TRANSLATION FOR REFERENCE PURPOSE ONLYThis is a translation of the original release in Japanese. In the event of any discrepancy, the original release in Japanese shallprevail.

Corporate Governance Report
Last Update: February 19th, 2024

UNITED ARROWS LTD.
Yoshinori Matsuzaki, Representative Director, President, and CEO
Contact: IR Department +81-3-5785-6637
Securities Code: 7606
http://www.united-arrows.co.jp/en/
The corporate governance of UNITED ARROWS LTD. (the “Company” or “we”) is described below.

I.

Basic Views on Corporate Governance, Capital Structure, Corporate Profile andOther Basic Information

1. Basic Views
At the time of its founding in October 1989, UNITED ARROWS LTD. defined its founding spirit
as "contributing to society by setting new standards of Japanese lifestyle." The essence of thisspirit has been maintained and its expressions updated to better match the times so that it cancontinue to function as the basis for the actions of all directors and employees as our Company
Policy. In addition, we have defined our promise to society and the creation of value for five
distinct stakeholders as key features of our Policy Structure. The five distinct stakeholders forwhich value is to be created are customers, employees, business partners, society, andshareholders. In this regard, the Company's mission is to increase value for all stakeholders.
In order to maintain the proper mindset that will allow us to realize our Company Policy, we
put in place the Code of Conduct. This code expresses how we should think and act to achieve
our stated goals.
Recognizing the critical need to build a transparent and fair management framework, alongwith a structure under which we are capable of making timely and bold decisions, we arecommitted to continuously strengthening and expanding our corporate governance capabilities
and functions in order to realize our Company Policy, fulfill our promise to society, and create
value for five distinct stakeholders. Through these means, we are working to enhance ourcorporate value on a long-term and continuous basis.
To enhance corporate governance continuously, the Company develops and discloses its
corporate governance policy.
https://www.united-arrows.co.jp/ir/governance/ (in Japanese)[Reasons for Non-compliance with the Principles of the Corporate Governance Code]
The Company complies with all principles of the Corporate Governance Code.
1

[Disclosure Based on the Principles of the Corporate Governance Code] Updated[Principle 1.3 Basic Strategy for Capital Policy]
Sustainable growth and improving business results are our top priority toward realization of
Our Promise—Our Five Core Values stated in our Company Policy. The Company will use cash
generated from earnings growth to invest for medium- to long-term growth, while at the sametime improving its capital policy by paying robust dividends and carrying out share buybacks.
We aim to support business activities by implementing a flexible financial/capital policy, whileat the same time creating value for all stakeholders in “Our Five Values” by increasing capitalefficiency.
[Principle 1.4 Cross-Shareholdings]
The Company sold all shares it held as cross-shareholdings in 2015 when Japan’s Corporate
Governance Code was enacted and currently does not hold any such shares.
Going forward, if we decide to hold shares in another company as cross-shareholding, judging
that the cross-shareholding is appropriate after considering its purpose, benefits (e.g.,
dividends,

benefitsfromassociatedtransactions),

capital

cost

and

other

factors

comprehensively, the Company will develop and disclose specific standards for exercising
voting rights for the cross-shareholding.
In the case where the company holding the Company’s shares as a cross-shareholding (crossshareholding shareholder) shows an intention to sell the shares, the Company will not disturb
such sales.
The Company will not engage in transactions that lack economic rationale with the company
holding the Company’s shares as a cross-shareholding (cross-shareholding shareholder).
[Principle 1.7 Related Party Transactions]
If the Company engages in any transaction with its related party (director or major shareholderof the Company), the Company will obtain prior approval of its Board of Directors for thetransaction so as not to harm the interests of the Company or the common interests of its
shareholders.
The Company will disclose related party transactions in accordance with the Companies Act,
Accounting Standard for Related Party Disclosures, and other related provisions.
[Supplementary Principles 2.4.1]■View on ensuring diversity in hiring, etc. of core resources
The Company is working to increase productivity while ensuring job satisfaction for each
employee, recognize diversity and establish an organizational culture and labor environmentthat respect individuals.
- Diversity on employment category
More than 70% of the employees are mid-career employees, and the percentage of mid-career
employees in the core resources is also at the same level. The diversity of new graduates and2

mid-career employees for positions from store sales to store managers, managers and officers
is sufficiently ensured, and the Company will maintain the current level going forward.
- Gender diversity
The ratio of female employees that are in a section head or higher was 18% as of April 2021.
The Company has established a goal by manager hierarchy to raise the percentage to 30% asof the end of March 2026. The Company confirms the number of managers by gender at theannual manager appointment, and advocates achieving the goal for appointed managers infive years. As of the end of March 2023, the ratio of female employees at the section head andabove is 22.4%. The appointment goal and the actual results of annual appointment of female
managers have been disclosed on the ESG Data Book (Renewed annually in August).
ESG Data Book
https://www.united-arrows.co.jp/en/sustainability/management/- Diversity on nationality
Since the Company’s current major market is within Japan, all core resources are Japanese.
Therefore, the Company does not set a goal of appointing, etc. foreign employees to coreresources. However, UNITED ARROWS TAIWAN LTD., an overseas subsidiary of theCompany, works to ensure there is management other than the President with locally hired
employees. Going forward, together with the overseas expansion scenario, the Company willconsider appointing, etc. locally hired employees to core resources.
■Policies on resource development and internal environment establishment
Policies on resource development and internal environment establishment as well as theirimplementation statuses at the Company are disclosed on the Company website.
The Company website
https://www.united-arrows.co.jp/en/about/our-values/[Principle 2.6 Demonstrating the Function as Asset Owner of Corporate Pension]
The Company has a defined contribution pension system. For employees to create stable assets,
the Human Resources Department engages in educational activities regarding the system.
[Principle 3.1 Full Disclosure](1) Company objectives (e.g., company policy), business strategies and business plans
Company policy: our “Policy Structure” is posted on the Company website.

3

Business strategy: UNITED ARROWS Group’s Medium-Term Vision and businessstrategies/measures to achieve the Vision are published on the Company website and in
documents such as financial results, and securities report.
Business plan: information such as management policy and performance targets are publishedin financial results, presentation materials of earnings announcements and other documents.
(2) Basic views and guidelines on corporate governance based on each of the principles of theCode (original)
At the time of its founding in October 1989, UNITED ARROWS LTD. defined its founding spirit
as "contributing to society by setting new standards of Japanese lifestyle." The essence of thisspirit has been maintained and its expressions updated to better match the times so that it cancontinue to function as the basis for the actions of all directors and employees as our Company
Policy. In addition, we have defined our promise to society and the creation of value for five
distinct stakeholders as key features of our Policy Structure. The five distinct stakeholders forwhich value is to be created are customers, employees, business partners, society, andshareholders. In this regard, the Company's mission is to increase value for all stakeholders.
In order to maintain the proper mindset that will allow us to realize our Company Policy, we
put in place the Code of Conduct. This code expresses how we should think and act to achieve
our stated goals.
Recognizing the critical need to build a transparent and fair management framework, alongwith a structure under which we are capable of making timely and bold decisions, we arecommitted to continuously strengthening and expanding our corporate governance capabilities
and functions in order to realize our Company Policy, fulfill our promise to society, and create
value for five distinct stakeholders. Through these means, we are working to enhance ourcorporate value on a long-term and continuous basis.
To enhance corporate governance continuously, the Company develops and discloses its
corporate governance policy.
https://www.united-arrows.co.jp/ir/governance/ (in Japanese)(3) Board policies and procedures in determining the remuneration of the senior managementand directors;
The Company policy regarding director remuneration is to contribute to sustainable growth by
improving business performance and increasing corporate value over the medium to long term,
and the remuneration standards and structure are designed to match roles, duties andpositions.
Remuneration for executive directors consists of fixed compensation set based on the
remuneration standards for their roles, duties and positions, executive bonuses reflecting
short-term business performance such as the level of achievement of the Company’s businessperformance in each fiscal year and the business objectives set by each executive director, andstock-based compensation reflecting medium- to long-term performance (Board Benefit Trust(BBT)).

4Base compensation is fixed monthly and determined based on remuneration standards forroles, duties and positions, taking into account remuneration levels of other companies in thesame industry or other companies of a similar size, the Company’s business performance andemployee pay levels, based on a third-party survey of remuneration for corporate managers.
The amount of executive bonuses is calculated by multiplying the amount of basic bonuses set
forth in the director remuneration table by the degree to which consolidated operating income
for the target fiscal year meets the initial plan, and is determined by taking into account theindividual evaluations of each executive director. Allocations to individual executive directors
are determined in such a way that a higher-ranking director in the director remuneration table
will have a higher bonus coefficient (i.e., the ratio of bonuses to the sum of base compensation
and bonuses). The objective of this is to further strengthen their commitment to achieving
management targets over any given single fiscal year. In principle, no bonus will be paid ifconsolidated operating income is below a certain level against the initial earnings forecast. The
proposed amount of executive bonuses to be paid will be determined by the Board of Directors
after consultation by the Nomination and Compensation Committee and will be paid within acertain period from the end of the fiscal year.
With respect to stock-based compensation, a higher-ranking director in the director
remuneration table will have a higher share of total remuneration. The aim of this is to further
promote value-sharing with shareholders and build a remuneration structure that contributes
to medium- to long-term enhancement of corporate value. The stock-based compensationconsists of restricted stock compensation, which is subject to transfer restrictions until theretirement of a director and executive officer of the Company and the Group companies, andperformance-linked stock compensation, which is paid according to the degree of achievementof the medium-term management plan. The aim is to strengthen commitment to achieving theplan.
Bonuses and stock-based compensation will not be paid to non-executive directors. Only basecompensation will be paid to them according to their individual roles and responsibilities.
The remuneration of each director who is not an Audit and Supervisory Committee member isdetermined in accordance with the policy described above by resolution of the Board of
Directors within a range set by approval of a Shareholders Meeting. The Nomination andCompensation Committee is consulted before determining the remuneration.
The remuneration of each director who is an Audit and Supervisory Committee member isdetermined in accordance with the policy described above by unanimous resolution of the Audit
and Supervisory Committee within a range set by approval of a Shareholders Meeting.
In addition to the above, the Nomination and Compensation Committee examines theappropriateness of the policy, structure, and remuneration table and calculation rules on
director remuneration and puts forward revision proposals.
(4) Board policies and procedures in the appointment/dismissal of the senior management andthe nomination of candidates for directors and audit and supervisory board members
Our policy on the nomination of director candidates (excluding outside directors) is to nominate
those who are committed to achieving goals and highly competent in making management
decisions based on their experience, insight and expertise to contribute to sustainable growth5and higher corporate value over the medium to long term in line with the Company Policy(hereinafter “Nomination Policy 1”).
Our policy on the nomination of outside director candidates is to nominate those who haveabundant experience, deep insight and a high level of expertise to fulfill the function of control
and oversight over management from independent standpoints while contributing tosustainable growth and higher corporate value over the medium to long term in line with theCompany Policy (hereinafter “Nomination Policy 2”).
As for nomination procedures, the nomination of candidates for directors who are not Audit andSupervisory Committee members is determined by resolution of the Board of Directors inaccordance with Nomination Policies 1 and 2. The Nomination and Compensation Committee
is consulted in making the decision. Gender, nationality and other such factors of candidates
are not considered.
The nomination of candidates for directors who are Audit and Supervisory Committee members
is determined by resolution of the Board of Directors with consent of the Audit and Supervisory
Committee in accordance with the policy described in (3) above as well as Nomination Policies
1 and 2. Gender, nationality and other such factors of candidates are not considered.
In case of circumstances that warrant dismissal of a senior management member such as
significantly lacking management capability or engaging in a serious wrongdoing, the Board of
Directors or the chair of the Board (or a person acting in his or her place according to thepredetermined order if the chair is the subject person) will consult the Nomination andCompensation Committee. Fully respecting recommendations by the Committee, the Board of
Directors will determine whether the dismissal is necessary.
(5) Explanations with respect to the individual appointments/dismissals and nominations in
the Board’s appointment/dismissal of the senior management and the nomination of candidates
for directors and audit and supervisory board members based on (4)Explanations on appointments/dismissals and nominations of directors (6 inside directors and4outside directors) are provided in the documents attached to Corporate Governance Policy of
the Company.
The following is the link to the Corporate Governance Policy.
https://www.united-arrows.co.jp/ir/governance/ (in Japanese)[Principles 3.1.3]- Initiatives on sustainability
The Company establishes a Sustainability site within its corporate website. The website posts
numerical sustainability targets and management information including sustainability
statements and materiality. By posting this information, with a sense of consistency with ourbusiness strategy and business challenges, the Company discloses and provides information inan easy to understand, specific manner.
Sustainability site
https://www.united-arrows.co.jp/en/sustainability/6

- Climate-related risks and earning opportunities and their potential impacts on the Company’sbusiness activities, revenue and others
The Company recognizes that climate change is an important management issue in its businessactivities. We intend to reinforce our governance system and ramp up efforts to analyze the impact
of climate change on our business, develop appropriate measures and capture more growth
opportunities, thereby applying such efforts to corporate strategy. Amidst this background, theCompany endorsed the Recommendations of the Task Force on Climate-related Financial Disclosure(TCFD), established by the Financial Stability Board (FSB). We will actively disclose activities tocombat climate change and related information toward the realization of a sustainable society andenvironment as well as sustainable corporate growth.
For details, please see our website.

https://www.united-arrows.co.jp/en/sustainability/management/- Investment, etc. in human capital
As one of the Company Policy Structures, the Company has made a promise to society andpledged to create value for five distinct stakeholders. These are customers, employees, business
partners, society and shareholders. In this regard, the Company's mission is to increase value
for all stakeholders.
The concept below for creating value for employees is included in the disclosed Code of Conduct.
The Company is making investments in human capital based on this code.
■Concept of creating employee value in the Code of Conduct (excerpt)
As our employees are associates who agree to our corporate philosophy and work with us torealize it, we call them “members.” Our group’s corporate name, UNITED ARROWS, embodies
arrows that fly straight toward the same target together. UNITED ARROWS represents agroup of individual members with different personalities working together to realize the same
corporate philosophy (goal). With this policy in mind, we aim to manage our human resources
well. For our group, creating value for employees means to make sure that our employees
improve their abilities, reach their full potential, and feel happy in their work at our group. To
achieve this goal, we believe that it is important to provide our members, who value theircommunity and enhance productivity, with opportunities to upgrade their abilities and to
reward our members according to their performance. We have established specific guidelines
for the creation of value for employees, such as the Handbook for a Management System for
Human Resources and Compliance Manual.
■Details of the investment in human capital are described in the Company Sustainability site
“Code of Conduct for Creating Value for Employees”
https://www.united-arrows.co.jp/en/about/our-values/7

- Investment, etc. in intellectual property
The Company sets out below in its website to protect intellectual property rights. In addition
to complying with the below, continuous investments in human capital and management
resources are made in order to develop and maintain an appropriate management system.
■Protection of intellectual property rights (excerpt)“Many of the products and services that we handle are associated with intellectual property rights such as
trademark rights and copyrights. With internal regulations for management put in place to control and protect
our rights appropriately, we are striving to prevent the infringement of rights of third parties through measures
including advancing internal education and stepping up a check system. By correctly understanding andrespecting creativity, we at the Company are promoting initiatives to provide products and services to ourcustomers. ”
https://www.united-arrows.co.jp/en/about/our-values/<Supplementary Principles 4.1.1>
Scope of Matters Delegated to the Management
In addition to what is provided for by laws and regulations and the Articles of Incorporation,
resolution by the Board of Directors is required for deciding/revising its Policy Structure, as
well as for material management matters with quantitative thresholds set especially formatters that may have a significant impact on earnings results, such as investments and loans.
Matters to be judged/decided by the Management Committee and other approvers are
stipulated in the “list of approvers,” thereby setting them out and clarifying the scope of mattersdelegated to the management.
[Principle 4.9 Independence Standards and Qualification for Independent Directors]
The Company sets forth the Independence Determination Standards for Independent Officers
as follows and deems that any independent officers who do not fall under any of the items below
are sufficiently independent from the Company.
1. A major shareholder of the Company (Note 1) or an executive thereof
2. A party whose major client or supplier is the Company (Note 2) or an executive thereof
3. A major client or supplier of the Company (Note 3) or an executive thereof
4. A major lender of the Company (Note 4) or an executive thereof
5. A consultant, accounting professional or legal professional who receives a large amount ofmoney or other properties (Note 5) from the Company or its subsidiaries other than executive
remuneration (if the recipient is a corporation, partnership or any other type of organization,
any person who belongs to that organization)
6. A person who received from the Company or its subsidiaries more than 10 million yen in
donations in the most recent fiscal year of the Company (if the recipient is a corporation,
partnership or any other type of organization, any person who belongs to that organization)
7. An executive of a company in which an executive of the Company or its subsidiaries iscurrently appointed as outside director or outside audit and supervisory board member, or an
executive of a parent or subsidiary of such a company
8. A person who fell under any of items 1 through 7 above in the past three years.
89. An immediate family member (spouse or a relative within the second degree of kinship) of
any of the persons listed in 1) through 3) below. However, persons who are not important are
excluded.
1) Persons listed in items 1 through 8 above.
2) An executive of a subsidiary of the Company
3) A person who fell under 2) or was an executive of the Company in the past three years.
Note 1: A “major shareholder” means a shareholder who directly or indirectly holds 10% ormore of the total voting rights on shares of the Company.
Note 2: A “party whose major client or supplier is the Company” means a client or supplier thatreceived payments from the Company or its subsidiaries totaling over 100 million yen or 2% ofconsolidated net sales of the client or supplier group, whichever is higher, in the most recent
fiscal year of the client or supplier.
Note 3: A “major client or supplier of the Company” means a client or supplier that madepayments to the Company or its subsidiaries totaling over 2% of consolidated net sales of theCompany group in the Company’s most recent fiscal year.
Note 4: A “major lender of the Company” means a lender whose loans to the Company or its
subsidiaries amounted to over 2% of consolidated assets of the Company group as of the last
day of the Company’s most recent fiscal year.
Note 5: A “large amount of money or other properties” means those whose average total amountexceeds 10 million yen in the Company’s most recent three fiscal years.
[Supplementary Principles 4.10.1]
Appropriate involvement and advice of independent outside directors by establishment of
independent Nomination Committee and Compensation Committee- The Nomination and Compensation Committee composed of all independent outside directors
and the Representative Director (President and CEO) is established to strengthen the
independence/objectivity and accountability of Board functions related to appointment andcompensation of directors. The majority of the Nomination and Compensation Committee
members are independent outside directors. The Nomination and Compensation Committee
provides advice including viewpoints on diversity such as gender and skills.
- An outside director will become the chairperson of the Nomination and Compensation
Committee (in case of multiple outside directors, the chairperson will be determined upon
mutual discussion).
- The Nomination and Compensation Committee is held quarterly in principle, and is to beconvened by the chairperson as necessary.
- The Nomination and Compensation Committee provides opinions to the Board of Directors on
the matters below.
<Matters on nomination>- Appointment of each director candidate and his/her dismissal

9

- Appointment/dismissal (election or removal) of senior management (refers to executive
directors including the Representative Director (President and CEO); the same applies
hereinafter)- Whether or not to individually appoint or transfer candidates for executive officers anddirectors of affiliated companies<Matters on compensation>- Matters on compensation, etc. of directors (excluding those who are Audit and Supervisory
Committee members)<Other matters>- Matters on successor plan of Chief Executive Officer (CEO)- Other matters that the Board of Directors individually consults to the Committee<Supplementary Principles 4.11.1>
View on the appropriate balance between knowledge, experience and skills of the board as awhole, and also on diversity and appropriate board size
The Company chooses the corporate governance structure of the Company with the Audit andSupervisory Committee with the aim of strengthening the Board’s monitoring function andexpediting decision-making through appointment of outside directors who do not executebusiness and appropriate delegation of authority.
Our policy is to keep the number of Board members to the minimum required for ensuring
Board functions— no more than six directors who are Audit and Supervisory Committee
members, and no more than eight directors who are not members of the Audit and Supervisory
Committee members.
Our policy on the nomination of outside directors is to appoint people with abundant
experience, deep insight and a high level of expertise and ensure that outside directors makeup at least 1/3 of the total number of directors, and to appoint at least one outside director who
has management experience at another company.
In order to effectively fulfill their delegated responsibilities, executive directors are appointed
as “Chief X Officers” to clarify their areas of responsibility and roles.
It is our basic policy that the Board of Directors should be composed in ways to achieve abalance between diversity, including aspects of gender, internationality, work history, age andappropriate size. Internationality considered by the Company not only refers to differences innationality but also covers persons with abundant international business experience.
The composition of the Board of Directors of the Company and the requirements and skills of
the executive directors and executive officers are explained in the supplementary materials of
the Corporate Governance Policy of the Company.
The following is the link to the Corporate Governance Policy.
https://www.united-arrows.co.jp/ir/governance/ (in Japanese)<Supplementary Principles 4.11.2>
10Positions at other listed companies served by directors
The Company has confirmed that the additional positions held by our outside directors at othercompanies are to the extent that allows them to devote sufficient time and effort toappropriately fulfilling their roles and responsibilities at the Company.
Any director positions at other listed companies served by our directors are disclosed as“significant concurrent positions outside the Company” in the Notice of Ordinary General
Meeting of Shareholders each year.
https://www.united-arrows.co.jp/en/ir/stockinfo/notification/<Supplementary Principles 4.11.3>
Analysis and evaluation on the effectiveness of the board as a whole
The Company annually conducts a questionnaire on the effectiveness of the Board of Directorsthat includes the composition of the Board, deliberations, the quality of the information
provided to the Board, and other aspects. Through this self-evaluation by directors, theCompany periodically verifies the effectiveness of the Board and take measures to improveissues and reinforce the operation. An overview of the results is disclosed.
First, based on the outcome of the questionnaire concerning the fiscal year ended March 2022,
the Board of Directors positioned the following as tasks to undertake: (i) continuously review
necessary skills and update the skill matrix in light of the business environment, (ii) deepen
discussions on formulation of new medium-term management plans, and (iii) consider
measures for effectively implementing a succession plan for senior management members,
including executive officers, in order to realize the management strategy. In response, during
the fiscal year ended March 2023, the Committee for Formulation of the Medium-termManagement Plan, which consists mainly of executive directors, gave a report to the Board of
Directors each time progress was made during the review phase, and the opinions of outside
directors with diverse perspectives served to deepen discussions aimed at developing a new
medium-term management plan. At the same time, the need for the succession of directors andexecutive officers was confirmed, and although there is still a sense that more discussion isneeded on specific implementation methods and measures, two new directors were elected to
examine the skills needed to steadily implement the medium- to long-term management planand to build a management structure that will realize solid growth.
Subsequently, in a questionnaire concerning the fiscal year ended March 2023 conducted in
April 2023, although no major problems were pointed out with regard to the operation andeffectiveness of the Board of Directors, an opinion was expressed that the skills required ofmembers should continue to be examined and measures to fulfill them should be considered
and discussed in the execution phase of the newly established medium-term management plan.
In addition, in order to achieve the medium- to long-term management plan and to make themanagement system more robust, opinions were expressed on the need for a plan to appoint
members who will lead the next generation of management and to develop target members,
and on how to utilize the “agenda items” of the Board of Directors as an opportunity to discussthese important management issues. In the future, based on the opinions submitted, the11Company will consider and implement initiatives to further enhance the effectiveness of thesystem.
<Supplementary Principles 4.14.2>
Training policies for directors
Our training policies for directors are as follows.
(1) Training programs by experts on economy, finance, legal and other areas necessary forbusiness operation of the Company are provided as necessary.
(2) Separately from the above, explanations are provided on the Company’s philosophy,business strategy, and business activities and there is a tour of major facilities at the time aperson assumes the office of director.
(3) Full-time Audit and Supervisory Committee members obtain the necessary information by
regularly attending multiple expert committees and share to other Audit and Supervisory
Committee members as necessary.
In addition, directors are able to receive external training at the expense of the Company toacquire the knowledge needed for fulfilling their roles and responsibilities.
[Principle 5.1 Policy for Constructive Dialogue with Shareholders] and [Principle 5.2
Establishing and Disclosing Business Strategies and Business Plans]
The Company aims to improve the soundness of corporate management and create shareholder
value by increasing the transparency of its management through active IR operations anddriving communication with its shareholders and investors. In addition, the Company works
to enhance information disclosure by disclosing its medium-term management plan that shows
its strategies as well as quantitative targets for profitability and capital efficiency (ROE), while
striving to maintain and boost profitability by establishing investment/exit standards based on
capital cost.
The Company establishes and discloses Disclosure Policies for “constructive dialogue withshareholders and investors, and full disclosure.”
Policies, establishment of systems and other matters on timely disclosure under the Companies
Act, the Financial Instruments and Exchange Act and other laws and regulations are describedin “Information Disclosure Criteria and Methods,” “Timely Information Disclosure Structureand Systems,” “Quiet Period,” and “Precautionary Notes Regarding Statements with Respect
to Future Forecasts” in the Disclosure Policies.
Policies, establishment of systems and other matters for constructive dialogue withshareholders and investors are described in “Comprehensive Communication,” “Pertinent
Feedback on the Company’s IR Activities” and “Constructive Dialog with Shareholders andInvestors” in the Disclosure Policies.
The Company establishes and discloses its medium-term management plan (Medium-Term
Vision) every three years. We strive for full disclosure by stating quantitative targets forprofitability and capital efficiency (ROE), in addition to strategies, in the medium-term
management plan. We set the ROE target at a value higher than capital cost recognizedinternally to increase corporate value over the medium to long term.
12

To use cash from operating activities beneficially, the Company calculates, when making newinvestments in sales facilities or undertaking large-scale renovations, the number of years until
investment recovery taking into account capital cost, the net present value (NPV) and internalrate of return (IRR). Investment decisions are made on condition that hurdle rates set by theCompany are exceeded. If it is expected to be impossible for a new business to post a single
fiscal year profit in three years and cover cumulative losses in five years, we will provide
company-wide backup to the business to improve profitability and, if there is no possibility of
improvement, consider exiting.
The following is the link to the Disclosures Policies.
https://www.united-arrows.co.jp/en/ir/disclosure/[Action to Implement Management that is Conscious of Cost of Capital and Stock Price]
The action to implement management that is conscious of cost of capital and stock price isdisclosed on the Company’s website.
https://www.united-arrows.co.jp/wpcontent/uploads/2024/02/e_presentation_hosoku_2024_3.pdf[Status of Dialogue with Shareholders]
The status of dialogue with shareholders is disclosed on the Company’s website.
https://www.united-arrows.co.jp/wp-content/uploads/2023/11/presentation_hosoku_2024_2.pdf(in Japanese)

2. Capital Structure
Foreign Shareholding Ratio

20% or more but less than 30%[Status of Major Shareholders]Name / Company Name

Number of Shares Owned

Custody Bank of Japan, Ltd.

Percentage (%)

4,837,500

17.44

3,203,500

11.55

Osamu Shigematsu

2,488,400

8.97

ADS Co., Ltd.

2,000,000

7.21

728,800

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

NORTHERN TRUST CO. (AVFC) RE
THE HIGHCLERE
INTERNATIONAL INVESTORSSMALLER COMPANIES FUND

13

Standing proxy: Tokyo Branch, The
Hongkong and Shanghai Banking
Corporation Limited (HSBC)STATE STREET LONDON CARE OF
STATE STREET BANK AND TRUST,BOSTON SSBTC
A/C UK LONDON BRANCHCLIENTS-UNITED KINGDOM

725,800

2.62

502,709

1.81

428,000

1.54

428,000

1.54

363,025

1.31

Standing proxy: Tokyo Branch, The
Hongkong and Shanghai Banking
Corporation Limited (HSBC)STATE STREET BANK AND TRUSTCOMPANY 505001
Standing proxy: Mizuho Bank, Ltd.
Mitsubishi UFJ Trust and Banking
Corporation
Standing proxy: The Master Trust
Bank of Japan, Ltd.
TAKISADA-NAGOYA CO., LTD.
JP MORGAN CHASE BANK 385781
Standing proxy: Mizuho Bank, Ltd.
Controlling Shareholder(except for Parent Company)
Parent Company--NoneSupplementary Explanation
1. In addition to the above, the Company holds 2,475,080 shares of treasury stock, which are
excluded from the status of major shareholders above.
2. Treasury stock excluded from calculation of the status of major shareholders as stated in 1
above does not include 142,344 shares of the Company's stock held as trust assets of the "Stock
Benefit Trust (BBT-RS).
3. The Change Report of Large-Volume Holdings made available for public inspection on May
31, 2023 states that Sumitomo Mitsui Trust Bank, Limited and its joint holders Sumitomo
Mitsui Trust Asset Management Co., Ltd. and Nikko Asset Management Co., Ltd. owned thefollowing shares as of May 25, 2023. However, the Company is unable to confirm the actual
number of shares owned as of September 30, 2023, and therefore these firms are not includedin the above status of major shareholders.
14The content of the Report of Large-Volume Holdings is as follows.
Name or Company Name / Address / Number of Shares Owned / Percentage (%)
Sumitomo Mitsui Trust Asset Management Co., Ltd. / 1-1-1 Shibakoen, Minato-ku, Tokyo /677,200 shares / 2.24%
Nikko Asset Management Co., Ltd. / 9-7-1 Akasaka, Minato-ku, Tokyo / 2,166,100 shares /7.17%

3. Corporate Attributes
Listed Stock Market and Market
Section

The Prime Market of the Tokyo Stock Exchange

Fiscal Year-End

MarchType of Business

Retail Trade

Number of Employees (consolidated) asof the End of the Previous Fiscal YearSales (consolidated) as of the End of thePrevious Fiscal Year

1,000 or more
From ¥100 billion to less than ¥1 trillion

Number of Consolidated Subsidiaries
as of the End of the Previous Fiscal

Less than 10

Year

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with
Controlling Shareholder
None

5. Other Special Circumstances Which May Have Material Impact on Corporate Governance
None

II. Business Management Organization and Other Corporate Governance Systems
regarding Decision-making, Execution of Business, and Oversight in Management
1. Organizational Composition and Operation
Organization Form

Company with Audit & Supervisory Committee[Directors]
Maximum Number of Directors
Stipulated in Articles of Incorporation
Term of Office Stipulated in Articles ofIncorporation

14
1 year15

Chairperson of the Board

President

Number of Directors

7

Appointment of Outside Directors

Appointed

Number of Outside Directors

3

Number of Independent Directors

3Outside Directors’ Relationship with the Company (1)Outside Directors’ Relationship with the
Name

Company*

Attributea**

Yukari Sakai

From another company

Yusaku Kurahashi

Lawyer

Shiho Takano

From another company

b

c

d

e

f

g

h

I.

j

k

Categories for “Relationship with the Company”“○” when the director presently falls or has recently fallen under the category; “△” when the
director fell under the category in the past*“●” when a close relative of the director presently falls or has recently fallen under the
category; “▲” when a close relative of the director fell under the category in the pasta. Executive of the Company or its subsidiaries
b. Non-executive director or executive of a parent company of the Company
c. Executive of a fellow subsidiary company of the Company
d. A party whose major client or supplier is the Company or an executive thereof
e. Major client or supplier of the Company or an executive thereof
f. Consultant, accountant or legal professional who receives a large amount of monetaryconsideration or other property from the Company besides compensation as a director/audit
and supervisory board member
g. Major shareholder of the Company (or an executive of the said major shareholder if theshareholder is a legal entity)
h. Executive of a client or supplier company of the Company (which does not correspond to anyof d, e, or f) (the director himself/herself only)
i. Executive of a company in which the same outside directors/audit and supervisory board
members are also appointed at the Company (the director himself/herself only)
j. Executive of a company or organization that receives a donation from the Company (thedirector himself/herself only)
k. OtherOutside Directors’ Relationship with the Company (2)

16

Name

Audit and

Designation

Supplementary

Supervisoryas

Explanation ofCommittee

Independent

thememberDirector

Relationship

Reasons for Appointment

Ms. Sakai has experience as
director and audit andsupervisory board member atother companies, abundantfinance-related knowledge,
including expertise in financing
and accounting matters, andvarious viewpoints from theperspective of diversity. The
Company appointed her as
outside director (Audit andYukari
Sakai

Supervisory Committee
○

○

---

members) in the belief that she
would leverage her abundant
experience and knowledge to
execute the Company's businessand fulfill the function of control
and oversight over management,
and she was elected in the 33rd
Ordinary General Meeting of
Shareholders. Ms. Sakai
satisfies the Independence
Determination Standards for
Independent Officers set forth by
the Company.

17

Name

Audit and

Designation

Supplementary

Supervisoryas

Explanation ofCommittee

Independent

thememberDirector

Relationship

Reasons for Appointment

Mr. Kurahashi has been engaged
in lawsuits and other disputecases, M&A, corporate
restructuring, and corporate legal
affairs as a lawyer, and has broad
experience, including
participating in third-party
committees in corporate scandalcases. The Company appointed
him as outside director (Audit
YusakuKurahashiand Supervisory Committee
○

○

---

member) in the belief that hewould leverage his extensive
specialized knowledge to enhance
the Company's corporate
governance and other matters,
and he was elected in the 33rd
Ordinary General Meeting of
Shareholders. Mr. Kurahashi
satisfies the Independence
Determination Standards for
Independent Officers set forth by
the Company.

18

Name

Audit and

Designation

Supplementary

Supervisoryas

Explanation ofCommittee

Independent

thememberDirector

Relationship

Reasons for Appointment

Ms. Takano has a wealth ofexperience in marketing,branding, new productdevelopment and others, andextensive knowledge as amanagement executive for many
years, acquired through her
tenure in several operatingcompanies in the food andcosmetics industries. The
Company appointed her as
outside director (Audit andSupervisory Committee member)in the belief that she would
leverage her extensive experience
Shiho
Takano○○---and knowledge to offer objective
and neutral advice, etc. on overall
corporate management from a
broad range of viewpoints thatare not bound by the industry inwhich the Company operates andthat she would help further
strengthen the sound andeffective management of theCompany. Subsequently, she waselected in the 33rd Ordinary
General Meeting of Shareholders.
Ms. Takano satisfies the
Independence Determination
Standards for Independent
Officers set forth by theCompany.

[Audit and Supervisory Committee]
Committee’s Composition and Attributes of Chairperson

19

All
Committee
Members

Full-time

InsideOutsideMembers

Directors

Directors

Audit andSupervisory

3

1

0

Committee

3

Chairperson

OutsideDirector

Appointment of Directors and/or
Staff to Support the Audit andAppointed

Supervisory Committee
Matters Related to the Independence of Such Directors and/or Staff from Executive Directors
The Company has employees who concurrently serve as staff to support the Audit andSupervisory Committee. The appointment, transfer, evaluation and the like of the staff aredetermined upon consultation with the Audit and Supervisory Committee to ensure
independence from directors who are not Audit and Supervisory Committee members.
Cooperation among Audit and Supervisory Committee, Accounting Auditors and Internal Audit
Departments
The Audit and Supervisory Committee is composed of three directors who are Audit andSupervisory Committee members (all of whom are outside directors). The Committee
determines policies on audits and other related matters in accordance with the regulations of
the Audit and Supervisory Committee, and prepares audit reports upon receiving reports from
Audit and Supervisory Committee members, directors who are not Audit and Supervisory
Committee members, and the accounting auditor.
As for internal audits, the Internal Auditing Office, which is placed directly under the president
and composed of five members, conducts store and department audits focusing on operational
efficiency/appropriateness and risk management. The results of these audits are shared with
the Audit and Supervisory Committee to recognize issues. Internal audits are also conductedon subsidiaries.
[Establishment of Optional Nomination/Remuneration Committee]
Establishment of Optional
Committee(s) Corresponding toNomination Committee or

Appointed

Remuneration Committee
Committee’s Name, Composition, and Attributes of Chairperson

20Committee’s
Name
Optional
Committee
Corresponding
to Nomination
Committee

All
Committee
Members

Full-time

InsideOutsideOutsideMembers

Directors Directors

Experts

Other Chairperson

Nomination
andCompensation

4

2

1

3

0

0

4

2

1

3

0

0

OutsideDirector

Committee

Optional
Committee
Corresponding
toRemuneration

Nomination
andCompensation

OutsideDirector

Committee

Committee

Supplementary Explanation
The Nomination and Compensation Committee composed of all independent outside directors
and the Representative Director (President and CEO) is established to strengthen the
independence/objectivity and accountability of Board functions related to appointment andremuneration of directors. The Company's Nomination and Compensation Committee serves
as both a nomination committee and a compensation committee. The Committee is held
quarterly in principle, and is to be convened by the chair as necessary.
Specific matters to be deliberated at the Nomination and Compensation Committee aredescribed in the Corporate Governance Policy of the Company.
https://www.united-arrows.co.jp/ir/governance/ (in Japanese)[Independent Directors]
Number of Independent Directors

3

Matters relating to Independent Directors---[Incentives]
Incentive Policies for Directors

Performance-linked Remuneration, other

Supplementary Explanation

21

For directors who are not Audit and Supervisory Committee members, with the aim of further
promoting value-sharing with shareholders and building a remuneration structure that
contributes to medium- to long-term enhancement of corporate value, the Company introduced
restricted stock compensation, which is subject to transfer restrictions until the retirement of
a director and executive officer of the Company and the Group companies, and a system togrant performance-linked stock compensation (Board Benefit Trust (BBT)), which is paid
according to the degree of achievement of the medium-term management plan, for the purposeof strengthening commitment to achieve the plan.
Recipients of Stock Options
Supplementary Explanation--[Director Remuneration]
Disclosure of Individual Directors’
Remuneration

No Individual Disclosure

Supplementary Explanation
Total amounts of remuneration by director category are disclosed in securities reports andother documents.
Policy on Determining
Remuneration Amounts andAppointed

Calculation Methods
Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods
The Company policy regarding director remuneration is to contribute to sustainable growth by
improving business performance and increasing corporate value over the medium to long term,
and the remuneration standards and structure are designed to match roles, duties andpositions.
Remuneration for executive directors consists of fixed compensation set based on the
remuneration standards for their roles, duties and positions, executive bonuses reflecting
short-term business performance such as the level of achievement of the Company’s businessperformance in each fiscal year and the business objectives set by each executive director, andstock-based compensation reflecting medium- to long-term performance (Board Benefit Trust(BBT)).
22

Base compensation is fixed monthly and determined based on remuneration standards forroles, duties and positions, taking into account remuneration levels of other companies in thesame industry or other companies of a similar size, the Company’s business performance andemployee pay levels, based on a third-party survey of remuneration for corporate managers.
The amount of executive bonuses is calculated by multiplying the amount of basic bonuses set
forth in the director remuneration table by the degree to which consolidated operating income
for the target fiscal year meets the initial plan, and is determined by taking into account theindividual evaluations of each executive director. Allocations to individual executive directors
are determined in such a way that a higher-ranking director in the director remuneration table
will have a higher bonus coefficient (i.e., the ratio of bonuses to the sum of base compensation
and bonuses). The objective of this is to further strengthen their commitment to achieving
management targets over any given single fiscal year. In principle, no bonus will be paid ifconsolidated operating income is below a certain level against the initial earnings forecast. The
proposed amount of executive bonuses to be paid will be determined by the Board of Directors
after consultation by the Nomination and Compensation Committee and will be paid within acertain period from the end of the fiscal year.
With respect to stock-based compensation, a higher-ranking director in the director
remuneration table will have a higher share of total remuneration. The aim of this is to further
promote value-sharing with shareholders and build a remuneration structure that contributes
to medium- to long-term enhancement of corporate value. The stock-based compensationconsists of restricted stock compensation, which is subject to transfer restrictions until theretirement of a director and executive officer of the Company and the Group companies, andperformance-linked stock compensation, which is paid according to the degree of achievementof the medium-term management plan. The aim is to strengthen commitment to achieving theplan.
Bonuses and stock-based compensation will not be paid to non-executive directors. Only basecompensation will be paid to them according to their individual roles and responsibilities.
The remuneration of each director who is not an Audit and Supervisory Committee member isdetermined in accordance with the policy described above by resolution of the Board of
Directors within a range set by approval of a Shareholders Meeting. The Nomination andCompensation Committee is consulted before determining the remuneration.
The remuneration of each director who is an Audit and Supervisory Committee member isdetermined in accordance with the policy described above by resolution of the Audit andSupervisory Committee within a range set by approval of a Shareholders Meeting.
In addition to the above, the Nomination and Compensation Committee examines theappropriateness of the policy, structure, and remuneration table and calculation rules on
director remuneration and puts forward revision proposals.
[Support System for Outside Directors]
The Company has employees who concurrently serve as staff to support the Audit andSupervisory Committee that is mainly composed of outside directors. To ensure effectiveness of
instructions given to the aforementioned staff by Audit and Supervisory Committee members,
23

we give the necessary investigation authority to the staff and put in place a system ofcooperation by departments.
Board of Directors meeting materials are sent to outside directors by the day before eachmeeting. In addition, outside directors check sufficient information other than Board materials
by referring to meeting minutes provided by secretariats of key meeting bodies.
[Status of Persons Retired from Office of Representative Director and President or the Like]
Names and other details of counselor, advisor or the like who are former representative
directors and presidents or the like
Working

Name

Position/
title

Description of duties

arrangements/

Date ofconditions

retirement

Term of(e.g., full-time/

as president,

officepart-time, paid/

etc.

unpaid)1. Providing various
types of advice todirectors of the
Osamu
Shigematsu

Company (not involved
Chairmanin management)
2. Providing advice on

Part-time, paid

March 31,2012

1 yearimproving corporate
culture, corporate
loyalty, and creativity
Total number of counselors,advisors or the like who are former
representative directors and1presidents or the like
Other Matters
The Board of Directors deliberates on and decides any new appointment of a person who has
retired from the office of representative director and president or the like to the position ofadvisor and other. Upon expiration of the term, we will renew the term as necessary.

2. Matters Related to Functions of Business Execution, Auditing, Oversight, Nomination andRemuneration Decisions (Overview of Current Corporate Governance System)24

With approval by the 27th Ordinary General Meeting of Shareholders held on June 23, 2016
for amendments to the Articles of Incorporation associated with transition to a Company with
an Audit and Supervisory Committee, the Company transitioned to a Company with an Audit
and Supervisory Committee.
(1) Board of Directors
The Board of Directors is composed of seven directors (including three outside directors) and inprinciple meets once a month. Board meetings are attended by directors who are not Audit andSupervisory Committee members and directors who are Audit and Supervisory Committee
members. The Board of Directors makes decisions on matters prescribed by laws andregulations as well as important matters set forth by internal rules such as the Board of
Directors regulations. It also monitors and supervises the status of business execution. In
addition, extraordinary Board meetings are held on an as-needed basis, and directors also havediscussions with each other whenever necessary. As such, we have a framework in place forenabling efficient business execution.
(2) Audit and Supervisory Committee
The Audit and Supervisory Committee is composed of three directors who are Audit andSupervisory Committee members. The Committee determines policies on audits and otherrelated matters in accordance with the regulations of the Audit and Supervisory Committee,
and prepares audit reports upon receiving reports from Audit and Supervisory Committee
members, directors who are not Audit and Supervisory Committee members, and theaccounting auditor. The Audit and Supervisory Committee, all three members of which areoutside directors, ensures transparency of management and assumes the roles of monitoring
and auditing the Company as a whole. The holding of Company shares by Audit andSupervisory Committee members is described in “number of Company shares owned” in the“status of officers” of securities reports. They do not have any personnel, transactional andother interests in the Company.
The Company establishes independence standards for outside officers and deems that any
independent officers who satisfy the standards are sufficiently independent from the Company.
The independence standards are described in the Corporate Governance Policy disclosed on the
Company website.
https://www.united-arrows.co.jp/ir/governance/ (in Japanese)
All of the three outside directors of the Company satisfy the aforementioned independence
standards.
In addition, pursuant to Article 427, paragraph 1 of the Companies Act, the Company hasentered into an agreement that limits liability for damages under Article 423, paragraph 1 ofthe same Act with each Audit and Supervisory Committee member who is a non-executive
director. The maximum amount of the liability for damages under the agreement is the amountprescribed by laws and regulations.
(3) Nomination and Compensation Committee

25

Details of the Nomination and Compensation Committee are described in the Supplementary
Explanation in "II. Business Management Organization and Other Corporate Governance
Systems regarding Decision-making, Execution of Business, and Oversight in Management" "1.

Organizational

Composition

andOperation"-[EstablishmentofOptional

Nomination/Remuneration Committee].
(4) Executive Officer System
The Company adopted an executive officer system on July 1, 2008, with the aim of ensuring
the prompt execution of operations and enhancing the decision-making and supervisory
functions of the Board of Directors. On April 1, 2021, in order to operate this system more
effectively, the Company redefined the role of executive officers and changed the contract form
between the Company and executive officers from the previous so-called employment-type todelegation-type contracts.
(5) Internal Audit Departments
As for internal audits, the Internal Auditing Office, which is placed directly under the president
and composed of five members, conducts store and department audits focusing on operational
efficiency/appropriateness and risk management. The results of these audits are shared with
the Audit and Supervisory Committee to recognize issues. Internal audits are also conductedon subsidiaries.
(6) Status of Accounting Audit(i) Name of audit corporation
Deloitte Touche Tohmatsu LLC(ii) Continuous audit period
16 years(iii) Names of certified public accountants who executed the services
Mr. Tsutomu Hirose, Designated Limited Liability Partner, Engagement Partner andCertified Public Accountant
Mr. Hayato Otsuji, Designated Limited Liability Partner, Engagement Partner andCertified Public Accountant(iv) Composition of assistants related to audit services
The composition of assistants related to the audit services comprises eight certified public
accountants, four persons who passed the CPA examination, and eighteen others.

3. Reasons for Adoption of Current Corporate Governance System
As described above, the Company is a Company with an Audit and Supervisory Committee. We
believe that this corporate structure with an Audit and Supervisory Committee is anappropriate corporate governance system that will help to enhance the Company’s corporate
value over the medium to long term. We believe it will do this by strengthening the Board’s
26monitoring function and expediting decision-making through appointment of outside directors
who do not execute business and appropriate delegation of authority.

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Shareholder Meetings and Ensure Smooth Exercise of
Voting Rights
Supplementary Explanation
Early Notification of

We dispatch the notice of a shareholders meeting about three

General Shareholder

weeks before the date of the meeting.

Meeting

For the 34th Ordinary General Meeting of Shareholders held on
June 26, 2023, the notification was sent out on June 2, about
three weeks before the date of the meeting.

Scheduling AGMs

The Company strives to make shareholder meetings more open by

Avoiding the Peak Day

scheduling shareholder meetings avoiding the peak days andselecting times that facilitate participation by individual
shareholders, as well as holding friendly meetings forshareholders and directors to get to know each other.

Allowing Electronic
Exercise of Voting Rights

Shareholders may exercise their voting rights via the Internet.

Participation in Electronic
Voting Platform and Other
Measures to Improve

The Company participates in the Electronic Voting Platform for

Voting Rights

Foreign and Institutional Investors operated by ICJ, Inc.

Environment for
Institutional Investors
Providing Convocation

The Company provides convocation notices in English summary

Notice in English

version on the Company website and “Listed Company Search” ofthe Tokyo Stock Exchange website.
The Company website
https://www.united-arrows.co.jp/en/ir/stockinfo/notification/

Other

Convocation notices, results of resolutions, and extraordinary
reports are posted on the Company website.
https://www.united-arrows.co.jp/en/ir/stockinfo/notification/
The convocation notice is posted on the Company website and the“Listed Company Search” of the Tokyo Stock Exchange website on
May 26, about one week before sending the notice by mail. In
addition, at the 34th Ordinary General Meeting of Shareholders,the Company held a live streaming event (participatory) via the27Supplementary Explanation
Internet so that the proceedings of the General Meeting of
Shareholders could be viewed from remote locations using thecomputers and smartphones.

2. IR Activities
Supplementary Explanation
Preparation and

Posted on an IR website of the Company.

Publication of Disclosure

https://www.united-

Policies

arrows.co.jp/en/ir/disclosure/

Briefing by the
Representative

The Company holds quarterly earnings
results briefings (in principle on the day
following an earnings release) where its
representative director explains earnings
results, as well as the fiscal year policy andRegular Investor Briefings
for Analysts andInstitutional Investors

progress compared with the policy. Also,
directors in charge or other relevant persons
explain the progress of measures in separate

Yes

programs on the same day as the earnings
results briefings.
In the fiscal year ended March 2023, we helda total of 94 individual IR meetings and small
meetings with analysts and institutional
investors in Japan.
We actively participate in IR conferences heldby securities firms in and outside Japan forRegular Investor Briefings

overseas investors.

for Overseas Investors

We held 33 individual IR meetings withoverseas investor in the fiscal year ended
March 2023.

28

None

Supplementary Explanation
In addition to monthly sales reports(updated after 3 p.m. on the second business
day of each month), the following earnings
materials are posted on the website.
• Financial Results (Japanese, English)• Securities reports, quarterly reports(Japanese)• Data Book (Japanese, English)• Presentation Material of Earnings
Posting of IR Materials on
WebsiteAnnouncements (Japanese, English),Earnings Announcement Meetings Q&A(Japanese, English)• Shareholders news (Japanese)
Monthly sales reports
https://www.unitedarrows.co.jp/en/ir/monthly/
Earnings materials
https://www.united-arrows.co.jp/en/ir/library/
Three persons are assigned in thedepartment in charge of IR and the officer incharge of IR is appointed to push forwardwith fair and timely information disclosure

Establishment ofand actively carry out IR operations.

Department and/or

Officer in charge of IR: Satoshi Tan,Manager in Charge of IR

Executive Officer CSO, General Manager ofCorporate Strategy Division
Department in charge of IR: IR Department(Responsible person: Toshiharu Mii,
Department Manager of IR Department )29

Briefing by the
Representative

Supplementary Explanation

Briefing by the
Representative

In addition to the forgoing, our activities
include the following.
• Distribute IR e-mail newsletters toanalysts, institutional investors andindividual investors.
• Hold store tours and small meetings
involving business managers for
institutional investors on an ad-hoc basis.
• Hold company briefing sessions for
Otherindividual investors on an ad-hoc basis.
• Annually conduct a shareholders survey
using shareholders news. Shareholders’opinions on management, IR activities andother matters of the Company are collected
and analyzed as reference materials toimprove measures for shareholders such as
by making changes to shareholders’ special
benefit programs and reviewing thedividend policy.

3. Measures to Ensure Due Respect for Stakeholder
Supplementary Explanation
Stipulation of Internal
Rules for Respecting the
Position of Stakeholders

Our management policy is to realize the Company Policy andmaximize corporate value by continuously creating value for our
five stakeholders—customers, employees, business partners,
society and shareholders.

30Supplementary Explanation
The Company incorporates its commitment to “Creating Five
Values” in the corporate philosophy. The five values are: value forcustomers, value for employees, value for business partners, value
for society, and value for shareholders, and the Company
considers it its mission to increase value for all stakeholders.
The Company's basic management policy is to make every effort
to create these five values while at the same time helping to
improve Japanese lifestyles and culture as a public entity ofsociety.
Furthermore, in recent years, corporate management thatemphasizes the environment, society, and governance to realize a
Implementation ofEnvironmental Activities,
CSR Activities etc.

sustainable society has become increasingly important. We aim toproactively take initiatives in our sustainability issues. Therefore,
in 2020 we set out five themes of supply chains, resources,
communities, human resources and governance, based on
Creating Five Values. In 2022, we established three categories
which we need to prioritize, namely, “Circularity,” “Carbon
Neutrality” and “Humanity,” and seven quantitative targets
associated with each category. By actively promoting
sustainability activities to achieve the five themes and sevenquantitative targets, we will contribute to solving social issues
and to society through our business activities.
Specific activities are disclosed on our Company’s Sustainability
site.
https://www.united-arrows.co.jp/en/sustainability/

Development of Policies on

The Company establishes the Disclosure Policies and discloses

Information Provision tothem on the Company website.

Stakeholders

https://www.united-arrows.co.jp/en/ir/disclosure/31

Supplementary Explanation
The Company works to create a comfortable work environment
focusing on women who account for about 60% of its employees sothat they can continue working through various life events suchas marriage, childbirth and family care. We facilitate balancing
work and family for employees who have children such as byoffering maternity leave, childcare leave, child nursing leave anda shorter work hour system. In 2018, the Company received
accreditation for the third time by the Ministry of Health, Laborand Welfare as a company actively supporting child rearing. As a
Other

result of these efforts, the ratio of returning to work after taking
childcare leave stood at 91.4% as of the end of March 2023. The
Company also has leave, time off and shorter work hour systems
for caring for the family.
For the status of employees such as the number of female
employees and the ratio of women in managerial positions—store
manager and higher—as well as data on the use of childbirth andchild rearing support systems have been disclosed on the ESG
Data Book (Renewed annually in August)..
https://www.united-arrows.co.jp/en/sustainability/management/

32

IV. Matters Related to the Internal Control System
1. Basic Views on Internal Control System and the Progress of System Development
Basic Management Policy
At the time of its founding in October 1989, the Company defined its founding spirit as"contributing to society by setting new standards of Japanese lifestyle." The essence of thisspirit has been maintained and its expressions updated to better match the times so that it cancontinue to function as the basis for the actions of all directors and employees as our Company
Policy.
In addition, we have defined our promise to society and the creation of value for five distinct
stakeholders as key features of our Policy Structure. The five distinct stakeholders for which
value is to be created are customers, employees, business partners, society, and shareholders.
In this regard, the Company's mission is to increase value for all stakeholders.
We establish the internal control system as an operational framework necessary for achieving
the Company Policy. With an awareness that building the internal control system requires anopen corporate culture where anyone regardless of his or her duties or roles can provide theright opinions and such opinions are reflected, all directors and employees will look for
improvements at all times in executing their duties.
1. Compliance System(a) We establish compliance regulations. The aim is to secure public trust in the Group by
putting a compliance system in place and ensuring the soundness of operations, and thereby
help to realize the Company Policy. In practicing compliance, officers and employees shallobserve the "UNITED ARROWS Group Code of Conduct" based on this Code. They also promotevarious initiatives to secure public trust in the Group in response to changes in society, businessactivities, and other factors, and seek to realize the Company Policy.
(b) We establish a Compliance Committee to promote compliance in a company-wide andeffective manner. The Committee examines and approves compliance policies, activity plans,
and training plans, and examines issues that may impact compliance.
(c) We put in place an internal reporting system that enables directors and employees to reportanonymously to external organization in accordance with the internal reporting regulations
any behavior that would be suspected of constituting compliance issue if such behavior aroseor came to light. We work to foster a corporate culture that does not overlook any wrongdoings
or irregularities, however small they may be. The Company will keep reported information
secret and will not treat persons who reported disadvantageously.
(d) For execution of duties, we put in place a system for proper checks and balances andreporting to function by clarifying the scope of duties and approval authority by department
and responsibility in accordance with the rules for divisions of duties and the rules fordelegation of authority.
(e) The Internal Auditing Office placed directly under the president confirms the status ofcompliance with laws, regulations and the Articles of Incorporation as well as the status ofexecution of duties by conducting regular internal audits of stores and departments.

33

2. Information Retention and Management System(a) We manage information on execution of duties with retention periods set based on theclassification of information in accordance with the document management rules. Where
necessary, we keep documents available for inspection.
(b) We ensure thorough retention and management of important management information also
for documents stored in systems by setting access authority in accordance with internal rules
and guidelines on information systems.
3. Risk Management System(a) We establish risk management regulations with the aim of developing a risk management
system and preventing the occurrence of risks or minimizing losses in the event of theoccurrence of risks. In this way, it will help to realize the Company Policy. In order to practicerisk management autonomously, officers and employees make efforts to identify and addressrisks that may impede the realization of the Company Policy when executing their duties.
(b) We establish a Risk Management Committee to promote risk management in a companywide and effective manner. The Committee examines and approves risk management policies,
activity plans, and training plans; evaluates and selects critical risks and examines andapproves measures to deal with such risks; and examines issues that may impact risk
management.
(c) In the event of a crisis, the Company will set up a Task Force to centrally manage
information and take action.
(d) Amid changing environments that surround the Company, each department always reviews
risk factors. At the same time internal rules and various manuals are established on an ongoingbasis. Through these activities, the Company establishes systems for both risk prevention andappropriate response in the event of a crisis.
4. System for Efficient Execution of Duties(a) In executing their duties, directors are to make decisions in accordance with laws andregulations, as well as internal rules such as the Board of Directors regulations and the rules
for delegation of authority.
(b) Regular Board of Directors meetings are in principle held monthly and in them the Board
deliberates resolution items and receives reports on the status of business execution andbusiness performance. In addition, extraordinary meetings of the Board of Directors are held
on an as needed basis, and directors also have discussions with each other whenever necessary.
Furthermore, a system is in place for executive directors to discuss and resolve importantmatters at the Management Committee that meets weekly in order to ensure opportunity for
full discussion and enhance speed of management.
(c) By adopting an executive officer system, we have accelerated business execution andstrengthened the Board’s decision-making and oversight functions.
5. Group Management System(a) We have established a subsidiary management system under which important businessmatters are decided and reported as necessary by setting forth basic policies and frameworks
34

for managing subsidiaries in accordance with the rules on managing subsidiaries andassociates, while emphasizing autonomous operation of each company. In addition, theCompany sends directors and audit and supervisory board members to its subsidiaries
depending on the circumstances to optimize business. This also enhances business efficiency
with a framework put in place for identifying operational situations through reporting at theboard of directors of each subsidiary.
(b) The Company works to establish the internal control system for the Group. This is donewith relevant divisions of the Company, in coordination with each other, by providing guidanceand support as necessary for the establishment of control (e.g., internal rules, delegation of
authority), compliance and risk management systems at its subsidiaries, while suchframeworks as internal reporting are expanded to subsidiaries.
(c) The Internal Auditing Office of the Company conducts internal audits also covering its
subsidiaries to confirm their compliance with laws, regulations and articles of incorporation as
well as their status of executing duties under internal rules.
(d) We ensure and continue to improve the reliability of financial reporting and, in turn, publiccredibility by establishing the necessary systems covering subsidiaries for internal control overfinancial reporting.
6. Audits by the Audit and Supervisory Committee(a) The Company has employees who concurrently serve as staff to support the Audit andSupervisory Committee. To ensure their independence from directors (excluding those who are
Audit and Supervisory Committee members), the appointment, transfer, evaluation,
disciplinary action and the like of the staff are determined upon consultation with the Audit
and Supervisory Committee.
(b) To ensure effectiveness of instructions given to the aforementioned staff by the Audit andSupervisory Committee, we give necessary investigation authority to the staff and put in placea system of cooperation by departments.
(c) Directors and employees of the Group promptly report to the Audit and Supervisory
Committee or Audit and Supervisory Committee members any important matter that causes
or may potentially cause significant damage to the Company.
(d) We have a system in place for risks identified by internal audits and by the Risk
Management Committee to be reported regularly to the Audit and Supervisory Committee.
(e) We have a system in place for ensuring that a person who has reported to the Audit andSupervisory Committee or an Audit and Supervisory Committee member will not be subjected
to disadvantageous treatment such as demotion and reduction in salary on the grounds ofmaking that report. We disseminate information on and ensure thorough understanding of thissystem.
(f) To understand important decision-making processes by the board of directors or other organs
as well as the status of business execution in the Group, the Company’s Audit and Supervisory
Committee or Audit and Supervisory Committee members may attend board of directors,
management committee and other important meetings of Group companies, and, if necessary,request their directors, executive officers and employees to provide explanations and inspect
the necessary documents.
35

(g) The Audit and Supervisory Committee of the Company may use external advisers such asaccounting auditors and attorneys where necessary.
(h) If an Audit and Supervisory Committee member requests an advance payment of expenses
to be incurred, reimbursement of expenses paid, or repayment of a debt assumed for executionof his or her duties, the Company will agree to the request unless such expenses or debt arefound to be unnecessary for the execution of duties.

2. Basic Views on Eliminating Anti-Social Forces(1) The Group’s basic policy is to stand firmly against and not to have any relationshipwhatsoever with anti-social forces/organizations which bring threats to the order and securityof the civil society.
(2) The Company establishes internal systems and collects information to eliminate anti-social
forces, having the General Affairs and Legal Department as a department in charge
coordinating with legal advisors, the police and external organizations such as the Tokyo
Center for Removal of Criminal Organizations as well as regional anti-crime advisers.

V. Other
1. Adoption of Anti-Takeover Measures
Adoption of Anti-Takeover Measures

None

Supplementary Explanation---

2. Other Matters Concerning Corporate Governance System■ Timely Information Disclosure System
1. Division responsible for timely disclosure
The officer in charge of investor relations is responsible for handling the disclosure of
information, and the IR Department is responsible for ensuring the timely disclosure of suchinformation. Collaborating closely with related departments and divisions, steps are taken to
identify pertinent information, to prepare all the necessary documents, and to ensure theirtimely disclosure.
The IR Department is responsible for addressing all inquiries from market-related parties aswell as shareholders and other investors.
2. Identification of Information for Timely Disclosure
The officer responsible for handling the disclosure of information and the head of the IR
Department attend in-house weekly, monthly, and all other important meetings. At thesemeetings, efforts are made to gather information on the status of measures implemented byeach division.

36

In the event that any information subject to timely disclosure is anticipated, the department
or division that handles the subject information reports all details to the officer responsible forhandling the disclosure of information and the head of the IR Department in a timely manner.
3. Preparation of Timely Information Disclosure Documentation and Disclosure
The Finance and Accounting Department is responsible for preparing the Company’s
accounting-related disclosure materials, including financial results and quarterly reports.
Documentation relating to the Company’s shares and personnel transfers and assignments is
prepared and handled by the General Affairs and Legal Department and the Human Resources
Department, respectively. Ultimately final examination of the details of documentation is to bedone by the officer responsible for handling the disclosure of information and the head of the
IR Department, who ensure the information’s timely disclosure.
4. Management of Timely Disclosure Information
The Company has put in place a set of internal rules governing the handling and storage ofinternal information. The utmost emphasis is placed on ensuring the confidentiality of
information subject to timely disclosure. The officer responsible for handling the disclosure of
information works diligently to prevent any leakage of insider information to external parties
and to prevent any incidence of internal insider trading.
5. Quiet Period
The Company has identified the period from the day after each quarterly financial settlement
date to each quarterly financial results announcement as a so-called quiet period. Thisinitiative aims to prevent the leakage of financial results information and to ensure equity.
During this period, the Company refrains from responding to financial results inquiries andfrom holding individual IR meetings. In the event, however, that an important incident arises
during the quiet period that is subject to timely disclosure, the details are immediately
announced in accordance with the timely information disclosure rules and regulations.
The Company aims to disclose monthly sales information on the second business day of eachfollowing month. The Company accordingly refrains from commenting on sales data during any
relevant applicable month in an effort to ensure the equity of information disclosure.

37

■ Corporate Governance System

Events occurred related to the Company
and its subsidiaries

Collect
information

Ascertain information on the deliberation of andimportant matters pertinent to the related departmentsof the Company and its subsidiaries (Corporate
Planning, Administration & Legal, Financial &Accounting, other)

Ascertain information on the deliberations of andimportant matters pertinent to the related
departments of the Company and its subsidiaries
as well as the Internal Controls Committee (chairedby the Representative Director, President)

Officer responsible for IR(individual responsible forhandling information)
IR Department

Officer responsible for IR(individual responsible for handling information)
IR Department

Disclose information

Share and determine
information

Information on the decisions and accountsettlement of the Company and its subsidiaries

Determinewhether or not
to disclose■ Timely Disclosure System

Prior deliberation by the
M anagement Committee andother bodies as required

Report decision onwhether disclosure isrequired

Board of Directors

Report decision on whether
disclosure is required

Report to directors and related departments

Officer responsible for IR, IR Department

Timely information disclosure

38

Prior
deliberation

Tokyo Stock
Exchange
Legal counsel