance with the independence standards established by the relevant financial instruments exchanges. In appointing Outside Members of the Board of Directors who are Audit and Supervisory Committee Members, TMC uses its own definitions of the unique roles of and expectations for its Outside Members of the Board of Directors and Outside Members of the Board of Directors who are Audit and Supervisory Committee Members as well as the Independence Assessment Criteria to appoint individuals who can fulfill and satisfies those.

[Limited liability agreements]

TMC has entered into limited liability agreements with Non-executive Directors pursuant to Article 427, Paragraph 1 of the Companies Act to limit the amount of their liabilities stipulated in Article 423, Paragraph 1 of the Companies Act to the amount stipulated in Article 425, Paragraph 1 of the Companies Act.

3.	Reason for the selection of the current corporate governance system

TMC believes it is important to put in place a system that enables customer opinions and on-site information to be swiftly communicated to management in order to realize timely and accurate management decision-making, and enables it to review whether such management decisions are accepted by its customers and society. TMC has transitioned from a Company with Audit & Supervisory Board to a Company with Audit and Supervisory Committee following approval at the 121st Annual General Meeting of Shareholders held on June 12, 2025. With this transition, we will work to further invigorate the Board of Directors by enabling all members, both internal and external, to engage in discussions without being constrained by their positions, while also advancing the swift decision-making process through the delegation of authority to the executive management and strengthening the Board’s monitoring functions.

III. Implementation of measures for shareholders and other stakeholders

1.	Approach toward the vitalization of General Shareholders’ Meeting and the facilitation of exercise of voting rights


		Supplementary Information
Early distribution of notice of convocation of General Shareholders’ Meeting		In connection with Ordinary General Shareholders’ Meetings, TMC distributes the notice of convocation of General Shareholders’ Meeting at an early date prior to the date of the meeting and posts the notice on its website prior to the distribution.

Scheduling of General Shareholders’ Meeting avoiding the date on which General Shareholders’ Meeting of companies are concentrated		TMC convenes a General Shareholders’ Meeting avoiding the date on which General Shareholders’ Meetings of companies are either most concentrated on or second most concentrated on.

Exercise of voting rights by electronic means		TMC enables shareholders to exercise voting rights on the Internet.

Measures aimed at participation in electronic voting platforms and other improvements in voting environments geared towards institutional investors		TMC participates in an electronic voting platform for institutional investors operated by ICJ Corporation.

Provision of summary English-language convocation notices		TMC creates English-language convocation notices and makes them available on both its company website as well as within electronic voting platforms for institutional investors at the same time as the Japanese-language convocation notices.

2. IR activities


	Supplementary Information	Explanation by Representative Members of the Board
Formulation and publication of disclosure policies	-	-

Periodic briefing for individual investors	In addition to convening briefings a few times a year (not regularly scheduled), on the exclusive site for individual investors, the operating summary and business activities are clearly disclosed.	No

Periodic briefing for analysts and institutional investors	Explaining financial results and business strategies of the relevant business year every quarter. Also convenes business briefings (unscheduled) concerning the medium- and long-term direction of the business.	Yes

Periodic briefing for foreign investors	Explaining financial results and business strategies of the relevant business year every quarter. In addition, business briefings (unscheduled) concerning the medium- and long-term direction of the business are convened.	Yes

Disclosure of IR documents on the website	In addition to legal disclosure documents such as annual securities reports, reference materials for earnings results briefings, etc. are timely disclosed as well. TMC works to enhance its information services by distributing videos of TMC’s press conferences, such as announcements of new model launches.	-

	Through the “Integrated Report,” TMC describes and conveys to stakeholders its long-term strategy for enhancing its corporate value and the ways that it is contributing to the sustainable development of society.

	Integrated Report https://global.toyota/en/ir/library/annual/

IR related divisions (personnel)	TMC maintains IR personnel in the Accounting Group and Public Affairs Division, and offices resident IR personnel in New York, U.S.A. and London, U.K.	-

Other	Implementing one-on-one meetings with investors, plant tours, etc.	-

3.	Activities concerning respect for stakeholders


		Supplementary Information
Setting forth provisions in the internal regulations concerning respect for the stakeholders’ position		For sustainable development, TMC has engaged in management emphasizing all of its stakeholders, and worked to maintain and develop favorable relationships with its stakeholders through open and fair communication. This philosophy is outlined and disclosed in the Corporate Social Responsibility Policy (“Sustainability Fundamental Policy”) “Contribution towards Sustainable Development.” https://global.toyota/en/sustainability/csr/policy/

Promotion of environmental preservation activities and CSR activities		TMC has aimed to contribute to the creation of a prosperous society through its business activities based on the Guiding Principles at Toyota while continuing to uphold the spirit of the Toyoda Principles, which we have inherited since its foundation. In 2020, TMC complied the Toyota Philosophy in the aim to be the “best company in town” that is both loved and trusted by local people to achieve the mission of “Producing Happiness for All.” TMC will strive to contribute to the sustainable development of the society and planet by promoting sustainability under the Toyota Philosophy. With regards to climate change, in April 2021, TMC announced that it would aim to take on global-scale challenges to achieve carbon neutrality by 2050. Under the mission of “Producing Happiness for All” in 2024, and toward our transformation into a mobility company, TMC identified six key issues (materialities) based on changes in the social environment and feedback from our stakeholders. Through our efforts, we aim to contribute to society while enhancing Toyota’s own sustainable corporate value. In addition, TMC discloses its specific efforts regarding sustainability in its “Sustainability Data Book.” Sustainability Data Book https://global.toyota/en/sustainability/report/sdb/ Information on sustainability https://global.toyota/en/sustainability/

Establishment of policy concerning disclosure of information to stakeholders		TMC has engaged in timely and fair disclosure of its operating results, financial condition and non-financial information as stated in the Sustainability Fundamental Policy “Contribution towards Sustainable Development”. In order to ensure the accurate, fair, and timely disclosure of information, TMC has established the Disclosure Committee chaired by an officer of the Accounting Division. The


		Committee holds regular meetings for the purpose of preparation, reporting and assessment of its annual securities report and semi-annual report under the Financial Instruments and Exchange Law of Japan and Form 20-F under the U.S. Securities Exchange Act, and also holds extraordinary committee meetings from time to time whenever necessary.

Others		[Female Employee Participation in the Workplace] Since TMC began full-scale hiring of women for office and technical positions in 1992 as part of its HR policy to respect diversity, it has been continuing this effort from the viewpoint of “hiring of more female employees,” “childcare support,” and “career development support.” Since 2023, under the leadership of President Sato, TMC has newly positioned the promotion of female employee participation as one of the important issues for the entire company. The Sustainability Meeting shares and discusses the current status, challenges, and progress of initiatives within the company once every two months to support these initiatives. In May 2024, TMC held the “Global Women’s Conference.” Approximately 160 people, including Koji Sato (President), Gill A. Pratt (Chief Scientist), Yumi Otsuka (Chief Sustainability Officer), executive officers, department managers, female employees, and members of overseas entities participated this conference. We are discussing and taking action towards initiatives that change how everyone at Toyota works and achieves results, aiming to realize “active participation by all” and create a workplace where women can work with even more enthusiasm. <<Appointment of female managers>> As of the filing date of this report, there are two females among 10 Members of the Board of Directors: Kumi Fujisawa and Hiromi Osada. <<Target to promote female employee participation in the workplace >> Under the Act on the Promotion of Women’s Active Engagement in Professional Life, TMC has set the following targets. ● Increase the number of females in managerial positions in 2014, when the target was set, fivefold by 2030 ● Achieve an average rate of male employees taking childcare leave of 85% or higher <<Main Activities>> [Higher new employee hiring rates for female graduates] Stronger hiring efforts are being made to achieve employment and manager position ratios for women in office and technical positions that are equivalent to the ratio in the relevant labor market over the medium- and-long term (office: 40%, technical: 10%) Hiring results in April 2025 for office positions were 40%, for technical positions were 12%, and for skilled positions were 20% [Career development] ● Establish and carry out tailored career plans for women based on each of their life events ● Providing internal and external career development opportunities for 100 female managerial candidates and employees in management roles each year since 2020 addressing the topics of “solving individual problems” and “networking inside and outside the company”


		e.g., mentoring by internal and external mentors, roundtable with internal female executives, networking events with female employees of other companies, and participation in external programs

		<<Others>>
		[Continuing participation in the “Toyota Group Female Engineer Fund / Foundation”]
		● Support with 12 Toyota group companies the Toyota Female Engineer Development Foundation established to foster and support female engineers working in the field of manufacturing
		● In fiscal 2025, female engineers from Toyota visited 9 middle and high schools to speak about the appeals of their jobs, with approximately 1,600 students participating (for the first time in Miyagi and Osaka Prefectures)
		● For female science and engineering students, TMC provided scholarship of 600,000 yen per year and opportunities where they can exchange with female engineers and students of other universities. In fiscal 2025, 66 students participated as new scholarship students. The scholarship students to date totaled 1,000

		[Childcare/nursing care support]
		● Respecting the diverse values of individuals, TMC provides a rich variety of work options in line with a gradational view of work-childcare balance so that each employee can pursue a diverse life and career path as envisioned by each employee

		<<Enhancing our system to support employees balancing work and family commitments>>
		● Leave system, reduced working hours, special leave system for childcare, family care and medical treatment that go beyond the statutory requirements
		For instance, reduced working hours system for employees with children of up to the age of 18, absence and leave system for infertility treatment, and exemption from shift work and reduced working hours at production sites
		● Utilizing a system to allow working from home
		● Subsidizing childcare costs (e.g., babysitter costs) to employees who have returned to work after a shorter childcare leave than the standard period
		● Establishing onsite childcare facilities (e.g., accepting children during the company’s operating schedule, shuttle bus, sick child care)

		<<Creating an environment and raising awareness so that eligible employees feel comfortable utilizing the system>>
		● Provide various seminars, inform employees of the system on the company intranet, and set up a consultation hotline
		● With the target of ensuring that 100% of eligible employees take partner childcare leave (if they choose to do so), disseminating this information and circulating questionnaires throughout the company (actual ratio increased to 67.4% in fiscal 2025 from 61.5% in fiscal 2024)


		● Securing backup staff at all workplaces, including those involving shift-work, in the event of an employee working reduced hours or taking leave so that the company can achieve both the effectiveness of the childcare initiatives and smooth business operation

		[Recruitment and Retention of Diverse Human Resources]
		<<Expansion of mid-career recruitment>>
		● TMC has been working company-wide to expand mid-career recruitment to reinforce resources to ensure diversity and reserve the capacity for taking on challenges (ratio of mid-career hires: 39% in fiscal 2022, 41% in fiscal 2023, 49% in fiscal 2024, and 48% in fiscal 2025)
		● To secure a stable number of hires over the medium to long term, it is necessary to build a potential talent pool (by fostering awareness and interest). Therefore, TMC is strengthening its recruitment branding so that candidates will choose TMC as an “attractive workplace”
		● To realize TMC’s human resources development, it is necessary for both the workplace and employees to proactively build relationships with colleagues. To achieve this, TMC is actively adopting direct recruiting methods and advancing its hiring process with a strong emphasis on empathy (referral hiring, direct scouting recruitment, alumni hiring)

		§ Support for retention of mid-career hires
		● TMC is also promoting onboarding initiatives that do not consider joining the company as the final goal, but rather aim for each individual to find sense of fulfillment and opportunities for growth
		● TMC is promoting initiatives to improve access to information that mid-career hires need immediately after joining the company. (Providing briefings for new hires (including archives), and establishing an intranet)
		● TMC is working to ensure mid-career hires become familiar with TMC’s way of working (Providing training for mid-career hires (TPS, problem solving and history training)
		● TMC has formulated onboarding guidelines and established an intranet for workplaces accepting mid-career hires

IV. Matters Concerning the Internal Control System

1.	Basic Policy on Internal Control System and the Status of Development

Basic understanding of system to ensure appropriateness of business operations

Based on the “Toyota Philosophy,” “Guiding Principles at Toyota,” “Toyota Code of Conduct,” “Toyota Way 2020,” and “Toyota Group Vision,” TMC ensures that each of the employees who work at TMC and its subsidiaries correctly understands and put into practice this philosophy and vision. TMC also develops such human resources.

TMC will work to create an open workplace culture where we align with the genba (frontlines) and we can approach and talk to each other.

Based on the concept of the Toyota Production System (TPS), Toyota will build a system to “detect abnormalities and halt the pipeline so that we can make improvements” and continue to put this into practice to ensure the appropriateness of the business operations.

System to ensure the appropriateness of business operations and outline of implementation status of such systems

TMC has endeavored to establish a system for ensuring the appropriateness of business operations as a corporate group and the proper implementation of that system in accordance with the “Basic Policies on Establishing Internal Controls.” Each business year, TMC inspects the establishment and implementation of internal controls to confirm that the organizational units responsible for implementing internal controls are functioning autonomously and are enhancing internal controls as necessary, and findings from the inspection are reviewed at Governance Risk Compliance Meetings (GRC Meeting) and the Board of Directors’ meetings.

(1)	System to ensure that Members of the Board of Directors execute their responsibilities in compliance with relevant laws and regulations and the Articles of Incorporation

[System]

1) TMC will make decisions regarding business operations after comprehensive discussions at the Board of Directors’ meeting and other meetings of various cross-sectional decision-making bodies. Matters to be decided are properly submitted and discussed at the meetings of those decision-making bodies in accordance with the relevant rules.

2) TMC will appropriately discuss significant matters and measures relating to issues such as corporate ethics, compliance and risk management at the GRC Meetings or the Board of Directors’ meetings, etc.

3) TMC will ensure that Members of the Board of Directors act in compliance with relevant laws and regulations and the Articles of Incorporation, based on the Code of Ethics and other explanatory documents that include necessary legal information, presented on occasions such as explanation to members of the Board of Directors when they assume office.

[Implementation status]

1) In executing business operations, matters to be discussed are properly presented to the Board of Directors and cross-sectional decision-making bodies in accordance with regulations that identify the matters to be discussed with decision-making bodies. Matters are then comprehensively examined before decisions are made. The following matters require a resolution of the Board of Directors: (1) matters stipulated in the Companies Act and other laws and ordinances, (2) matters stipulated in the Articles of Incorporation, (3) matters delegated for resolution at the General Shareholders’ Meeting, and (4) other material business matters. The following matters are required to be reported to the Board of Directors: (1) status of execution of business operations and other matters stipulated in the Companies Act and other laws and ordinances and (2) other matters deemed necessary by the Board of Directors.

2) With the aim of establishing a governance structure that can deliver sustainable growth over the medium- to long-term in accordance with the “Toyota Philosophy,” “Guiding Principles at Toyota,” “Toyota Code of Conduct,” etc., TMC deliberates on important topics pertaining to sustainability, corporate ethics, compliance and risk management as well as responses thereto at GRC Meetings or the Board of Directors’ meetings, etc.

3) TMC has stipulated the fundamental provisions to be observed by Members of the Board of Directors and other executives in the “Guiding Principles at Toyota,” the “Toyota Code of Conduct,” the “Code of Ethics,” etc., and all executives have been familiarized with these provisions. The relevant laws and regulations and the Articles of Incorporation that executives are to observe are listed in manuals to make all executives familiarized with those laws, regulations and rules and we conduct compliance education for newly appointed executives.

(2)	System to retain and manage information relating to the execution of the duties of Members of the Board of Directors

[System]

Information relating to exercising duties by Members of the Board of Directors shall be appropriately retained and managed by each division in charge pursuant to laws and regulations and the relevant internal rules.

[Implementation status]

In accordance with the relevant internal rules as well as laws and regulations, all organizational units are required to properly retain and manage materials used by decision-making bodies, minutes of meetings, and other information needed for the execution of duties by Members of the Board of Directors. TMC has established global systems and mechanisms for addressing full range of information security issues, including the management of confidential information, and regularly conducts inspections of progress being made in this regard by TMC and its subsidiaries.

(3)	Rules and systems related to the management of risk of loss

[System]

1) TMC will properly manage the capital fund through its budgeting system and other forms of control, conduct business operations, and manage the budget, based on the authorities and responsibilities in accordance with the “Ringi” system (effective consensus-building and approval system) and other systems. Significant matters will be properly submitted and discussed at the Board of Directors’ meeting and other meetings of various bodies in accordance with the standards stipulated in the relevant rules.

2) TMC will ensure accurate financial reporting by issuing documentation on the financial flow and the control system, etc., and by properly and promptly disclosing information through the Disclosure Committee. TMC will also disclose non-financial information in a timely and appropriate manner.

3) In addition to establishing basic rules for risk management, TMC will appoint a person responsible for risk management, identify material risks related to our business activities, and implement countermeasures against such risks in cooperation with each region or subsidiary.

4) As a precaution against events such as natural disasters, TMC will prepare manuals, conduct emergency drills, arrange risk diversification and insurance, etc. as needed.

[Implementation status]

1) Budget is allocated to each supervisory unit assigned to administer each expense item, general expenses, research and development expenses, capital expenditures, etc. and is managed in accordance with the earnings plan. Significant matters are properly submitted for discussion in accordance with standards in the rules stipulating the matters to be discussed at the Board of Directors and other decision-making bodies.

2) To ensure accurate financial reporting, commentaries are prepared on financial information collected to prepare consolidated financial reports, and these are distributed to subsidiaries as necessary. To ensure the timely and proper disclosure of information, information is collected through the Disclosure Committee, where decisions on the need for disclosure are made.

Processes of TMC and its key subsidiaries are being documented as required by law, and the effectiveness of internal control systems with respect to financial reporting is evaluated. The effectiveness of the disclosure process is also evaluated.

3) Toyota has appointed a Chief Risk Officer (“CRO”) charged with global risk management. The CRO is working to prevent and mitigate the impact of risks that could arise in Toyota’s global business activities. Beneath the CRO are regional CROs appointed to handle risk management in specific regions. At head office departments (such as Accounting and Purchasing), risk management by function is assigned to chief officers and risk managers of individual divisions, while at in-house companies, risk management by product is assigned to the company presidents and risk managers of individual divisions. This structure enables coordination and cooperation between the regional head offices and sections. In the area of quality, the Global-CQO (Chief Quality Officer) is in charge of each Regional-CQO, and is promoting the improvement of products and services sincerely reflecting customer feedback, as well as the manufacturing that is in compliance with laws and regulations, across the entire company globally. TMC is also monitoring market developments and establishes and enhances management structure that responds to quality risks.

4) To prepare against disaster, Group/Region and all divisions have formulated business continuity plans (BCPs) for resuming production and restoring systems, among others, and they are continuing to improve these BCPs by conducting regular training (initial responses and restoration efforts) each year. TMC has also adopted a three-pronged approach to business continuity management (BCM) entailing concerted efforts by employees and their families, Toyota Group companies and their suppliers, and TMC.

(4)	System to ensure that Members of the Board of Directors exercise their duties efficiently

[System]

1) Members of the Board of Directors will promptly determine the management policies based on precise on-the-spot information and, in accordance with Toyota’s advantageous “field-oriented” approach, appoint and delegate a high level of authority to officers who take responsibility for business operations in each in-house company, region, function, and process. The responsible officers will proactively compose relevant business plans under their leadership and execute them in a swift and timely manner in order to carry out Toyota’s management policies. Members of the Board of Directors will supervise the execution of duties by the responsible officers.

2) TMC, from time to time, will listen attentively to the opinions of various experts and stakeholders and reflect those opinions in TMC’s management and corporate activities.

[Implementation status]

1) TMC has established product-based in-house companies, and adopted a field-oriented Group-wide organization in which each region, function and process is regarded as a “Group/Region” within which the “in-house companies” and individual divisions of the Group/Region play key roles in executing operations. The Board of Directors makes decisions efficiently by appropriately receiving updates on the company’s situation that are in line with the field from the president and chief officers who are also Operating Officers. The in-house company presidents and responsible officers responsible for business execution are independently formulating and implementing policies for each organizational unit, and chief officers and higher management are supervising these efforts.

2) TMC has created opportunities to hear opinions from various stakeholders such as external experts in each region to obtain advice and information from an outside perspective, and utilizes them in the consideration of approaches to management and corporate activities.

(5)	System to ensure that employees conduct business in compliance with relevant laws and regulations and the Articles of Incorporation

[System]

1) TMC will clarify the responsibilities of each organization unit and maintain a basis to ensure continuous improvements in the system.

2) TMC has appointed a person in charge of compliance and will continuously review the compliance framework to ensure effectiveness. For this purpose, each organization unit shall confirm the effectiveness by conducting self-checks, among others, and report the result to Board of Directors and other meetings.

3) TMC will promptly obtain information regarding legal compliance and corporate ethics and respond to problems and questions related to compliance through its hotline called “Toyota Speak Up Line” that TMC established, as well as through other channels.

[Implementation status]

1) TMC has worked to “visualize” operations and improve the transparency of responsibility authority by clarifying the responsibilities of each organizational unit and making it available to all employees on the internal site. TMC is also providing training in education programs for new recruits as well as in personnel-grade-specific education programs to foster a corporate culture of “watching things closely,” identifying problems, and “continuing to improve.”

2) TMC has appointed a Chief Compliance Officer as a compliance supervisor. TMC has been providing education to a wide range of employees including newly hired employees to ensure that all employees acquire basic knowledge about compliance so as to improve compliance awareness throughout the Company.

A specialized department inspects the compliance status of each organizational unit and reports the outcome of these inspections to the Board of Directors or other meetings.

3) TMC has established a hotline called “Toyota Speak Up Line” and other internal reporting channels to enable employees to consult with outside attorneys or the relevant internal persons in charge about problems and questions concerning compliance. TMC conducts investigations of the facts and takes necessary measures once informed of an issue. The details of these consultations and outcomes of the measures subsequently taken are reported to the relevant executives at TMC.

(6)	System to ensure the appropriateness of business operations of the corporation and the business group consisting of the parent company and subsidiaries

[System]

TMC shares its Vision and Philosophy with its subsidiaries to develop and maintain a sound environment of internal controls for the business group.

In addition, TMC will manage its subsidiaries in a comprehensive manner appropriate to their positioning by clarifying the roles of the division responsible for the subsidiaries’ financing and management and the roles of the division responsible for the subsidiaries’ business activities. Those divisions will confirm the legality and appropriateness of the operations of the subsidiaries by exchanging information with those subsidiaries, periodically and as needed.

i. System concerning a report to the corporation on matters relating to the execution of the duties of Members of the Board of Directors, etc. of subsidiaries

TMC will require prior consent of TMC or a report to TMC on important managerial matters of subsidiaries based on the internal rules agreed between TMC and its subsidiaries. The important managerial matters of subsidiaries will be discussed at TMC’s Board of Directors’ meeting and other meetings in accordance with the standards stipulated in the relevant rules relating to submission of matters to such meetings.

ii. Rules and systems related to the management of risk of loss at subsidiaries

TMC will require its subsidiaries to establish a system to implement initiatives related to the management of risk, such as finance, safety, quality, environment, and natural disasters, and require them to promptly report to TMC on significant risks. TMC will discuss significant matters and measures at the GRC Meetings or the Board of Directors’ meeting, etc. in accordance with the standards stipulated in the relevant rules relating to submission of matters to such meetings.

iii. System to ensure that Members of the Board of Directors, etc. of subsidiaries exercise their duties efficiently

TMC will require Members of the Board of Directors of its subsidiaries to promptly determine the management policies based on precise on-the-ground information, determine responsibilities, implement appropriate delegation of authority based on the responsibilities, and efficiently conduct business.

iv. System to ensure that Members of the Board of Directors, etc. and employees of subsidiaries conduct business in compliance with relevant laws and regulations and the Articles of Incorporation

TMC will require its subsidiaries to establish a system concerning compliance. TMC will periodically confirm its status and report the result to Board of Directors and other meetings.

TMC will promptly obtain information regarding legal compliance and corporate ethics of its subsidiaries and respond to problems and questions related to compliance of its subsidiaries through the whistleblower offices established by its subsidiaries and through the whistleblower office, that TMC has established the company and cover its subsidiaries and other channels.

[Implementation status]

TMC has extended its Vision and Philosophy to its subsidiaries and direct them to ensure that they are suitably incorporated into their own Vision and Philosophy, code of conduct and other principles.

TMC clarified roles and tasks relating to subsidiary management and each department is managing the subsidiaries in a comprehensive manner appropriate to their positioning. Furthermore, each fiscal year TMC conducts inspections of subsidiary management by each department, the results of which are confirmed at the Board of Directors’ meetings, etc.

i. TMC is providing direction to ensure that on important managerial matters at its subsidiaries, prior consent is sought from TMC or reports are submitted to TMC in accordance with internal rules agreed upon between TMC and its subsidiaries. Of such important managerial matters, those that have implications for Group operations are discussed at TMC’s Board of Directors’ meetings in accordance with TMC’s standards stipulating matters to be discussed at the Board of Directors.

ii. TMC is requiring its subsidiaries to establish a system to implement initiatives related to the management of risk, such as finance, safety, quality, environment, and natural disasters, and require them to promptly report to TMC on significant risks through regular communication with the subsidiaries. Significant matters and measures related thereto are discussed at the GRC Meetings or the Board of Directors’ meetings, etc. in accordance with the standards relating to submission of matters.

iii. TMC confirms that the organizational structure is reviewed at its subsidiaries to ensure efficient execution of operations, that responsibilities are being determined appropriately, and that authority is being appropriately delegated, and requires improvements to be made as necessary.

iv. TMC inspects each subsidiary’s compliance systems to ensure they are adequate and reports the outcomes of these activities to TMC’s Board of Directors or other meetings. TMC has extended to its subsidiaries the financial compliance rules that should be instituted at the subsidiaries. TMC also provides subsidiaries with direction on carrying out regular voluntary inspections to ensure that these rules are permeated into the day-to-day operations of its subsidiaries.

In addition, to ensure that the duties performed by directors, etc. of subsidiaries are in compliance with laws and regulations, TMC is working to raise awareness among those directors, etc. of the laws and regulations that they need to comply with, key points for ensuring such compliance, and so on.

TMC is made aware of problems and questions related to compliance at its subsidiaries through the whistleblower offices established by its subsidiaries and through the whistleblower office that TMC has established the company to cover its subsidiaries. Factual investigations are conducted by subsidiaries and relevant divisions of TMC, and necessary measures, including corrective measures and reporting to relevant executives, are taken.

(7)	System to ensure that the Audit and Supervisory Committee’s audit is effective

[System]

1. TMC has established the Audit and Supervisory Committee Office and has assigned full-time staff to support this function. The said employees must follow the directions and orders from the Audit and Supervisory Committee Members, and any changes in its personnel will require prior consent of the Audit and Supervisory Committee or an Audit and Supervisory Committee Member selected by the Audit and Supervisory Committee. Regarding the expenses necessary for the Audit and Supervisory Committee and its members to execute their duties, TMC will take appropriate budgetary steps and also pay for expenses that become necessary as a result of circumstances that were not expected at the time of the taking of budgetary steps.

2. Members of the Board of Directors (excluding Members of the Board of Directors who are Audit and Supervisory Committee Members) and employees will report on the execution of their duties to the Audit and Supervisory Committee upon its request periodically and as needed. They will also immediately report to Audit and Supervisory Committee any fact discovered that may cause significant damage to TMC or its subsidiaries. Members of the Board of Directors, etc. of subsidiaries will report any necessary matter to the Audit and Supervisory Committee as needed. Material matters that have been reported to the internal reporting hotline established by TMC or its subsidiaries or a similar channel will also be reported to the Audit and Supervisory Committee. TMC maintains internal rules stipulating that a person who has made a report to the Audit and Supervisory Committee will not be subject to disadvantageous treatment for having made such a report.

3. TMC will ensure that Audit and Supervisory Committee Members attend meetings of its major decision-making bodies, inspect important Company documents, and have opportunities to exchange information with the Accounting Auditor and the Internal Audit Department periodically and as needed, as well as directly appoint any necessary external experts.

[Implementation status]

1. TMC has established the Audit and Supervisory Committee Office and has assigned full-time staff to support this function. Prior consent of an Audit and Supervisory Committee Member selected by the Audit and Supervisory Committee is obtained for organizational changes to and personnel of the Audit and Supervisory Committee Office. TMC has taken budgetary steps at the beginning of the fiscal year as part of ordinary corporate procedures for expenses deemed necessary by the Audit and Supervisory Committee and its members for them to execute their duties. TMC also pays for expenses that become necessary as a result of circumstances that were not expected when the budgetary steps were taken.

2. Members of the Board of Directors (excluding Members of the Board of Directors who are Audit and Supervisory Committee Members), employees and subsidiaries of TMC report to the Audit and Supervisory Committee Members on the status of business execution as appropriate from time to time. When they discover a fact that may cause significant damage to the Company or its subsidiaries, they immediately report such fact to the Audit and Supervisory Committee. They also report to the Audit and Supervisory Committee on the status of consultations received at the Speak-up Hotline, the external consultation hotline for Japanese subsidiaries established by TMC, and the internal reporting hotlines established by the subsidiaries. TMC promotes awareness among employees by stipulating in the internal reporting rules that a person who has made a report to the Audit and Supervisory Committee will not be subject to disadvantageous treatment for having made such a report.

3. In addition to establishing a system whereby Audit and Supervisory Committee Members can attend meetings of executive bodies that deliberate and decide on important projects, TMC ensures that important Company documents requested by the Audit and Supervisory Committee are made available to them. TMC also arranges for opportunities for the Audit and Supervisory Committee to receive reports from the Accounting Auditor and the Internal Auditing Department at Audit and Supervisory Committee meetings and other meetings convened as necessary.

2.	Basic Policy and Preparation towards the Elimination of Antisocial Forces

(1)	Basic Policy for Elimination of Antisocial Forces

TMC has established the “Basic Policy Against Antisocial Forces” and has a basic policy to not have any relationship with antisocial forces. TMC will take resolute action as an organization against any undue claims and actions by antisocial forces or groups, and has drawn the attention of such policy to its employees.

(2)	Preparation towards Elimination of Antisocial Forces

1) Establishment of Divisions Overseeing Measures Against Antisocial Forces and Posts in Charge of Preventing Undue Claims

TMC established divisions that oversee measures against antisocial forces (“Divisions Overseeing Measures Against Antisocial Forces”) in its major offices as well as assigned persons in charge of preventing undue claims. TMC also established a system whereby undue claims, organized violence and criminal activities conducted by antisocial forces are immediately reported to and consulted with Divisions Overseeing Measures Against Antisocial Forces.

2) Liaising with Specialist Organizations

TMC has been strengthening its liaison with specialist organizations by joining liaison committees organized by specialists such as the police. It has also been receiving guidance on measures to be taken against antisocial forces from such committees.

3) Collecting and Managing Information concerning Antisocial Forces

By liaising with experts and the police, Divisions Overseeing Measures Against Antisocial Forces share up-to-date information on antisocial forces and utilize such information to call TMC’s employees’ attention to antisocial forces.

4) Preparation of Manuals

TMC compiles cases concerning measures against antisocial forces and distributes them to each department within TMC.

5) Training Activities

TMC promotes training activities to prevent damages caused by antisocial forces by sharing information on antisocial forces within the company as well as holding lectures at TMC and its group companies.

V. Others

1.	Matters regarding responses to a takeover bid

Matters regarding responses to a takeover bid None

Supplementary Information

There are no plans to introduce any particular takeover defense measures.

2.	Matters regarding other corporate governance systems, etc.

Outline of the Timely Disclosure System

The following describes TMC’s company structure and procedures regarding the timely disclosure of Company information.

(Guiding Principles)

TMC practices its guiding principle of disclosing operating results, financial condition and non-financial information in a timely and appropriate manner. Such guiding principles are set forth in the Sustainability Fundamental Policy “Contribution towards Sustainable Development.”

(Disclosure Committee and its Purpose)

TMC has established a Disclosure Committee that is chaired by the chief officer of the Accounting Group in an effort to ensure that the information disclosed is accurate, fair and timely.

The Disclosure Committee meets periodically to draft, report and assess annual and quarterly reports prepared pursuant to the Japanese Financial Instruments and Exchange Act, and annual reports prepared pursuant to the U.S. Securities Exchange Act of 1934, as amended. The Disclosure Committee also holds meetings on an ad hoc basis as necessary.

(Procedures of the Disclosure Committee)

The Disclosure Committee performs the following procedures:

(1)

Collection of information

Collect information of TMC and its subsidiaries that may be subject to disclosure based on the materiality standards set forth by the Disclosure Committee through periodic and timely communications with the heads of the relevant divisions responsible for information disclosure.

(2)

Assessment of material information to be disclosed

Assess disclosure of collected information based on applicable laws, regulations and guidelines, such as stock exchange rules, the Japanese Financial Instruments and Exchange Act, and the U.S. Securities Exchange Act.

(3)

Disclosure based on assessment

Based on the assessment made above, disclose information in a timely manner. When necessary, a report to the Board of Directors, the company representative and certification procedures on the disclosure documents will precede the disclosure. The Audit and Supervisory Committee Members (or the Audit and Supervisory Committee) may receive reports from the Disclosure Committee as necessary and may provide opportunities for reporting and Q & A sessions with company representatives.

(4)

Ensuring of appropriate information collection and disclosure procedures

Make further efforts to enhance the company structure pertaining to timely and fair disclosure: the internal auditing division assesses the overall information disclosure process, and independent external auditors and outside legal counsel provide support in establishing disclosure controls and procedures, and offer guidance on the sufficiency and appropriateness of the disclosure information.

(5)

Provision of company regulation

Details of the procedures and the organizational structure mentioned above are stipulated in the Company’s internal disclosure guidelines.

LOGO

“Toyota Philosophy”


		MISSION		Producing Happiness for All Using our technology, we work towards a future of convenience and happiness, available to all
		VISION		Creating Mobility for All Toyota strives to raise the quality and availability of mobility so that individuals, businesses, municipalities and communities can do more, while achieving a sustainable relationship with our planet
		VALUE		The Toyota Way We unite our three strengths (Software, Hardware and Partnerships) to create new and unique value that comes from the Toyota Way

Business-strategy Reasons for Holding, and Shareholding Status of, Strategically-held Shares and the Breakdown by Issue

a.	Business-strategy Reasons for Holding Strategically-held Shares


Company	Balance sheet value (Millions of yen)	Investment Ratio (%) (Note 1)	Business-strategic Reasons for Shareholding
KDDI CORPORATION	959,347	9.28	In the midst of the trend toward liberalization of the telecommunications sector in the 1980s, to achieve synergy effects on the enhancement of its automobile business, TMC entered the information and communications business and invested in Teleway Japan Corporation (“TWJ”) in 1984 and NIPPON IDOU TSUSHIN CORPORATION (“IDO”) in 1987. After that, TWJ merged with Kokusai Denshin Denwa Co., Ltd. (“KDD”) in 1998, and DDI CORPORATION (DDI), KDD and IDO merged to create KDDI Corporation (“KDDI”) in October 2000, making TMC one of the shareholders of KDDI. Since 2002, prompted by the increase in internet-connected vehicles, TMC and KDDI have cooperated on G-BOOK and other services for the telematics business of Toyota. In addition, the two companies have been working together since 2016 to build a global communications platform between vehicle communications devices and cloud services. In this and other ways, the companies have been accelerating initiatives to provide safety and comfort through the integration of vehicles and telecommunications. In addition to these initiatives, to accelerate efforts to develop services that enrich people’s lives and solve social issues through the use of big data and other means, TMC acquired additional shares of KDDI in 2021. In 2023 and 2024, as a result of considering an optimal capital relationship with KDDI and in light of the relationship of trust built through the longstanding business and capital alliance with KDDI, TMC sold a portion of its shareholding in KDDI.

MS&AD Insurance Group Holdings, Inc.	340,405	6.56	TMC invested in The Chiyoda Fire & Marine Insurance Co., Ltd. (“Chiyoda”) to cooperate in activities such as development of insurance products. Through subsequent mergers involving Chiyoda, The Dai-Tokyo Fire & Marine Insurance Co., Ltd., The Sumitomo Marine & Fire Insurance Co., Ltd. and others, current MS&AD Insurance Group Holdings, Inc. (“MS&AD Insurance”) was formed. TMC holds shares of MS&AD Insurance to maintain and develop the business relationship with MS&AD Insurance in the mobility services sector focused on financial services for achieving a “safe and secure traffic environment for society,” including the joint development of insurance services using automotive connected technologies.

Note 1:

The investment ratio is the percentage represented by the number of shares of each company held by TMC to the total number of issued shares of such company as of March 31, 2025.

b.	Number of companies whose shares are held and the balance sheet value of such shares


		Number of companies		Total balance sheet value (Millions of yen)
	Unlisted shares		81		69,893
	Shares other than unlisted shares		34		2,951,382
(Companies in which TMC increased its shareholding in the fiscal year ended March 2025)
		Number of companies		Total purchase price associated with increase in number of shares (Millions of yen)		Reason for increase in number of shares
	Unlisted shares		1		696		TMC has determined that the shareholding will contribute to the improvement in corporate value from a medium- to long-term perspective.
	Shares other than unlisted shares		1		1,964
(Companies in which TMC decreased its shareholding in the fiscal year ended March 2025)
		Number of companies		Total sale price associated with decrease in number of shares (Millions of yen)
	Unlisted shares (Note 2)		2		597
	Shares other than unlisted shares		14		643,380
Note 2: This includes one company that was liquidated.

c.	Information on an issuer-by-issuer basis relating to the number and balance sheet value, etc. of specified investment shares and deemed shareholdings

Specified investment shares


Company	Fiscal year ended March 2025		Fiscal year ended March 2024		Shareholding purpose, outline of matters including business alliances, quantitative shareholding effect (Note 1) and reason for increase in number of shares	Holder of TMC’s shares
	Number of shares (Shares)		Number of shares (Shares)
	Balance sheet value (Millions of yen)		Balance sheet value (Millions of yen)
KDDI CORPORATION		203,294,600		253,094,600	To maintain and develop automotive (information) business relations	Yes
		959,347		1,134,370

MS&AD Insurance Group Holdings, Inc.		105,551,899		52,610,933	To maintain and develop automotive (financial) business relations [Reason for increase in the number of shares] Partial sale and stock split	Yes
		340,405		427,885

NIPPON TELEGRAPH AND TELEPHONE CORPORATION		2,019,385,000		2,019,385,000	To maintain and develop automotive (information) business relations	Yes
		292,205		363,085

Mitsubishi UFJ Financial Group, Inc.		102,580,000		149,263,153	To maintain and develop financial business relations	Yes
		206,288		232,403

Suzuki Motor Corporation		96,000,000		24,000,000	To maintain and develop business alliances (including product complementation, joint development, and collaboration in the field of production) [Reason for increase in the number of shares] Stock split	Yes
		173,760		166,896

Grab Holdings Limited		222,906,079		222,906,079	To maintain and develop automotive (Mobility as a Service (“MaaS”)) business relations	No
		150,980		105,976

Renesas Electronics Corporation		75,015,900		75,015,900	To maintain and develop automotive (procurement) business relations	No
		149,094		200,330

Hotai Motor Co., Ltd.		45,294,234		45,294,234	To maintain and develop automotive (business alliance) business relations	Yes
		124,609		138,049

PT Astra International Tbk		1,920,000,000		1,920,000,000	To maintain and develop automotive (business alliance) business relations	Yes
		85,962		94,925

Isuzu Motors Limited		39,000,000		39,000,000	To maintain and develop business alliances directed towards the promotion of Connected, Autonomous, Shared, and Electric (CASE) technologies in commercial businesses	Yes
		78,644		80,145

Joby Aviation, Inc		72,871,831		72,871,831	To maintain and develop automotive (MaaS) business relations	No
		65,593		59,140


Pony AI Inc. (Note 2)	42,453,831	*	To maintain and develop automotive (MaaS) business relations	No
	55,987	*

Uber Technologies, Inc.	5,125,868	5,125,868	To maintain and develop automotive (MaaS) business relations	No
	55,841	59,753

Aurora Innovation, Inc.	47,348,178	47,348,178	To maintain and develop automotive (MaaS) business relations	No
	47,610	20,217

Sumitomo Metal Mining Co., Ltd.	11,058,000	11,058,000	To maintain and develop automotive (procurement) business relations	Yes
	35,883	50,723

Mazda Motor Corporation	31,928,500	31,928,500	To maintain and develop business alliances (establishment and operation of a joint venture (production of finished cars) in the United States, joint development, technological collaboration and product complementation)	Yes
	30,083	56,050

Yamaha Motor Co., Ltd.	18,750,000	37,500,000	To maintain and develop automotive (procurement) business relations	Yes
	22,350	53,381

Panasonic Holdings Corporation	8,227,800	20,700,000	To maintain and develop automotive (procurement) business relations and cooperative relations through a joint venture (automotive rectangular batteries and urban development)	No
	14,576	29,922

Yamato Holdings Co., Ltd.	5,748,133	5,748,133	To maintain and develop automotive (sales) business relations	No
	11,275	12,404

Inchcape plc	6,666,327	6,666,327	To maintain and develop automotive (sales) business relations	No
	8,657	9,229

KYB Corporation	2,938,834	1,469,417	To maintain and develop automotive (procurement) business relations	No
	8,637	7,597

Sumitomo Electric Industries, Ltd.	2,420,000	2,420,000	To maintain and develop automotive (procurement) business relations	Yes
	5,968	5,681

GS Yuasa Corporation	2,236,080	2,236,080	To maintain and develop automotive (procurement) business relations	Yes
	5,327	7,035

Daido Steel Co., Ltd.	4,345,000	4,345,000	To maintain and develop automotive (procurement) business relations	Yes
	5,171	7,893

ZENRIN CO., LTD	4,272,000	4,272,000	To maintain and develop automotive (information) business relations	Yes
	4,533	3,627

Mitsui High-tec, Inc.	4,677,500	935,500	To maintain and develop automotive (procurement) business relations [Reason for increase in the number of shares] Stock split	Yes
	3,237	8,160



Shin-Etsu Chemical Co., Ltd.	744,000	744,000	To maintain and develop automotive (procurement) business relations	Yes
	3,152	4,898

PKSHA Technology Inc.	766,600	766,600	To maintain and develop automotive (technology) business relations	No
	2,251	4,186

Akebono Brake Industry Co., Ltd.	15,495,175	15,495,175	To maintain and develop automotive (procurement) business relations	No
	1,658	2,262

Electreon Wireless Ltd.	291,911	—	To maintain and develop automotive (technology) business relations [Reason for increase in the number of shares] From a medium- to long-term perspective, shares were acquired based on the judgment that it would contribute to enhancing corporate value.	No
	955	—

DAIICHI KOUTSU SANGYO Co., Ltd.	1,078,000	1,078,000	To maintain and develop automotive (MaaS) business relations	No
	825	911

CHUO MALLEABLE IRON CO., LTD.	792,000	792,000	To maintain and develop automotive (procurement) business relations	Yes
	371	392

MISONOZA Inc.	80,000	80,000	To maintain and develop business relations with local economies	No
	136	149

Dynamic Map Platform Co., Ltd. (Note 3)	10,000	*	To maintain and develop automotive (information) business relations	No
	15	*

Sumitomo Mitsui Financial Group, Inc. (Note 4)	—	5,375,312	—	Yes
	—	47,889

Hamamatsu Photonics K.K. (Note 4)	—	8,400,000	—	No
	—	44,965

Tokio Marine Holdings, Inc. (Note 4)	—	9,414,165	—	Yes
	—	44,275

Central Japan Railway Company (Note 4)	—	3,000,000	—	No
	—	11,178

Toyo Tire Corporation (Note 4)	—	2,387,475	—	Yes
	—	6,752

Seino Holdings Co., Ltd. (Note 4)	—	2,210,716	—	No
	—	4,676

Fukuyama Transporting Co., Ltd. (Note 4)	—	309,100	—	Yes
	—	1,120

Nakanihon KOGYO Co., Ltd. (Note 4)	—	12,000	—	No
	—	128

Getaround, Inc(Note 4)	—	702,127	—	No
	—	33

Notes:

Although it is difficult to quantify the effect of holding each type of share, TMC assessed the appropriateness of its shareholdings as of March 31, 2024 by reviewing whether individual shareholdings are meaningful and examining specific factors, such as whether the benefits and risks from such shareholdings are commensurate with the cost of capital, and then taking necessary measures.

2.	Pony AI Inc. is included in the list above because its shares became specified investment shares upon a public listing on November 27, 2024. “*” indicates that the entry is omitted because the company’s shares were not specified investment shares in the previous fiscal year.

3.	Dynamic Map Platform Co., Ltd. is included in the list above because its shares became specified investment shares upon a public listing on March 27, 2025. “*” indicates that the entry is omitted because the company’s shares were not specified investment shares in the previous fiscal year.

4.	“—” indicates that TMC did not hold shares of that company.

For the fiscal year ended March 2025, the balance sheet values of shares in Sumitomo Electric Industries, Ltd. and those listed thereunder, which are specified investment shares, represent less than one percent of TMC’s capital. However, since the total number of companies listed as specified investment shares and deemed shareholding is less than 60, all specified investment shares held by TMC are listed above.

Deemed shareholdings


Company (Note 1)	Fiscal year ended March 2025		Fiscal year ended March 2024		Shareholding purpose, outline of matters including business alliances, quantitative shareholding effect (Note 2) and reason for increase in number of shares	Holder of TMC’s shares
	Number of shares (Shares)		Number of shares (Shares)
	Balance sheet value (Millions of yen)		Balance sheet value (Millions of yen)
Bridgestone Corporation		3,988,674		3,988,674	To contribute to the retirement benefit trust; the right to instruct the exercise of voting rights is reserved	Yes
		23,912		26,549

Sumitomo Rubber Industries, Ltd.		1,378,700		2,757,500	To contribute to the retirement benefit trust; the right to instruct the exercise of voting rights is reserved	Yes
		2,596		5,179

OKAYA & CO., LTD.		76,000		98,000	To contribute to the retirement benefit trust; the right to instruct the exercise of voting rights is reserved	Yes
		530		1,657

Misonoza Inc.		5,000		5,000	To contribute to the retirement benefit trust; the right to instruct the exercise of voting rights is reserved	No
		9		9

Taiho Kogyo Co., Ltd.		12,279		12,279	Taiho Kogyo Co., Ltd. is an affiliated company of TMC To contribute to the retirement benefit trust; the right to instruct the exercise of voting rights is reserved	Yes
		7		12

MITSUI & CO., LTD.		—		6,000,640	—	Yes
		—		42,641

Panasonic Holdings Corporation		—		11,901,230	—	No
		—		17,203

Sumitomo Mitsui Financial Group, Inc.		—		1,486,400	—	Yes
		—		13,242

Sumitomo Corporation		—		3,352,175	—	No
		—		12,242

Mitsubishi UFJ Financial Group, Inc		—		4,608,540	—	Yes
		—		7,175

AGC Inc.		1,000,000		1,000,000	—	Yes
		—		5,528

NHK SPRING CO, LTD.		—		2,650,957	—	Yes
		—		3,968

The Hyakugo Bank, Ltd.		—		3,986,595	—	Yes
		—		2,587



Tokai Tokyo Financial Holdings, Inc.	—	3,461,000	—	Yes
	—	2,108

The Bank of Nagoya, Ltd.	—	310,900	—	Yes
	—	2,071

Juroku Financial Group, Inc.	—	261,636	—	Yes
	—	1,253

The Ogaki Kyoritsu Bank, Ltd.	—	547,250	—	Yes
	—	1,195

Kobe Steel, Ltd.	—	206,000	—	Yes
	—	424

Notes:

1.	The numbers of specified investment shares and deemed shareholdings are not summed when selecting top companies in terms of balance sheet value.

2.	Although it is difficult to describe the quantitatively the effect of each shareholding, TMC reviews the rationality of its deemed shareholdings from a medium- to long-term perspective, without setting a specific reference date, and takes necessary measures.

3.	“—” indicates that TMC did not hold shares of that company.

(3)	Investment shares held for pure investment purposes None

(4) Investment securities whose purpose of ownership was changed from pure investment to other than pure investment during the fiscal year ended March 2025

None

Changes in strategically-held shares


		March 31, 2021			March 31, 2022			March 31, 2023			March 31, 2024			March 31, 2025
Number of companies	Listed		54			53			49			40			34
	Unlisted		103			95			92			84			81
	Deemed shareholdings		41			31			24			17			4
	Total		198			179			165			141			119
Balance (100 million yen)	Listed		24,728			30,324			30,949			35,087			29,513
	Unlisted		2,998			902			1,151			1,240			698
	Deemed shareholdings		2,344			1,955			1,270			1,450			270
	Total		30,071			33,180			33,370			37,777			30,483
Ratio of the balance of strategically-held shares to consolidated net assets (total assets)			12.4	%		12.2	%		11.4	%		10.7	%		8.3	%


Strategic Holdings of Listed Shares

LOGO

Method of Determining Performance-based Remuneration

1.	Method of Determining Performance-based Remuneration (Bonus and Share Compensation)

Directors with Japanese citizenship (excluding Outside Members of the Board of Directors and Members of the Board of Directors who are Audit and Supervisory Committee Members) TMC sets the total amount of compensation that each member of the Board of Directors receives annually (“Annual Total Remuneration”) at an appropriate level based on position and duties by referencing a benchmark of Japanese and also global companies selected based on the size of each person’s role and other factors.

TMC makes sure that short term incentive (“STI”) and long term incentive (“LTI”) account for around 20% and 50% of the Annual Total Remuneration, respectively, and performance-based remuneration, which is STI and LTI combined, account for around 70%. STI is provided in the form of cash compensation based on “consolidated operating income,” “fluctuation of TMC’s market capitalization*,” and “individual performance evaluation.” LTI is provided in the form of share compensation based on “multiple financial indicators,” “non-financial indicator,” and “individual performance evaluation.” In addition, there are cases where LTI may be paid in cash to retiring members of the Board of Directors (excluding outside members of the Board of Directors and members of the Board of Directors who are Audit and Supervisory Committee members) and members of the Board of Directors who do not reside in Japan (excluding outside members of the Board of Directors and members of the Board of Directors who are Audit and Supervisory Committee members).

TMC’s market capitalization is calculated by multiplying the closing price of TMC’s common stock for on the Tokyo Stock Exchange by the number of shares issued after deducting the number of shares of treasury stock

< Composition of Compensation >


Type of Remuneration	% of Total Remuneration	Remuneration Method	Concept

Base compensation	Around 30%	Cash compensation	The percentage of total remuneration represented by LTI is designed to increase as an individual’s roles and
STI	Around 20%	Cash compensation
LTI	Around 50%	Share compensation

< Concept of Performance Evaluating Indicators >



STI	Financial indicators	(1) Consolidated operating income (single year)	Indicator for evaluating TMC’s efforts based on short-term business performance
	Financial indicators	(2) Fluctuation of TMC’s market capitalization	Corporate value indicator for shareholders and investors to evaluate TMC’s efforts

	Individual performance evaluation		Qualitative evaluation of performance of each member of the Board of Directors

LTI	Financial indicators	(3) Consolidated operating income (multiple years)	Indicator for evaluating TMC’s medium- to long-term efforts based on business performance

		(4) Total shareholder return	Corporate value indicator for shareholders and investors to evaluate TMC’s medium- to long-term efforts
		(5) Return on equity

	Non-financial indicator	(6) Progress of efforts to resolve sustainability issues	Indicator for evaluating TMC’s medium- to long-term efforts based on the degree of corporate value enhancement

	Individual performance evaluation		Qualitative evaluation of performance of each member of the Board of Directors

< Method and Reference Value for Each Performance Evaluating Indicator and Evaluation Result >


STI	Evaluation Weight	Evaluation Method	Reference Value	Evaluation Result
(1) Consolidated operating income (single year)	70%	Evaluate the degree of attainment of consolidated operating income in FY2024, using the average consolidated operating income of TMC over the last 10 fiscal years as a reference value (set in 2023)	2.5 trillion yen	157%

(2) Fluctuation of TMC’s market capitalization	30%	Comparatively evaluate the fluctuation of TMC’s market capitalization for FY2024 (average from January through March), using the market capitalization of TMC and TOPIX for FY2023 (average from January through March) as reference values	TMC: 46.8 trillion yen TOPIX: 2,665.15


LTI	Evaluation Weight	Evaluation Method	Reference Value	Evaluation Result
(3) Consolidated operating income (multiple years)	35%	Evaluate the degree of attainment of consolidated operating income for the last three fiscal years, including FY2024, using the average consolidated operating income of TMC over the last 10 fiscal years as a reference value (set in 2023)	2.5 trillion yen	138%

(4) Total shareholder return	17.5%	Comparatively evaluate TMC’s total shareholder return, using the rate of change calculated by dividing the sum of the stock price of TMC on the last day of FY2024 and the cumulative amount of dividend per share during the period from the fiscal year that is four years before FY2024 through FY2024 by the stock price on the last day of the fiscal year that is five years before FY2024 and the rate of change in TOPIX Net Total Return calculated in the same manner as reference values	TOPIX: 213.4%

(5) Return on equity	17.5%	Comparatively evaluate TMC’s return on equity for FY2024 using the levels recommended by the Ito Review*1 as reference values	8%

(6) Progress of efforts to resolve sustainability issues	30%	Evaluate the degree of contribution of business activities during FY2024 in accordance with the six key issues (materiality)2 3	Six key issues (materiality)

*	1 A report on corporate governance reforms released by the Ministry of Economy, Trade and Industry in 2014

2 The six key issues identified by Toyota are: (1) Expanding the Value of Mobility; (2) Safety & Reliability; (3) Coexistence of Humanity & the Earth (including carbon neutrality); (4) Supporting the Community and Employment; (5) Active Participation for All; and (6) Strong Production and Business Operation

3 As a result of the model certification application issues that were reported by Toyota to MLIT in 2024, we reflected this incident in the evaluation for “Strong Production & Business Operation,” one of our six key evaluation criteria, and accordingly reduced remuneration amounts for directors (excluding members of the Board of Directors who were Audit & Supervisory Board members) for fiscal 2024. The evaluation for “Strong Production & Business Operation” for operating officers who did not concurrently serve as directors also reflected this, thus similarly reducing their remuneration for fiscal 2024.

< Concept of Individual Performance Evaluation >

For the determination of Annual Total Remuneration, the STI base amount and the LTI base amount are adjusted to reflect the performance evaluation results of financial and non-financial indicators, and are further adjusted based on individual performance evaluations. The evaluation takes into account various factors, such as initiatives (including the ESG perspective) based on the Toyota Philosophy and initiatives toward medium- to long-term corporate value enhancement, as well as trust from his or her peers and contribution to the promotion of human resources development. The range of adjustments based on individual performance evaluations is set within the range of 50% above or below the STI base amount and the LTI base amount, which reflect the performance evaluation results of financial and non-financial indicators, commensurate with position and job responsibilities. The amount of performance-based remuneration for each member of the Board of Directors is calculated based on evaluation results. Given the magnitude of roles and responsibilities the Chairman of the Board of Directors, the Vice Chairman of the Board of Directors, and the President and Member of the Board of Directors, we have determined that individual remuneration is to be adjusted solely based on company-wide performance evaluations, and thus have not conducted an individual performance evaluation for them.

2)	Directors with foreign citizenship (excluding Outside Members of the Board of Directors and Members of the Board of Directors who are Audit and Supervisory Committee Members)

Fixed remuneration and performance-based remuneration are set based on the remuneration levels and structures that allow TMC to secure and retain talented personnel. Annual Total Remuneration levels as well as the percentages of fixed remuneration and performance-based remuneration in total remuneration are set taking into account each member’s job responsibilities and the remuneration standards of the entity for which such member previously worked (application determined individually). Performance-based remuneration consists of STI and LTI as is the case with directors with Japanese citizenship (excluding Outside Members of the Board of Directors and members of the Board of Directors who are Audit and Supervisory Committee members). The amounts of STI and LTI change in the same manner by reflecting STI and LTI performance evaluating indicators set for directors with Japanese citizenship (excluding Outside Members of the Board of Directors and members of the Board of Directors who are Audit and Supervisory Committee members) and individual performance evaluation results. In addition, there are cases where we provide income tax compensation for certain members of the Board of Directors in light of the difference in income tax rates with those of their former affiliations.

2.	Clawback rule

TMC has introduced a clawback rule in November 2023. Under this rule, if TMC is required, in connection with financial reporting requirements under applicable laws and regulations, to restate its past financial statements, TMC will, subject to certain conditions, can mandatorily recover the resulting overpaid portion of performance-based remuneration from incumbent or retired members of the Board of Directors who received such remuneration. The clawback rule does not apply to members of the Board of Directors who retired from office before its introduction.

The compensation that is subject to clawback is the whole or part of performance-based remuneration, including share compensation, that has been paid based on financial statements before restatement, and the clawback applies to the three fiscal years ended immediately before the day on which the restatement of financial statements is required. The management and operation of this rule, including the identification of remuneration, periods, and individuals who are subject to clawback, are conducted by the Executive Compensation Meeting.

Cementing Our Work Foundation and Addressing Certification Issues

Group vision “Inventing our path forward, together”

The Group vision represents the direction the Toyota Group* should take and the vision and values to which all Toyota Group members can return.

“Inventing our path forward, together.”

Sakichi Toyoda, the founder of the Toyota Group, invented the Toyoda wooden hand loom with the desire to make life a little easier for his struggling mother. Kiichiro Toyoda invented the domestically produced passenger car with the idea that the automobile industry must be developed by the knowledge and skills of Japanese people. Thinking of others, learning, honing skills, making things, and bringing smiles to people’s faces—that passion and attitude toward invention are truly the starting point of the Toyota Group. In a time when there is no right answer, we will build a corporate culture in which we can say “thank you” to each other and aim to be a Toyota Group that is needed in the future, where diverse human resources can play an active role.

Toyota Industries Corporation, Toyota Motor Corporation, Aichi Steel Corporation, JTEKT CORPORATION, Toyota Auto Body Co., Ltd., Toyota Tsusho Corporation, AISIN CORPORATION, DENSO Corporation, TOYOTA BOSHOKU CORPORATION, TOYOTA FUDOSAN CO., LTD., TOYOTA CENTRAL R&D LABS., INC., Toyota Motor East Japan, Inc., Toyoda Gosei Co., Ltd., Hino Motors, Ltd., Daihatsu Motor Co., Ltd., Toyota Housing Corporation, Toyota Motor Kyushu, Inc., Woven by Toyota, Inc.(As of March 31, 2025)

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Cementing our work foundation and addressing certification issues

[Work foundation]


In the past year, as the foothold for sustainable growth, we have made steady progress in creating an environment in which we can demonstrate the “competitiveness of a company with the capacity to produce over 10 million cars” and our “ability to take on various challenges,” in other words, initiatives to cement our “work foundation.” We have been making Companywide efforts to create reserve capacity to develop human resources and ensure safety and quality. In particular, we have focused on improving the foundations of our production sites.
The environment surrounding manufacturing is becoming increasingly severe. Japan’s working-age population is expected to decline by 20% over the next 15 years. Buildings and facilities are aging, leading to more frequent impacts on operations. Based on our awareness of the issue that if we are unable to improve the productivity and comfort of our workplaces, we will risk losing the foundations of manufacturing, we have been working to improve plant environments through initiatives such as heat mitigation measures and create employee-friendly production lines that accommodate diverse individuals from all walks of life. Furthermore, in moving forward into the future, we launched the “Factories for the Future” project, which seeks to transform manufacturing as we know it. We are committed to making more extensive efforts to improve productivity and job satisfaction envisioning 10 to 50 years into the future, such as substantially expanding automation and introducing diverse work-styles. The development area is no exception, and we made efforts to improve the “competitiveness of a company with the capacity to produce over 10 million cars.” One example is the “AREA 35” project, which seeks to improve our accuracy in forecasting customer needs and optimize the types of specifications and parts we offer, while flexibly responding to the diverse range of customer needs by leveraging the strengths of our well-designed Toyota New Global Architecture (TNGA) platform. Through trial runs at 10 domestic plants, we have managed to generate a level of development efficiency equivalent to three vehicle model redesign projects. Going forward, we will expand our activities globally to further improve development and production efficiency.

In addition, we have also made progress on developing the foundations of future-oriented automobile manufacturing. For example, this includes establishing structures that link everything from development to sales through digital transformation (DX) to facilitate easy access to comprehensive information on the specification of vehicles, instead of having to contact each person in charge due to the current state of distributed core systems.

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[Responding to certification issues]

Regarding certification issues, we have been making Companywide efforts to prevent recurrence. We have made two quarterly reports on our progress to the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) so far, and have made improvements under the Ministry’s guidance.

In the short term, we aim to steadily implement the 14 tasks set forth to prevent recurrence. The certification issue revealed that there is a disconnect between management and the frontlines. Taking the issue to heart, many executives made it a point to personally visit frontline sites.

Through this initiative, they discovered various issues, such as the fact that certification operations rely on the tremendous efforts of those on the frontlines in addition to the revelation that the operation of these sites had been significantly affected due to aged facilities and equipment.

To address these conditions, we implemented measures to reduce the burden and concerns that plagued the frontlines, which included adding manpower to departments with heavy workloads and making decisive investments in over 250 pieces of equipment needed to perform work correctly.

We also improved the auditing system by increasing the headcount of “Legal Supervisors” to about 40, so as to strengthen second-line auditing and establish a system to thoroughly understand what certification sites are going through.

Then, in order to strengthen the management of development stages, we reviewed the structure to facilitate decisions on whether a project can move on to the next stage by clarifying who is responsible at each stage, for example of preparing for certification and completing development. We have already started operation for actual projects, allowing them to stop before moving to the next stage in case a plan is deemed too difficult. We will continue to improve the frontlines to make work easier for them and prepare environments where work can be done in a correct manner.

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In the medium term, we aim to change the awareness of each and every individual as well as the corporate culture. The Toyota Production System (TPS) self-study activities for Certification Work led by Chairman Toyoda serves as the anchor for these efforts. The TPS self-study activities are held across departments for members to gather and improve the work process as a whole, eliminating bottlenecks and downtime, so as to generate reserve capacity and perform work correctly. Improvement activities are underway for example with the goal of reducing lead times in processes such as the development of engine control units and vehicle specification sheets.

In the long term, we aim to lobby for the reform of the certification system itself. In March 2025, a public-private conference involving the MLIT and automobile manufacturers kicked off to study future-proof certification systems. We will deliver the voices of our certification sites to the MLIT and link this effort to system reforms that contribute to Japan’s competitiveness.

We have come to understand that addressing the certification issue is in itself the act of improving the corporate culture, systems and mechanisms of the company as a whole. We are committed to improving governance in the Toyota way through ongoing efforts to enhance the effectiveness of our initiatives.

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Progress on consolidated governance Regarding consolidated governance, we steadily implemented the measures formulated last year.

In terms of corporate culture, members of top management of the six Group companies* gathered and made a joint effort to promote improvements focused on worksites as part of the TPS self-study activities. By expanding multilayered communication by the members of top management and the operational staff, we are facilitating the sharing of concerns and thoughts among individuals at all Group companies.

In particular, we strengthened coordination with Daihatsu Motor Co., Ltd., Hino Motors, Ltd., and Toyota Industries Corporation, which are working to prevent the recurrence of certification issues. We have continued to engage in frequent discussions with members of top management from Daihatsu Motor Co., Ltd. and Toyota Industries Corporation regarding the difficulties and management issues that each of us faces, including the progress on recurrence prevention measures and better business coordination. Regarding Hino Motors, Ltd., we are supporting preparations for business integration with Mitsubishi Fuso Truck and Bus Corporation, in collaboration with Daimler Truck Holding AG. We will continue to deepen coordination of these companies among both the members of top management as well as operational staff prioritizing recurrence prevention. In terms of our structures, we have been working to improve the effectiveness of the Board of Directors and steering our initiatives in the right direction by incorporating the knowledge of outside directors. The “Governance Risk Compliance Meeting” established in June 2024 addresses important management issues at hand, including the certification issues and BCPs to prepare for major disasters. In addition, the “Sustainability Meeting” evaluates the five key themes of sustainability management, including the Factories for the Future and the participation and advancement of diverse human resources.

In terms of our systems, to strengthen internal controls, we have conducted audits of 17 key subsidiaries from multiple perspectives, devoting over twice as much time than the conventional process. We also conduct internal control training for officers of subsidiaries and provide these officers with information on case studies at other companies as part of our practical and concrete training programs.

LOGO

Our commitment to accepting responsibility for the certification issues has been reflected in the evaluations of the Chairman, Vice Chairman, and President, and their compensation has been reduced. For more information, please refer to “ Compensation to Members of the Board of Directors and Audit & Supervisory Board Members for FY2025” under “Status of Members of the Board of Directors and Audit & Supervisory Board Members.”

We will continue to work toward improving governance from a Groupwide and consolidated perspective.

*	Toyota Industries Corporation, Toyota Motor Corporation, Toyota Auto Body Co., Ltd., Toyota Motor East Japan, Inc., Hino Motors, Ltd., Daihatsu Motor Co., Ltd.

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