{"url_path":"/sec/tm/10-k/2026/item-16g","section_key":"item-16g","section_title":"Item 16G CORPORATE GOVERNANCE","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-06-10","source_url":"https://www.sec.gov/Archives/edgar/data/1094517/0001193125-26-264811-index.html","accession_number":"0001193125-26-264811","cik":"0001094517","ticker":"TM","issuer_name":"TOYOTA MOTOR CORP/","edgar_url":"https://www.sec.gov/Archives/edgar/data/1094517/0001193125-26-264811-index.html","primary_entity_key":"0001094517","primary_entity_name":"TOYOTA MOTOR CORP/"},"word_count":2770,"has_tables":true,"body_markdown":"ITEM 16G. CORPORATE GOVERNANCE\n\nSignificant Differences in Corporate Governance Practices between Toyota and U.S. Companies Listed on the NYSE\n\nPursuant to home country practices exemptions granted by the NYSE, Toyota is permitted to follow certain corporate governance practices complying with Japanese laws, regulations and stock exchange rules in lieu of the corporate governance standards under Section 303A of the NYSE Listed Company Manual (the “NYSE Corporate Governance Rules”). More specifically, Toyota is exempt from the NYSE Corporate Governance Rules, except for requirements that (a) Toyota’s Audit & Supervisory Committee satisfies the requirements of Rule 10A-3 under the Exchange Act, (b) Toyota must disclose significant differences in its corporate governance practices as compared to those followed by domestic companies under the NYSE listing standards, (c) Toyota’s principal executive officer must notify the NYSE in writing after any executive officer of Toyota becomes aware of any non-compliance with (a), (b) and (e), (d) Toyota must submit annual and interim written affirmations to the NYSE, and (e) Toyota must adopt and comply with a written policy providing that it will recover erroneously awarded incentive-based compensation from its executive officers in the event that it is required to prepare an accounting restatement due to the material noncompliance by Toyota with any financial reporting requirement under the securities laws. Toyota’s corporate governance practices and those followed by domestic companies under the NYSE Corporate Governance Rules have the following significant differences:\n\n1. Members of the Board of Directors. The NYSE Corporate Governance Rules require U.S. listed companies generally to have a majority of the board be “independent directors,” as defined under the NYSE Corporate Governance Rules. The NYSE Corporate Governance Rules also require that the non-management directors of each U.S. listed company meet at regularly scheduled executive sessions without management. As a foreign private issuer, neither rule applies to Toyota. Unlike the NYSE Corporate Governance Rules, neither the Companies Act nor the regulations of the Japanese stock exchanges require, and accordingly Toyota does not have, an internal corporate organ or committee comprised solely of “independent directors” as defined under the regulations of the Japanese stock exchanges.\n\nThe Companies Act requires Toyota to have “outside” members of the Board of Directors, as defined under the Companies Act. Toyota currently has five outside members of the Board of Directors. An “outside” member of the Board of Directors refers to:\n\n \n\n \n(a)\n\na person who is not, and has never been during the ten year period before becoming an outside member of the Board of Directors, an Executive Director of Toyota or its subsidiaries;\n\n \n\n \n(b)\n\nif a person was a member of the Board of Directors, accounting counselor (in the case that an accounting counselor is a legal entity, a member of such entity who is in charge of its affairs) or Audit and Supervisory Board member (excluding those who have ever been Executive Directors, etc.) of\n\n \n\n145\n\n##### Table of Contents\n\n \n\nToyota or any of its subsidiaries at any time during the ten year period before becoming an outside member of the Board of Directors, such person who has not been an Executive Director, etc. of Toyota or any of its subsidiaries during the ten year period before becoming a member of the Board of Directors, accounting counselor or Audit and Supervisory Board member; and\n\n \n\n \n(c)\n\na person who is not a spouse or relative within the second degree of kinship of any member of the Board of Directors, manager or other key employee of Toyota.\n\nSuch qualifications for an “outside” member of the Board of Directors are different from the director independence requirements under the NYSE Corporate Governance Rules.\n\nIn addition, pursuant to the regulations of the Japanese stock exchanges, Toyota is required to have one or more “independent director(s),” defined under the relevant regulations of the Japanese stock exchanges as “outside directors” (as defined under the Companies Act), who are unlikely to have any conflicts of interests with Toyota’s general shareholders. Each of the outside members of the Board of Directors of Toyota satisfies the “independent director” requirements under the regulations of the Japanese stock exchanges. The Japanese Corporate Governance Code provides that certain listed companies, including Toyota, should appoint at least one-third of their directors as “independent outside directors” as defined based on the criteria for assessing director independence established by Toyota in line with the independence standards of the Japanese stock exchanges. Each of the outside members of the Board of Directors of Toyota satisfies the “independent outside director” requirements under the independence standards of the Japanese stock 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, Toyota has clarified the unique roles of and expectations for Toyota’s outside members of the Board of Directors and revised the independence assessment criteria. The definition of “independent director” and “outside director” reflecting such criteria is different from that of the definition of independent director under the NYSE Corporate Governance Rules.\n\nThe roles of and expectations for outside members of the Board of Directors are as follows.\n\nTo 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\n\nTo 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\n\nTo 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\n\nTo provide advice and support on key issues and business strategies, etc., in addition to matters presented to the Board of Directors\n\n(For outside members of the Board of Directors who are Audit & Supervisory Committee members)\n\nIn addition to the above, to conduct audits from a fair and neutral standpoint, utilizing their abundant experience and advanced expertise\n\nThe independence assessment criteria of Toyota are as follows.\n\nOutside members of the Board of Directors who satisfy the requirements stipulated by the Companies Act and do not fall into any of the following categories are deemed to be independent.\n\n \n\n \n1.\n\nHistory of belonging to affiliated companies: Persons who are currently functioning as executive directors, members of the Audit & Supervisory Committee (excluding outside members of the Board of\n\n \n\n146\n\n##### Table of Contents\n\n \n\nDirectors) or Audit and Supervisory Board, operating officers, or employees of our company and its consolidated subsidiaries. Or those who functioned as executive directors, members of the Audit & Supervisory Committee (excluding outside members of the Board of Directors) or the Audit and Supervisory Board, operating officers, or employees at any time during the last ten years.\n\n \n\n \n2.\n\nMajor 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 fiscal years.\n\n \n\n \n3.\n\nMajor 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 fiscal years.\n\n \n\n \n4.\n\nHighly 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 executives) in any of the last three fiscal years.\n\n \n\n \n5.\n\nLarge 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 fiscal years.\n\n \n\n \n6.\n\nMajor shareholders: Persons who are executing business in companies, etc., that are ranked tenth or higher in terms of the ownership ratio of our company’s shares or for which our company is ranked tenth or higher in terms of the ownership ratio of their shares.\n\n \n\n \n7.\n\nAffiliated 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.\n\n \n\n \n8.\n\nClose relatives: Spouses, or relatives within the second degree of kinship, of members of the Board of Directors, the Audit & Supervisory Committee or Audit and Supervisory Board, operating officers, key employees of our company and its consolidated subsidiaries, or persons falling into the above 1 to 6 (excluding non-key persons).\n\n \n\n \n9.\n\nMutual 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.\n\n \n\n \n10.\n\nTerm of office: Persons whose term of office as an outside executive is longer than 12 years.\n\nPersons 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 executives stipulated in the Companies Act and are substantially independent, and thus, a conflict of interest against general shareholders is deemed not to emerge.\n\n2. Nominating / Corporate Governance and Compensation Committees. Under the Companies Act, Toyota has elected to structure its corporate governance system as a company with an audit & supervisory committee. Toyota, as a Japanese company with an audit & supervisory committee, is not required to have certain committees that are required of U.S. listed companies subject to the NYSE Corporate Governance Rules, including those that are responsible for director nomination, corporate governance and executive compensation. However, members of Toyota’s Executive Appointment Meeting, a majority of whom are outside directors, discuss recommendations to the Board of Directors concerning the appointment and dismissal of members of the Board of Directors. Members of the Executive Compensation Meeting, a majority of whom are outside directors, review the remuneration system for members of Board of Directors (excluding for Audit & Supervisory Committee members) and senior management as well as determine the amount of remuneration for each member\n\n \n\n147\n\n##### Table of Contents\n\nof the Board of Directors (excluding for Audit & Supervisory Committee members). The Japanese Corporate Governance Code provides that certain listed companies, including Toyota, generally should have the majority of the members of each of certain committees be independent directors, and those committees of Toyota satisfy that principle.\n\nPursuant to the Companies Act, Toyota’s Board of Directors nominates and submits a proposal for the appointment of members of the Board of Directors for shareholder approval. The shareholders vote on such nomination at the general shareholders’ meeting. The Companies Act requires that the limits or calculation formula of the remuneration, bonus and any other benefits in compensation for the execution of duties (“remuneration, etc.”) of directors, the kind of remuneration, etc. (in case that the remuneration, etc. are other than cash (excluding shares and stock acquisition rights)) to be received by directors, and the limits of remuneration, etc. that are shares and stock acquisition rights to be granted to directors must be determined by a resolution of the general shareholders’ meeting, unless their remuneration, etc. is provided for in the articles of incorporation. The distribution of remuneration, etc., among each member of the Board of Directors (excluding Audit & Supervisory Committee members) is broadly delegated to the Board of Directors and the distribution of remuneration among each Audit & Supervisory Committee member is determined by consultation among the Audit & Supervisory Committee members.\n\n3. Audit Committee. In addition to satisfying the requirements of Rule 10A-3 under the Exchange Act (including that each member meet the independence requirements of Rule 10A-3(b)(1) ), audit committees of companies listed on the NYSE generally are supposed to satisfy additional requirements, such as each member needing to be also an “independent director” as defined under the NYSE Corporate Governance Rules, and having specified purposes, duties and responsibilities. Toyota is not subject to the aforementioned additional requirements.\n\nPursuant to the requirements of the Companies Act, Toyota elects its Audit & Supervisory Committee members and the other members of the Board of Directors separately through a resolution adopted at a general shareholders’ meeting. The Companies Act of Japan stipulates that the Audit & Supervisory Committee must consist of at least three members of the Board of Directors. Toyota currently has four Audit & Supervisory Committee members.\n\nUnder the Companies Act, a majority of the Audit & Supervisory Committee members must be “outside” members of the Board of Directors. An “outside” member of the Board of Directors is any person who satisfies all of the requirements as described above in “1. Members of the Board of Directors.”:\n\nThree of the Audit & Supervisory Committee members of Toyota are “outside” members of the Board of Directors and satisfy the “independent director” requirements under the regulations of the Japanese stock exchanges, as described above in “1. Members of the Board of Directors.”\n\nUnlike the NYSE Corporate Governance Rules, the Companies Act, among other matters, does not require Audit & Supervisory Committee members to establish an “expertise in accounting or financial management” nor are they required to present other special knowledge and experience. Toyota’s Board of Directors has not determined that any of its Audit & Supervisory Committee members has “expertise in accounting or financial management,” as set forth in the NYSE Corporate Governance Rules. However, the Japanese Corporate Governance Code indicates that persons with appropriate experience and skills as well as necessary knowledge of finance, accounting, and laws should be appointed as Audit & Supervisory Committee members, and in particular, one or more Audit & Supervisory Committee members who have sufficient knowledge of finance and accounting matters should be appointed. Toyota has appointed persons who are able to provide opinions and advice regarding management based on their broader experience and discretion beyond finance and accounting. Under the Companies Act, the Audit & Supervisory Committee may determine the auditing policies and methods of investigating the conditions of Toyota’s business and assets and prepares auditors’ reports. Further, the Audit & Supervisory Committee makes decisions concerning proposals relating to the appointment and dismissal\n\n \n\n148\n\n##### Table of Contents\n\nof accounting auditors; it also has the authority to dismiss the accounting auditor when certain matters specified under the Companies Act occur.\n\nU.S. domestic issuers listed on NYSE are required to disclose the charter of their audit committees. Japanese law and the regulations of the Japanese stock exchanges do not require such disclosure, and accordingly, we do not disclose our Audit & Supervisory Committee charter.\n\n4. Corporate Governance Guidelines. Unlike the NYSE Corporate Governance Rules, Toyota is not required to comply with the Japanese Corporate Governance Code under Japanese laws and regulations, including the Companies Act, the Financial Instruments and Exchange Law of Japan and the regulations of the Japanese stock exchanges. However, if Toyota does not comply with the Japanese Corporate Governance Code, it is required to explain the reasons why it does not do so in accordance with the regulations of the Japanese stock exchanges. In addition, Toyota is required to resolve at the Board of Directors matters relating to a system, which is required under the ordinance of the Ministry of Justice (“internal control system” or “naibu-tosei”), to ensure the execution of duties of the members of the Board of Directors to comply with laws, regulations and articles of incorporation, and any other systems to ensure the adequacy of the business, and to disclose such matters resolved, policies and the present status of its corporate governance in its business reports, annual securities report and certain other disclosure documents in accordance with the regulations under the Financial Instruments and Exchange Law and the regulations of the Japanese stock exchanges in respect of timely disclosure.\n\n5. Code of Business Conduct and Ethics. Similar to the NYSE Corporate Governance Rules, under the Japanese Corporate Governance Code, Toyota is encouraged to adopt a code of conduct regarding ethical business activities for members of the Board of Directors, officers and employees. Toyota has resolved matters relating to maintenance of an “internal control system,” or “naibu-tosei,” in order to ensure its employees comply with laws, regulations and the articles of incorporation, etc., pursuant to the Companies Act, and Toyota maintains guidelines and internal regulations such as “Guiding Principles at Toyota,” “Toyota Code of Conduct” and a code of ethics pursuant to Section 406 of the Sarbanes-Oxley Act. Please see “Item 16B. Code of Ethics” for additional information."}