Corporate Governance Report
Last updated: January 16, 2024

Yokorei Co., Ltd.
President and Representative Director, CEO: Kenji Furuse
Contact: Akiko Komatsu,
Corporate Officer & Public Relations
and IR Dept. General Manager
Securities code: 2874
The following outlines Yokorei's commitment to corporate governance.

I.

Corporate Governance Philosophy, Capital Structure, Corporate Attributes, and Other Basic
Information

1. Basic philosophy
The Yokorei Group seeks to fulfil the trust of diverse stakeholders, to realize sustainable growth,and to increase corporate value over the medium to long term. In addition to this, with the aim ofachieving fair and highly transparent management, the Group endeavors to speed up decisionmaking and strengthen checking functions to enhance corporate governance.
Our fundamental views on corporate governance are summarized on our website under the heading:
Basic Policy on Corporate Governance.

[Reason not to Enforce Each Principle of the Corporate Governance Code]Principle 2.4.1 Ensuring diversity in mid-career hires
In regard to hiring, we value diversity and promote the recruiting of diverse human resources
regardless of gender, nationality, work experience, or other attributes. In Yokorei Sustainability
Vision 2030, we set the goal of at least doubling the number of female managers compared to fiscal
2020 (3 female managers) by fiscal 2030 to support the active participation of women, but as ofnow, there are no measurable targets related to hiring non-Japanese or mid-career people. As of
September 30, 2023, of the 150 managers at Yokorei, 3 were women, 0 were non-Japanese, and 58
were mid-career hires (2 of which were women).

Supplementary Principle 2.5.1

Establishing a whistleblower hotline independent from the

management team
Our internal whistleblowing system already in existence is effective at detecting risks at an earlydate and is functioning sufficiently well at promoting compliance; however, we would like tofurther strengthen this framework and are considering establishing an external whistleblower
hotline independent from management.
-1-Supplementary Principle 4.1.3

Oversight of a succession plan for the CEO and other top

executives
We recognize that it is a top priority to foster a management team able to steadfastly achieve ourbusiness strategies based on our business principles and with a focus on future developments. As
such, we plan to carry out discussions on our Nominating and Remuneration Advisory Committee(with more than one half of its members being independent outside directors) and we will deepen
debate regarding policies for fostering management and formulating a succession plan.

Supplementary Principle 4.2.2

Formulating basic policy on sustainability-related initiatives

We formulated Yokorei Sustainability Vision 2030 with an eye toward 10 years from 2020 to raise
medium- to long-term corporate value, have set harmony with the global environment, creating a
rewarding workplace, providing better quality and service, developing together with local
communities, and strengthening the business foundation and ensuring soundness as our materiality,
and strive to solve related issues. The Board of Directors effectively supervises the allocation ofbusiness resources, including investments in human capital and intellectual property, and will
launch various initiatives, including an examination of the business portfolio.

Principle 4.11 Preconditions for ensuring the effectiveness of the Board of Directors and the
Audit & Supervisory Board
Our Board of Directors is composed of directors, 8 directors and 4 outside directors (Articles ofIncorporation limit the number of directors to no more than 15), and they are selected in such a waythat ensures a good overall balance in terms of knowledge, experience, and expertise related to the
Corporate Management Sector, Cold Logistics Business Sector, and Food Sales Business Sector,
and Customs Clearance Business Sector. We have also established a framework with officers incharge of overseas Group companies and have deemed our current composition to be diverse interms of gender, work experience, and age and robust in terms of size. Yokorei does not use
internationality (nationality) as part of its criteria for appointment, as there is little need for it due tothe nature of the current business.

At present, no Audit & Supervisory Board Members are certified public accountants or licensed tax
accountants; however, we deem all members to possess knowledge of finance, accounting, and law
from their prior professional experience and other career activities, and one appointed member
possesses sufficient knowledge of finance and accounting from experience with corporate financescreening at a financial institution. We conduct an anonymous survey of all directors in order toassess the overall effectiveness of the Board of Directors and, as a commitment to improving Board
functions, we strive to identify issues and make on-going improvements. We have confirmed that-2-

our current Board of Directors is operating appropriately overall.
Supplementary Principle 5.2 i

Basic policy regarding business portfolio

The basic policies, goals, and revisions of the business portfolio are under consideration for
implementation during the current medium-term management plan.
* Measures to realize management with cost of capital and stock prices in mind (underconsideration)[Disclosure Based on the Principles of the Corporate Governance Code]Principle 1.4

Cross-Shareholdings

We regularly carry out a detailed examination of whether the benefits and risks balance out the costof capital of our cross-shareholdings and the Board of Directors assesses the medium- to long-term
economic rationale and future outlook of cross-shareholdings. Based on this analysis, we graduallysell any holdings whose strategic significance has diminished. With respect to the exercise of
voting rights of shares held as cross-shareholdings, the Company formulates specific standards anddiscloses them, and makes decisions whether to approve or disapprove a proposal based on acomprehensive judgement of the relationship with the relevant company and whether such a
proposal will lead to sustainable growth for the Group and increase of its corporate value over the
medium to long term. This includes opposition to a proposal in cases where shareholder value will
be significantly undermined by such issues as serious concerns resulting from social scandal, legal
violations, organizational restructuring, and so forth.

Principle 1.7 Transactions with Related Parties
The Company will always obtain the approval of the Board of Directors when engaging incompeting transactions and conflict-of-interest transactions with the Company’s officers or withcorporate entities that are substantially controlled by the Company’s officers. The Company
discloses the key facts appropriately in accordance with the provision of laws and regulations when
it has engaged in such a transaction.
When engaging in transactions with its major shareholders, the Company obtains the approval of
the Board of Directors in accordance with laws and regulations to ensure that such transactions do
not harm the common interests of the Company and its shareholders, except when it is clear that theterms of transactions are the same as transactions in general.

Supplementary Principle 2.4.1

Ensuring diversity in mid-career hires

In regard to hiring, we value diversity and promote the recruiting of diverse human resources
regardless of gender, nationality, work experience, or other attributes. In Yokorei Sustainability
Vision 2030, we set the goal of at least doubling the number of female managers compared to fiscal-3-2020 (3 female managers) by fiscal 2030 to support the active participation of women, but as ofnow, there are no measurable targets related to hiring non-Japanese or mid-career people. As of
September 30, 2023, of the 150 managers at Yokorei, 3 were women, 0 were non-Japanese, and 58
were mid-career hires (2 of which were women).

Principle 2.6

Role of Corporate Pension Fund as Asset Owner

Given that the management of the corporate pension fund impacts on stable asset formation for
employees as well as the Company’s financial position, the Company endeavors to assign and train
human resources with the necessary experience and qualities so that the organization with the
responsibility for managing the corporate pension fund can carry out the appropriate activities suchas monitoring investment institutions. Moreover, the Company has introduced a defined
contribution corporate pension plan as part of the welfare program and makes efforts to provide
information on asset management in addition to providing explanations when employees join the
Company. We are examining establishing a Corporate Pension Fund Management Working Groupto manage the plan.

Principle 3.1

Full disclosure(1) We disclose information detailing our corporate philosophy, corporate strategies (MediumTerm Management Plan), and the like on our website and in our securities reports, earnings
statements, and so on. Furthermore, we have formulated a Basic Policy on Corporate
Governance and have published it on our website.
(2) We aim to respond to the trust placed in us by a wide range of stakeholders and to realize
sustainable growth and raise medium- to long-term corporate value. We also aim to practicehighly transparent and fair management and we are always working to improve corporate
governance through swifter decision making and stronger oversight functions.
(3) Directors’ remuneration is approved by the Board of Directors, based on the policy for
determining individual remuneration for directors as resolved by the Board of Directors. This islimited to the scope passed by resolution at the General Shareholders Meeting, and based on the
results of discussions and deliberations by the Nominating and Remuneration Advisory
Committee (which has independent outside directors comprising a majority of its members).
Director compensation is comprised of base compensation that is a fixed amount, performancebased compensation that reflects business results for one fiscal year, and stock compensationthat reflects medium- to long-term business results. The rough ratios of each form ofcompensation, if performance targets are met, are 60% base compensation, 20% performancebased compensation, and 20% stock compensation. Outside director and Audit & Supervisory-4-

Board Member compensation is only comprised of base compensation of a fixed amount.
(4) The appointment of top management and the nomination of director and Audit & Supervisory
Board Member candidates is spearheaded by representative directors, who compile a list of
candidates taking into account knowledge and professional experience, as well as legally
mandated qualifications. Final approval is made by the Board of Directors based on the resultsof discussions and deliberations by the Nominating and Remuneration Advisory Committee(which has independent outside directors comprising a majority of its members). If a member of
top management is part of a social scandal or has professionally violated a law or regulation, or
the Company's Articles of Incorporation, or has considerably damaged corporate value throughprofessionally negligent conduct, a framework is in place to ensure appropriate management,
including dismissal upon comprehensive review by the Board of Directors.
(5) Explanation regarding the appointment and dismissal of candidates for director and Audit &Supervisory Board Member are provided in the “Reason for Appointing/Dismissing Directors
and Audit & Supervisory Board Member,” an attachment to this report.
■ Toshio Yoshikawa (Chairman and Director)
Since being appointed President and Representative Director in December 2003, Mr. Toshio
Yoshikawa has demonstrated leadership with clear foresight at the center of management, whileraising corporate value for the Group as a whole. He assumed the office of Chairman and
Representative Director of the Company in December 2015, and his abundant experience andextensive knowledge based on the principle of the hands-on approach are deemed essential to thesustainable enhancement of the Group’s corporate value and for this reason, the Company
nominated him for director.
■ Kenji Furuse (President and Representative Director, CEO)
Since joining the Company, Mr. Kenji Furuse has mainly worked in the Food Sales Business
Sector. He served as General Manager of Kyushu Group and General Manager of the Internal
Audit Department among other key positions, and assumed the office of director in December
2019. He has been demonstrating outstanding management capabilities as Chief of the Corporate
Management Sector since October 2021 by, for example, leading efforts to strengthen the
Company’s compliance system and promoting sustainability management. His abundant experienceand in-depth knowledge are deemed essential to the sustainable enhancement of the Group’s
corporate value and for this reason, the Company nominated him for director.
■ Koji Ochi (Managing Director)
Mr. Koji Ochi has held key positions in the management of a Group company and individual-5-

business sectors. Since December 2021, he has contributed to the Group’s development by leading
operational reforms mainly of the Food Sales Business Sector as Managing Director. He is wellversed in corporate management in general and his diverse experience and knowledge are deemed
essential to the sustainable enhancement of the Group’s corporate value and for this reason, theCompany nominated him for director.
■ Naotaka Yoshikawa (Managing Director)
After gaining operational experience in the Cold Logistics Business Sector and holding positions
including General Manager of the General Affairs & Human Resources Department and General
Manager of the Overseas Business Department, Mr. Naotaka Yoshikawa has contributed to theCompany’s development by strongly promoting organizational revitalization and operational
reforms in the Food Sales Business Sector. The abundant experience and broad knowledge he has
accumulated to date are deemed essential to the sustainable enhancement of the Group’s corporate
value and for this reason, the Company nominated him for director.
■ Hiroshi Okada (Director)
Mr. Hiroshi Okada is well versed in operations overall due to his many years of operational
experience in the Cold Logistics Business Sector. After holding key positions in the Cold Logistics
Business Sector, he became responsible for the Norway business and has been strongly promoting
overseas strategies of the Company. The abundant operational experience and global insight he has
accumulated to date are deemed essential to the sustainable growth and enhancement of corporate
value of the Group and for this reason, the Company nominated him for director.
■ Hiroto Ikeda (Director)
Since joining the Company, Mr. Hiroto Ikeda has mainly worked in the Cold Logistics Business
Sector, and held positions including General Manager of various blocks. Since March 2023, he has
been leading efforts to strengthen the organizational strength of the Domestic Production Area
Sales Group of the Food Business Sales ector from a new perspective and with vitality, as General
Manager of the Domestic Production Area Sales Group. The abundant operational experience andbroad insight he has accumulated to date are deemed essential to the sustainable growth andenhancement of corporate value of the Group and for this reason, the Company nominated him fordirector.
■ Yoshiaki Hoshino (Director)
Mr. Yoshiaki Hoshino held key positions including General Manager of the General Affairs
Department, and assumed the office of Corporate Officer in December 2019. As Vice President of
Diamond Tokachi Co., Ltd., he has been significantly helping to expand the sales base of the
agricultural products business of the Company. The abundant operational experience and broad
insight he has accumulated to date are deemed essential to the sustainable growth and enhancementof corporate value of the Group and for this reason, the Company nominated him for director.
-6-

■ Satoshi Yoshida (Director)
Mr. Satoshi Yoshida supervises operations related to general affairs and personnel affairs, and is
promoting the Company’s work style reforms and human capital management by spearheading theestablishment and operation of a new personnel system with his leadership. His abundant
operational experience and broad insight, including those from his previous work, are deemed
essential to the sustainable enhancement of the Group’s corporate value and for this reason, theCompany nominated him for director.
■ Mototsugu Sakai (Outside Director/Independent Officer)
Details given in section: II. 1. Matters related to institutional structure & organizational operations(2) Director relationships D. Relationships to the Company (2).
■ Yosuke Horiai (Outside Director/Independent Officer)
Details given in section: II. 1. Matters related to institutional structure & organizational operations(2) Director relationships D. Relationships to the Company (2).
■ Mitsuhiro Honda (Outside Director/Independent Officer)
Details given in section: II. 1. Matters related to institutional structure & organizational operations(2) Director relationships D. Relationships to the Company (2).
■ Yoriko Sakamoto (Outside Director/Independent Officer)
Details given in section: II. 1. Matters related to institutional structure & organizational operations(2) Director relationships D. Relationships to the Company (2).
■ Keizou Inoue (Outside Audit & Supervisory Board Member/Independent Officer)
Details given in section: II. 1. Matters related to institutional structure & organizational operations(2) Director relationships D. Relationships to the Company (2).
■ Shuzo Hayashi (Outside Audit & Supervisory Board Member)
Details given in section: II. 1. Matters related to institutional structure & organizational operations(2) Director relationships D. Relationships to the Company (2).
■ Eizo Tanahashi (Outside Audit & Supervisory Board Member /Independent Officer)
Details given in section: II. 1. Matters related to institutional structure & organizational operations(2) Director relationships D. Relationships to the Company (2).
■ Hisao Munakata (Outside Audit & Supervisory Board Member /Independent Officer)
Details given in section: II. 1. Matters related to institutional structure & organizational operations(2) Director relationships D. Relationships to the Company (2).

Supplementary Principle 3.1.3 Sustainability-related initiatives, etc.
We formulated Yokorei Sustainability Vision 2030 with an eye toward 10 years from 2020 to raise
medium- to long-term corporate value and have set harmony with the global environment, creatinga rewarding workplace, providing better quality and service, developing together with local-7-

communities, and strengthening the business foundation and ensuring soundness as our materiality.
In terms of creating a rewarding workplace, we will position human capital as an important elementof our business foundation and implement related measures. As for strengthening the businessfoundation and ensuring soundness, we actively work to improve our brand value, including
intellectual property, as we reinforce corporate governance. Recognizing that the impact of climatechange–related risks and profit opportunities on business is an important management issue, wehave expressed our agreement with the spirit of the international disclosure framework proposed by
the Task Force on Climate-Related Financial Disclosures (TCFD), reviewed the matter in the
Sustainability Committee organized around the management team and, following the approval of
the Board of Directors, have been conducting disclosure based on the TCFD framework.

Supplementary Principle 4.1.1

Roles and Responsibilities of the Board of Directors (1)The Board of Directors shall make decisions on material matters stipulated in its Bylaws, inaddition to matters stipulated in laws and regulations and the Company's Articles of Incorporation.
Authority for decisions on other matters shall be delegated according to organizational rules
prescribed by the Board of Directors and the Rules for the Division of Duties & Administrative
Authority.

Principle 4.9

Independence Standards and Qualifications for Independent Outside Directors

Based on the Tokyo Stock Exchange's criteria for independence, we have stipulated Standards for
Outside Director and Outside Audit & Supervisory Board Members Independence, and we selectcandidates who meet these standards.

Supplementary Principle 4.10.1

Appropriate participation and advice by independent outside

directors through an independent Nominating and Remuneration Committee
We make decisions regarding the nomination and remuneration of managers and directors
following deliberations by the Nominating and Remuneration Advisory Committee, more than halfof whose members are independent outside directors, in order to follow proper procedures that are
fair and highly transparent.

Supplementary Principle 4.11.1

Philosophy regarding the diversity of the directors, etc.

Our Board of Directors appoints directors, 8 of whom are directors and 4 of whom are outside
directors, in such a way that ensures a good overall balance in terms of knowledge, experience, andexpertise related to the Corporate Management Sector, Cold Logistics Business Sector, Food Sales
Business Sector, and Customs Clearance Business Sector. We have also established a frameworkwith officers in charge of overseas Group companies and have deemed our current composition to-8-

be diverse in terms of work experience and age and robust in terms of size, which is shown in theskill matrix. Yokorei Group does not use gender as part of its criteria for appointment. Whenappointing directors, our representative directors select candidates who maintain a balance between
excellent character, knowledge, experience, and expertise in such a way that will contribute toimproving the Company's sustainable growth and corporate value. Appointments are finalized by
the Board of Directors after deliberation by a voluntary advisory committee on nominating andremuneration (with a majority of their members being independent outside directors). With regard
to dismissal, if a director has violated a law or regulation, or the Company's Articles ofIncorporation, or if a director has considerably damaged corporate value through, for example,
professionally negligent conduct, similar procedures as those for appointment are followed anddismissals are finalized by the Board of Directors after deliberation by an advisory committee on
nominating and remuneration.

Supplementary Principle 4.11.2

Concurrent service of directors and Audit & Supervisory Board

Members
When directors or Audit & Supervisory Board Members of the Company serve concurrently as
officers or auditors of companies other than our Company, we limit the scope of said concurrent
service so that they can appropriately fulfill their duty of diligence and duty of loyalty.
Additionally, we disclose material facts of concurrent service every year in our notification of theAnnual General Meeting of Shareholders and our securities reports.

Supplementary Principle 4.11.3

Evaluation of the effectiveness of the Board of Directors

We conduct an anonymous survey of all directors in order to assess the overall effectiveness of theBoard of Directors and, as a commitment to improving Board functions, we strive to identify issues
and make on-going improvements. While we have confirmed the effectiveness of our current Boardof Directors and are confident that it is operating appropriately overall, we will strive to distribute
important reference material as quickly as possible and ensure more active discussions from broad
points of view.

Supplementary Principle 4.14.2

Policy on Training for Directors and Audit & Supervisory Board

Members
The Company provides newly appointed Directors with opportunities to acquire the necessary
information and knowledge on laws and regulations, management strategy, and finance required forappointment as well as providing ongoing training needed in order to fulfil their roles andresponsibilities. The Company gives newly appointed Audit & Supervisory Board Members andOutside Directors an overview of the Group’s business and carries out site visits, providing-9-opportunities to deepen their understanding of the Group’s business.

Principle 5.1

Policy for constructive dialogue with shareholders

Through constructive dialogue with shareholders, the Company endeavors to contribute tosustainable growth and an increase in corporate value over the medium to long term. The Company
has established the Public Relations and IR Department as a dedicated IR unit, and management
executives and the Directors engage in dialogue with shareholders to the extent it is reasonable. The
Company holds financial results briefings regularly (twice a year) and actively engages in investor
meetings, facility tours, and interviews. In addition, by strengthening the collaboration of related
departments through the officer with responsibility for the IR unit, the Company works to identify
the actual composition of shareholders and to establish and operate rules on the prevention of
insider trading.

2. Capital structure
Foreign shareholding ratio

10% or more but less than 20%[Major Shareholders]Name

Number of shares held

Ratio (%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

6,293,900

10.66

Matsuoka Co., Ltd.

2,569,800

4.35

The Dai-ichi Life Insurance Company, Limited

2,205,720

3.73

The Bank of Yokohama, Ltd.

2,176,955

3.68

Custody Bank of Japan, Ltd. (Trust Account)

1,629,800

2.76

The Norinchukin Bank

1,473,419

2.49

Hacchoko Co., Ltd.

1,411,870

2.39

Yokorei Employee Shareholding Association

1,329,040

2.25

BNYM SA/NV FOR BNYM FOR BNYM GCM

1,023,842

1.73

1,022,000

1.73

CLIENT ACCTS M ILM FE
SAKATA SEED CORPORATION

Majority shareholders (excluding parent company)-----

Parent company

None

Supplementary explanation----- 10 -

Corporate attributes
Stock exchange listing and section

Tokyo Stock Exchange Prime Market

Fiscal year end

September

Industry sector

Wholesale Trade

Number of employees at end of previous fiscal

Over 1,000

year (consolidated)
Net sales in the previous fiscal year

Between ¥100 billion and ¥1 trillion(consolidated)
Number of consolidated subsidiaries at end ofLess than 10

previous fiscal year

3. Guidelines on measures to protect minority shareholders during dealings with majority shareholders----4. Other special circumstances that may have a material impact on corporate governance------ 11 -

II. Administrative Organizational Structure Covering Decision-Making, Execution, andSupervision in Management Activities, and Other Corporate Governance Systems
1. Matters related to institutional structure and organizational operations
Organizational form

Company with Audit & Supervisory Board
Members[Matters Related to Directors]
Number of directors under the Articles of Incorporation

15

Term of service of directors under the Articles of Incorporation

2 years

Chairperson of the Board of Directors

Company president

Number of directors

12

Appointment of outside directors

Appointed

Number of outside directors

4

Number of outside directors designated as independent officers

4

Relationships to the Company (1)Relationship to the Company*
Name

AffiliationaMototsugu Sakai

From another company

Yosuke Horiai

Certified public accountant

Mitsuhiro Honda

Academic

Yoriko Sakamoto

Attorney

b

c

d

e

f

g

h

i

j

k

△

*Categories of "relationships to the Company"*A ○ icon indicates a category applicable to said person currently or recently. A △ icon indicates a
category applicable to said person in the past.
*A ● icon indicates a category applicable to a close family member currently or recently. A ▲ icon
indicates a category applicable to a close family member in the past.

a

Executive of a listed company or its subsidiaryb

Executive or non-executive director of the parent company of a listed companyc

Executive of a sister company of a listed companydA party whose major client or supplier is a listed company or an executive thereofeMajor client or supplier of a listed company or an executive thereoffConsultant, accounting expert, or legal expert receiving a large monetary sum or other property,
other than corporate officer remuneration, from a listed company- 12 -

g

Major shareholder of a listed company (or an executive thereof, if the major shareholder is a
corporation)hExecutive (said person only) of a client or supplier (not covered by items d, e, and f) of a listedcompanyi

Executive (said person only) of an entity with a mutual appointment of an outside directorjExecutive (said person only) of an entity to whom a listed company makes donationsk

Other relationship

Relationships to the Company (2)Name

Independent
officer

Supplementary
explanation
related toapplicable
items

Reason for selection

Mr. Mototsugu Sakai has a wealth of experience andextensive insight obtained by holding key positionsin ZEN-NOH (the National Federation ofAgricultural Cooperative Associations), and basedon the forgoing, he monitors and provides advice on
Mototsugu〇

management in general with objectivity and---fairness. The Company believes that he will

Sakai

continue to share useful opinions on the Company’s
management in general and nominated him foroutside director. Furthermore, Mr. Sakai meets theCompany’s prescribed the Standards ofIndependence for Outside Officers.
Mr. Yosuke Horiai has a wealth of experience as acertified public accountant and ample knowledge
about corporate financial affairs. Based on theforegoing, he monitors and provides advice
YosukeHoriai〇regarding management in general with objectivity---and fairness as an expert in finance and accounting.
The Company believes that he will continue to shareuseful opinions on the Company’s management ingeneral and nominated him for outside director.
Furthermore, Mr. Horiai meets the Company’s- 13 -

prescribed the Standards of Independence for
Outside Officers.
Mr. Mitsuhiro Honda has held key positions intaxation affairs at the National Tax Agency and iscurrently active as a professor at the University ofTsukuba Graduate School and in other positions.
Based on his wealth of experience and broad insight,
he monitors and provides advice on management in
Mitsuhiro〇----

general with objectivity and fairness. The Company

Honda
believes that he will continue to share useful
opinions on the Company’s management in generaland nominated him for outside director.
Furthermore, Mr. Honda meets the Company’sprescribed the Standards of Independence for
Outside Officers.
Ms. Yoriko Sakamoto has a proven track record as
an educator, and leveraging her extensive insightand experience as an attorney, she monitors andprovides advice on management in general with
Yoriko〇Sakamoto

objectivity and fairness. The Company believes that---she will continue to share useful opinions on the
Company’s management in general and nominatedher for outside director. Furthermore, Ms. Sakamoto
meets the Company’s prescribed the Standards ofIndependence for Outside Officers.

Voluntary establishment of committees equivalent toEstablished

Nominating Committee or Remuneration Committee

Establishment of voluntary committees and their member composition and chairperson attributes

Committee nameVoluntary committee
equivalent to Nominating
Committee
Nominating and Remuneration
Advisory Committee

Voluntary committee
equivalent to Remuneration
Committee
Nominating and Remuneration
Advisory Committee

6

6Total members- 14 -

Full-time members

22Internal directors

22

Outside directors

44Outside experts

00

Other members

00Chairperson

Outside directors

Outside directors

Supplementary explanation

We have established a Nominating and Remuneration Advisory Committee, which has independent
outside directors comprising a majority of its members, as an advisory body to the Board of
Directors for the purpose of strengthening the Board’s supervisory functions and accountability,
while also enhancing its discussions. This committee deliberates on matters related to thenomination and dismissal of directors, as well as matters of remuneration, and reports those results
to the Board of Directors, thereby ensuring equitable, transparent, and objective proceedings by the
Board with regard to nominations, remuneration, and the like.

[Matters Related to Audit & Supervisory Board Members]
Establishment of Audit & Supervisory Board

Established

Number of Audit & Supervisory Board Members underthe Articles of Incorporation
Number of Audit & Supervisory Board Members

4
4

Coordination between Audit & Supervisory Board Members, Accounting Auditors, and the Internal
Auditing Department

Audit & Supervisory Board Members regularly meet with certified public accountants carrying out
accounting audit tasks and exchange information and opinions on audit plans and audit results,
while coordinating in person for some of the audits by certified public accountants. In addition,
they receive review reports from accounting audit firms at the time of quarterly earnings reports
and they check any material issues that exist.
Also, our Internal Audit Department, which is a dedicated office independent from businessexecution tasks, takes charge of internal audits. Audit & Supervisory Board Members work with
the Internal Audit Department on an on-going basis to exchange information on audit plans, audit
results, and the like. While maintaining a close relationship, they strive to facilitate theimplementation of highly efficient and effective audits.
- 15 -

Appointment of Outside Audit & Supervisory
Board Members
Number of Outside Audit & Supervisory Board
Members
Number of Outside Audit & Supervisory Board
Members designated as independent officers

Appointed
43

Relationships to the Company (1)Relationship to the Company*
Name

Affiliationa

Keizou Inoue

From another company

Shuzo Hayashi

From another company

Eizo Tanahashi

Attorney

Hisao Munakata

Other

b

c

d

e

f

g

h

i

j

k

l

m

△
△

* Categories of “relationships to the Company”* A ○ icon indicates a category applicable to said person currently or recently. A △ icon indicates a
category applicable to said person in the past.
* A ● icon indicates a category applicable to a close family member currently or recently. A ▲ icon
indicates a category applicable to a close family member in the past.

a

Executive of a listed company or its subsidiarybNon-executive director or accounting advisor of a listed company or its subsidiaryc

Executive or non-executive director of the parent company of a listed companydAudit & Supervisory Board Members of the parent company of a listed company

eExecutive of a sister company of a listed companyf

A party whose major client or supplier is a listed company or an executive thereofgMajor client or supplier of a listed company or an executive thereofhConsultant, accounting expert, or legal expert receiving a large monetary sum or other property,
other than corporate officer remuneration, from a listed companyi

Major shareholder of a listed company (or an executive thereof, if the major shareholder is a
corporation)j

Executive (said person only) of a client or supplier (not covered by items f, g, and h) of a listedcompanyk

Executive (said person only) of an entity with a mutual appointment of an outside directorlExecutive (said person only) of an entity to whom a listed company makes donationsmOther relationship- 16 -

Relationships to the Company (2)Name

Independent
officer

Supplementar
y explanation
related toapplicable
items

Reason for selection

We are appointing Mr. Inoue Outside Audit

Keizou Inoue〇

Mr. Inoue is& Supervisory Board Member because wefrom ZEN-

deem him capable of appropriately auditing

NOH (thethe business execution of directors due to his

National

wealth of experience and knowledge from his

Federation ofcareer in key positions at ZEN-NOH and his

Agricultural

later involvement in corporate management

Cooperative

and audits. Furthermore, Mr. Inoue meets the

Associations).

Company’s prescribed the Standards ofIndependence for Outside Officers.
We are appointing Mr. Hayashi Outside Audit& Supervisory Board Member because we

Mr. Hayashi

deem him capable of appropriately auditing

is from The

the business execution of directors due to his

Norinchukin

wealth of experience and knowledge from his

Bank.

considerable professional work involved with

Shuzo Hayashi

business, finance, and accounting at The
Norinchukin Bank.
We are appointing Mr. Tanahashi Outside
Audit & Supervisory Board Member because
we deem him capable of appropriately
auditing the business execution of directors
due to his wealth of experience andEizo Tanahashi〇

knowledge from his considerable professional----

experience and his work involved withcorporate law as an attorney. Furthermore,
Mr. Tanahashi meets the Company’sprescribed the Standards of Independence for
Outside Officers.

- 17 -

We are appointing Mr. Munakata Outside
Audit & Supervisory Board Member because
we deem him capable of adequately auditing
the business execution of directors due to his
wealth of experience and knowledge of crisis
management and his career in key positions at
Hisao Munakata〇

the Defense Agency (now the Ministry of----

Defense), including Vice Chief of Staff andInspector General of the North Eastern Armyin the Ground Self-Defense Force.
Furthermore, Mr. Munakata meets theCompany’s prescribed the Standards ofIndependence for Outside Officers.

[Matters Related to Independent Officers]
Number of independent officers

7

Other details concerning independent officers

Mototsugu Sakai, Yosuke Horiai, Mitsuhiro Honda, and Yoriko Sakamoto were appointed at the74th General Shareholders Meeting. All four individuals are independent officers in their capacities
as outside directors. Mototsugu Sakai possesses abundant experience and broad knowledge, having
held keys positions at ZEN-NOH (the National Federation of Agricultural Cooperative
Associations), and we deem that he can provide valuable opinions on all aspects of business
management. Yosuke Horiai possesses abundant experience as a certified public accountant and his
considerable knowledge related to corporate finance, and because of his extensive experience andknowledge, we deem that he can provide the Board of Directors with valuable opinions and advice
on all aspects of business management. Mitsuhiro Honda has held various important taxationrelated positions at the National Tax Agency and is currently active in various capacities, including
as a professor at the University of Tsukuba Graduate School. Because of his abundant experience,
we deem that he can provide the Board of Directors with valuable opinions and advice on all
aspects of business management. Because of her abundant experience as an educator and extensive
knowledge and experience as an attorney, we deem that Yoriko Sakamoto can provide the Board of
Directors with valuable opinions and advice on all aspects of business management from various- 18 -

perspectives.

Independent officers Keizou Inoue, Eizo Tanahashi, and Hisao Munakata were appointed Outside
Audit & Supervisory Board Members at the 73rd General Shareholders Meeting. From his
experience with corporate management and auditing, we deem Keizou Inoue capable of providing
advice to our management team and fulfilling supervisory functions with regard to businessexecution. We deem Eizo Tanahashi capable of utilizing his specialized knowledge and experience
as an attorney to support our auditing systems. Hisao Munakata has had a career in key positions at
the Defense Agency (now the Ministry of Defense), including Vice Chief of Staff and Inspector
General of the North Eastern Army in the Ground Self-Defense Force. We deem him capable ofutilizing his wealth of experience and knowledge of crisis management to support our auditing
systems.

[Incentive-related Matters]
Implementation of measures to provide incentives to directors

Introduced
performance-based
compensation plan,etc.

Supplementary explanation of this item

[Performance-based Compensation Plan]
The total amount of performance-based bonus, limited to the scope passed by resolution at theGeneral Shareholders Meeting that reflects business results for one fiscal year, is based on theperformance indicators of (i) operating income, (ii) ordinary income, and (iii) profit attributable toowners of the parent in the consolidated business results for each fiscal year. If the base amount forachieving the target is set at 100, it is determined to vary from 0 to 150, taking into account the
year-on-year rate of change and the degree of achievement of the planned figures disclosed in theearnings statements.
Based on the results, it is possible to vary up to 10% before and after taking into account the trendsof other companies, etc., and even in this case, it is within the range of 0 to 150. Operating income,which indicates the status of our core business, is the most important indicator, and ordinary
income and profit attributable to owners of the parent are used as transparent indicators that do notleave room for other objective and arbitrary evaluation procedures.

- 19 -

[Others]
We approved the introduction of a restricted stock compensation scheme at the December 20, 2019
General Shareholders Meeting in order to more clearly elucidate the link between director
compensation and Company share price, while also increasing directors’ incentive to achievestronger operating results and to boost their level of awareness toward share price increases.

Stock option recipients

Supplementary explanation of this item

[Matters Related to Director Compensation]
Disclosure of individual director compensation

We do not disclose individual compensation.

Supplementary explanation of this item

Director compensation detailed in the 76th term (the fiscal year ended September 30, 2023)
securities report is as follows.
Recipients:
8 (excluding outside directors), Amount: 234 million yen (base compensation: 126 million yen,
performance-based bonus: 36 million yen, restricted stock compensation: 70 million yen)
4 outside directors, Amount: 24 million yen (base compensation: 24 million yen)

Policy for determining compensation amounts and calculation methods

Yes

Disclosure of policy for determining compensation amounts and calculation methods

Directors’ remuneration is approved by the Board of Directors, based on the policy for determining
individual remuneration for directors as resolved by the Board of Directors. This is limited to thescope passed by resolution at the General Shareholders Meeting, and based on the results ofdiscussions and deliberations by the Nominating and Remuneration Advisory Committee (which
has independent outside directors comprising a majority of its members) Director compensation iscomprised of base compensation that is a fixed amount, performance-based compensation thatreflects business results for one fiscal year, and restricted stock compensation that reflects mediumto long-term business results. The rough ratios of each form of compensation, if performancetargets are met, are 60% base compensation, 20% performance-based compensation, and 20%
restricted stock compensation. Outside director and Audit & Supervisory Board Member- 20 -

compensation are only comprised of base compensation of a fixed amount.

[Support System for Outside Directors (Outside Audit & Supervisory Board Members)]
With regard to the Board of Directors agenda and relevant materials, the General Affairs
Department provides advance copies and communicates necessary information to outside directors(Outside Audit & Supervisory Board Members). Additionally, the Company assigns employees toassist with the duties of Audit & Supervisory Board Members.

[Former Representative Directors/Presidents]
Former representative directors/presidents in advisory/consulting positions

Name

Job
title/position

HiroyukiMatsubara

AdvisorResponsibilities

Employment terms (fulltime, part-time,
with/without compensation,etc.)

Date retired
from said
positionTerm

Full-time

2023/12/22-

Generalmanagement
adviceTotal no. of former representative directors/presidents in1

advisory/consulting positions

Other Matters----

2. Matters on Functions Related to Business Execution, Auditing and Supervision, Nominations, andRemuneration Decisions (Overview of Current Corporate Governance System)
1. Board of Directors
The Company’s Board of Directors consists of 12 members (four of whom, Mototsugu Sakai,
Yosuke Horiai, Mitsuhiro Honda, and Yoriko Sakamoto, are independent outside directors) and, in
addition to making decisions on important management issues and executing business tasks, theBoard strives for mutual supervision among directors and thorough compliance. In principle, theBoard meets once a month. Additionally, corporate officers are called to attend and contribute theiropinions to Board meetings as necessary, while the Board endeavors to achieve dynamic
management able to engage in swift and accurate decision making.
2. Executive Management Committee- 21 -

The Executive Management Committee is comprised of the Chairman and Director; the President
and Representative Director; the Managing Director; and the Chief of each Sector. The committee
reviews matters referred to the Board and reports on transitional matters for important businessexecution, as well as the management of subsidiaries. In principle, the committee meets twice amonth.
3. Audit & Supervisory Board Members and Audit & Supervisory Board
The Company has adopted an Audit & Supervisory Board Member System that consists of four

Outside Audit & Supervisory Board Members (two of whom are part-time auditors). As noted in
the section Reasons for Appointing These Outside Audit & Supervisory Board Members, all of
the Company’s Outside Audit & Supervisory Board Members possess broad experience andknowledge of finance, accounting, law, and crisis management, and their independence from the
management team is ensured, while three Audit & Supervisory Board Members (Keizou Inoue,
Eizo Tanahashi, and Hisao Munakata) are independent officers. Audit & Supervisory Board

Members visit business sites to conduct on-site audits following the audit policy and audit plan,
while also auditing directors’ execution of duties by attending Board of Directors meetings. Audit& Supervisory Board Members, the Internal Audit Department, and accounting auditors exchange
information on the results of audits and other matters and maintain a close relationship as they
strive to facilitate the implementation of highly efficient and effective audits.
4. Status of accounting audits
The Company has signed an auditing agreement with Deloitte Touche Tohmatsu LLC to receive
audits from an independent and unbiased point of view. The certified public accountants who haveaudited the Company are Konosuke Misawa, a designated limited liability partner and managing
partner auditing us for the fifth consecutive year, Yuji Ujigawa, a designated limited liability
partner and managing partner auditing us for the first year, as well as 10 certified public
accountants assisting with the audit, in addition to 29 other personnel.
5. Nominating and Remuneration Advisory Committee
We have established a Nominating and Remuneration Advisory Committee, which has independent
outside directors comprising a majority of its members, as an advisory body to the Board of
Directors for the purpose of strengthening the Board’s supervisory functions and accountability,
while also enhancing its discussions. This committee deliberates on matters related to thenomination and dismissal of directors, as well as matters of remuneration, and reports those results
to the Board of Directors, thereby ensuring equitable, transparent, and objective proceedings by the
Board with regard to nominations, remuneration, and the like.

- 22 -

3. Reason for adopting present system of corporate governance
The Company has adopted an Audit & Supervisory Board Members system. Of the four Audit &Supervisory Board Members, all four are Outside Audit & Supervisory Board Members (threeof whom are independent officers) who possess the requisite knowledge and practical experiencefor performing the professional tasks of Audit & Supervisory Board Member. Furthermore, by
making 4 of the 12 directors outside directors, we strive to incorporate diverse perspectives in ourmanagement as we work to strengthen reciprocal management supervisory functions among
directors. With this structure, we judge that we are able to ensure proper corporate management andtherefore have selected this current system.

- 23 -

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Efforts to boost participation in General Shareholders Meetings and to facilitate the exercise of
voting rights
Supplementary explanation
Early notification of General

Early notification is sent and disclosure on the company website

Shareholders Meetings

is made before General Shareholders Meetings (notification of the76th General Shareholders Meeting was sent 17 days before anddisclosure on the company website was made 22 days before theday of convocation).

Scheduling meetings to avoid

We take the schedules of other companies’ General Shareholders

peak meeting days

Meetings into account and endeavor to avoid scheduling our
event during the peak meeting days in Japan.

Electronic exercise of voting

We have adopted a system for exercising voting rights over therightsinternet.

Participating in a platform for

We participate in a platform for electronically exercising voting

electronically exercisingrights.

voting rights and otherinitiatives to improve theenvironment for exercising
voting rights among
institutional investors
Providing an English version

We provide an English version of the General Shareholdersof the General Shareholders

Meeting notification.

Meeting Notifications(Summary)
Other

We post General Shareholders Meeting notifications, business
reports (in video format), video of shareholders meetings, and theresults of shareholder votes on our website.

2. Investor relations activities
Supplementary explanation
Creation andannouncement
We post our Disclosure Policy on the Company website.
of Disclosure
Policy- 24 -

Explanations by
the representative
himself/herself

RegularFinancial results briefings are held twice a year: after theinvestor

announcement of the second quarter financial results andbriefings forafter the annual financial results. Additionally, whenanalysts andformulating Medium-Term Management Plans, we explain

institutional

the content of those plans at the time of financial results

investors

briefings.

Available

Company IR website URL(Japanese) https://www.Yokorei.co.jp/ir/(English) https://www.Yokorei.co.jp/en/ir/
・ Management policies (message from top management,
Long-Term Vision and Medium-Term Management Plan,risk management initiatives, etc.)
・ Get to know Yokorei (easy-to-understand explanations ofour business activities)
Posting of IR
materials on
website・ Information (policies for dividends and shareholder
returns, FAQs, etc.) for individual investors
・ Information (integrated reports, etc.) for institutional
investors
・ Financial highlights, IR library (earnings statements,
securities reports, financial briefing materials, etc.)
・ Stock and bond information (dividends, shareholder
incentives, General Shareholders Meetings, ratings
information, etc.)
・ Others: we disclose a variety of other information,
including our IR calendar.

Establishmentof an IR
department(manager)・ Department in charge: an IR manager is positioned in the
Public Relations and IR Dept.
・ Director in charge: Director and Chief of Corporate
Management Sector

3. Initiatives for respecting the position of stakeholders
Supplementary explanation
Guidelines (internal

Stipulated in the Yokorei Group code of conduct and Basic Policy

regulations, etc.) foron Corporate Governance.

respecting the position of
stakeholders- 25 -

[Initiatives for the SDGs & Sustainability]
・ Coexisting with local communities (reducing GHG by adopting
solar power generation systems and CFC-free naturalrefrigerants, acquiring Green Management Certification,
Aquaculture Stewardship Council (ASC) certification, and Chain
Implementation ofof Custody (CoC) certification.
environmental protection
activities, CSR activities,

・ Creating workplaces with a sense of fulfillment (using IT to savelabor and work hours; diversity promotion)etc.

・ Providing higher quality and better services
・ Developing alongside local communities (establishing a programfor donating 1% of net income and sending it to social welfare
groups and others)
・ Ensuring a strong and healthy business foundation

Formulation of policies on

Our basic policy is to disclose material information on our

the provision of information

Company to shareholders, investors, and other stakeholders in ato stakeholders

timely, unbiased, and fair manner.

- 26 -

IV. Matters Related to our Internal Control System
1. Basic philosophy on and establishment of an internal control system
1. Systems for ensuring compliance with laws and regulations and the Company’s Articles ofIncorporation in the execution of duties by Directors and employees(1) The Company has established the Basic Policy on Compliance and the Compliance Manual(Code of Conduct) indicating the general principles that form the standards of conduct,
decisions, and evaluation for officers and employees, and has ensured that all officers and all
employees are well aware of it.
(2) In accordance with the Compliance Management Regulations, the Corporate Management
Headquarters conducts integrated compliance-related management to develop, promote, andmanage compliance systems.
(3) The Company has established the Yokorei Group Whistleblowing and Consultation Helpdesk
in the General Affairs Department as the internal reporting system for legal violations andother compliance-related facts, which it works to prevent. Based on the Whistleblowing
Process Rules, the Company also protects providers of information, which includes notengaging in unfavorable treatment.
(4) The Company has established the Internal Audit Department under the direct supervision of
the President and Representative Director, and it conducts systematic internal audits, which
include the state of compliance, based on an annual plan.
(5) Matters related to the execution of important corporate business are determined by the regularmeetings of the Board of Directors held once a month and by extraordinary meetings of theBoard of Directors. The Board of Directors also oversees the execution of duties by the
Directors.
(6) Audit & Supervisory Board Members report their opinions to the Board of Directors asnecessary and also advise on improvements to the execution of duties by the Directors asnecessary.
(7) The Company has no relationship of any kind with anti-social forces and the entire
organization will continue its firm stance against interference and other actions by anti-social
forces.
2. System regarding the retention and management of information relating to the execution ofduties by Directors(1) The President and Representative Director has appointed the Chief of the Corporate
Management Sector as the person responsible for the company-wide supervision of retention
and management of information relating to the execution of duties by Directors.
(2) The Company has established the Management Rules for Documents Relating to the- 27 -

Execution of Duties by Directors for the retention and management of information relating to
the execution of duties by Directors. Information is recorded on documents or electromagnetic
media, retained and managed based on the rules.
(3) The Directors and Audit & Supervisory Board Members may view these documents at anytime.
3. Rules and other systems related to managing the risk of loss
(1) The Company has ensured that all officers and all employees are well aware of the Basic
Policy on Risk Management, which stipulates the basic objectives and action guidelines forrisk management activities.
(2) The Board of Directors has established the Risk Management Rules to set out the relevant
departments and the emergency response for each type of risk for the priority management
risks.
(3) The Corporate Management Headquarters develops and operates the company-wide risk
management system, and will continue the comprehensive and integrated management ofGroup-wide risk.
(4) Audit & Supervisory Board Members and the Internal Audit Department audit theeffectiveness and appropriateness of risk management in each department.
4. Systems for ensuring the appropriateness of financial reporting(1) In order to ensure the appropriateness of the Group’s financial reporting, the Company
develops and operates internal controls and evaluates their effectiveness in accordance with
the Internal Control Rules and the Basic Policy on the Development, Operation, andEvaluation of Internal Controls.
(2) Led by the development and operation team of the Internal Control Committee, the Company
will endeavor to develop and operate the systems required to ensure the appropriateness of theGroup’s financial reporting.
5. Systems for ensuring the efficient execution of duties by Directors(1) Authority and responsibility are clearly specified based on the rules regarding the division ofduties and authority so that the Directors execute duties efficiently.
(2) A review of performance and execution of operations is carried out at the meetings of theBoard of Directors that are held every month with the aim of efficient implementation ofoperations by assessing the achievement of management targets and issues.
(3) In order to strengthen the supervisory function and accountability of the Board of Directors aswell as enhance its deliberations, the Company has established the Nomination andRemuneration Advisory Committee, which has independent Outside Directors as a majority of- 28 -

the members, as an advisory body to the Board of Directors. The committee reports the detailsof deliberations on matters related to the appointment, dismissal and remuneration of Directors
to the Board of Directors to ensure fairness, transparency, and objectivity in the procedures
related to the nomination and remuneration of Directors.
(4) Important decisions on management targets and matters with a serious impact are submitted to
the Board of Directors after full discussion and consideration at Management meetings inorder to expedite and streamline decision-making.
6. Systems for ensuring the proper operation of the corporate group composed of the Company
and its subsidiaries(1) System for reporting matters related to the execution of duties of Directors of subsidiaries to
the Company
a. In order to accurately understand the details of management at subsidiaries, the Company
sets out the matters to be discussed and reported to the Company in advance and manages
them appropriately based on the Affiliated Company Management Rules and the Detailed
Rules for the Operation of Subsidiaries based on them established by the Company.
b. The regular meetings of the Company’s Board of Directors and Management meetings
regularly receive reports on execution of operations, financial position, and other important
information from the Representative Directors and other officers of subsidiaries.
(2) Rules and other systems for managing the risk of loss at subsidiaries
a. Based on the Company’s Risk Management Rules, each subsidiary appoints a person withresponsibility for risk management and makes efforts to prevent and detect risk.
b. The Company stipulates that each subsidiary will report promptly to the Company’s Risk
Management Committee if a risk of loss is identified and has established a risk management
system for the comprehensive and integrated management of Group-wide risk.
(3) Systems for ensuring the efficient execution of duties by Directors of subsidiaries
a. The Company formulates fiscal year plans and medium-term management plans for theGroup in order to implement appropriate and efficient operations, taking into consideration
the business characteristics, size, and other features of subsidiaries.
b. The Chief of the Company’s Corporate Management Sector, who is the person withresponsibility for the management of subsidiaries, receives timely reports on important
decisions related to business activities and matters with a serious impact from theRepresentative Directors and other officers of subsidiaries, considers the content, and, whennecessary, gives advice and reports to the Board of Directors.
(4) Systems for ensuring compliance with laws and regulations and the Articles of Incorporationin the execution of duties by Directors and employees of subsidiaries.
- 29 -

a. Based on the Detailed Rules for the Operation of Subsidiaries, each subsidiary ensures that
all officers and all employees are well aware of the Company’s Basic Policy on Complianceand the Compliance Manual (Code of Conduct).
b. Based on the Company’s Compliance Management Rules, each subsidiary appoints a person
who is responsible for compliance to promote compliance and provide education andguidance.
c. The Company’s Internal Audit Department regularly conducts audits of subsidiaries, which
include the state of compliance.
7. Matters relating to employees when the Audit & Supervisory Board Members request theassignment of employees to assist in their duties, matters relating to the independence of theemployees from the Directors, and matters relating to ensuring the effectiveness of instructions
given by Audit & Supervisory Board Members to the employees(1) When the Audit & Supervisory Board has requested employees to assist with the duties of
Audit & Supervisory Board Members, the employees are appointed in consultation with the
Audit & Supervisory Board.
(2) Personnel evaluations and transfers of the employees are conducted in consultation with the
Audit & Supervisory Board in order to ensure their independence from the Board of Directors.
Additionally, to ensure the effectiveness of the instructions of the Audit & Supervisory Board
Members, the duties ordered by the Audit & Supervisory Board Members are not subject tocommands and orders of the Directors and persons from the organizations with which theemployees are affiliated.
8. Systems related to reports to Audit & Supervisory Board Members(1) The Company’s Directors and employees and the Directors, Audit & Supervisory Board
Members, and employees of subsidiaries report on company business position and the status
of development and operation of the internal control system at the request of Audit &Supervisory Board Members.
(2) The General Manager of the Company’s Internal Audit Department reports to Audit &Supervisory Board Members on the results of audits conducted by the Internal Audit
Department. The General Manager of the General Affairs Department reports to Audit &Supervisory Board Members on the status of reports and consultations with the Yokorei Group
Whistleblowing and Consultation Help Desk.
(3) The Company’s Directors and employees and the Directors, Audit & Supervisory Board
Members, and employees of subsidiaries report promptly to Audit & Supervisory Board
Members after learning of facts that could cause significant corporate damage, serious
compliance violations, and misconduct.
- 30 -

(4) The Company and its subsidiaries prohibit unfavorable treatment of any person who has madea report to Audit & Supervisory Board Members for reason of having made such a report, andensure that the Company’s Directors and employees and the Directors, Audit & Supervisory
Board Members, and employees of subsidiaries are well aware of this prohibition.
9. Matters relating to policies on processing of audit expenses, etc.
(1) When the Audit & Supervisory Board Members request the Company to pay the expenses forthe execution of their duties in advance, the Company processes the expenses or obligations
promptly unless deemed unnecessary.
(2) The Company sets a budget each fiscal year for expenses that arise related to the execution ofduties by Audit & Supervisory Board Members.
10. Other systems for ensuring the effectiveness of audits by Audit & Supervisory Board Members(1) Audit & Supervisory Board Members hold regular meetings with members of theManagement meetings composed of the Representative Director and others to exchange
opinions and communicate.
(2) Audit & Supervisory Board Members hold regular meetings with the accounting auditor toexchange information.
(3) Audit & Supervisory Board Members collaborate with the Internal Audit Department andendeavor to engage in appropriate communications and implement effective audit operations.

2. Basic philosophy and systems for excluding anti-social forces
Basic philosophy and systems for excluding anti-social forces(1) In the Yokorei Group Code of Conduct, the Company stipulates, “We firmly reject any
unreasonable demands from anti-social forces or those suspected of being anti-social forces,and do not have any relationship with them,” and we implement an organized response incooperation with attorneys, police departments, and other external agencies.
(2) The Company is a member of a Corporate Defense Countermeasures Federation and also
strives to gather information on and assess the status of anti-social forces through contact with
police departments that have jurisdiction as well as the shareholder register administrator andother parties.

- 31 -

V.

Others1. Adoption of anti-takeover measures
Adoption of anti-takeover measures

Not adopted

Supplementary explanation of this item-----

2. Other matters related to the corporate governance framework----Reference: Corporate governance diagram

General Meeting of Shareholders
Nomination/dismissal

Nomination/
dismissal

Nomination/
dismissal

Audit

Consults

Audit
Reports

Nominating &Remuneration
Advisory Committee
ChairmanandandRepresentative
Director, President
andChairman
Director,
PresidentRepresentativeand Representative
Director,Director,CEO
CEOInternal Audit Department

Executive Management
Committee

Directors in charge, corporate officers(execution of business)
Instructions

Reports

Instructions

Business Sector
Guidance- 32 -

Reports

Corporate Management
Sector

Accounting Auditors (external
auditors)

Audit & Supervisory Board(4 auditors, all Outside Audit &Supervisory Board Members)

Board of Directors(12 directors (4 of whom are outside directors); decides on
business execution, supervises the execution of duties bydirectors)