notice of the 47th ordinary general meeting of shareholders

1

Note: This English translation is for reference purposes only. In the event of any discrepancy between the Japanese original and this English translation, the Japanese original shall prevail. We assume no responsibility for this translation or for direct, indirect or any other forms of damage arising from the translation.

(Securities code: 7211)

June 9, 2016

To our shareholders

5-33-8, Shiba, Minato-ku, Tokyo

MITSUBISHI MOTORS CORPORATION

Chairman of the Board Osamu Masuko

NOTICE OF THE 47TH ORDINARY GENERAL MEETING OF SHAREHOLDERS

You are cordially invited to attend the 47th Ordinary General Meeting of Shareholders of Mitsubishi Motors Corporation (“MMC”) to be held as described as below.

If you are unable to attend, as described in the “Notice on Exercising Voting Rights” (P. 3 and P. 4), you may exercise your voting right(s) in writing or via the Internet. To do so, please review the “Reference Materials” for the Ordinary General Meeting of Shareholders contained in this notice, and exercise your voting right(s) either by posting your voting form so that it arrives before 5:45 p.m. on Thursday, June 23, 2016 or inputting your vote on the website for exercising voting right(s) before the aforementioned date and time.

1. Date and time Friday, June 24, 2016 at 10:00 a.m. (Japan time)

2. Place 2-1, Nakase, Mihama-ku, Chiba-shi, Chiba

Makuhari Event Hall, Makuhari Messe

(Please note that the place for this Ordinary General Meeting of Shareholders differs from the one for the previous meeting in consideration of a capacity.)

3. Purposes

Matters to report 1. Contents of Fiscal 2015 (from April 1, 2015 to March 31, 2016) Business Report, contents of Consolidated Financial Statements and Audit Reports of Accounting Auditors and Audit & Supervisory Board on the Consolidated Financial Statements

2. Report on the Fiscal 2015 (from April 1, 2015 to March 31, 2016) Financial Statements

Matters for resolution

Proposal No. 1 Appropriation of surplus

Proposal No. 2 Election of 10 Members of the Board

Proposal No. 3 Election of 1 Audit & Supervisory Board Member

4. Notice on Exercising Voting Rights

Please refer to the “Notice on Exercising Voting Rights” described on P. 3 and P. 4.

2

Requests

Starting this year, no souvenirs will be provided to shareholders attending the General Meeting of Shareholders, for which we would appreciate your understanding.

If you attend the meeting, please present the enclosed voting form to the reception desk.

If you exercise your voting rights by proxy, one other shareholder who possesses voting rights may attend the General Meeting of Shareholders as your proxy. Please note that the shareholder acting as your proxy must submit a document evidencing his or her right of representation.

Notes

If it becomes necessary to amend any items contained in the reference materials for the Ordinary General Meeting of Shareholders, the Business Report, the Consolidated Financial Statements or the Financial Statements, the amended material will be posted on MMC’s website at: (http://www.mitsubishi-motors.com/jp/investors/event/meeting.html)

The below-mentioned documents are not included in this Notice of Ordinary General Meeting of Shareholders, but are posted on MMC’s website pursuant to laws and regulations and Article 13 of MMC’s Articles of Incorporation. Consequently, the documents attached to this notice are part of the documents that were audited by the Audit & Supervisory Board Member and the Accounting Auditors in preparing the Audit Reports.

(a) “Accounting Auditors” and “System to ensure that the Members of the Board’s performance of their

duties complied with applicable laws and regulations and the Articles of Incorporation of MMC and other

systems to ensure appropriate business activities and the operating status of such systems” of Business Report

(b) Consolidated Statement of Changes in Net Assets and Notes to Consolidated Financial Statements

(c) Statement of Changes in Net Assets and Notes to Financial Statements

(http://www.mitsubishi-motors.com/jp/investors/event/meeting.html)

Internet Broadcast

MMC will broadcast the General Meeting of Shareholders live on the Internet. Please view the broadcast by accessing MMC’s website at the following link. (http://www.mitsubishi-motors.com/jp/)

Date and time of availability: Friday, June 24, 2016, from 10:00 a.m. (Japan time)

- The live broadcast will end just before the session of questions from shareholders and answers.

- You may not be able to view the broadcast depending on your equipment or network environment.

- The meeting will be filmed from the back of the meeting venue. As such, shareholders attending the meeting may unavoidably come into the picture at times. We ask for your kind understanding in this matter.

Viewing the Meeting After the Broadcast

The General Meeting of Shareholders will be available to view as a recorded video. Please view the video by accessing MMC’s website at the following link. (http://www.mitsubishi-motors.com/jp/)

Period of availability: Approximately one month starting on Friday, June 24, 2016

3

Notice on Exercising Voting Rights

The following three methods are available for exercising voting rights.

Shareholders Attending the General Meeting of Shareholders

Please present the enclosed voting form to the reception desk.

Date and time: Friday, June 24, 2016 at 10:00 a.m. (Japan time)

Place: 2-1, Nakase, Mihama-ku, Chiba-shi, Chiba

Makuhari Event Hall, Makuhari Messe

Exercising Voting Rights in Writing

Please indicate either “for” or “against” for each proposal using the enclosed voting form, and return it to MMC to

arrive by the voting deadline (no postage is necessary).

In case any voting forms indicating neither “for” or “against” for each proposal are submitted, MMC will treat

such voting forms as indicating “for.”

Voting deadline: To be received no later than 5:45 p.m. on Thursday, June 23, 2016 (Japan time)

Exercising Voting Rights via the Internet

Please access the website for exercising voting right(s) (http://www.evote.jp/) via PCs, smartphones, or cell

phones, enter “login ID” and “tentative password” stated on the enclosed voting form, and enter “for” or “against”

in accordance with the indication on the display.

Voting deadline: No later than 5:45 p.m. on Thursday, June 23, 2016 (Japan time)

4

Exercising Voting Rights via the Internet

If you exercise your voting right(s) via the Internet, you are kindly requested to ascertain the following items and exercise your voting right(s):

(1) Website for Exercising Voting Rights

(i) To exercise your voting right(s) via the Internet, you are kindly requested to visit the website for exercising voting right(s) (http://www.evote.jp/) via PCs, smartphones, or cell phones and use that site in accordance with indication on the display. (Please note, however, that the website will not be available from 2:00 a.m. to 5:00 a.m. on each day.)

(ii) The website for exercising voting right(s) may not be available depending on usage environment of the Internet, services to which you subscribe, or device model you use.

(iii) If you have any questions about the website for exercising voting right(s) (http://www.evote.jp/), please make inquiries to the helpdesk shown below.

(2) How to Exercise Voting Right(s) via the Internet

(i) On the website for exercising voting right(s) (http://www.evote.jp/), you are kindly requested to use “login ID” and “tentative password” stated on your voting form to enter “for” or “against” in accordance with the indication on the display.

(ii) To prevent unauthorized access or falsification of the content for exercising voting right(s) by a person other than a shareholder, shareholders who exercise voting rights via the Internet are kindly requested to change the “tentative password” on the website for exercising voting right(s).

(3) Expenses Incurred to Visit the Website for Exercising Voting Right(s)

Any Internet connection costs, communication charges, etc., incurred to access the website for exercising voting right(s) via PCs, smartphones or cell phones will be borne by shareholders.

Handling of Duplicate Exercising of Voting Rights in Writing and/or via the Internet

(1) In case a voting right is exercised in duplicate in writing and via the Internet, exercising of voting rights over the Internet shall be regarded as valid.

(2) Except in case (1) above, in case a voting right is exercised in duplicate, the last exercising of the voting right shall be regarded as valid.

<For institutional investors>

Institutional investors may use the “Electronic Proxy Voting Platform for Institutional Investors” managed by ICJ, Inc.

Inquiries about the system, etc.

Stock Transfer Agency Department of Mitsubishi UFJ Trust & Banking Corporation (Helpdesk)

Telephone: 0120-173-027 (toll free)

Operating hours: 9:00 – 21:00

5

NOTICE OF THE 47TH ORDINARY GENERAL MEETING OF SHAREHOLDERS

Reference Materials

Proposal No. 1 Appropriation of surplus

Mitsubishi Motors Corporation (“MMC”) considers returning profits to its shareholders one of the most important tasks of management. In the automobile industry, there is great demand for capital in order for companies to achieve sustainable growth, such as through further promotion of technological innovations and environmental efforts; therefore, it is our basic policy to maintain the stable distribution of profits to shareholders after comprehensively considering cash flows and business performance.

Having comprehensively considered the state of business performance for the full term and other such factors, MMC would like to set the end-of-term dividend at 8 yen per share, as stated in the most recent dividend forecast. Including the interim dividend of 8 yen, this will make the dividend for the term 16 yen per share.

(1) Type of dividend

Cash

(2) Dividend allocation to shareholders and total amount of dividends

8 yen per common stock of MMC

Total amount of dividends: 7,867,519,544 yen

(3) Effective date of dividend

June 27, 2016

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Proposal No. 2 Election of 10 Members of the Board

1. Reason, etc. for Proposal

The terms of office of 13 current Members of the Board will expire at the conclusion of this Ordinary General Meeting of Shareholders. MMC is currently working on the investigation of the improper conduct in fuel consumption testing on vehicles manufactured by MMC and establishment of measures to prevent its recurrence. In addition, after fulfilling certain terms and conditions, MMC plans the issuance of new shares to Nissan Motor Co., Ltd. (“Nissan”) through a third-party allotment. When the issuance of new shares is implemented, MMC plans to propose the corporate officer structure including the composition of Members of the Board in view of a capital and business alliance with Nissan, and seek the shareholders’ judgment as to the structure at the extraordinary general shareholders’ meeting to be held thereafter. Accordingly, at this Ordinary General Meeting of Shareholders, towards the response to the improper conduct and establishment of measures to prevent its recurrence as well as the establishment of the capital and business alliance relationship with Nissan, MMC hereby requests shareholder approval of the election of the following 10 candidates for Members of the Board, as proposed by the Company.

2. Term of Office

Given the reason, etc. for the proposal above, the terms of office of all Members of the Board to be elected shall expire at the conclusion of the first general meeting of shareholders to be held after the conclusion of this Ordinary General Meeting of Shareholders (including extraordinary general shareholders’ meetings).

No. Name

(Date of birth) History, position and responsibility in MMC

and important concurrent positions

Number of MMC shares

owned

1

Osamu Masuko (February 19, 1949)

April 1972 Joined Mitsubishi Corporation 15,783

April 2003 Senior Vice President, Division COO of Motor Vehicle Business Div., Mitsubishi Corporation

June 2004 Managing Director, in charge of Overseas Operations Group Headquarters, MMC

January 2005

President, Chief Business Ethics Officer, MMC

October 2007

President, MMC

June 2014 Chairman of the Board and CEO, MMC (to the present)

[Reasons for nomination] Having long been in charge of the management of the Company, Mr. Osamu Masuko has considerable insight and business experience concerning corporate management. As such, MMC continuously proposes him as a candidate for Member of the Board with the expectation that he will play an important role in the decisions in significant matters and business execution of the Company.

Reappointment

7

No. Name




owned

2

Mitsuhiko Yamashita (April 17, 1953)

April 1979 Joined Nissan Motor Co., Ltd. –

April 2004 Senior Vice President (Officer) in charge of Research and Development, Nissan Motor Co., Ltd.

April 2005 Executive Vice President (Officer) in charge of Research and Development, Nissan Motor Co., Ltd.

June 2005 Member of the Board of Directors and Executive Vice President (Officer), Nissan Motor Co., Ltd.

April 2014 Member of the Board of Directors, Nissan Motor Co., Ltd.

June 2015 Retired from Member of the Board of Directors, Nissan Motor Co., Ltd.

July 2015 Technical Advisor to Board, Nissan Motor Co., Ltd. (to the present)

[Reasons for nomination] Mr. Mitsuhiko Yamashita has considerable experience and achievements in the corporate management in the field of automobile development. As such, MMC proposes him as a new candidate for Member of the Board with the expectation that he will play an important role in the promotion of reform as well as management and supervision of the business execution in development division as the person in charge of the division.

3

Kozo Shiraji (April 22, 1954)

April 1977 Joined Mitsubishi Corporation –

April 2009 Senior Vice President, Division COO of Motor Vehicle Business Div., Mitsubishi Corporation

April 2013 Executive Vice President, Group CEO of Machinery Group, Mitsubishi Corporation

April 2016 Senior Executive Officer, Assistant to President, MMC (to the present)

[Reasons for nomination] Mr. Kozo Shiraji has considerable experience, achievements and insight on global business management nurtured through his long-standing career in the automotive business at a general trading company that operates worldwide. As such, MMC proposes him as a new candidate for Member of the Board with the expectation that these qualities may benefit the Company’s management.

New

New

8

No. Name




owned

4

Koji Ikeya (September 27, 1957)

April 1981 Joined The Mitsubishi Bank, Ltd. –

April 2008 Executive Officer and General Manager of Corporate Banking Credit Division, The Bank of Tokyo-Mitsubishi UFJ, Ltd.

May 2011 Managing Executive Officer and Group Head of Osaka Corporate Banking Group, The Bank of Tokyo-Mitsubishi UFJ, Ltd.

May 2012 Managing Executive Officer in charge of Corporate Banking Credit Division, Credit Division, Credit Supervision Division and CIB Credit Division, The Bank of Tokyo-Mitsubishi UFJ, Ltd.

May 2014 Managing Executive Officer and Group Head of Corporate Banking Group No. 1, The Bank of Tokyo-Mitsubishi UFJ, Ltd.

May 2015 Senior Managing Executive Officer and Group Head of Corporate Banking Group No. 1, The Bank of Tokyo-Mitsubishi UFJ, Ltd. (to the present)

<Important concurrent positions> Outside Audit & Supervisory Board Member, SPDC Ltd. Outside Director, Mitsubishi Aluminum Company, Ltd.

[Reasons for nomination] Having served in a number of senior positions at a financial institution, Mr. Koji Ikeya has considerable business experience and abundant insight on finance and accounting. As such, MMC proposes him as a new candidate for Member of the Board with the expectation that these qualities may benefit the Company’s management.

5

Toshihiko Hattori (March 23, 1952)

April 1974 Joined MMC 6,668

April 2008 Executive Officer, Corporate General Manager of Asia & ASEAN Office, MMC

November 2008

Executive Officer, Corporate General Manager of North Asia Office, MMC

June 2009 President, Kanto Mitsubishi Motor Sales Co., Ltd.

April 2011 Senior Executive Officer, Head Officer of the Headquarters, Global After Sales Group Headquarters, MMC

April 2013 Senior Executive Officer, Head Officer of the Headquarters, Domestic Sales Group Headquarters, MMC

June 2013 Member of the Board, Head Officer of the Headquarters, Domestic Sales Group Headquarters, MMC (to the present)

[Reasons for nomination] Mr. Toshihiko Hattori has served as a manager in a range of divisions, in addition to his business experience in domestic and overseas sales division and after sales division of the Company. As such, MMC continuously proposes him as a candidate for Member of the Board with the expectation that this abundant experience and insight may benefit the Company’s management.

New

Reappointment

9

No. Name




owned

6

Takeshi Ando (July 7, 1956)

April 1982 Joined MMC 4,768

May 2007 Executive Vice President, Mitsubishi Motors (Thailand) Co., Ltd.(“MMTh”)

April 2011 Executive Officer, MMC Executive Vice President, MMTh

April 2012 Senior Executive Officer, MMC Executive Vice President, MMTh

January 2013 Senior Executive Officer, MMC Executive Vice President and COO, MMTh

July 2013 Senior Executive Officer, Plant General Manager of Nagoya Plant, MMC

June 2014 Member of the Board, Head Officer of the Headquarters, Production Group Headquarters, MMC (to the present)

[Reasons for nomination] Mr. Takeshi Ando has contributed significantly to the management of the Company, especially in production divisions, and has insight based on his broad experience therein. As such, MMC continuously proposes him as a candidate for Member of the Board with the expectation that this achievement and insight may benefit the Company’s management.

Reappointment

10

No. Name




owned

7

Harumi Sakamoto (April 10, 1938)

April 1962 Joined Ministry of International Trade and Industry 3,074

July 1984 Head of Policy Planning Office of Minister’s Secretariat, Ministry of International Trade and Industry

June 1986 Chief of Sapporo Trade and Industry Bureau, Ministry of International Trade and Industry

August 1987 Advisor, The Dai-Ichi Kangyo Bank, Ltd.

May 1990 Managing Director, The Seiyu, Ltd.

May 1993 Senior Managing Director, The Seiyu, Ltd.

May 1997 Executive Vice President, The Seiyu, Ltd.

May 1997 Director, The Seibu Department Stores, Ltd.

September 1997

Executive Vice President, The Seibu Department Stores, Ltd.

October 2000

Secretary General, Japan Association for the 2005 World Exposition

October 2003

Vice Chairperson, Japan Association for the 2005 World Exposition

June 2006 President, The Distribution Systems Research Institute

June 2010 Chairman, Japan Facility Management Promotion Association

January 2012

Chairperson, Japan Facility Management Association

June 2013 Member of the Board, MMC (to the present)

<Important concurrent positions> Outside Director, The Bank of Yokohama, Ltd.

[Reasons for nomination] Ms. Harumi Sakamoto has considerable experience and insight as an administrative officer and a corporate manager. As such, MMC continuously proposes her as a candidate for Non-Executive Director so that her experience and insight may be reflected in the Company’s management.

Independent Director

Non-Executive Director

Reappointment

11

No. Name




owned

8

Shunichi Miyanaga (April 27, 1948)

April 1972 Joined Mitsubishi Heavy Industries, Ltd. 1,996

June 2008 Member of the Board, Executive Vice President, Mitsubishi Heavy Industries, Ltd.

April 2011 Member of the Board, Senior Executive Vice President, Mitsubishi Heavy Industries, Ltd.

April 2013 Member of the Board, President, Mitsubishi Heavy Industries, Ltd. (to the present)


<Important concurrent positions> Member of the Board, President, Mitsubishi Heavy Industries, Ltd.

[Reasons for nomination] Mr. Shunichi Miyanaga has considerable experience, achievements and insight nurtured through his long-standing career in corporate management at the manufacturing company that operates worldwide. As such, MMC continuously proposes him as a candidate for Non-Executive Director so that these qualities may be reflected in the Company’s management.

9

Takeshi Niinami (January 30, 1959)

April 1981 Joined Mitsubishi Corporation 1,996

April 2001 General Manager, LAWSON Project Management Unit and Food Service Business Unit, Consumer Business Div., Mitsubishi Corporation

May 2002 President and CEO, Representative Director, Lawson, Inc.

May 2013 Chief Executive Officer, Representative Director, Lawson, Inc.

May 2014 Chairman, Representative Director, Lawson, Inc.

May 2014 Chairman, Member of the Board, Lawson, Inc.


October 2014

President & Chief Executive Officer, Member of the Board, Representative Director, Suntory Holdings Limited (to the present)

<Important concurrent positions> President & Chief Executive Officer, Member of the Board, Representative Director, Suntory Holdings Limited Outside Director, ORIX Corporation

[Reasons for nomination] Mr. Takeshi Niinami has considerable experience, achievements and insight nurtured through his career as a corporate manager in a range of companies. As such, MMC continuously proposes him as a candidate for Non-Executive Director so that these qualities may be reflected in the Company’s management.

Independent Director


Reappointment


Reappointment

12

No. Name




owned

10

Ken Kobayashi (February 14, 1949)

July 1971 Joined Mitsubishi Corporation –

April 2003 Senior Vice President, General Manager of Singapore Branch, Mitsubishi Corporation

June 2004 Senior Vice President, Division COO of Plant Project Div., Mitsubishi Corporation

April 2006 Senior Vice President, Division COO of Ship, Aerospace & Transportation Systems Div., Mitsubishi Corporation

April 2007 Executive Vice President, Group CEO of Industrial Finance, Logistics & Development Group, Mitsubishi Corporation

June 2007 Member of the Board, Executive Vice President, Group CEO of Industrial Finance, Logistics & Development Group, Mitsubishi Corporation

June 2008 Executive Vice President, Group CEO of Industrial Finance, Logistics & Development Group, Mitsubishi Corporation

April 2010 Senior Executive Vice President, Executive Assistant to President, Mitsubishi Corporation

June 2010 Member of the Board, President & CEO, Mitsubishi Corporation

April 2016 Chairman of the Board, Mitsubishi Corporation (to the present)

<Important concurrent positions> Chairman of the Board, Mitsubishi Corporation Outside Director, NISSIN FOODS HOLDINGS CO., LTD. Outside Director (Member of the Board), Mitsubishi Heavy Industries, Ltd. (inauguration expected in June, 2016)

[Reasons for nomination] Mr. Ken Kobayashi has considerable experience, achievements and insight on global business management nurtured through his career as a corporate manager at a general trading company that operates worldwide. As such, MMC proposes him as a new candidate for Non-Executive Director so that these qualities may be reflected in the Company’s management.

(Notes) 1. Ms. Harumi Sakamoto, Mr. Shunichi Miyanaga, Mr. Takeshi Niinami and Mr. Ken Kobayashi are candidates for Non-Executive Directors.

2. Ms. Harumi Sakamoto’s term of office as Non-Executive Director will be three years as of the conclusion of this Ordinary General Meeting of Shareholders.

3. Mr. Shunichi Miyanaga’s term of office as Non-Executive Director will be two years as of the conclusion of this Ordinary General Meeting of Shareholders.

4. Mr. Takeshi Niinami’s term of office as Non-Executive Director will be two years as of the conclusion of this Ordinary General Meeting of Shareholders.

5. MMC has concluded agreements with Ms. Harumi Sakamoto, Mr. Shunichi Miyanaga and Mr. Takeshi Niinami limiting their liability for damages to the higher of 7 million yen or the minimum amount of liability stipulated in Article 425, Paragraph 1 of the Companies Act for the liability stipulated in Article 423, Paragraph 1 of the same Act. MMC intends to continue the above-mentioned limitation of liability agreements with the candidates if their reelections are approved.

6. MMC intends to conclude an agreement with Mr. Ken Kobayashi limiting his liability for damages


New

13

to the higher of 7 million yen or the minimum amount of liability stipulated in Article 425, Paragraph 1 of the Companies Act for the liability stipulated in Article 423, Paragraph 1 of the same Act.

7. MMC has provided notification of the status of Ms. Harumi Sakamoto and Mr. Takeshi Niinami as independent directors pursuant to the regulations of the Tokyo Stock Exchange.

8. As presented in “1. (4) Issues to be addressed,” during the terms of office of Ms. Harumi Sakamoto, Mr. Shunichi Miyanaga and Mr. Takeshi Niinami as Non-Executive Directors at MMC, the MMC Group has revealed improper conduct in fuel consumption testing on vehicles manufactured by MMC. They had not recognized this problem until it was revealed. However, they regularly made suggestions at meetings of the Board of Directors, etc. from the standpoint of legal compliance. Since the problem was revealed, they have fulfilled their responsibilities by giving directions regarding comprehensive investigations of the said conduct, recurrence prevention measures, etc.

9. Mr. Ken Kobayashi currently serves as a Director at Mitsubishi Corporation, a specified affiliated business operator (major trading partner) and has served as such in the past five years.

14

Proposal No. 3 Election of 1 Audit & Supervisory Board Member

As Audit & Supervisory Board Member Mr. Takitaro Fukuda will resign the post at the conclusion of this Ordinary General Meeting of Shareholders, MMC proposes the election of one Audit & Supervisory Board Member. The candidate for election is as follows.

The Audit & Supervisory Board has consented to this proposal.

Name (Date of birth)

History and important concurrent positions


owned

Yoshitsugu Oba (October 7, 1953)

November 1975

Joined Tohmatsu Awoki & Co. –

September 1982

Registered as certified public accountant

June 1990 Partner, Tohmatsu & Co.

October 2007 Functional Risk Leader-Audit, Deloitte Touche Tohmatsu

October 2010 National Professional Practice Director, Deloitte Touche Tohmatsu LLC

June 2016 Scheduled to retire from Deloitte Touche Tohmatsu LLC

[Reasons for nomination] Although Mr. Yoshitsugu Oba does not have experience of direct involvement in the management of a company, he has abundant specialist knowledge and deep insight on accounting and audit accumulated over many years as a certified public accountant. As such, MMC proposes him as Outside Audit & Supervisory Board Member so that he can provide appropriate recommendations from the viewpoint of adequacy and appropriateness with the Company.

(Notes) 1. Mr. Yoshitsugu Oba is a candidate for Outside Audit & Supervisory Board Member.

2. MMC intends to conclude an agreement with Mr. Yoshitsugu Oba limiting his liability for damages to the higher of 7 million yen or the minimum amount of liability stipulated in Article 425, Paragraph 1 of the Companies Act for the liability stipulated in Article 423, Paragraph 1 of the same Act.

3. MMC intends to provide notification of the status of Mr. Yoshitsugu Oba as an independent auditor pursuant to the regulations of the Tokyo Stock Exchange.

Independent Auditor

New

Outside Audit & Supervisory

Board Member

15

(Attached documents)

Business Report

(From April 1, 2015 to March 31, 2016)

1. Current status of the MMC Group

Regarding the recent report on improper conduct in fuel consumption testing of vehicles manufactured by MMC (MMC’s press release issued on April 20, 2016), MMC sincerely and deeply apologizes for causing huge embarrassment and concern to its shareholders, customers, and many other stakeholders.

MMC, which is committed to sincerely responding to users of the vehicle types in question and all other parties concerned, has set up a special investigation committee consisting of external experts, and is conducting comprehensive investigations into the causes. MMC has also resolved to handle this problem and take recurrence prevention measures so that it can regain people’s trust.

Meanwhile, as of May 12, 2016, MMC executed a basic agreement with Nissan Motor Co., Ltd. (“Nissan”) for proceeding with discussions and studies towards completing a capital and business alliance between MMC and Nissan. Going forward, the MMC Group will strive to restore its brand and credibility and to enhance its product viability, by seeking to build a solid alliance relationship with Nissan, including a capital tie up. MMC respectfully asks its shareholders for their understanding.

(1) Review and results of business activities

Consolidated results for the fiscal year under review are as follows:

Sales volume (retail) decreased 42,000 units, or 4%, from the previous fiscal year to 1,048,000 units. By region, sales volume in Japan fell 13,000 units, or 11%, compared to the previous fiscal year to 102,000 units, although number of registered vehicles increased but sales of minicars decreased. In North America, sales volume increased 18,000 units, or 16%, from the previous fiscal year to 135,000 units, due to increased sales of Outlander and Outlander Sport (RVR) models in particular. In Europe, total sales volume decreased 21,000 units, or 9%, from the previous fiscal year to 206,000 units, with sales in Western Europe (e.g. Germany and the UK in particular) increasing 19,000 units, or 11%, from the previous fiscal year to 173,000 units, while sales volume in Russia fell compared to the previous fiscal year as its economy fell into a slump and prices rose due to currency depreciation. In the Asian region, although sales in Thailand increased from the previous fiscal year due to strong sales of new Pajero Sport models launched in October, sales decreased in China and Indonesia, pushing down overall sales volume in Asia by 22,000 units, or 6%, from the previous fiscal year to 322,000 units. In other areas, sales volume decreased 4,000 units, or 1%, from the previous fiscal year to 283,000 units.

Consolidated net sales increased 87.1 billion yen, or 4%, from the previous fiscal year to 2,267.8 billion yen. Consolidated operating income grew 2.5 billion yen, or 2%, from the previous fiscal year, to 138.4 billion yen as a result of continuous improvements related to cost reduction, volume, and model mix, etc., despite unfavorable foreign exchange rates and increased costs of market-related measures. Consolidated ordinary income decreased 10.6 billion yen, or 7%, from the previous fiscal year to 141.0 billion yen. Consolidated profit (profit attributable to owners of parent) decreased 45.6 billion yen, or 39%, from the previous fiscal year to 72.6 billion yen, as a result of the recording of losses relating to fuel consumption testing of 19.1 billion yen, which is part of the estimable loss related to the improper conduct in fuel consumption testing on vehicles manufactured by MMC, as extraordinary losses.

16

Regarding the consolidated results of each business sector, net sales of the automobile business showed an increase of 94.4 billion yen, or 4% from the previous fiscal year to 2,260.6 billion yen. Net sales of the automobile financing business decreased 7.5 billion yen, or 51%, from the previous fiscal year to 7.1 billion yen.

Principal measures the MMC Group carried out during the fiscal year under review were as follows.

<Overview>

Significant achievements were made in optimizing its production system during the fiscal year under review.

On November 30, 2015, MMC ended vehicle production at its U.S. plant. Production at this plant started in 1988 and surpassed 222,000 units a year in 2000, but annual production dived to 19,000 units in 2009, mainly due to termination of the OEM agreement with Chrysler and the effects of the collapse of Lehman Brothers. Then, in 2012, production of Outlander Sport (RVR) models started, improving the operating ratio. However, MMC ended production at the plant and switched to Japan-based production (i.e. exports from Japan), because the plant was small for one producing finished vehicles, resulting in inefficient operation, and also because exports to Russia, which had occupied one-third of production volume, dropped sharply, causing a significant decline again in the number of vehicles produced.

On the other hand, MMC has strengthened its production capacity in ASEAN countries, which are expected to experience further strong growth. In the Philippines, MMC started production in January 2015 at a new plant and applied to participate in the “CARS Program,” an automotive industry development policy implemented by the Government of the Philippines. Preparation for local production is underway so that Mirage hatchback models and Mirage G4 sedan models can be released in early 2017. Production capacity at the plant is assumed to be 50,000 units a year. In Indonesia, construction of a new plant was started in April 2015 and preparations are currently underway for plant operation to start in April 2017. Construction work is progressing on schedule. After construction of the plant is completed, Pajero Sport mid-size SUVs, new mini-MPVs, and COLT L300 (light commercial vehicle) are scheduled to be produced sequentially. Production capacity there is assumed to be 160,000 units per year, and the sales system needed will be established. Some ASEAN countries are currently facing an economic slowdown, but this region represents a market with huge growth potential from medium- and long-term perspectives, so these new plants, as well as the plant in Thailand, will play important roles as MMC’s main production facilities.

In terms of products, MMC has strengthened its lineup of SUVs and electric vehicles, which is the core of its product strategies. First, new models of Outlander and Outlander PHEV were released in June 2015 in Japan by completely changing their front body designs and significantly improving the quality of power train components, bodies, chassis, etc. The new Outlander PHEV is one of MMC’s main types of vehicle installed with a Plug-in Hybrid EV system, enabling integrated control of driving battery and two motors, engine and four-wheel drive. Since the release of these models in Japan, they have been put on the market in other areas, including Europe, and gained popularity in all areas, achieving global sales of 42,000 units (an increase of 20% year-on-year) in FY2015. In Thailand, new Pajero Sport models were also released in October 2015. These models have been sold well because the products are highly rated as full-fledged SUVs with refined designs, drive superbly and have an amazing interior space, and also because MMC has received five times more orders for these models than forecasted during the reservation period from August to September of the same year. MMC will also release new Pajero Sport models gradually in countries other than Thailand and work to expand sales. The lineup of SUVs and electric vehicles will also be expanded continuously.

On January 1, 2016, MMC established a representative office in Silicon Valley, in the United States, home to a number of headquarters of global IT companies and research institutions. Thanks to the synergies between talents,

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advanced technologies, investments and business infrastructure from over the world, Silicon Valley continues to lead in business and serves as an environment that creates new services and products one after another. Establishing its base in this environment, MMC seeks to respond to new business opportunities in an agile manner, while precisely grasping the trends in society, evolution of technologies and customer’s needs.

MMC is also pursuing alliances with other automotive makers steadily. MMC signed an agreement with Fiat Group Automobiles in September 2015 concerning the supply of vehicles based on the Triton, a small pickup truck, and started supplying them in February 2016. The planned supply period is six years, and the accumulated number of units shipped is scheduled to be about 180,000. In November 2014, MMC started providing the compact sedan Attrage, a sedan version of Mirage, to Chrysler Mexico under an OEM supply agreement. Since then, shipments have been continuing steadily at a rate of about 20,000 units a year.

(2) Capital expenditures

Capital expenditures made by the MMC Group during the fiscal year under review amounted to 69.0 billion yen in total, as a result of investments in development and production facilities mainly related to new products and technologies.

(3) Financing conditions

Funds required for the automobile business during the fiscal year under review were financed chiefly by funds obtained from operating activities, and the outstanding balance of its borrowings stood at 27.1 billion yen as of March 31, 2016. The automobile sales financing business, which had been conducted by Mitsubishi Motors Credit of America, Inc. was terminated. As a result, the outstanding balance of borrowings, etc. related to the financial services business was zero as of March 31, 2016.

(4) Issues to be addressed

(a) Improper conduct in fuel consumption testing of vehicles manufactured by MMC

Regarding the recent report on improper conduct in fuel consumption testing of vehicles manufactured by MMC, MMC sincerely and deeply apologizes for causing huge embarrassment and concern to its shareholders, customers, and many other stakeholders.

In connection with the development of the following car models by Nissan and MMC, Nissan measured fuel consumption of minicars manufactured by MMC for reference, and discovered that its measurement results differed from MMC’s reported data. After conducting in-house investigations into this matter, MMC was able to identify improper conduct in the use of driving resistance data to show better fuel consumption than the actual results.

During its internal investigation, with respect to models for the Japanese domestic market, MMC have found that there were models to which different testing method from the one required by Japanese law has been applied, and that running resistance values for some models have been calculated on paper, among other facts.

Regarding this problem, MMC has set up a special investigation committee consisting of independent external experts to conduct objective and comprehensive investigations, and is conducting investigations to determine all the facts. Investigation results will be disclosed whenever they become available. MMC will treat this problem as a top-priority issue, investigate the causes as soon as possible, and take recurrence prevention measures. In addition, MMC is committed to responding sincerely to users of the vehicle types in question and all parties concerned in this matter.

(b) Management strategy

In the globalizing automobile industry, developed nations and regions are demanding both better fuel

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consumption and exhaust purification, increasingly sophisticated accident-prevention and safety technology requiring advanced IT technology, and improved and new value-added functions, such as those available in connected cars. In this environment, further advances, further intensification of competition, and further prolongation in research and development are expected in the near future. Specifically, environmental regulations in particular are planned to be more stringent both in developed and emerging markets. MMC is also expecting increased research and development costs and capital expenditures for research and development of internal combustion engines (ICE) to satisfy environmental regulations, and to bolster its electric vehicle and plug-in hybrid vehicle product line-up. In the advanced accident-prevention and safety technology and connected car space, longer development cycles and large-scale purchases will be necessary to purchase high valued-added parts from large automotive parts and electronics manufacturers.

As of May 12, 2016, MMC executed a basic agreement with Nissan for proceeding with discussions and studies towards completing a capital and business alliance between MMC and Nissan and decided on the issuance of new shares to Nissan through a third-party allotment. Through the third-party allotment, Nissan will acquire 34.0 % of the total number of issued common stock of MMC for 237 billion yen, as soon as certain terms and conditions are met.

The MMC Group will endeavor to restore its brand and credibility as a member of the Renault/Nissan alliance by way of building a solid collaborative relationship that includes a capital tie-up with Nissan. Furthermore, the MMC group believes it can effectively leverage development resources as part of the Renault/Nissan alliance through the integrated management of the product and technology development space, and improve its purchasing efficiency of parts centering on improved product viability and high value-added parts. Specifically, it seeks to promote a business alliance in such areas as management exchanges, cross sharing of engineering assets, continuous collaboration in developing minicars, collaboration in the ASEAN region, powertrain sharing in ICE and electric vehicle, production facility utilization, purchasing synergies, and financial services and after sales.

In response to the quality problems in 2000 and 2004, MMC has upheld policies of “Compliance first,” “Customer first,” “Safety first.” Upon the occurrence of the quality problem in 2002, MMC has established “Customer First Program (CFP),” while working on a range of reforms, including the formulation of internal rules and review of operation processes, in order to prevent recurrence of quality problems. However, as stated above, an improper conduct in fuel consumption testing on vehicles manufactured by MMC has been revealed recently. It is unfortunate, to say the least, that MMC was unable to fully comply with its corporate ethics even after its previous misconduct. In view of the fact that the scandals including the improper conduct in fuel consumption testing occurred mainly in the development division, MMC will implement internal reforms with utmost determination. In addition to reforming the development division through technological and human resource support from Nissan including placement of Nissan’s top personnel from its development division, MMC will overhaul its organizational structure and internal processes and enhance employee education.

As the MMC Group takes up the challenges outlined above, it will give first priority to compliance in its undertakings and continue to make constant efforts to restructure management systems so that it can regain the trust of customers and society-at-large as soon as possible. By conducting radical reforms of MMC’s internal control, governance and compliance systems, MMC will work to further strengthen corporate governance, as well as improve and enhance its regulatory compliance, and to ensure the appropriateness and efficiency with which it executes its business. MMC aims to achieve sustainable growth and increase corporate value through these initiatives and to return profits to shareholders in a consistent manner. MMC respectfully asks our shareholders for their continued and unwavering support and guidance.

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(5) Financial position and operating results

Fiscal 2012 Fiscal 2013 Fiscal 2014 Fiscal 2015

Net sales

(In millions of yen) 1,815,113 2,093,409 2,180,728 2,267,849

Automobiles 1,805,073 2,081,212 2,166,214 2,260,603

Financial services 10,059 12,157 14,640 7,117

Elimination or unallocated

(19) 38 (126) 129

Operating income

(In millions of yen) 67,382 123,434 135,913 138,377

Ordinary income


Profit attributable to owners of parent

(In millions of yen)

37,978 104,664 118,170 72,575

Earnings per share

(In yen) 6.61 156.60 120.16 73.80

Net assets


Stockholders’ equity per share

(In yen)

(9.21) 549.63 669.74 682.45

Total assets

(In millions of yen) 1,452,809 1,543,890 1,582,802 1,433,725

(Notes) 1. Earnings per share is calculated using the number of shares after deduction of the average number of treasury stock during each fiscal year from the average number of issued shares during each fiscal year.

2. Stockholders’ equity per share is calculated using the number of shares after deduction of the number of treasury stock at each fiscal year end from the total number of issued shares at each fiscal year end.

3. Ten shares of common stock were consolidated into one share on August 1, 2013, and calculated Earnings per share and stockholders’ equity per share on the assumption that the share consolidation was conducted at the beginning of the fiscal 2013.

4. Due to the adoption of “Accounting Standard for Business Combinations” (J Statement No. 21 issued on September 13, 2013), etc., “Profit attributable to owners of parent” is used instead of “Net income” from the fiscal year under review.

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(6) Major subsidiaries (As of March 31, 2016)

Company Name Location Capitalization(In millions)

Ownership

(%) Business Lines

Hokkaido Mitsubishi Motor Sales Co., Ltd.

Hokkaido JPY 100 100.00 Automobile sales

Higashi Nihon Mitsubishi Motor Sales Co., Ltd.

Fukushima JPY 100 100.00 Automobile sales

Kanto Mitsubishi Motor Sales Co., Ltd.

Tokyo JPY 100 100.00 Automobile sales

Chubu Mitsubishi Motor Sales Co., Ltd.

Aichi JPY 100 100.00 Automobile sales

Nishi Nihon Mitsubishi Motor Sales Co., Ltd.

Osaka JPY 100 100.00 Automobile sales

Mitsubishi Automotive Logistics Technology Co., Ltd.

Kanagawa JPY 436 83.24 Automobile transport, maintenance and sales of parts

Pajero Manufacturing Co., Ltd. Gifu JPY 610 100.00 Automobile manufacture

Suiryo Plastics Co., Ltd. Okayama JPY 100 100.00 Manufacture of automobile parts

Mitsubishi Automotive Engineering Co., Ltd.

Aichi JPY 350 100.00 Automobile engineering

Mitsubishi Motors North America, Inc.

U.S.A. USD 398 100.00 Automobile sales

Mitsubishi Motors Europe B.V. Netherlands EUR 107 100.00 Sales of parts

Mitsubishi Motors (Thailand) Co., Ltd.

Thailand THB 7,000 100.00 Automobile manufacturing, sales

Mitsubishi Motors Australia, Ltd. Australia AUD 1,789 100.00 Automobile sales

Mitsubishi Motors Philippines Corp.

Philippines PHP 1,640 51.00 Automobile manufacturing, sales

(Notes) 1. Mitsubishi Motors North America, Inc. terminated its automotive manufacturing business at the end of November 2015.

2. As presented in “1. (7) Major businesses (b) Financial services,” the business operation of Mitsubishi Motors Credit of America, Inc. has been terminated.

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(7) Major businesses (As of March 31, 2016)

The major businesses of the Mitsubishi Motors Corporation group (the “MMC group”) are as follows:

(a) Automobiles

MMC group’s major businesses are automobiles and parts for engineering, manufacturing and sales. MMC group’s major products are as follows:

(i) SUVs and pickup trucks

RVR/Outlander Sport/ASX, Outlander, Outlander PHEV, Triton/L200/L200 Sportero/Strada*, Pajero/Montero, Pajero Sport/Montero Sport*

(ii) Passenger cars, minivan

Attrage/Mirage G4*, Lancer*, Lancer Sportback*, Dignity, Delica D:2, Delica D:3, Delica D:5, Delica Van, Proudia, Mirage/Space Star, Lancer Cargo

(iii) Minicars

i-MiEV, eK Space, eK Wagon, Townbox, Minicab Truck, Minicab Van, MINICAB-MiEV, MINICAB-MiEV TRUCK

(Notes) 1. All multiple model names separated by a slash represent one single model. Underlined names are those used solely outside Japan.

2. Those marked with asterisks (*) are vehicle models that are exclusively available outside Japan.

3. Production and sales of eK Space and eK Wagon have been terminated as of April 20, 2016.

(b) Financial services

In North America, the MMC Group conducted its automobile sales financing business through Mitsubishi Motors Credit of America, Inc., a subsidiary of Mitsubishi Motors North America, Inc. (MMNA), but terminated this business in June 2015 by transferring major business operations to Ally Financial Inc., a major sales finance company in the United States, through strengthened alliance with this company.

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(8) Major offices, research & development centers and plants (As of March 31, 2016)

(a) MMC

Head Office Minato-ku, Tokyo

Research & Development Center Okazaki, Aichi

EV Research & Development Center Okazaki, Aichi

Kyoto Research & Development Center Kyoto, Kyoto

Tokachi Research & Development Center Kato-gun, Hokkaido

Nagoya Plant Okazaki, Aichi

Mizushima Plant Kurashiki, Okayama

Powertrain Plant

Powertrain Plant–Kyoto Kyoto, Kyoto

Powertrain Plant–Shiga Konan, Shiga

Powertrain Plant–Mizushima Kurashiki, Okayama

(Note) Due to a reorganization, Powertrain Plant-Mizushima has become part of the Mizushima Plant on April 1, 2016.

(b) Subsidiaries

Subsidiaries are as presented in “1. (6) Major Subsidiaries.”

(9) Employees (As of March 31, 2016)

Number of Employees: 29,555 persons

(Notes) 1. The number of employees is the number of employees currently on duty (excluding individuals seconded from MMC group to other companies and including individuals seconded to MMC group from other outside companies). Employees at unconsolidated subsidiaries are not included.

2. The number of employees does not include 4,515 temporary employees (temporary contract employees, part-time employees, fixed-term employees, dispatched employees, etc.).

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(10) Major lenders (As of March 31, 2016)

The presentation of individual major lenders’ names was omitted since MMC’s borrowings accounted for only a small proportion of its cash requirement as of March 31, 2016.

For the purpose of raising working capital in a steady and efficient manner, MMC entered into a commitment line agreement on a credit limit of 60,000 million yen with a syndicate of financial institutions lead-managed by The Bank of Tokyo-Mitsubishi UFJ, Ltd. Yet, as of March 31, 2016, there existed no outstanding balance of any loan under this agreement.

(Status of the commitment line agreement)

Bank Name Maximum Borrowing Limit

The Bank of Tokyo-Mitsubishi UFJ, Ltd. 20,000 million yen

Mitsubishi UFJ Trust and Banking Corporation 10,000

Development Bank of Japan Inc. 5,200

Mizuho Bank, Ltd. 5,000

Sumitomo Mitsui Banking Corporation 5,000

Others (15 banks) 14,800

Total 60,000

Moreover, MMC’s Thai production and marketing subsidiary Mitsubishi Motors (Thailand) Co., Ltd. entered into a commitment line agreement on a combined total credit limit of THB12,000 million with five local Thai banks. Yet, as of March 31, 2016, there existed no outstanding balance of any loan under this agreement.

(Status of the commitment line agreement)

Bank Name Maximum Borrowing Limit

Bangkok Bank Public Company Limited 3,600 million THB

Bank of Ayudhya Public Company Limited 3,600

Others (3 banks) 4,800

Total 12,000

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2. Stock of MMC (As of March 31, 2016)

(1) Total number of issuable shares

1,575,000,000 shares

(2) Total number of issued shares

983,661,919 shares (no change from the end of the previous fiscal year)

(3) Number of shareholders

297,132 persons (decreased by 35,944 persons from the end of the previous fiscal year)

(4) Major shareholders

Name of Shareholder Number of Shares Ratio of Shareholding

Mitsubishi Heavy Industries, Ltd. 124,293,855 shares 12.63%

Mitsubishi Corporation 99,044,251 10.07

MHI Automotive Capital, LLC 1 38,638,625 3.92

The Bank of Tokyo-Mitsubishi UFJ, Ltd. 38,517,159 3.91

MHI Automotive Capital, LLC 2 33,968,253 3.45

Japan Trustee Services Bank, Ltd. (Trust account) 27,602,000 2.80

The Master Trust Bank of Japan, Ltd. (Trust account) 20,763,700 2.11

JP MORGAN CHASE BANK 385632 17,793,824 1.80

THE BANK OF NEW YORK, TREATY JASDEC AC COUNT

12,644,487 1.28

Japan Trustee Services Bank, Ltd. (Trust account 9) 10,782,700 1.09

(Note) The above ratios of shareholding have been calculated excluding treasury stock (221,976 common stock).

3. Stock acquisition rights of MMC (As of March 31, 2016）

Not applicable.

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4. Members of the Board and Audit & Supervisory Board Members

(1) Members of the Board and Audit & Supervisory Board Members (As of March 31, 2016)

Position Name Responsibility and Important Concurrent Positions

*Chairman of the Board and CEO

Osamu Masuko

*President and COO Tetsuro Aikawa

*Executive Vice President (in charge of Overseas Operations)

Hiroshi Harunari In charge of Overseas Operations Group Headquarters A In charge of Overseas Operations Group Headquarters B In charge of Global After Sales Group Headquarters

*Executive Vice President

Ryugo Nakao In charge of Development Group Headquarters

Executive Vice President

Gayu Uesugi Chairman of the Board and CEO, Mitsubishi Motors North America, Inc.

Managing Director (in charge of Cost Innovation)

Shuichi Aoto Chief Business Ethics Officer Head Officer of the Headquarters, CSR, Corporate Affairs, Controlling & Accounting Group Headquarters In charge of Procurement

Managing Director Yutaka Tabata Head Officer of the Headquarters, Corporate Planning & Finance Group Headquarters

Member of the Board Toshihiko Hattori Head Officer of the Headquarters, Domestic Sales Group Headquarters

Member of the Board Seiji Izumisawa Head Officer of the Headquarters, Quality Affairs Group Headquarters

Member of the Board Takeshi Ando Head Officer of the Headquarters, Production Group Headquarters

Member of the Board (Non-Executive Director)

Mikio Sasaki Senior Advisor to the Board, Mitsubishi Corporation Outside Director, Mitsubishi Electric Corporation Outside Director, Tokio Marine Holdings, Inc. Outside Director, Mitsubishi Research Institute, Inc.


Harumi Sakamoto Outside Director, The Bank of Yokohama, Ltd.


Shunichi Miyanaga *Member of the Board, President, Mitsubishi Heavy Industries, Ltd.


Takeshi Niinami *President & Chief Executive Officer, Member of the Board, Representative Director, Suntory Holdings Limited Outside Director, ORIX Corporation Outside Director, ACCESS CO., LTD.

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Position Name Responsibility and Important Concurrent Positions

Audit & Supervisory Board Member (Full-Time)

Takitaro Fukuda

Audit & Supervisory Board Member (Full-Time)

Yoshikazu Nakamura

Audit & Supervisory Board Member (Outside Audit & Supervisory Board Member)

Katsunori Nagayasu *Chairman, The Bank of Tokyo-Mitsubishi UFJ, Ltd. Audit & Supervisory Board Member, NIPPON STEEL & SUMITOMO METAL CORPORATION Outside Director, Isetan Mitsukoshi Holdings Ltd. Outside Director, Kirin Holdings Company, Limited


Toshimitsu Iwanami Executive Advisor, NEC Corporation


Yaeko Takeoka Attorney at Law, Kohwa Sohgoh Law Offices

(Notes) 1. An asterisk (*) indicates a Representative Director.

2. Mr. Yoshikazu Nakamura and Ms. Yaeko Takeoka took the office of Audit & Supervisory Board Members on June 24, 2015 (on the date of the 46th Ordinary General Meeting of Shareholders).

3. Mr. Hideo Kimura, Audit & Supervisory Board Member retired from his position on June 24, 2015 (the date of the 46th Ordinary General Meeting of Shareholders).

4. Mr. Tatsuhiko Nojima, Audit & Supervisory Board Member resigned from his position on June 24, 2015 (the date of the 46th Ordinary General Meeting of Shareholders).

5. Mr. Katsunori Nagayasu, Audit & Supervisory Board Member assumed the office of Outside Director, Kirin Holdings Company, Limited on March 30, 2016.

6. Mr. Seiji Izumisawa, Member of the Board resigned from his position on March 31, 2016.

7. Mr. Katsunori Nagayasu, an Audit & Supervisory Board Member, has a wealth of experience accumulated over many years at financial institutions and extensive knowledge in finance and accounting.

8. MMC has submitted notifications, specifying Ms. Harumi Sakamoto and Mr. Takeshi Niinami, each a Member of the Board and Mr. Toshimitsu Iwanami and Ms. Yaeko Takeoka, each an Audit & Supervisory Board Member as an independent director or an independent auditor, to Tokyo Stock Exchange, Inc.

9. On April 1, 2016, the positions and responsibilities of some Members of the Board were changed as indicated below. (An asterisk (*) indicates a Representative Director.)

Name Change on April 1, 2016

Ryugo Nakao *Executive Vice President

Head Officer of the Headquarters, Quality Affairs Group Headquarters

In charge of Development Group Headquarters

Gayu Uesugi Executive Vice President

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(2) Amount of compensation of Members of the Board and Audit & Supervisory Board Members

Total amount of compensation for the fiscal year under review (A year from April 1, 2015 to March 31, 2016)

Classification Fixed Compensation

Number of Payees Amount of Compensation

Member of the Board 14 persons 470 million yen

(of which, Non-Executive Director) (4) (48)

Audit & Supervisory Board Member 7 90

(of which, Outside Audit & Supervisory Board Member)

(4) (36)

Total 21 560

(Notes) 1. The above number of payees includes an Audit & Supervisory Board Member who retired as of June 24, 2015 (on the date of the 46th Ordinary General Meeting of Shareholders), and also an Audit & Supervisory Board Member who resigned as of the same date.

2. The maximum amount of compensation for Members of the Board was set at 80 million yen per month. (Resolution at the 23rd Ordinary General Meeting of Shareholders held on June 26, 1992)

3. The maximum amount of compensation for Audit & Supervisory Board Members was set at 10 million yen per month. (Resolution at the 45th Ordinary General Meeting of Shareholders held on June 25, 2014)

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(3) Non-Executive Directors and Outside Audit & Supervisory Board Members

(a) Relationships between MMC and entities where Non-Executive Directors and Outside Audit & Supervisory Board Members hold important concurrent positions (As of March 31, 2016)

Classification Name Important Concurrent Positions Relations with MMC

Member of the Board

Mikio Sasaki

Senior Advisor to the Board, Mitsubishi Corporation

Sale of automobiles outside Japan, etc.

Outside Director, Mitsubishi Electric Corporation

Purchase of parts, etc.

Outside Director, Tokio Marine Holdings, Inc.

MMC has insurance transactions with this company’s subsidiary(ies).

Outside Director, Mitsubishi Research Institute, Inc.

MMC has consulting business entrustment transactions with this firm.

Harumi Sakamoto Outside Director, The Bank of Yokohama, Ltd.

Banking transactions

Shunichi Miyanaga Member of the Board, President, Mitsubishi Heavy Industries, Ltd.

Purchase of parts, etc.

Takeshi Niinami

President & Chief Executive Officer, Member of the Board, Representative Director, Suntory Holdings Limited

No notable relations

Outside Director, ORIX Corporation


Outside Director, ACCESS CO., LTD.


Audit & Supervisory

Board Member

Katsunori Nagayasu

Chairman, The Bank of Tokyo-Mitsubishi UFJ, Ltd.

Banking transactions

Audit & Supervisory Board Member, NIPPON STEEL & SUMITOMO METAL CORPORATION

Purchase of automobile steel- plate products, etc.

Outside Director, Isetan Mitsukoshi Holdings Ltd.


Outside Director, Kirin Holdings Company, Limited


Toshimitsu Iwanami Executive Advisor, NEC Corporation

MMC has IT system development entrustment transactions with this firm.

Yaeko Takeoka Attorney at Law, Kohwa Sohgoh Law Offices


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(b) Principal activities

Classification Name Principal Activities

Member of the Board

Mikio Sasaki He attended 12 out of 13 meetings of the Board of Directors held during the fiscal year under review, and expressed his opinions from his standpoint as an experienced corporate manager.

Harumi Sakamoto

She attended 12 out of 13 meetings of the Board of Directors held during the fiscal year under review, and expressed her opinions from her knowledge cultivated as an administrative officer and her standpoint as an experienced corporate manager.

Shunichi Miyanaga He attended 11 out of 13 meetings of the Board of Directors held during the fiscal year under review, and expressed his opinions from his standpoint as an experienced corporate manager.

Takeshi Niinami He attended 11 out of 13 meetings of the Board of Directors held during the fiscal year under review, and expressed his opinions from his standpoint as an experienced corporate manager.

Audit & Supervisory

Board Member

Katsunori Nagayasu

He attended 10 out of 13 meetings of the Board of Directors and 11 out of 13 meetings of the Audit & Supervisory Board held during the fiscal year under review, and expressed his opinions from his standpoint as an experienced corporate manager.

Toshimitsu Iwanami

He attended all 13 meetings of the Board of Directors and all 13 meetings of the Audit & Supervisory Board held during the fiscal year under review, and expressed his opinions from his standpoint as an experienced corporate manager.

Yaeko Takeoka

Since assuming the post in June 2015, she attended all 11 meetings of the Board of Directors and all 10 meetings of the Audit & Supervisory Board held during the fiscal year under review, and expressed her opinions from her professional standpoint as an attorney at law.

(Note) As presented in “1. (4) Issues to be addressed,” the MMC Group has revealed improper conduct in fuel consumption testing of vehicles manufactured by MMC. Non-Executive Directors and Outside Audit & Supervisory Board Members had not recognized this problem until it was revealed. However, they regularly made suggestions at meetings of the Board of Directors, etc. from the standpoint of legal compliance. Since the problem was revealed, they have fulfilled their responsibilities by giving directions regarding comprehensive investigations, recurrence prevention measures, etc.

(c) Outline of contracts for limitation of liability

MMC has concluded agreements with all Non-Executive Directors and all Outside Audit & Supervisory Board Members limiting their liability for damages to the higher of 7 million yen or the minimum amount of liability stipulated in Article 425, Paragraph 1 of the Companies Act for the damages stipulated in Article 423, Paragraph 1 of the same Act.

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Accounting Auditors

(1) Name of Accounting Auditors

Ernst & Young ShinNihon LLC

(2) Amount of compensation to Accounting Auditors for the fiscal year under review

Item Amount of

Compensation

Amount of compensation, etc. for the fiscal year under review 199 million yen

Sum of the amount of money and other material advantage to be paid by MMC and its subsidiaries to Accounting Auditors

346

(Notes) 1. Among MMC’s significant subsidiaries, Mitsubishi Motors North America, Inc. (U.S.), Mitsubishi Motors (Thailand) Co., Ltd. (Thailand) and three other companies are audited by Certified Public Accountants or audit corporations (including persons or entities with equivalent qualifications overseas) other than MMC’s Accounting Auditors.

2. The audit agreement between MMC and the Accounting Auditors does not clearly distinguish the amount of compensation for the audit under the Companies Act and that for the audit under the Financial Instruments and Exchange Act, and the two amounts cannot practically be distinguished from each other. Therefore, the amount of compensation indicated above for the fiscal year under review is the total of these two kinds of amounts.

(3) Reason why the Audit & Supervisory Board has agreed to the amount of compensation to Accounting Auditors

The Audit & Supervisory Board conducted necessary reviews of the appropriateness of Accounting Auditors’ audit plan, system, audit work, basis of calculating estimated compensation, etc., and judged that the compensation to MMC’s Accounting Auditors for FY2015 was reasonable.

(4) Details of non-audit work

MMC entrusted fact-verification duties concerning the Productivity Improvement Facility Investment Plan to the Accounting Auditors and paid consideration therefor.

(5) Policy on decision to dismiss or not reappoint Accounting Auditors

If it is deemed that any of the items prescribed in Article 340, Paragraph 1 of the Companies Act apply to the Accounting Auditors, the Audit & Supervisory Board shall dismiss the Accounting Auditors based on the agreement of all the Audit & Supervisory Board Members. If this occurs, an Audit & Supervisory Board Member selected by the Audit & Supervisory Board shall report the dismissal of the Accounting Auditors and the reasons for this dismissal to the first Ordinary General Meeting of Shareholders held after the dismissal.

If the Audit & Supervisory Board judges that it is necessary to dismiss or not reappoint the Accounting Auditors due to an impediment in the Accounting Auditors’ execution of their duties or other such reason, the Audit & Supervisory Board shall make a proposal on this dismissal or non-reappointment to the Ordinary General Meeting of Shareholders.

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(6) Business suspension order to which the Accounting Auditor was subject during past two years

(a) Subject of administrative order


(b) Content of administrative order

• Suspension from accepting new engagements for three months from January 1, 2016 to March 31, 2016

• Order for improvement of business operations (improvement of business management system)

(c) Reason for administrative order

(i) In regard to the audit of financial documents for TOSHIBA CORPORATION for the fiscal years ended March 31, 2010, 2012 and 2013, Ernst & Young ShinNihon LLC’s (the “Audit Corporation”) seven certified public accountants, in negligence of due care, attested that the financial statements contained no material misstatement, when in fact the statements contained material misstatement.

(ii) The Audit Corporation’s operation of services was found to be grossly inappropriate.

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System to ensure that the Members of the Board’s performance of their duties complied with applicable laws and regulations and the Articles of Incorporation of MMC and other systems to ensure appropriate business activities and the operating status of such systems

The MMC Group establishes and operates the internal control systems in accordance with the “Basic Policy on the Establishment of Internal Control Systems” resolved at the Board of Directors.

Since the establishment of the Business Ethics Committee as a Board of Directors advisory committee in June 29, 2004, the Committee has met on a monthly basis and provided instructions and advices related to the business ethics and corporate culture reform in the MMC Group. In addition, in the fiscal year under review, the Committee has implemented trainings by positions in accordance with the business ethic practice program, established by MMC. Similar trainings have been provided targeting employees in charge of compliance at domestic subsidiaries and independent sales companies.

In addition, with the aim of the securement of the independence in internal audit operation, expansion of scope of audit as a result of globalization, proactive involvement in significant management matters and further expedite audit, MMC has established Internal Audit Office as an organization directly reporting to the President in January 2016. Furthermore, in order to separate supervisory and business execution functions, to further strengthen the supervisory functions of its Board of Directors meeting, and to perform swift decision-making, MMC has decided to change its corporate structure to a Company with Supervisory Committee and dissolve the Business Ethics Committee composed of outside experts as of June 2016, and has made preparation thereof.

Under these circumstances, an “improper conduct in fuel consumption testing on vehicles manufactured by MMC” has been revealed as announced by MMC on April 20, 2016. In response to the finding of the problem, MMC has established a Special Investigation Committee consisting of external experts in order to investigate the facts surrounding this problem, analyze the cause of this problem, and make suggestions on measures to prevent its recurrence.

Meanwhile, as of May 12, 2016, MMC announced that it shall proceed with discussions and studies with Nissan towards completing a capital and business alliance between MMC and Nissan. To reform the MMC Group, MMC must reform its corporate culture and consciousness, focusing on the development division, and MMC believes that it will be possible to further this reform by obtaining personnel and technical support from Nissan through a capital and business alliance. To do so, upon consultations with Nissan, MMC came to the conclusion that it is necessary to decide on a new corporate governance structure of the MMC Group after a reevaluation, and MMC decided on the cancellation of change of corporate structure to a Company with Supervisory Committee. Going forward, the MMC Group will take the results of the investigation and measures to prevent recurrence of similar problems to be announced by the Special Investigation Committees seriously, and implement a radical reform of the internal control systems and the operation thereof, while making utmost efforts for its reconstruction and augmentation through the group.

The current outline of the “Basic Policy on the Establishment of Internal Control Systems” resolved at the Board of Directors is as follows.

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“Basic Policy on the Establishment of Internal Control Systems”

(1) System to ensure that the Members of the Board’s and employees’ performance of their duties complied with applicable laws and regulations and the Articles of Incorporation of MMC

(a) To comply with standards of business ethics, MMC shall establish a code of conduct, build an organizational structure, and carry out education and training. MMC shall also establish a contact point for reporting internal problems to gather up information concerning business ethics, and shall use the information gathered to prevent and rectify problems and stop them from occurring again.

(b) To monitor company management, MMC shall appoint Non-Executive Directors.

(c) The internal audit divisions shall conduct strict audits to check whether MMC’s business execution is in violation of laws and regulations, the Articles of Incorporation, internal regulations or others. If a problem is discovered, the internal audit divisions shall report them to the relevant Members of the Board or others, and periodically check the status of improvement measures following occurrence.

(d) MMC shall establish the Business Ethics Committee as a Board of Directors advisory committee composed of outside experts and strive to achieve further compliance with business ethics by obtaining direction and advice regarding MMC’s business activities from an external perspective.

(Note) As stated above, the Business Ethics Committee will be dissolved in June 2016.

(2) Regulations and other systems to manage risk of loss

(a) To manage business risk, MMC shall clearly prescribe respective standards for making proposals and reports to the Board of Directors and the Management Directors’ Meetings in each of the rules of the Board of Directors and rules of the Management Directors’ Meetings, and operate in accordance with these rules.

(b) MMC shall appoint an employee in charge of risk management at each organization (e.g. division), and shall make efforts to establish and strengthen the risk management structure with the said employee at the core of these efforts.

(c) MMC shall establish a body in charge of promoting risk management and work to develop and strengthen its overall risk management structure.

(d) To prepare for the occurrence of unforeseen circumstances, MMC shall develop a system to enable prompt reporting to MMC’s Members of the Board and others, and prompt, accurate responses.

(3) System to ensure that the Members of the Board’s performance of their duties is executed efficiently

(a) MMC shall prescribe a management plan throughout the company and clarify detailed business targets and methods of execution at each functional company body in order to achieve the plan. Members of the Board shall periodically receive reports on the plan’s implementation, and shall work to maintain and improve management efficiency.

(b) MMC shall clarify the roles and authorizations of Members of the Board, and the Board of Directors and the Management Directors’ Meetings shall execute business efficiently based on the rules of the Board of Directors and rules of the Management Directors’ Meetings.

(c) MMC shall unify the reporting lines in the organization, thus expediting decision making and improving internal communication. In addition, MMC shall develop a system for efficient organizational operation and business execution, thus securing efficient execution of duties by MMC’s Members of the Board.

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(4) System to store and manage information related to the Members of the Board’s performance of their duties

Based on internal rules, MMC shall prepare information pertaining to execution of duties by Members of the Board as physical documents or electronic data and appoint a person responsible for the management of this information. Preparation methods, retention methods, retention periods, duplication methods, disposal methods and other matters shall be determined in accordance with the relative importance of information, and the information shall be appropriately managed.

(5) System to ensure appropriate business activities of MMC group which comprises MMC, the parent company and the subsidiaries

(a) MMC shall determine the bodies with control over MMC’s subsidiaries, responsibilities and authorizations for the management of MMC’s subsidiaries, management methods and other matters in the internal rules, thus securing proper operation of duties across the business group.

(b) MMC shall supervise and manage its subsidiaries, aiming for appropriate business execution by their personnel in line with laws and regulations and the Articles of Incorporation, compliance with its code of conduct, and establishment and improvement of operational audit systems in a manner that is suitable for their sizes, business types, etc.

(c) MMC shall establish and strengthen its subsidiaries’ risk management systems, depending on their sizes, business types, etc., through giving directions regarding implementation of risk management.

(d) MMC shall strengthen, develop and streamline its subsidiaries’ business operations, depending on their sizes, business types, etc., through supervising and managing them in accordance with Rules for Management of Subsidiaries and Affiliates and other internal rules.

(e) MMC shall improve Rules for Management of Subsidiaries and Affiliates and other internal rules so that it can receive explanations and reports from its subsidiaries regarding important information (e.g. business operations, performance, and financial conditions) in advance or in an ex-post facto manner.

(f) MMC and its subsidiaries shall ensure the appropriateness of their respective financial information and develop the bodies and internal rules necessary for the preparation and disclosure of reliable financial reporting.

(6) Matters related to employees requested by Audit & Supervisory Board Members to support audit activities

A body to assist the Audit & Supervisory Board Members with their duties shall be established and dedicated staff shall be allocated to this body.

(7) Matters related to the independence of employees in (6) above from the Members of the Board and the ensuring the effectiveness of directions given to those employees

(a) The employee assigned to assist the Audit & Supervisory Board Members with their duties shall only carry out duties under the directions of those Audit & Supervisory Board Members without concurrently performing duties for other sections.

(b) When personnel changes are made to staff assigned to assist the Audit & Supervisory Board Members with their duties, opinions shall be sought from those Members in advance. In addition, evaluations of those dedicated staffs shall be carried out by the Audit & Supervisory Board Members.

(8) System to allow the Members of the Board and employees, and the Members of the Board, Audit & Supervisory Board Members and employees of MMC’s subsidiaries or persons received reports from them to report information to Audit & Supervisory Board Members, and other systems related to reporting to Audit & Supervisory Board Members

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(a) The Audit & Supervisory Board Members shall attend meetings of the Board of Directors and other important meetings of MMC.

(b) MMC shall develop a framework to steadily provide important internal information regarding management, compliance and other matters of MMC and its subsidiaries to the Audit & Supervisory Board Members and ensure that it is thoroughly operated.

(c) Personnel of MMC and its subsidiaries shall report matters regarding business execution promptly and appropriately when requested to do so by MMC’s Audit & Supervisory Board Members.

(9) System to ensure that those who report the matters described in (8) do not face unfavorable treatment on the grounds that such reports are made

It is prohibited to unfavorably treat personnel of MMC and its subsidiaries who report such matters directly or indirectly to the Audit & Supervisory Board Members on the grounds that such reports are made. This prohibition shall be notified to all personnel of MMC and its subsidiaries.

(10) Matters related to procedures for the prepayment or reimbursement of expenses incurred for Audit & Supervisory Board Members executing duties, and settlement policy for expenses or debt incurred for other related duties

In case the Audit & Supervisory Board Members make requests to MMC for the prepayment of job-related expenses, etc. in accordance with Article 388 of the Companies Act, these expenses or debts shall be paid promptly or settled after being examined by relevant sections unless it can be verified that these expenses or debts are not necessary for the Audit & Supervisory Board Members to execute their duties.

(11) Other systems to ensure that Audit & Supervisory Board Members’ activities are conducted effectively

The Audit & Supervisory Board Members shall periodically conduct exchanges of opinions with the President, and work in cooperation with the internal auditing division and the Accounting Auditors, thus facilitating proper communication and effective auditing operations.

(12) System toward elimination of criminal or unethical organizations

MMC and its subsidiaries shall, in a unified manner across all companies, respond to unreasonable demands from antisocial forces that pose a threat to the order and safety of society with a resolute stance, and shall ensure that they have absolutely no relations with antisocial forces.

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Consolidated Financial Statements

Consolidated Balance Sheet

(As of March 31, 2016)


Assets Liabilities and net assets

(Assets) 1,433,725 (Liabilities) 748,387

Current assets 914,183 Current liabilities 639,250

Cash and bank deposits

Notes and accounts receivable – trade

Merchandise and finished goods

Work in process

Raw materials and supplies

Short-term loans receivable

Deferred tax assets

Other

Allowance for doubtful accounts

Non-current assets

Property, plant and equipment, net

Buildings and structures

Machinery, equipment and vehicles

Tools, furniture and fixtures

Land

Construction in progress

Intangible assets

Intangible assets

Investments and other assets

Investment securities

Long-term loans receivable

Net defined benefit asset

Deferred tax assets

Other


453,371

172,119

141,260

19,601

28,467

3,031

14,883

82,864

(1,414)

519,541

341,124

80,205

123,157

32,230

91,752

13,778

16,519

16,519

161,897

83,075

7,185

3,408

9,378

64,825

(5,975)

Notes and accounts payable – trade 362,066

Electronically recorded obligations – operating

27,093

Short-term loans payable 12,379

Current portion of long-term debt 14,155

Lease obligations 1,820

Accounts payable – other and accrued expenses

113,177

Income taxes payable 6,609

Deferred tax liabilities 45

Allowance for product warranties 41,561

Provision for losses relating to fuel consumption testing

20,567

Other 39,774

Non-current liabilities 109,137

Long-term debt 540


Deferred tax liabilities 26,663

Net defined benefit liability 34,002

Other 46,614

(Net assets) 685,337

Shareholders’ equity 739,328

Common stock 165,701

Capital surplus 85,257

Retained earnings 488,590

Treasury stock (220)

Accumulated other comprehensive income

(68,181)

Valuation difference on available-for-sale securities

4,429

Deferred gains or losses on hedges 542

Foreign currency translation adjustment

(59,109)

Remeasurements of defined benefit plans (14,043)

Non-controlling interests 14,189

Total 1,433,725 Total 1,433,725

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Consolidated Statement of Income



Net sales 2,267,849

Cost of sales 1,797,659

Gross profit 470,190

Selling, general and administrative expenses 331,812

Operating income 138,377

Non-operating income 18,337

Interest and dividend income 6,523

Equity in earnings of affiliates 10,993

Other 820

Non-operating expenses 15,687

Interest expenses 1,587

Foreign exchange losses 11,302

Litigation expenses 967

Other 1,830

Ordinary income 141,027

Extraordinary income 12,419

Gain on sales of non-current assets 10,848

Other 1,570

Extraordinary losses 44,619

Loss on retirement of non-current assets 3,247

Impairment loss 2,188

Losses relating to fuel consumption testing 19,126

Loss on closing of plants 19,062

Other 995

Profit before income taxes 108,827

Income taxes – current 23,070

Income taxes – deferred 7,949

Profit 77,807

Profit attributable to non-controlling interests 5,232

Profit attributable to owners of parent 72,575

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Consolidated Statement of Changes in Net Assets


(In millions of yen) Shareholders’ equity

Common stock Capital surplus Retained earnings Treasury stock

Total shareholders’

equity

Balance at beginning of year 165,701 85,257 432,241 (220) 682,980

Changes of items during the period

Dividends of surplus (16,226) (16,226)

Profit attributable to owners of parent 72,575 72,575

Purchase of treasury stock (0) (0)

Net changes of items other than shareholders’ equity

Total changes of items during the period – – 56,348 (0) 56,348

Balance at end of year 165,701 85,257 488,590 (220) 739,328

Accumulated other comprehensive income

Non- controlling

interests

Total net assets

Valuation difference on available-for- sale securities

Deferred gains or losses on

hedges

Foreign currency

translation adjustment

Remeasure-ments of defined

benefit plans

Total accumulated

other comprehensive

income

Balance at beginning of year 7,844 286 (21,013) (11,445) (24,327) 12,113 670,766

Changes of items during the period

Dividends of surplus (16,226)

Profit attributable to owners of parent 72,575

Purchase of treasury stock (0)

Net changes of items other than shareholders’ equity (3,414) 255 (38,096) (2,598) (43,853) 2,075 (41,777)

Total changes of items during the period (3,414) 255 (38,096) (2,598) (43,853) 2,075 14,570

Balance at end of year 4,429 542 (59,109) (14,043) (68,181) 14,189 685,337

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Notes to Consolidated Financial Statements

1. Basis of consolidated financial statements

(1) Scope of consolidation

(a) Number of consolidated subsidiaries and names of major consolidated subsidiaries

Number of consolidated subsidiaries: 36

Names of major consolidated subsidiaries

Kanto Mitsubishi Motor Sales Co., Ltd., Pajero Manufacturing Co., Ltd., Mitsubishi Motors North America, Inc., Mitsubishi Motors Europe B.V., Mitsubishi Motors (Thailand) Co., Ltd., Mitsubishi Motors Australia, Ltd., etc.

Change in scope of consolidation

MMC has included MMCA Auto Owner Trust 2015-1 and two other companies in its consolidated subsidiaries from this fiscal year as they were newly established during the year.

In addition, MMC has excluded MMCA Auto Owner Trust 2011-A and eight others from its consolidated subsidiaries from this fiscal year due to their liquidation.

(b) Names of major unconsolidated subsidiaries, etc.

Names of major unconsolidated subsidiaries

Mitsubishi Motors Krama Yudha Indonesia Co., Ltd., etc.

Reason for exclusion from scope of consolidation

The amounts of total assets, net sales, net loss or profit, and retained earnings of unconsolidated subsidiaries, including the above, are all insignificant in size and do not have a significant impact on the consolidated financial statements in aggregate either, therefore such subsidiaries are excluded from the scope of consolidation.

(2) Application of the equity method

(a) Number of affiliates to which the equity method is applied and names of major companies, etc.

Number of affiliates to which the equity method is applied: 20

Names of major companies, etc.

MMC Diamond Finance Corp., JATCO Ltd., Vina Star Motors Corporation, GAC Mitsubishi Motors Co., Ltd., etc.

Change in scope of equity method

Mitsubishi Motor Sales (China) Co., Ltd. is excluded from the scope of MMC group’s equity-method affiliates this year due to the sale of the investment.

(b) Names of unconsolidated subsidiaries and affiliates to which the equity method is not applied

Names of major companies, etc.

(Unconsolidated subsidiaries)

Mitsubishi Motors Krama Yudha Indonesia Co., Ltd., etc.

(Affiliates)

Heian Manufacturing Co., Ltd., etc.

Reason for non-application of equity method

The amounts such as net loss or profit and retained earnings of unconsolidated subsidiaries and affiliates to which the equity method is not applied are all insignificant in size and do not have a significant impact on the consolidated financial statements in aggregate either, therefore such unconsolidated subsidiaries and affiliates are excluded from the scope of equity method.

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(3) Fiscal year end dates of consolidated subsidiaries

For those overseas consolidated subsidiaries, for which the fiscal year end date (December 31) is different from the consolidated fiscal year end date (March 31), additional financial statements are prepared as of March 31, for consolidation purposes.

(4) Accounting policies

(a) Valuation bases and methods of assets

(i) Securities

Held-to-maturity securities: Stated at amortized cost.

Other securities with a readily determinable market value:

Stated at fair value based on the market price on the consolidated balance sheet date and the cost of securities sold is computed based on the moving average method. The difference between the acquisition cost and the carrying value of other securities, including unrealized gains and losses, is recognized in valuation difference on available-for-sale securities in the accompanying consolidated balance sheet.

Other securities without a readily determinable market value:

Stated at cost determined by the moving average method.

(ii) Derivative financial instruments

Market price method (excluding interest rate swaps for which the special accounting provisions are applied)

(iii) Inventories

Inventories of MMC and its domestic consolidated subsidiaries are principally stated at cost determined by the first in first out method or specific identification method (under either method, the balance sheet carrying value is reduced to recognize any deterioration of recoverability). Inventories of the overseas consolidated subsidiaries are principally stated at the lower of cost or market value. Cost is determined by the specific identification method.

(b) Depreciation and amortization

(i) Property, plant and equipment (excluding leased assets)

Depreciation of property, plant and equipment (excluding leased assets) is principally calculated using the declining balance method or the straight line method over the estimated useful life of the respective assets for MMC and domestic consolidated subsidiaries. Depreciation is principally calculated using the straight line method for the overseas consolidated subsidiaries.

The useful lives of the assets are based on the estimated lives of assets for MMC and are consistent with the Corporation Tax Act for its domestic consolidated subsidiaries. The useful lives of the assets are determined based on the expected useful lives for the overseas consolidated subsidiaries.

(ii) Intangible assets (excluding leased assets)

Intangible assets (excluding leased assets) are amortized using the straight line method for MMC and its domestic consolidated subsidiaries and using the straight line method primarily over the period for which each asset is available for use for its overseas consolidated subsidiaries. Software intended for use by MMC and its domestic consolidated subsidiaries is amortized using the straight line method over the period for which each asset is available for use (5 years).

(iii) Leased assets

Assets recognized under finance leases that do not involve transfer of ownership to the lessee are depreciated using the straight line method based on the contract term of the lease agreement. If a guaranteed residual value is determined in the lease agreement, the said guaranteed residual value is deemed as the residual value of such leased assets. If the residual value is not determined, it is deemed to be zero.

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(c) Allowances and provisions

(i) Allowance for doubtful accounts

The allowance for doubtful accounts is provided based on MMC and its consolidated subsidiaries’ historical experience with respect to write-offs and an estimate of the amount of specific uncollectible accounts.

(ii) Allowance for product warranties

The allowance for product warranty claims is calculated based on MMC and its consolidated subsidiaries’ historical experience and estimations with respect to future costs relating to claims.

(iii) Provision for losses relating to fuel consumption testing

To provide for losses relating to fuel consumption testing, provision is calculated to the extent that can be reasonably projected and estimated at the end of the fiscal year.

(Additional information)

Regarding the acquisition of vehicle-type approvals from the Ministry of Land, Infrastructure, Transport and Tourism, MMC engaged in improper conduct related to the fuel consumption testing of vehicles it manufactured to indicate better fuel consumption. MMC reported this fact to the Ministry on April 20, 2016.

Among the losses relating to fuel consumption testing, an amount, which is calculated to the extent that can be reasonably projected and estimated at the end of the fiscal year, is provided as provision for losses relating to fuel consumption testing. However, as specific details of the compensation to be paid to stakeholders have not yet been determined, this amount may be subject to change in the following fiscal year and thereafter.

(d) Other significant matters forming the basis of preparing the consolidated financial statements

(i) Translation of foreign currency accounts

Receivables and payables denominated in foreign currencies are translated into yen at the rates of exchange in effect at the balance sheet date, and differences arising from the translation are included in the statements of income.

The accounts of the consolidated foreign subsidiaries are translated into yen as follows:

a. Asset and liability items are translated at the rate of exchange in effect on March 31;

b. Components of shareholders’ equity are translated at their historical rates at acquisition or upon occurrence; and

c. Revenues, expenses, and cash flow items are translated at the average rate for the financial period. Translation adjustments are included in “Net assets.”

(ii) Hedge accounting

Forward foreign exchange contracts: deferral hedge accounting (those with forecast transactions)

Interest rate swaps: deferral hedge accounting or special accounting provisions prescribed in Accounting Standards for Financial Instruments

(iii) Net defined benefit liability

Accrued retirement benefits for employees at the end of fiscal year are calculated based on the retirement benefits obligation and the fair value of the pension plan assets estimated at the end of the fiscal year.

Prior service cost is amortized using the straight line method over periods within the estimated average remaining service years of the employees.

Actuarial gains and losses are being amortized using the straight line method over the periods within the estimated average remaining service years of the employees.

Unrecognized actuarial gains and losses and unrecognized prior service costs are recognized in remeasurements of defined benefit plans in accumulated other comprehensive income in net assets after adjusting for tax effects.

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When calculating retirement benefits obligation, the benefit calculation formula standard was used for attributing the expected defined net benefits to the period until this fiscal year.


MMC contributed 79,200 million yen in cash to the retirement benefit trust during the fiscal year, aiming to improve the financial status of its retirement benefit plan. As a result, the balance of net defined benefit liability decreased by the same amount.

(iv) Transactions subject to consumption taxes

Consumption tax is excluded from the transaction amount in the Statement of Income and is included in the Balance Sheet amount.

(v) Application of consolidated taxation system

The consolidated taxation system is applied.

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2. Change in accounting policy

(Application of Accounting Standard for Business Combinations)

Effective from this fiscal year, MMC applied the “Accounting Standard for Business Combinations” (ASBJ Statement No. 21, September 13, 2013), “Accounting Standard for Consolidated Financial Statements” (ASBJ Statement No. 22, September 13, 2013), “Accounting Standard for Business Divestitures” (ASBJ Statement No. 7, September 13, 2013), etc. Under the new standards, any difference arising on changes in MMC’s ownership interests in subsidiaries, which continue to be controlled by MMC, are recorded as capital surplus, and acquisition-related costs are recognized as expenses in the fiscal year in which they are incurred. Furthermore, for business combinations carried out on or after April 1, 2015, any adjustments arising on the finalization of the tentative acquisition cost allocation are reflected in the consolidated financial statements in the fiscal year in which the business combination occurs. In addition, minority interests have been represented as non-controlling interests, and the presentation thereof in the Consolidated Statement of Income has been changed.

Application of the Accounting Standard for Business Combinations, etc. is in line with the transitional measures provided in Paragraph 58-2 (4) of the Accounting Standard for Business Combinations, Paragraph 44-5 (4) of the Accounting Standard for Consolidated Financial Statements and Paragraph 57-4 (4) of the Accounting Standard for Business Divestitures. MMC adopted the Standards on April 1, 2015.

These changes have no impact on the consolidated financial statements.

3. Change in accounting method

(Change in the method of estimating the allowance for product warranties)

This year MMC changed its method for estimating the allowance for product warranties to one in which future payments are estimated based on the ratio of after-sales service costs to past sales and on analysis of past after-sales service costs for each product, model year, and region.

The method has been changed because, since April 2013, MMC promoted a customer-oriented program called the “Customer First Program (CFP),” which includes product-quality activities to achieve “quality targets” (i.e. quality goals), and has also gathered and analyzed market quality information during this process. At the end of this fiscal year, three years have passed since this program started and this is the same period required for the initial vehicle inspection after the date of purchase. As a result, MMC is able to estimate future after-sales service costs more precisely.

As a result of this change, operating income, ordinary income, and profit before income taxes for the fiscal year decreased by 6,955 million yen respectively.

4. Notes to Consolidated Balance Sheet

(1) Assets pledged as collateral and liabilities secured

(a) Assets pledged as collateral

(b) Liabilities secured

Short-term loans payable and long-term debt (including current portion) 18,653 million yen

(2) Accumulated depreciation of property, plant and equipment 865,429 million yen

Property, plant and equipment, net 39,823 million yen

Other 2,471 million yen

Total 42,294 million yen

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(3) Guarantee liabilities

Guarantee recipient

PCMA Rus, LLC 5,529 million yen

Employees 628 million yen

Other 66 million yen


5. Notes to Consolidated Statement of Changes in Net Assets

(1) Class and total number of issued shares at end of this fiscal year

Common stock: 983,661,919 shares

(2) Dividends of surplus

(a) Dividend payment

Resolution Types of shares

Total dividends


Dividend per share

(In yen)

Cut off date Effective date

Ordinary General Meeting of Shareholders

held on June 24, 2015

Common stocks

8,359 8.5March 31,

2015 June 25, 2015

Board of Directors Meeting held on October

27, 2015

Common stocks

7,867 8.0September 30, 2015

December 2, 2015

(b) Dividends with the cut-off date in the year ended March 31, 2016 and the effective date in the year ended March 31, 2017

Expected resolution Types of shares

Source of dividends

Total dividends

(In millions of

yen)

Dividend per share (In yen)

Cut off date

Effective date

The Ordinary General Meeting of Shareholders

to be held on June 24, 2016

Common stocks

Retained earnings

7,867 8.0March 31,

2016 June 27,

2016

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6. Financial instruments

(1) Overview of financial instruments

(a) Our policy to manage financial instruments

MMC group’s capital management policy is to limit its investments to low-risk financial products and to obtain required funds mainly through bank borrowings. We use derivative instruments to hedge interest rate, foreign currency and similar risks, and we do not enter into any speculative transactions.

(b) Nature and risks of financial instruments and our risk management structure

Trade receivables, which includes notes and accounts receivable – trade, are exposed to the credit risk of our customers. To manage this risk, in accordance with MMC group’s credit control rules, each group company monitors the financial condition of its major customers, as well as managing the maturity profiles and outstanding balances of the receivables by customer.

Trade receivables denominated in foreign currency are exposed to foreign currency risk. In principle, forward foreign exchange contracts are used to hedge the net position after offsetting foreign currency denominated payables.

Some investment securities are exposed to the risk of market price fluctuation. However, such securities are composed of mainly the stocks of companies with which MMC group has business relationships.

Trade payables, which include notes and accounts payable – trade, and electronically recorded obligations-operating, are mostly expected to be settled within one year. While trade payables include certain payables denominated in foreign currencies, in principle these are managed by netting against foreign currency denominated receivables.

Floating rate bank borrowings are exposed to interest rate risk. For some of the borrowings, derivative transactions (interest rate swaps) may be used as hedging instruments on an individual loan contract basis to hedge the interest payable fluctuation risk. Such transactions meet the criteria of special accounting provisions for interest rate swaps, and therefore hedge effectiveness assessment is not required.

Certain intercompany loans are exposed to foreign currency risk, however derivative transactions may be used as hedging instruments for some of these loans.

In order to mitigate counterparty risks, MMC group enters into derivative transactions only with highly rated financial institutions.

Trade payables and bank borrowings are exposed to liquidity risk. Each group company manages these risks, by preparing cash flow projections and other similar tools.

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(2) Fair value of financial instruments

The carrying amount, fair value, and the difference between the carrying amount and the fair value of the financial instruments at March 31, 2016 are as follows.

Carrying amount Fair value Difference

(In millions of yen) (In millions of yen) (In millions of yen)

(a) Cash and bank deposits 453,371 453,371 –

(b) Notes and accounts receivable – trade

172,119 172,119 –

(c) Investment securities 16,342 16,342 –

Total assets 641,834 641,834 –

(a) Notes and accounts payable – trade

362,066 362,066 –

(b) Electronically recorded obligations-operating

27,093 27,093 –

(c) Short-term loans payable 12,379 12,379 –

(d) Long-term debt 14,695 14,727 31

(e) Accounts payable – other and accrued expenses

113,177 113,177 –

Total liabilities 529,411 529,443 31

Derivative transactions (*) (144) (144) –

(*) The amount of the receivable/payable derived from derivative transactions is presented on a net basis. Items that are net liabilities in total are shown in parentheses ( ).

(Note)1 Method for measuring the fair value of financial instruments, other securities and derivative transactions

Assets

(a) Cash and bank deposits

The carrying amounts are used as fair values as these items are settled within a short period of time and the fair values are approximately equal to the carrying amounts.

(b) Notes and accounts receivable – trade

The carrying amounts are used as fair values as these items are generated in the normal course of business operations and principally settled within a short period of time and the fair values are nearly equal to the carrying amounts.

(c) Investment securities

The fair values of investment securities are based on their respective market values.

Liabilities

(a) Notes and accounts payable – trade, (b) Electronically recorded obligations-operating, (c) Short-term loans payable and (e) Accounts payable – other and accrued expenses

The carrying amounts are used as fair values of these items as these items are settled within a short period of time and the fair values are nearly equal to such carrying amounts.

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(d) Long-term debt

Long-term debt is classified by certain terms to maturity, and their fair values are determined based on the respective present values of the total amount of principal and interest discounted using the prevailing interest rates that would be applied if similar loans were made at the valuation date.

Derivative transactions

The determination of fair values is based on quotations obtained from counterparty financial institutions.

As interest rate swaps under the special hedge provisions are accounted together with the corresponding hedged item (long-term debt), their fair values are reflected in the fair value of long-term debt.

(Note)2 Non-listed stocks and stocks of subsidiaries and affiliates (consolidated balance sheet amount: 66,732 million yen) do not have any quoted market price, and their future cash flows cannot be estimated and consequently, it is difficult to reasonably measure fair value. Accordingly, such financial instruments are not included in “(c) Investment securities.”

7. Earnings and equity per share

Stockholders’ equity per share of common stock 682.45 yen

Earnings per share of common stock 73.80 yen

8. Subsequent events

(1) Improper conduct in fuel consumption testing on vehicles manufactured by MMC


The four applicable vehicle types are eK Wagon and eK Space manufactured by MMC since June 2013 and Dayz and Dayz Roox, which were supplied to Nissan Motor Co., Ltd. (“Nissan”). The total number of these vehicles sold by MMC until the end of March 2016 was 157,000, while the total number of these vehicles produced by MMC for Nissan over the same period was 468,000.

Fuel consumption testing for all of these vehicle types was conducted by MMC; however, in connection with the development of subsequent car models, Nissan also measured fuel consumption, and discovered that its measurement results differed from MMC’s reported data. Subsequently, Nissan requested that MMC confirm this difference. After conducting in-house investigations into this matter, MMC was able to identify improper conduct in the use of driving resistance data to show better fuel consumption than the actual results for the above-mentioned vehicles.

With respect to losses relating to this fuel consumption testing (excluding losses included as provisions this fiscal year), the possible impact on MMC Group’s financial position or results of operations for the following year and thereafter cannot be reasonably estimated currently.

(2) Capital and business alliance and issuance of new shares through third-party allotment

MMC passed resolutions at the board of directors meeting held on May 12, 2016 concerning the execution of a Basic Agreement with Nissan for proceeding with discussions and studies towards completing an Alliance between MMC and Nissan and the issuance of new shares to Nissan through a Third-Party Allotment.

(a) Purpose and reasons for the Alliance

In the globalizing automobile industry, developed nations and regions are demanding both better fuel consumption and exhaust purification, increasingly sophisticated accident-prevention and safety technology requiring advanced IT technology, and improved value-added functions, such as those available in connected cars. In this environment, further advances, further intensification of competition, and further

48

prolongation in research and development are expected in the near future. Specifically, environmental regulations in particular are planned to be more stringent both in developed and emerging markets. MMC is also expecting increased research and development costs and capital expenditures for research and development of internal combustion engines (ICE) to satisfy environmental regulations, and to bolster its electric vehicle and plug-in hybrid vehicle product line-up. In the advanced accident-prevention and safety technology and connected car space, longer development cycles and large-scale purchases will be necessary to purchase high valued-added parts from large automotive parts and electronics manufacturers.

MMC therefore seeks to build a constructive alliance relationship over the medium to long term with Nissan and to become a member of the Renault/Nissan group through the Alliance. In doing so, MMC believes that it can greatly restore MMC’s credibility in regard to maintenance of profit-generating opportunities and future competitiveness with this medium- to long-term strategy.

MMC will raise capital from Nissan through the Alliance by executing the Third-Party Allotment. It will also endeavor to restore its brand and credibility as a member of the Renault/Nissan alliance by way of building a solid collaborative relationship that includes a capital tie-up. Furthermore, MMC believes it can effectively leverage development resources as part of the Renault/Nissan alliance through the integrated management of the product and technology development space, and improve its purchasing efficiency of parts centering on improved product viability and high value-added parts.

With that, MMC passed the resolutions at the board of directors meeting held on May 12, 2016 concerning execution of the Basic Agreement with Nissan and issuance of new shares to Nissan through the Third-Party Allotment.

Furthermore, when MMC carried out the public offering in 2014, Mitsubishi Heavy Industries, Ltd. (“MHI”), Mitsubishi Corporation, and The Bank of Tokyo-Mitsubishi UFJ, Ltd. have confirmed together with MMC that they will not assign or otherwise dispose of the MMC common stock that they have come to directly or indirectly hold through the public offering until the end of June 2017, and that this arrangement will not change after the Alliance is formed. However, MMC will no longer be an equity-method company of MHI as a result of the dilution that will occur upon the execution of the Third-Party Allotment.

(b) Details of the Alliance

Details of the Capital Alliance

MMC will issue 506,620,577 shares of common stock through the Third-Party Allotment to Nissan, and Nissan will subscribe to all the new shares that are issued by MMC. After the Third-Party Allotment, Nissan’s proportion of the total voting rights and Nissan’s proportion of the total number of issued common stock will each be 34.0%. Nissan will also become a major shareholder, the largest shareholder that is also a major shareholder, and an affiliate of MMC through the Third-Party Allotment.

Details of the Business Alliance

MMC and Nissan have agreed to move forward with a business alliance with respect to the following matters. MMC and Nissan will discuss the specific policies and terms, etc. of the business alliance.

• Management exchanges;

• Cross sharing of engineering assets;

• Continue collaboration in developing minicars;

• Collaboration in the ASEAN region;

• Powertrain sharing in ICE and electric vehicle;

• Production facility utilization;

• Purchasing synergies; and

• Financial services and after sales.

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(c) Alliance Schedule

• The resolution date of the Board of Directors meeting of MMC and Nissan: May 12, 2016

• Execution of the Basic Agreement: May 12, 2016

• Execution of the Alliance Agreement: By May 25, 2016 (planned)

• Due diligence performed by Nissan: By August 2016 (planned)

• Payment for the Third-Party Allotment: Around October 2016 (planned) (Note)

(Note) Nissan will make the payment within 10 business days of the satisfaction of all terms and conditions.

(d) Outline of Issuance Registration

• Type of offered securities: MMC’s common stock

• Planned issuance period: Until the day on which two years elapse from the planned effective date of the Issuance Registration (May 20, 2016 – May 19, 2018)

• Planned issuance amount: Up to 237,361,872,737 yen

• Offering method: Third-Party Allotment (planned)

• Purpose of raising funds

The funds will be allocated to strengthening strategic product research and development, upgrading research and development equipment, and reforming IT systems

• Issuance conditions

Type and number of offered shares: 506,620,577 shares of MMC common stock

• Amount to be paid for the offered shares: 468.52 yen per share

• Total amount to be paid: 237,361,872,737 yen

• Amount of capital and capital reserve to be increased

Amount of capital to be increased: 118,680,936,369 yen

Amount of capital reserve to be increased: 118,680,936,368 yen

• Payment period: September 1, 2016 – December 31, 2017

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Financial Statements

Balance Sheet

(As of March 31, 2016)

(In millions of yen) Assets Liabilities and net assets

(Assets) 938,787 (Liabilities) 468,602

Current assets 515,386 Current liabilities 443,088

Cash and bank deposits

Notes receivable – trade

Accounts receivable – trade

Finished goods

Work in process


Prepaid expenses

Short-term loans receivable

Deferred tax assets

Accounts receivable – other

Other


Non-current assets

Property, plant and equipment, net

Buildings

Structures

Machinery and equipment

Vehicles


Land

Construction in progress

Intangible assets

Intangible assets

Investments and other assets

Investment securities

Subsidiaries and affiliates’ stocks

Long-term loans receivable

Investments in capital of subsidiaries and affiliates

Guarantee deposits

Long-term prepaid expenses

Other


164,893

1

198,696

29,156

15,476

14,036

789

5,619

10,497

55,374

21,766

(923)

423,400

181,425

37,350

7,173

48,381

1,466

28,218

48,799

10,035

13,322

13,322

228,652

21,128

167,805

3,136

20,795

5,913

6,054

5,132

(1,314)

Notes payable – trade 2,200

Electronically recorded obligations – operating

27,838

Accounts payable – trade 272,069

Short-term loans payable 10,000


Accounts payable – other 45,779

Income taxes payable 20

Accrued expenses 3,762

Deposits received 11,580

Allowance for product warranties 17,792

Provision for losses relating to fuel consumption testing

20,567

Other 29,858

Non-current liabilities 25,513

Lease obligations 793

Guarantee deposits received 3,728

Provision for retirement benefits 529

Long-term accounts payable – other 3,740

Deferred tax liabilities 5,875

Asset retirement obligations 3,601

Other 7,244

(Net assets) 470,184

Shareholders’ equity 465,796

Common stock 165,701

Capital surplus 85,257

Other capital surplus 85,257

Retained earnings 215,057

Legal reserve 4,818

Other retained earnings 210,238

Retained earnings brought forward 210,238

Treasury stock (220)

Valuation and translation adjustments

4,387

Valuation difference on available-for-sale securities

4,387

Total 938,787 Total 938,787

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Statement of Income



Net sales 1,806,047

Cost of sales 1,563,340

Gross profit 242,706

Selling, general and administrative expenses 181,245

Operating income 61,461

Non-operating income 58,797

Interest and dividend income 58,184

Other 612

Non-operating expenses 17,573

Interest expenses 515

Foreign exchange losses 15,083

Other 1,974

Ordinary income 102,685

Extraordinary income 2,788

Gain on sales of non-current assets 884

Gain on Investments in capital of subsidiaries and affiliates 768

Other 1,134

Extraordinary losses 47,525

Loss on retirement of non-current assets 2,214

Loss on valuation of subsidiaries and affiliates’ stocks 24,653

Losses relating to fuel consumption testing 19,126

Other 1,531

Profit before income taxes 57,947

Income taxes – current 6,367

Income taxes – deferred 9,307

Profit 42,272

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Statement of Changes in Net Assets


(In millions of yen) Shareholders’ equity

Common stock

Capital surplus Retained earnings

Treasury stock

Total shareholders’

equity

Other capital surplus

Total capital surplus

Legal reserve

Other retained earnings Total

retained earnings

Retained earnings brought

forward

Balance at beginning of year 165,701 85,257 85,257 3,196 185,815 189,011 (220) 439,750

Net change

Dividends of surplus 1,622 (17,849) (16,226) (16,226)

Profit 42,272 42,272 42,272

Purchase of treasury stock (0) (0)

Net change of items other than shareholders’ equity

Total net change – – – 1,622 24,423 26,045 (0) 26,045

Balance at end of year 165,701 85,257 85,257 4,818 210,238 215,057 (220) 465,796

Valuation and translation adjustments

Total net assets Valuation difference on available-for-sale

securities

Total valuation and translation

adjustments

Balance at beginning of year 7,708 7,708 447,458

Net change

Dividends of surplus (16,226)

Profit 42,272

Purchase of treasury stock (0)

Net change of items other than shareholders’ equity (3,320) (3,320) (3,320)

Total net change (3,320) (3,320) 22,725

Balance at end of year 4,387 4,387 470,184

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Notes to Financial Statements

1. Significant accounting policies

(1) Valuation bases and methods of assets

(a) Securities

Subsidiaries and affiliates’ stocks


Other securities

Other securities with a readily determinable market value:

Stated at fair value based on the market price on the balance sheet date and the cost of securities sold is computed based on the moving average method. The difference between the acquisition cost and the carrying value of other securities, including unrealized gains and losses, is recognized in valuation difference on available-for-sale securities in the accompanying balance sheet.

Other securities without a readily determinable market value:


(b) Derivative financial instruments

Market price method

(c) Inventories

Finished goods and work in process

Principally stated at cost determined by the first in first out method (the balance sheet carrying value is reduced to recognize any deterioration of recoverability)


Stated at cost determined by the gross average method (the balance sheet carrying value is reduced to recognize any deterioration of recoverability)

(2) Depreciation and amortization

(a) Property, plant and equipment (excluding leased assets)

Depreciation of property, plant and equipment is calculated using the declining balance method (however, the straight line method is applied to buildings (excluding building improvements) acquired on or after April 1, 1998).

The useful lives of the assets are based on the estimated lives of assets for MMC. The main useful lives of assets are as follows.

Buildings and structures

3 to 60 years

Machinery, equipment and vehicles

3 to 17 years


2 to 20 years

(Low value depreciable assets)

Assets for which the acquisition cost is equal to or more than 100,000 yen and less than 200,000 yen are depreciated in even amounts over three years pursuant to the provisions of the Corporation Tax Law.

(b) Intangible assets (excluding leased assets)

Intangible assets are amortized using the straight line method.

Software intended for use by MMC is amortized using the straight line method over the period for which each asset is available for use (5 years).

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(c) Leased assets

Assets recognized under finance leases that do not involve transfer of ownership to the lessee are depreciated using the straight line method based on the contract term of the lease agreement. If a guaranteed residual value is determined in the lease agreement, the said guaranteed residual value is deemed as the residual value of such leased assets. If the residual value is not determined, it is deemed to be zero.

(d) Long-term prepaid expenses

Long-term prepaid expenses are amortized using the straight line method over a fixed period.

(3) Allowances and provisions

(a) Allowance for doubtful accounts

The allowance for doubtful accounts is provided based on MMC’s historical experience with respect to write-offs and an estimate of the amount of specific uncollectible accounts.

(b) Allowance for product warranties

The allowance for product warranty claims is calculated based on MMC’s historical experience and estimations with respect to future costs relating to claims.

(c) Provision for losses relating to fuel consumption testing

To provide for losses relating to fuel consumption testing, provision is calculated to the extent that can be reasonably projected and estimated at the end of the fiscal year.



Among the losses relating to fuel consumption testing, an amount, which is calculated to the extent that can be reasonably projected and estimated at the end of the fiscal year, is provided as provision for losses relating to fuel consumption testing. However, as specific details of the compensation to be paid to stakeholders have not yet been determined, this amount may be subject to change in the following fiscal year and thereafter.

(d) Provision for retirement benefits

Accrued retirement benefits for employees are calculated based on the retirement benefits obligation estimated at the end of fiscal year.

Prior service cost is being amortized using the straight line method over a fixed number of years (ten years) within the estimated average remaining service years of the employees.

Actuarial gains and losses are being amortized using the straight line method over a fixed number of years (ten years) within the estimated average remaining service years of the employees.


MMC contributed 79,200 million yen in cash to the retirement benefit trust during the fiscal year, aiming to improve financial status of its retirement benefit plan. As a result, the balance of provision for retirement benefits decreased by the same amount.

(4) Hedge accounting

Forward foreign exchange contracts

Deferral hedge accounting (those with forecast transactions)

(5) Transactions subject to consumption taxes

Consumption tax is excluded from the transaction amount in the Statement of Income and is included in the Balance Sheet amount.

(6) Application of consolidated taxation system

The consolidated taxation system is applied.

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2. Change in presentation

(Statement of Income)

“Gain on sales of non-current assets,” which was included in “Other” under extraordinary income in the previous year (152 million yen), is presented as a separate item in this fiscal year due to its increased financial materiality.

“Impairment loss,” which was presented as extraordinary losses in the previous year (3,230 million yen), is included in “Other” under extraordinary losses in this fiscal year due to its decreased financial materiality. “Impairment loss” included in “Other” amounted to 1,007 million yen.

3. Change in accounting method

(Change in the method of estimating the allowance for product warranties)

This year MMC changed its method for estimating the allowance for product warranties to one in which future payments are estimated based on the ratio of after-sales service costs to past sales and on analysis of past after-sales service costs for each product, model year, and region.

The method has been changed because, since April 2013, MMC promoted a customer-oriented program called the “Customer First Program (CFP),” which includes product-quality activities to achieve “quality targets” (i.e. quality goals), and has also gathered and analyzed market quality information during this process. At the end of this fiscal year, three years have passed since this program started and this is the same period required for the initial vehicle inspection after the date of purchase. As a result, MMC is able to estimate future after-sales service costs more precisely.

As a result of this change, operating income, ordinary income, and profit before income taxes for the fiscal year decreased by 6,955 million yen respectively.

4. Notes to Balance Sheet

(1) Assets pledged as collateral and liabilities secured

Assets pledged as collateral

Buildings (Note 1) 13,416 million yen

Land (Note 1) 985 million yen

Accounts receivable – other (Note 2) 1,292 million yen

Investment securities (Note 3) 46 million yen


(Note 1) MMC provided collateral in respect of 10,000 million yen of the borrowings of Mitsubishi Motors (Thailand) Co., Ltd. (one of its subsidiaries) from financial institutions.

(Note 2) Accounts receivable - other were pledged based on a liability in a term lease contract relating to a building with Murata Medical Services, Ltd.

(Note 3) MMC provided collateral for the borrowings of Mizushima Eco-works Co., Ltd.

MMC has no obligations for such collateral.

(2) Accumulated depreciation of property, plant and equipment 630,542 million yen

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(3) Guarantee liabilities

Guarantee recipient

Mitsubishi Motors (Thailand) Co., Ltd. 13,828 million yen

PCMA Rus, LLC 5,529 million yen

Mitsubishi Motors North America, Inc. 94 million yen

Employees 628 million yen


(4) Monetary receivables from subsidiaries and affiliates, and payables to subsidiaries and affiliates

Short-term monetary receivables 84,689 million yen

Long-term monetary receivables 5,281 million yen

Short-term monetary payables 84,670 million yen

Long-term monetary payables 599 million yen

5. Notes to Statement of Income

(1) Volume of trade with subsidiaries and affiliates

Sales 711,880 million yen

Purchases 583,653 million yen

Non-operating transactions 61,410 million yen

(2) Total amount of research and development expenses (Selling, general and administrative expenses) 45,012 million yen

6. Notes to Statement of Changes in Net Assets

Class and total number of treasury stock at end of the fiscal year

Common stock 221,976 shares

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7. Income taxes

The significant components of deferred tax assets and liabilities

Deferred tax assets

Net operating losses carried forward 164,852 million yen

Allowance for doubtful accounts 680 million yen

Accrued retirement benefits 22,958 million yen

Loss on valuation of subsidiaries and affiliates’ stocks 111,095 million yen

Accounts payable - warranties 16,772 million yen

Allowance for product warranties 5,423 million yen

Provision for losses relating to fuel consumption testing 4,752 million yen

Others 17,153 million yen

Subtotal 343,688 million yen

Less valuation allowance (331,563) million yen

Total deferred tax assets 12,124 million yen

Deferred tax liabilities

Unrealized holding gain on securities 1,909 million yen

Others 5,593 million yen

Total deferred tax liabilities 7,503 million yen

Net deferred tax assets 4,621 million yen

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8. Related party transactions

(1) Parent company and major corporate shareholders, etc.

Attribution Name of company,

etc.

Percentage of voting stock held

Relationship with the

related party

Details of transactions

Amount of transaction(In millions

of yen)

Account title

Balance at year end(In millions

of yen)

Major shareholder

Mitsubishi Corporation

Direct 10.07 Indirect 0.00

Sales of products, etc. and purchase of raw materials

Sales of products, etc. (Note)1

266,738Accounts receivable - trade

16,526

(2) Subsidiaries and affiliates

Attribution Name of company,

etc.

Percentage of voting stock be

held

Relationship with the

related party

Details of transactions

Amount of transaction(In millions

of yen)

Account title

Balance at year end(In millions

of yen)

Subsidiary

Mitsubishi Motors (Thailand) Co., Ltd.

Direct 100

Sales of products, etc. and purchase of products, etc.

Purchase of products, etc. (Note)2

432,009Accounts payable - trade

41,204

Borrowings of funds (Note)3

-Short-term loans payable

10,000

Guarantee of obligations (Note)4

13,828 - -

Subsidiary

Mitsubishi Motors Australia, Ltd.

Direct 100 Sales of products, etc.



15,622

Subsidiary

Mitsubishi Motors North America, Inc.

Direct 100

Sales of products, etc. and purchase of products, etc.



12,350

Consumption taxes are excluded from the amount of transaction, however, included in the balance at year end.

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Terms and conditions of transactions and the policies on determination thereof:

(Note) 1. MMC determines selling prices of products, etc. as a result of studies and negotiations, taking market prices and total costs into consideration.

(Note) 2. MMC determines purchase prices of products, etc., as a result of studies and negotiations taking into consideration estimated costs, prices of current products, etc., and market prices for each product, etc.

(Note) 3. MMC determines the borrowing rates of borrowed funds in a reasonable manner taking market interest rates into consideration.

(Note) 4. MMC guarantees obligations for loans, etc. from financial institutions, etc., which are funds for equipment, working capital, etc., and guarantee fees are determined rationally through discussions. MMC has provided collateral in respect of 10,000 million yen of borrowings from financial institutions.

9. Earnings and equity per share

Stockholders’ equity per share of common stock 478.10 yen

Earnings per share of common stock 42.98 yen

10. Subsequent events

(1) Improper conduct in fuel consumption testing on vehicles manufactured by MMC


The four applicable vehicle types are eK Wagon and eK Space manufactured by MMC since June 2013 and Dayz and Dayz Roox, which were supplied to Nissan Motor Co., Ltd. (“Nissan”). The total number of these vehicles sold by MMC until the end of March 2016 was 157,000, while the total number of these vehicles produced by MMC for Nissan over the same period was 468,000.

Fuel consumption testing for all of these vehicle types was conducted by MMC; however, in connection with the development of subsequent car models, Nissan also measured fuel consumption, and discovered that its measurement results differed from MMC’s reported data. Subsequently, Nissan requested that MMC confirm this difference. After conducting in-house investigations into this matter, MMC was able to identify improper conduct in the use of driving resistance data to show better fuel consumption than the actual results for the above-mentioned vehicles.

With respect to losses relating to this fuel consumption testing (excluding losses included as provisions this fiscal year), the possible impact on MMC Group’s financial position or results of operations for the following year and thereafter cannot be reasonably estimated currently.

(2) Capital and business alliance and issuance of new shares through third-party allotment

MMC passed resolutions at the board of directors meeting held on May 12, 2016 concerning the execution of a Basic Agreement with Nissan for proceeding with discussions and studies towards completing an Alliance between MMC and Nissan and the issuance of new shares to Nissan through a Third-Party Allotment.

(a) Purpose and reasons for the Alliance

In the globalizing automobile industry, developed nations and regions are demanding both better fuel consumption and exhaust purification, increasingly sophisticated accident-prevention and safety technology requiring advanced IT technology, and improved value-added functions, such as those available in connected cars. In this environment, further advances, further intensification of competition, and further prolongation in research and development are expected in the near future. Specifically, environmental

60

regulations in particular are planned to be more stringent both in developed and emerging markets. MMC is also expecting increased research and development costs and capital expenditures for research and development of internal combustion engines (ICE) to satisfy environmental regulations, and to bolster its electric vehicle and plug-in hybrid vehicle product line-up. In the advanced accident-prevention and safety technology and connected car space, longer development cycles and large-scale purchases will be necessary to purchase high valued-added parts from large automotive parts and electronics manufacturers.

MMC therefore seeks to build a constructive alliance relationship over the medium to long term with Nissan and to become a member of the Renault/Nissan group through the Alliance. In doing so, MMC believes that it can greatly restore MMC’s credibility in regard to maintenance of profit-generating opportunities and future competitiveness with this medium- to long-term strategy.

MMC will raise capital from Nissan through the Alliance by executing the Third-Party Allotment. It will also endeavor to restore its brand and credibility as a member of the Renault/Nissan alliance by way of building a solid collaborative relationship that includes a capital tie-up. Furthermore, MMC believes it can effectively leverage development resources as part of the Renault/Nissan alliance through the integrated management of the product and technology development space, and improve its purchasing efficiency of parts centering on improved product viability and high value-added parts.

With that, MMC passed the resolutions at the board of directors meeting held on May 12, 2016 concerning execution of the Basic Agreement with Nissan and issuance of new shares to Nissan through the Third-Party Allotment.

Furthermore, when MMC carried out the public offering in 2014, Mitsubishi Heavy Industries, Ltd. (“MHI”), Mitsubishi Corporation, and The Bank of Tokyo-Mitsubishi UFJ, Ltd. have confirmed together with MMC that they will not assign or otherwise dispose of the MMC common stock that they have come to directly or indirectly hold through the public offering until the end of June 2017, and that this arrangement will not change after the Alliance is formed. However, MMC will no longer be an equity-method company of MHI as a result of the dilution that will occur upon the execution of the Third-Party Allotment.

(b) Details of the Alliance

Details of the Capital Alliance

MMC will issue 506,620,577 shares of common stock through the Third-Party Allotment to Nissan, and Nissan will subscribe to all the new shares that are issued by MMC. After the Third-Party Allotment, Nissan’s proportion of the total voting rights and Nissan’s proportion of the total number of issued common stock will each be 34.0%. Nissan will also become a major shareholder, the largest shareholder that is also a major shareholder, and an affiliate of MMC through the Third-Party Allotment.

Details of the Business Alliance

MMC and Nissan have agreed to move forward with a business alliance with respect to the following matters. MMC and Nissan will discuss the specific policies and terms, etc. of the business alliance.

• Management exchanges;

• Cross sharing of engineering assets;

• Continue collaboration in developing minicars;

• Collaboration in the ASEAN region;

• Powertrain sharing in ICE and electric vehicle;

• Production facility utilization;

• Purchasing synergies; and

• Financial services and after sales.

(c) Alliance Schedule

• The resolution date of the Board of Directors meeting of MMC and Nissan: May 12, 2016

• Execution of the Basic Agreement: May 12, 2016

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• Execution of the Alliance Agreement: By May 25, 2016 (planned)

• Due diligence performed by Nissan: By August 2016 (planned)

• Payment for the Third-Party Allotment: Around October 2016 (planned) (Note)

(Note) Nissan will make the payment within 10 business days of the satisfaction of all terms and conditions.

(d) Outline of Issuance Registration

• Type of offered securities: MMC’s common stock

• Planned issuance period: Until the day on which two years elapse from the planned effective date of the Issuance Registration (May 20, 2016 – May 19, 2018)

• Planned issuance amount: Up to 237,361,872,737 yen

• Offering method: Third-Party Allotment (planned)

• Purpose of raising funds

The funds will be allocated to strengthening strategic product research and development, upgrading research and development equipment, and reforming IT systems

• Issuance conditions

Type and number of offered shares: 506,620,577 shares of MMC common stock

• Amount to be paid for the offered shares: 468.52 yen per share

• Total amount to be paid: 237,361,872,737 yen

• Amount of capital and capital reserve to be increased

Amount of capital to be increased: 118,680,936,369 yen

Amount of capital reserve to be increased: 118,680,936,368 yen

• Payment period: September 1, 2016 – December 31, 2017

62

Report of Accounting Auditors on the Consolidated Financial Statements

Report of Independent Auditors

May 20, 2016

The Board of Directors



Mitsuo Sakamoto Designated and Engagement Partner Certified Public Accountant

Tomohiro Mizuno Designated and Engagement Partner Certified Public Accountant

Chihiro Yasunaga Designated and Engagement Partner Certified Public Accountant

Pursuant to Article 444, Section 4 of the Companies Act, we have audited the accompanying consolidated financial statements, which comprise the consolidated balance sheet, the consolidated statement of income, the consolidated statement of changes in net assets and the notes to the consolidated financial statements of MITSUBISHI MOTORS CORPORATION (the “Company”) applicable to the fiscal year from April 1, 2015 through March 31, 2016.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for designing and operating such internal control as management determines is necessary to enable the preparation and fair presentation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. The purpose of an audit of the consolidated financial statements is not to express an opinion on the effectiveness of the entity’s internal control, but in making these risk assessments the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position and results of operations of the MITSUBISHI MOTORS CORPORATION Group, which consisted of the Company and consolidated subsidiaries, applicable to the fiscal year ended March 31, 2016 in conformity with accounting principles generally accepted in Japan.

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Emphasis of Matter

1. As mentioned in Note 8. Subsequent events, regarding the acquisition of vehicle-type approvals from the Ministry of Land, Infrastructure, Transport and Tourism, MMC engaged in improper conduct related to the fuel consumption testing of vehicles it manufactured to indicate better fuel consumption. MMC reported this fact to the Ministry on April 20, 2016.

2. As mentioned in Note 8. Subsequent events, the Company passed resolutions at the board of directors meeting held on May 12, 2016 concerning the execution of a basic agreement with Nissan Motor Co., Ltd. (“Nissan”) for proceeding with discussions and studies towards completing a capital and business alliance between MMC and Nissan and the issuance of new shares to Nissan through a third-party allotment.

These events do not affect our audit opinion.

Conflicts of Interest

We have no interest in the Company which should be disclosed in compliance with the Certified Public Accountants Act.

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Report of Accounting Auditors

Report of Independent Auditors

May 20, 2016

The Board of Directors



Mitsuo Sakamoto Designated and Engagement Partner Certified Public Accountant

Tomohiro Mizuno Designated and Engagement Partner Certified Public Accountant

Chihiro Yasunaga Designated and Engagement Partner Certified Public Accountant

Pursuant to Article 436, Section 2, Paragraph 1 of the Companies Act, we have audited the accompanying financial statements, which comprise the balance sheet, the statement of income, the statement of changes in net assets, the notes to the financial statements and the related supplementary schedules of MITSUBISHI MOTORS CORPORATION (the “Company”) applicable to the fiscal year from April 1, 2015 through March 31, 2016.

Management’s Responsibility for the Financial Statements and the Related Supplementary Schedules

Management is responsible for the preparation and fair presentation of these financial statements and the related supplementary schedules in accordance with accounting principles generally accepted in Japan, and for designing and operating such internal control as management determines is necessary to enable the preparation and fair presentation of the financial statements and the related supplementary schedules that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements and the related supplementary schedules based on our audit. We conducted our audit in accordance with auditing standards generally accepted in Japan. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the related supplementary schedules are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the related supplementary schedules. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements and the related supplementary schedules, whether due to fraud or error. The purpose of an audit of the financial statements is not to express an opinion on the effectiveness of the entity’s internal control, but in making these risk assessments the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial statements and the related supplementary schedules in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements and the related supplementary schedules.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements and the related supplementary schedules referred to above present fairly, in all material respects, the financial position and results of operations of the Company applicable to the fiscal year ended March 31, 2015 in conformity with accounting principles generally accepted in Japan.

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Emphasis of Matter

1. As mentioned in Note 10. Subsequent events, regarding the acquisition of vehicle-type approvals from the Ministry of Land, Infrastructure, Transport and Tourism, MMC engaged in improper conduct related to the fuel consumption testing of vehicles it manufactured to indicate better fuel consumption. MMC reported this fact to the Ministry on April 20, 2016.

2. As mentioned in Note 10. Subsequent events, the Company passed resolutions at the board of directors meeting held on May 12, 2016 concerning the execution of a basic agreement with Nissan Motor Co., Ltd. (“Nissan”) for proceeding with discussions and studies towards completing a capital and business alliance between MMC and Nissan and the issuance of new shares to Nissan through a third-party allotment.

These events do not affect our audit opinion.

Conflicts of Interest

We have no interest in the Company which should be disclosed in compliance with the Certified Public Accountants Act.

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Audit Report of the Audit & Supervisory Board

Audit Report

With respect to the Members of the Board’s performance of their duties during the 47th fiscal year from April 1, 2015 to March 31, 2016, the Audit & Supervisory Board has prepared this audit report after deliberations based on the audit reports prepared by each Audit & Supervisory Board Member, and hereby reports as follows:

1. Method and Contents of Audit by Audit & Supervisory Board Members and the Audit & Supervisory Board

The Audit & Supervisory Board has established the audit policies, assignment of duties, etc., and received a report from each Audit & Supervisory Board Member regarding the status of implementation of their audits and results thereof. In addition, the Audit & Supervisory Board has received reports from the Members of the Board, etc. and the accounting auditors regarding the status of performance of their duties, and requested explanations as necessary.

In conformity with the Audit & Supervisory Board Member auditing standards established by the Audit & Supervisory Board, and in accordance with the audit policies and assignment of duties, etc., based on the following-described methods, each Audit & Supervisory Board Member examined the business report and related supplementary schedules for the fiscal year under review.

(1) Each Audit & Supervisory Board Member endeavored to facilitate mutual understanding with the Members of the Board, the internal audit division and other employees, etc., endeavored to collect information and maintain and improve the audit environment.

(2) Each Audit & Supervisory Board Member attended the meetings of the Board of Directors and other important meetings, received reports on the status of performance of duties from the Members of the Board and employees, etc. and requested explanations as necessary, inspected important approval/decision documents, and investigated the status of the corporate affairs and assets at the head office, research & development centers and plants. With respect to the subsidiaries, each Audit & Supervisory Board Member endeavored to facilitate mutual understanding and information exchange with the Members of the Board and Audit & Supervisory Board Members, etc. of each subsidiary and received from subsidiaries reports on their respective businesses as necessary.

(3) Also, each Audit & Supervisory Board Member received reports on a regular basis from the Members of the Board and employees, etc., requested explanations as necessary, and provided opinions with respect to matters mentioned in the business report. Such matters consist of the contents of the Board of Directors’ resolutions regarding the development and maintenance of the system to ensure that the Members of the Board’s performance of their duties complied with applicable laws and regulations and the Articles of Incorporation of the Company and other systems that are set forth in Article 100, Paragraphs 1 and 3 of the Ordinance for Enforcement of the Companies Act of Japan as being necessary for ensuring the appropriateness of business activities of a corporate group consisting of a joint stock company (kabushiki kaisha) and its subsidiaries, and the systems developed and maintained based on such resolutions (internal control systems). Also, concerning the internal control system over financial reporting, each Audit & Supervisory Board Member received reports on the evaluation and status of audit of that internal control system both from the Members of the Board, etc. and Ernst & Young ShinNihon LLC, and requested explanations as necessary.

In addition, based on the following-described methods, each Audit & Supervisory Board Member examined the financial statements (balance sheet, statement of income, statement of changes in net assets, and notes to financial statements) and the related supplementary schedules, as well as the consolidated financial statements (consolidated balance sheet, consolidated statement of income, consolidated statement of changes in net assets, and notes to consolidated financial statements), for the fiscal year under review.

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(1) Each Audit & Supervisory Board Member monitored and verified whether the accounting auditors maintained its independence and properly conducted its audit, received a report from the accounting auditors on the status of its performance of duties, and requested explanations as necessary.

(2) Each Audit & Supervisory Board Member was notified by the accounting auditors that they had established a “system to ensure that the performance of the duties of the accounting auditors was properly conducted” (the matters set forth in the items of Article 131 of the Ordinance on Accounting of Companies) in accordance with the “Quality Control Standards for Audits” (Business Accounting Council, October 28, 2005), and requested explanations as necessary.

2. Results of Audit

(1) Results of Audit of Business Report, etc.

(i) We acknowledge that the business report and the related supplementary schedules fairly present the status of the Company in conformity with the applicable laws and regulations and the Articles of Incorporation of the Company.

(ii) With regard to the performance of duties by Members of the Board, due to the finding of an improper conduct in fuel consumption testing on vehicles manufactured by the Company as stated in the Business Report, the Company has established a Special Investigation Committee consisting of external experts and currently is investigating the facts surrounding this problem.

The Audit & Supervisory Board will closely monitor the results of the future investigation.

With the exception of above, we acknowledge that there is no misconduct or material fact in violation of the Articles of Incorporation of the Company with regard to the performance of duties by Members of the Board.

(iii) We acknowledge that the Board of Directors’ resolutions with respect to the internal control systems are appropriate.

However, as the Company failed to prevent the occurrence of the improper conduct in fuel consumption testing on vehicles manufactured by the Company, efforts for the radical reform, reconstruction and augmentation of the internal control systems and the operation thereof are planned to be implemented by the Company. The Audit & Supervisory Board will closely monitor the future responses to and developments of the matter.

(2) Results of Audit of Financial Statements and Related Supplementary Schedules

We acknowledge that the methods and results of audit performed by the accounting auditors Ernst & Young ShinNihon LLC, are appropriate.

(3) Results of Audit of Consolidated Financial Statements

We acknowledge that the methods and results of audit performed by the accounting auditors Ernst & Young ShinNihon LLC, are appropriate.

May 25, 2016

MITSUBISHI MOTORS CORPORATION Audit & Supervisory Board

Audit & Supervisory Board Member (Full-time) Takitaro Fukuda

Audit & Supervisory Board Member (Full-time) Yoshikazu Nakamura

Outside Audit & Supervisory Board Member Katsunori Nagayasu

Outside Audit & Supervisory Board Member Toshimitsu Iwanami

Outside Audit & Supervisory Board Member Yaeko Takeoka

notice of the 47th ordinary general meeting of shareholders

Documents