Basic Policy on Corporate Governance
YOKOREI Co., Ltd.
Chapter 1 General Provisions

1. Purpose
The corporate philosophy of YOKOREI Co., Ltd. (“the Company”) is “companies are social institutions
and profits are a measure of their service.” The Company has established the Basic Policy on CorporateGovernance (“the Basic Policy”) with a view to realizing the sustainable growth of the YOKOREI Groupconsisting of the Company and its affiliates (“the Group”) and increasing its corporate value over themedium to long term and will make continuous efforts to improve corporate governance.

2. Basic Approach to Corporate Governance
The 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 of achieving fair and highly
transparent management, the Group endeavors to speed up decision-making and strengthen checking
functions to enhance corporate governance.
The Company has adopted the institutional design of a Company with a Board of Company Auditors basedon Japan’s Companies Act.

3. Establishment, Revision, and Abolition
The establishment, revision, and abolition of the Basic Policy will be by resolution of the Board ofDirectors.

Chapter 2 Relationships with Stakeholders
1. Relationship with Shareholders(1) Securing the Rights and Equal Treatment of Shareholders
The Company takes actions and develops an environment so as to secure the rights and effective equal
treatment of shareholders.
(2) General Meeting of Shareholders
The Company positions the General Meeting of Shareholders as the ultimate decision-making institution
and makes efforts to develop an environment in which shareholders can exercise their rights appropriatelyby setting dates for meetings that facilitate attendance by shareholders, sending notices of convocation as
early as possible, and introducing a platform for exercising voting rights, at least for institutional investors.
(3) Basic Strategy for Capital Policy
In order to realize the Group’s sustainable growth and increase in corporate value over the medium to longterm, the Company positions operating profit, EBITDA, and the equity ratio as key indicators andstrengthens the financial base with an awareness of the cost of capital.
The Company considers shareholder returns taking into account future business investment and capitalefficiency and maintenance of credit ratings based on strengthening of equity capital.

(4) Policy on Cross-Shareholdings
The Board of Directors of the Company verifies cross-shareholdings annually, including periodicallyexamining whether the benefits and risks of holdings are commensurate with the Company’s cost ofcapital. The Company makes efforts to reduce cross-shareholdings when the significance of such holdings
has fallen through such means as selling them in stages.
With respect to the exercise of voting rights of shares held as cross-shareholdings, the Company
formulates specific standards and discloses them, and makes decisions whether to approve or disapprove aproposal based on a comprehensive 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 themedium to long term. This includes opposition to a proposal in cases where shareholder value will besignificantly undermined by such issues as serious concerns resulting from social scandal, legal violations,organizational restructuring, and so forth.

(5) Transactions with Related Parties
The Company will always obtain the approval of the Board of Directors when engaging in competingtransactions and conflict-of-interest transactions with the Company’s officers or with corporate entities thatare 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 Boardof Directors in accordance with laws and regulations to ensure that such transactions do not harm thecommon interests of the Company and its shareholders, except when it is clear that the terms oftransactions are the same as transactions in general.

2. Relationship with Stakeholders Other Than Shareholders(1) Cooperation with Stakeholders
The Company builds positive relationships and strives to cooperate appropriately with stakeholders,
including employees, customers, suppliers, and local communities with an eye to the sustainable growth of
the Group and an increase in its corporate value over the medium to long term.
(2) Basic Policies
The Company has established and implements the Basic Policy on Compliance, the Basic Policy on
Quality, and the Basic Policies on the Environment, which are appropriately amended in the Compliance
Committee and reviewed by the Board of Directors. The Company also makes these policies known toemployees at worksites all over Japan.
(3) Responding to Sustainability Issues
To address sustainability issues, the Company has established YOKOREI Basic Policies on theEnvironment and YOKOREI Sustainability Vision 2030, and develops and implements operations andplans that are integrated into management, in addition to disclosing initiatives in the appropriate manner. Inparticular, the Company will endorse the international framework for disclosure (TCFD) of the impact ofclimate change-related risks on management.

(4) Ensuring Diversity
The Company recognizes that the existence of diverse perspectives and values is valuable and makes
efforts to ensure diversity, including the implementation of measures to promote the active participation ofwomen.
(5) Whistleblowing
The Company has established an appropriate system based on the Whistleblowing Process Rules, and theBoard of Directors checks on the status of responses to reports and manages the operation of the system.
(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 such as monitoring investment
institutions. Moreover, the Company has introduced a defined contribution corporate pension plan as partof the welfare program and makes efforts to provide information on asset management in addition toproviding explanations when employees join the Company.

Chapter 3 Enhancing Information Disclosure
1. Appropriate Information Disclosure
The Company utilizes a variety of media to actively disclose information deemed to be important toshareholders and stakeholders, even beyond the matters for disclosure required by laws and regulations.
The Company also discloses and provides the required information from disclosure materials in English.

Chapter 4 Corporate Governance System
1. Board of Directors and Directors(1) Roles and Responsibilities of the Board of Directors
The Board of Directors recognizes its fiduciary responsibility and accountability to shareholders andcarries out the following matters with an eye to sustainable growth and an increase in corporate value overthe medium to long term.
1. The Board of Directors indicates the direction of corporate strategy, etc.
2. The Board of Directors establishes an environment that supports appropriate risk taking.
3. The Board of Directors fulfils its roles and responsibilities appropriately, including the provision ofhighly effective oversight from an independent and objective perspective.
(2) Formulation of Strategy
The Board of Directors engages in constructive discussion on important decisions related to businessexecution, such as management strategy and management plans, and sets the strategic direction inaccordance with the corporate philosophy.
(3) Scope of Delegation to the Board of Directors
In addition to the matters provided for in laws and regulations and the Articles of Incorporation, the Boardof Directors makes decisions on important matters stipulated in the Regulations of the Board of Directors.

Authority for decision-making on other matters is delegated in accordance with the organizational rules
and the rules on division of duties and job authority stipulated by the Board of Directors.
(4) Composition of the Board of Directors
The Board of Directors shall be composed of Directors with a good overall balance of knowledge,
experience, and abilities, and the number of Directors shall not exceed 15. In addition, at least one third
have been appointed as Outside Directors with advanced knowledge in any of the fields of corporate
management, risk management, legal compliance, and finance and accounting in particular, and they create
further oversight of management by advising the Board of Directors based on their opinions and extensive
experience from an independent and objective perspective. Furthermore, in the case of social scandal orviolation of laws and regulations or the Articles of Incorporation, or in the case of significant impairment
to corporate value due to neglect of duties and other actions, the Director, including the Representative
Director, is dismissed following deliberation by the Nominating and Remuneration Committee, ensuring asystem that facilitates appropriate management.
(5) Remuneration
As cash remuneration, the Company pays the Directors basic remuneration, which is fixed remuneration,that takes account of their responsibilities, positions, and contributions to management and performancerelated bonuses that depend on business performance in a given fiscal year. The Company also pays theDirectors restricted stock remuneration with the objective of raising their awareness of contributing to theincrease of corporate value over the medium to long term. The Outside Directors are paid basic
remuneration, which is fixed remuneration, only.
(6) Concurrent Positions
Any service as an officer of another company by a Director shall be limited to the extent to which theduties of due care and loyalty as Director can be performed. In addition, the Company discloses significant
concurrent positions annually.
(7) Evaluation of the Effectiveness of the Board of Directors
In order to secure its effectiveness, the Board of Directors analyses and evaluates the status of its
operations and discloses a summary of the results.
2. Board of Auditors and Auditors(1) Roles and Responsibilities of the Board of Auditors and Auditors
The Board of Auditors and the Auditors are entrusted by shareholders as an independent organization tooversee the execution of duties by the Directors, and are thereby responsible for ensuring soundness for thesustainable growth of the Company and the Group and the increase of corporate value over the medium tolong term.
(2) Composition
Auditors shall be persons with the appropriate knowledge of finance and accounting, and there shall be no
more than four Auditors, at least half of whom shall be Outside Auditors.
(3) Nomination
The nomination of candidates for Auditor from among persons with advanced knowledge in any of thefields of corporate management, risk management, legal compliance, finance and accounting is determinedby the Board of Directors after obtaining the agreement of the Board of Auditors.
(4) Remuneration
The Company pays the Auditors basic remuneration, which is fixed remuneration, only.

(5) Concurrent Positions
Any service as an officer of another company by an Auditor shall be limited to the extent to which theduties of due care and loyalty as Auditor can be performed. In addition, the Company discloses significant
concurrent positions annually.
3. Independence Standards
The Company has established its own Standards of Independence for Outside Directors and Outside
Auditors based on independence standards of the Tokyo Stock Exchange and selects persons who meetthese standards of independence as candidates for independent officers.
4. Policy on Training for Directors and Auditors
The Company provides newly appointed Directors with opportunities to acquire the necessary informationand knowledge on laws and regulations, management strategy, and finance required for appointment aswell as providing ongoing training needed in order to fulfil their roles and responsibilities. The Company
gives newly appointed Auditors and Outside Directors an overview of the Group’s business and carries out
site visits, providing opportunities to deepen their understanding of the Group’s business.
5. Nominating & Remuneration Advisory Committee
In order to strengthen the supervisory function of the Board of Directors and enhance the corporate
governance system by ensuring fairness, transparency, and objectivity in procedures related to nomination
and remuneration of Directors and Auditors, the Company has established an optional Nominating &Remuneration Advisory Committee, with Independent Outside Directors as a majority of the members.
Chapter 5 Dialogue with Shareholders
1. Basic Policy on Dialogue with Shareholders
Through constructive dialogue with shareholders, the Company endeavors to contribute to sustainablegrowth and an increase in corporate value over the medium to long term. The Company has established thePublic 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.
Chief of Corporate Management Sector provides appropriate feedback as necessary to the management
meetings on the opinions, advice, and concerns received from shareholders and institutional investors
following dissemination of information to them. In addition, by strengthening the collaboration of related
departments through the officer with responsibility for the IR unit, the Company works to identify theactual composition of shareholders and to establish and operate rules on the prevention of insider trading.
2. Basic Policy on Business Portfolio
The Company will begin an examination of its business portfolio as part of the organizational reform under
the Medium-Term Management Plan (PhaseⅠ).
Established: May 13, 2016
Partially updated: November 26, 2018
Partially updated: January 10, 2020
Partially updated: January 15, 2021
Partially updated: November 25, 2021
Partially updated: December 22, 2021