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ԏԢԑӨՄՆՃՁՃՈԺՃՂӨՇՍՇՈԵՁ
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ԐՃՆӨԞՉՆӨԏՁՄՀՃՍԵԵՇ
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ԞՉՆӨԔԴԵԱӨՃԶӨԍՃՆՄՃՆԱՈԵӨԑՃՊԵՆՂԱՂԳԵ
ԍՃՁՄՀԺԱՂԳԵ
ԡԺՇԽӨԚԱՂԱԷԵՁԵՂՈ
ԣԺՁԵՀՍӨԱՂԴӨԱՄՄՆՃՄՆԺԱՈԵӨԴԺՇԳՀՃՇՉՆԵ

■ Reporting Period
Fiscal year 2020
(from December 1, 2019 to November 30, 2020)
1

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Message from Executive Officer in Charge of Promoting
ESG

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2

TOSEI group's ESG Promotion System - Tosei Corporation

TOSEI group's ESG Promotion System
The Tosei Group ESG Policy and The Tosei Group

ESG promotion system

ESG Action Guidelines
Commitment to SDGs

The Tosei Group ESG Policy and The Tosei Group ESG Action Guidelines

The Tosei Group ESG Policy
The Tosei Group has a mission of creating new value and inspiration in all aspects of real estate as a global-mindedgroup of seasoned professionals. It regards its commitment to the Environment, Society and Governance as a priority
management challenge. It will seriously address the social issues associated with real estate to contribute to society
and achieve its own continuous growth.

The Tosei Group ESG Action Guidelines
1. Carry out business activities that achieve sound growth
We will respond swiftly and appropriately to changes in business circumstances and continue business activities thatwill ensure sound growth to meet our social responsibility to all stakeholders. We will make concerted efforts tostrengthen our structure for enhancing corporate governance and building an internal control system.
2. Comply with laws and regulations
We will not only comply with laws and regulations relating to the environment, society and corporate governance, but
we will also provide internal training aimed at improving knowledge and promoting understanding, and we will carryout activities for increasing outsiders' awareness.
3. Take actions that increase the value of real estate
We will take actions toward resolving a range of issues involved in real estate and increasing its added value with aview to making effective use of real estate and energizing local communities in all our business activities.
4. Carry out business activities with environmental considerations
With the aspiration of building a low-carbon society, we will introduce measures that increase the energy efficiency ofreal estate owned. We will work to reduce water consumption and waste emissions and implement reduce, reuse andrecycle activities in a positive effort towards building a recycling-oriented society.
5. Contribute to tenants, locals and communities through real estate owned
In terms of our aim of practicing actions in accordance with these action guidelines, we will work to collaborate withcorporate tenants of real estate owned, business partners such as property management firms and occupants ofresidential real estate to establish harmony with the local people and communities.
3

6. Increase customer satisfaction
We will strive to offer products and services based on safety and reassurance and sincerely carry out businessactivities consistently from customers' standpoints in an effort to increase customer satisfaction.
7. Increase employee satisfaction
We will define personnel as an essential part of our business and continue developing seasoned professionals. We will
create a positive corporate culture in which diverse personnel with different backgrounds respect one another andwork with a focus on teamwork in an effort to boost employee satisfaction.
8. Disclose ESG information
We will disclose our ESG targets, monitor the state of actions on a regular basis and make their results known to
stakeholders on our website and by other means.

ESG promotion system
The Group carries out deliberations, decision-making and other responsibilities related to action plans on ESG through ESG
promotion meetings. The members consist of Executive Directors decided by the Board of Directors. Results ofdeliberations are reported to the Board of Directors and reflected in business activities. In addition, there are ESG project
teams or subordinate organizations comprised staff members of respective departments that implement action plans andoccasionally submit relevant feedback.

Commitment to SDGs
We have created links between the UN Sustainable Development Goals (SDGs) and the Tosei Group ESG Policy and Action
Guidelines.
In the future, we plan to select material issues for the Group to focus on.

4

5

Environment - Tosei Corporation

Environment
The Tosei Group has been striving to reduce the burden on the global environment bypromoting human and eco friendly corporate activities under the Tosei Eco Declaration.
In addition to initiatives through business activities, such as the development of ecofriendly real estate, the Group has been committed to eco-friendly activities involving
its own employees.
Environmental Targets and Vision

Initiatives Through Business Activities

Environmental awareness-raising and education

Third-party evaluation

Environmental Targets and Vision
Given pressing issues such as the changing attitudes towards environmental issues and reduction of greenhouse gas
emissions, the Tosei Group takes its corporate responsibility as a real estate company seriously. To step up its
environmental initiatives, the Group established the Tosei Group Eco Declaration in April 2019 and it conducts businessactivities based on Eco-Missions consisting of three action policies.

Tosei Group Eco Declaration
The Tosei Group has been striving to reduce the burden on the global environment by promoting human and eco
friendly corporate activities under the Tosei Eco Declaration.

In order to achieve our slogan "Heart into the City", the Tosei Group declares its intention to promote corporate
activities that are friendly to people and the environment and to work to reduce burdens on the environment, while
keeping true to our philosophy "To create new value and inspiration in all aspects of real estate."

Eco-Mission (Action Policy)
In accordance with "Tosei Group Eco Declaration", we promote activities related to the three missions described below
through various corporate activities to reduce environmental burdens, conserve environment, comply with environmental
laws and regulations and educate our people.

Mission 1
Promote environmental practice through business activities
We strive to minimize environmental burdens by introducing measures to contribute to energy conservation andresource saving in the real-estate revitalization.

6

Mission 2
Comply with environmental laws, regulations and raising of environmental awarenessWe work to conserve the environment by complying with environmental laws and regulations. We will also conductvarious measures aiming to increase Tosei group employees environmental conservation awareness.

Mission 3
Inform our activities to stakeholder
Starting with the announcement of "Eco Declaration" and "Eco Mission", we will promote open communication withthe society while providing information on our progress and results.

Establishment of targets in the environmental area
The Group has set itself reduction targets in the three areas shown below to promote environmental initiatives.

Targets for energy-saving andWater-saving

Target for Waste

greenhouse gas emission reductions

targets

discharge

Decrease energy consumption andReduce waterLong-termgreenhouse gas emissions by 5%,targets

respectively, in terms of basic units in fiveyears
Decrease energy consumption andgreenhouse gas emissions by 1%,

targets

respectively, in terms of basic units in one
year

properties

2.5% in five years

Reduce water

Short-term

Targetconsumption by

Fixed assets owned by the Company

Performance Data

7

consumption by
0.5% in one year

Reduce waste generation
by 2.5% in five years

Reduce waste generation
by 0.5% in one yearဵThe target property is the fixed asset that we have held since 2018, excluding condominiums, shared ownership, realestate for sale and those with lessthan one year of energy monitoring.

ဵOccupancy rate is not taken into account in the calculation of basic unit per floor area.
ဵThe GHG emission factor is based on the "emission factor by electric power company" published by the Ministry of theEnvironment and the Ministry of Economy, Trade and Industry, and uses the emission factor of the electric powercompany used by the target building.
ဵThe scope of waste generated per unit floor area includes only the Tosei Head Office Building. .

Creation of sustainable value ~Three Value-Ups Code~In the product planning phase both in the case of new construction and renovation to add value, we examine using ecofriendly equipment which suits property characteristics and we actively adopt products that are eco-friendly in a variety ofways, for example, equipment that conserves energy and saves resources. Especially when adding value to existing
properties after acquisition, the Group considers the adoption of specifications which will help conserve energy and savemoney and resources based on the "Three Value-Ups Code" for adding value across three dimensions: "Security," "Design"and "Ecofriendly."
8

Initiatives Through Business Activities
In the revitalization and development of real estate, The Tosei Group has been striving to reduce the burden on the global
environment by actively introducing measures that contribute to energy and resource savings.

Total amount of CO2 generated due to construction through TOSEI’s Real Estate
Revitalization Business can be reduced by about 31%
Tosei’s revitalization business is not only attractive as an investment product, but also leads to the utilization andextension of existing resources and is environmentally friendly.This means that, Tosei’s model as the utilization of existingused properties can reduce total amount of CO2 generated due to construction by 31% in comparison to the Scrap andBuild Model during 100-year term.

Example Case・ 20-year old office building
・Total floor space: 10,000m2
・Structure Steel-frame structure (S structure)

Assumptions (100-year term)
TOSEI Revitalization Model
・Demolition in 50 years (new construction twice)・Demolition in 30 years (3 times for new construction)

Scrap and Build Model
・Demolition in 30 years (3 times for newconstruction)
・Large-scale repairs every 10 years (4 times in total)

Installation of LED lighting in existing office building・
We are promoting the installation of LED lighting in our portfolio properties to achieve the reduction target we set in 2019.
So far, we installed LED lighting in two existing office properties and a Logistics, reducing electricity consumption by 30%
on average. Besides reducing electricity consumption and costs, the installation work is also expected to improve tenantsatisfaction through better lighting and easier maintenance.
9

Revitalization of existing properties as own-brand hotels,QWKHFDVHRI7RVHL+RWHO&RFRQH8HQRZKLFKLVWKH*URXS VVHFRQGRZQEUDQGKRWHOZHFRQYHUWHGDQRIILFHEXLOGLQJWKDWZDVVWDQGLQJFRPSOHWHO\HPSW\LQWRDKRWHO,QWKHILUVWIORRUHQWUDQFHZKLFKLVWKHSXEOLFIDFHRIWKHKRWHOZHWRRNRXW
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10

Promotion of greening
We are actively incorporating green spaces into existing properties and newly developed properties as part of ourcommitment to reducing the environmental impact of our activities. As of the end of November 2020, the total area wehad "greened," including the rooftops and walls of office buildings and the sites of condominiums, was 3,856m2. We
also plan to incorporate green spaces into commercial facilities and hotels currently under development.

THE PALMS CHOFU MANOR GARDEN

THE PALMS CHOFU MANOR GARDENTOSEI HOTEL COCONE UENOOKACHIMACHI

Development of net-zero energy housing (ZEH)
Tosei Urban Home Corporation is registered under the "Registration System of ZEH Builder"launched by METI．The number of ZEH buildings supplied from April 2020 to March 2021
was 18 out of 40, which represents a share of 45%. We aim to continue contributing to the
reduction of CO2 emissions through the spread of ZEH in the future.

THE PALMS COURTKAMAKURASHIROMEGURI

Main specifications and equipment

Solar power

High performance insulation

Energy meter

Revitalization of idle company-owned apartments
With population decreasing due to the country's declining birthrate and aging society,
it is increasingly critical to takeappropriate measures to deal with the issue ofabandoned houses and offices.
Tosei therefore undertakes to purchase idle company-owned apartments. By making
upgrades to a whole building orrestyling a building for use as condominiums, itseeks to use existing buildings as effectively as possible.

7VX]XNL:DUG<RNRKDPD

11

Participation in program to promote creation of quake-resistant and energy-efficient
real estate
In 2013, Tosei Asset Advisors was selected as a manager of the first real estate fund operated by the general incorporated
association Real Estate Sustainability & Energy-Efficiency Diffusion (Re-Seed) in a program to promote creation of quakeresistant and energy-efficient real estate launched by the Ministry of Land, Infrastructure, Transport and Tourism and theMinistry of the Environment. Tosei Asset Advisors was selected as a manager of the second real estate fund in 2014, andagain in 2017.

Environmental awareness-raising and education
Each employee of the Tosei Group strives to improve awareness of environmental conservation, and pursues
environmental initiatives in his/her daily life. These initiatives are aimed at reducing the burden on the environment anddeveloping a sustainable society. The project team, which consists of members selected from each department, plays theleading role in internal eco-friendly activities.

Rooftop Greening
In May 2010, the Tosei Group introduced greening to the rooftop of its head office,Toranomon Tosei Building. It did somainly to bolster the environmental awarenessof employees and to encourage communication, as well as to help alleviatetheheat island phenomenon. The Group strives to raise employees' environmental
awareness through events in whichemployees can take part, such as raisingseasonal flowers and vegetables and holding the Harvest Festival, for example.

Participation in Events Volunteers for cleaning activities
The Group has participated in community volunteer activities since 2009. This year, it took part in the Nishinagisa-Hatsu
Tokyo-Satoumi-Aid, a clean-up event held at Kasai Rinkai Park to remove marine debris. It also checked the types ofdebris collected and measured the total volume to contribute to future surveys for identifying the cause of marine debris.
Going forward, the Company will continue to promote environmental conservation activities.

Adoption of new eco-friendly materials for employees' business cards
The Group changed the material of business cards used by the Group's employees to LIMEX. This material is eco-friendly
because almost no water or trees are used. The Group aims to reduce the amount of paper used and raise environmental
awareness among employees by replacing business cards, the use of which reaches 500 pieces per person every year,with those made of eco-friendly materials.
12In-house resource and energy conservation initiatives
We are gradually making meeting materials, approval documents and other documents paperless through thedevelopment of our IT environment. We also continue to take slow and steady actions, such as using fans and halogen
heaters rather than relying entirely on air-conditioning systems.
We believe that continuous initiatives throughout the year are important to save resources and conserve energy andintend to continue raising awareness and educating employees about environmentally-friendly activities they can do intheir daily lives.

Third-party evaluation
The Tosei Group actively acquires third-party reviews of its environmental performance data both as a benchmark for
implementing and evaluating initiatives based on its ESG Policy and ESG Action Guidelines and in order to improve thereliability of the real estate it handles.

Participation in GRESB Real Estate Assessment
Tosei Corporation participated in the GRESB Real Estate Assessment for the first time in 2019 andreceived a "1 Star" inthe GRESB Rating, which is a relative evaluation based on the overall
GRESB Score.

About the GRESB Real Estate Assessment
GRESB is an annual benchmark which measures environmental, social, and governance ("ESG") considerations in real
assets including real estate and infrastructure held and managed by real estate companies and funds. It was
established primarily by major European pension funds groups based on the Principles for Responsible Investment(PRI) in 2009. A total of 964 entities, including real estate companies, REITs and funds, globally participated in the2019 GRESB Real Estate Ratings.

Acquisition of DBJ Green Building Certification
The offices "Toranomon Tosei Building" and "Koishikawa Tosei Building" developed and owned by Tosei have newly
acquired "DBJ Green Building Certification" by Development Bank of Japan, Ltd.

13

Utilization of environmentally rated loan programs
When raising funds for the acquisition of properties, we utilize loans programs for companies that are practicingenvironmentally conscious management offered by various banks. We have benefited from favorable interest rates on a
total of seven occasions since 2010 under the environmentally rated loan programs of Mizuho Bank and the Yachiyo Bank
as well as the Hokuriku Bank's Eco-Leadmaster environmentally rated loan program. Loan program environmental ratingassessments rated us highly for management that promotes environmentally conscious business activities and ESGinitiatives across the entire Group.

Acquisition of environmental certifications for real estate at Tosei Asset Advisers
Tosei Asset Advisors, Inc. is working to acquire a range of certifications through initiatives such as the installation ofenvironmentally-friendly equipment such as LED lighting and energy monitoring at office buildings for which it provides
asset management services and the proposal and conclusion of green lease agreements (lease contracts which include
articles on environmental consideration).

Acquisition of "4 Stars" in the GRESB Real Estate Assessment
OSJ Kinshicho TMK and OSJ NSY TMK, which are provided with asset management services by Tosei Asset Advisors, Inc.,
received a "Green Star" designation and a rating of "4 Stars."

14

15

Social - Tosei Corporation

SocialFor Our Customers

For Our Employees

Contributions to Local Communities

For Our Customers
We are conscious of creating products that respond to social issues and needs as the times change.

Aiming to contribute to the SDGs by creating housing
THE Palms Court Hibarigaoka" has four themes of "green conservation," "energy saving and waste reduction," "watersaving and water resource conservation," and "crime prevention and disaster prevention," and is among the 17 goals of
the SDGs. We aim to contribute to the six goals throgh the project.

Creation of comfortable residences
In the detached house development business, the Group proposes residences that are comfortable for all family members
in response to increasingly diverse lifestyles, including the rise in households where both partners work. At certain houses
in The Palms Court Kamakura Shiromeguri, we have planned houses where all family members can easily take part in
family chores, considering the line of flow. In product planning, we focused attention on the views of women, who support
the lives of family members through family chores and child rearing. A project team consisting chiefly of female employees
is responsible for the project from planning to development to create more comfortable houses.

16Creation of Community Spaces in Condominiums
In new condominiums for sale and rental condominiums, we actively incorporate community spaces that residents can use
depending on the situation. We sought to create an environment where residents with different lifestyles could live
comfortably, specifically, study rooms, guest rooms, party rooms, etc.

Barrier-Free Houses
THE Palms Court series of condominiums for sale includes barrier-free "Withstyle" homes for the elderly. These homes,
Tosei applies a unique design code consisting of 10 items based on the concept of a permanent residence, to create house
designs suitable for any situation in a long life.
Features include the installation of a closet that can be converted into an elevator at low cost should an elevator become
necessary in the future and wheelchair-accessible designs.

Management of product quality
Implementation of evaluations and inspections by third parties
For the THE Palms Yutenji Master Place, a newly constructed condominium,
Tosei implements evaluations and inspectionsthrough the Japan
Constructive Inspect Association, a third party designated by the Minister ofLand, Infrastructure andTransport, as well as inspections based on laws
and regulations to provide safe and reliable housing to customers.

17

ISO 9001 (quality management system)
Tosei is an ISO 9001-certified company for the planning, design, construction work management and after-sales service(regular inspections) of condominiums, office buildings, commercial buildings and detached houses, and engages in strict
quality management in compliance with ISO 9001. Tosei Community Co., Ltd., a subsidiary of Tosei Corporation, is also an
ISO 9001-certified entity that undertakes the planning and provision of general management operations forcondominiums, office buildings and rental condominiums.

May 2019 update

Efforts to pursue quality improvements in products in response to customer
needs Meetings
As part of quality management, the Tosei Group is in the process of adopting more unique initiatives.

Meetings for examining quality improvements
In conjunction with the construction or renovation of new or existing office buildings and condominiums, among otherproperties, Tosei conducts detailed checks on specifications and indepth meetings with the attendance of three parties the Company, design and construction management companies, and construction companies. It seeks to strengthen
collaboration among concerned parties to provide better products while preventing the occurrence of issues.

TOSEI-QC-10
Tosei manages all processes related to the construction and maintenance of new or existing office buildings orcondominiums through three parties - the Company, design and construction management companies, and construction
companies - based on Tosei's unique quality control standards, TOSEI-QC-10. Tosei strives to provide customers with safeand reliable products by conducting inspections and particularly rechecking those items that customers cannot oversee.

Feedback on customer requests for products
Tosei is moving forward with efforts to plan and design products with better quality by internally sharing feedback oncomplaints and requests raised by customers during after-sales inspections and their straightforward opinions obtained
from personal perspectives and resident questionnaires.

18

For Our Employees
Creation of happy, positive workplaces
We endeavor to create workplace environments that are based on respect for the diversity of the workforce regardless ofdifferences such as gender or age and where all employees can reach their full potential.

Whistleblowing system
Tosei operates a whistle-blowing system consisting of three Tosei Hotlines that can be accessed by all Group employees.
We also have a contact point in the Human Resource Department to prevent harassment and deal even more quickly withany harassment that does arise.

Circle activities
We subsidize circle activities to encourage communication among employees. A total of eight circles, including cultural andsports circles, have been established to date, providing employees with a valuable opportunity to communicate with
employees from departments or group companies with whom they would normally not associate at work.

Family days
We hold family days once a year to give children a better understanding of their parents' job and workplace. In 2019, a
total of 20 families or 62 family members attended the family day and enjoyed activities such as swapping business cards,
a stamp rally around the offices, and making models of homes. The day also served as a social occasion for employees
and their family members to get to know each other.

Human resource development training
The Tosei Group helps each employee enhance their skills and abilities through the implementation of human resource
training programs and the adoption of systems that facilitate personal development and qualification acquisition. To
develop a globally-minded group of seasoned professionals, as described in its corporate philosophy, the Group also
provides external management school training aimed to develop the next generation of leaders as well as training for
employees according to occupational level.

0DLQWUDLQLQJSURJUDPVGroup training for new graduates
Training for instructors of new graduates
Training for mid-career hires
Training for newly assigned junior administrator
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Training for mid-career hires
Training on management for managers
Training at business schools (one year)
Real estate notary training
Compliance training
Mental health training
ESG training
19

Supporting employees' work-life balance
Leave systems for every stage of life
We have developed various leave systems, such as maternity leave, childcare leave and nursing care leave, to support
employees when they have a child, raise young children, care for elderly relatives or experience other changes in theirlifestyles at the different stages of life.

Health Committee
In the interests of health management, employees are required to undergo an annual medical health checkup. The HealthCommittee, which comprises employees and partner industrial physicians, reviews the general working environment,
including the soundness of the office environment and the status of medical checkups, on a monthly basis. The results of
the reviews are provided to employees as feedback.

Mental healthcare
The Group sends questionnaires and provides training to all employees in relation to mental health care under theguidance of partner industrial physicians. It also moves forward with initiatives to maintain employees' physical andmental health condition by requiring employees who engage in overtime work that exceeds a certain amount to have aninterview with industrial physicians and other professionals. In addition, the Group provides a consultation service forsound mental health in collaboration with external medical institutions. The service provides a contact point for employees
and their families through which they can casually request health consultations without worry, either by phone or e-mail.

Employees' health promotion program
Tosei endeavors to maintain and improve its employees' health through regular medical health checkups. We alsoendeavor to further promote the early detection of disease and better health among employees aged 35 and over bypaying their share of the cost of comprehensive medical examinations. Every year, we offer a range of additional internal
activities such as public health nurse interviews, voluntary locomotive syndrome risk testing and a refresh program which
includes relaxing yoga to any employees who wish to participate.

Encouraging employees to take annual paid leave
To create an environment that made it easier for employees to take annual paid leave, we introduced the "Anniversary
leave" system under which employees take one day's annual paid holiday on one date every year which they themselves
fixed.

Efforts to reduce overtime work
To curb employees' long working hours, the Group is promoting initiatives to reduce overtime work through the adoptionof no-overtime-work days, the prohibition of overtime work after 21:00 as a general rule, and the recommendation ofmorning-oriented workstyles. The average number of overtime hours decreased for a sixth consecutive fiscal year,
reflecting efforts to improve business efficiency.

20human resources data
FY2017FY2018FY

FY2019FY2020

Number of
159

181

191

195

Men

111

128

137

144

Women

48

53

54

51

30.2

29.3

28.3

26.2

8.6

11.9

6.3

5.9

18

12

10

10

11

28

23

23

5.8

5.5

5.8

5.7

100

100

100

100

100

100

100

100

0

0

0

0

40.3

44.4

65.1

60.3

employees (Nonconsolidated)

Pct. of females in
employees (%)
Pct. of female
managers (%)
Number of new
graduate hires
Number of midcareer hires
Length of service
Pct. of employees
using childbirthand childcare
leave (%)
Pct. of employees
returning to work
after childcare
leave (%)
Pct. of employees
using elderly
parent care singleday leave (%)
Pct. of paid leaveused (%)

21

Contributions to Local Communities
Volunteers for cleaning activities
The Group has participated in community volunteer activities since 2009. This year, it took part in the Nishinagisa-Hatsu
Tokyo-Satoumi-Aid, a clean-up event held at Kasai Rinkai Park to remove marine debris. It also checked the types ofdebris collected and measured the total volume to contribute to future surveys for identifying the cause of marine debris.
Going forward, the Company will continue to promote environmental conservation activities.

The clean-up

The clean-up

Participants and marine debris
collected

Tokyo Coronavirus Medical Support Fund
In 2020, we donated donations through the Tokyo Coronavirus Medical Support Fund to support medical professionals dueto the spread of coronavirus infection. We donated 1 million yen and donations of 190,000 yen from Tosei Group officers
and volunteer employees.

The green feather fundraising activity
The activity aims to provide support for a range of programs, such as the maintenance of forests, development of forestry
volunteers and provision of forestry and environmental education for children.

Collection boxes for plastic bottle caps
The activity aims to send vaccines to children in developing countries by using profits earned from the sale of plastic bottle
caps to recycling companies.

Support activities for affected areas
Continuation of activities for supporting areas affected by the Great East Japan
Earthquake
Since 2011, the Tosei Group has been engaged in activities for supporting areas affected by the Great East Japan
Earthquake. Its recent activities include the organization of dental seminars and painting of rusted playground equipment
at nursery centers in the affected areas, as well as support for the opening of food stalls for a festival held at a temporary
housing site. These activities were carried out in cooperation with an NPO that is engaged in volunteer activities in theaffected areas.

22

We collected voluntary contributions from Group employees and others in order to donate 28 Taiko drums to Naruse Mirai
Junior High School, which had just opened in Higashimatsushima. Elementary and junior high schools in
Higashimatsushima always used to give many Taiko drumming performances. However, many drums were lost in thetsunami that hit the area. Thanks to the Taiko drums we donated, the school is now able to give Taiko drumming
performances at cultural festivals and the school and local residents were very pleased with the gift.

Taiko drums

Donations through the Japanese Red Cross Society
In 2019, Tosei sent, via the Japanese Red Cross Society, a donation of 1 million yen plus money collected from Group
employees, to support those affected by Typhoons Faxai and Hagibis.

23

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24

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Compliance:HSODFHFRPSOLDQFHDWWKHWRSRIRXUDJHQGDDQGUDLVHDZDUHQHVVRILWIURPWRSPDQDJHPHQWWRDOOHPSOR\HHVRI
WKH*URXSFRPSDQLHVRisk Management$VVXPLQJHYHU\SRVVLEOHULVNZHSUHSDUHDQGSUDFWLFHHPHUJHQF\UHVSRQVHVXQGHUQRUPDOFRQGLWLRQVZLWKDVSHFLDOIRFXVRQHOLPLQDWLQJUHODWLRQVKLSVZLWKDQWLVRFLDOIRUFHVInformation Disclosure:HSUDFWLFHGLVFORVXUHDQGFRPPXQLFDWLRQDSSURSULDWHO\DQGRQDWLPHO\EDVLVWRDOOVWDNHKROGHUVLQFOXGLQJVKDUHKROGHUV&RUSRUDWH*RYHUQDQFH6\VWHP

25

as of 29 February,2020

Operation of the Meetings of Board of Directors
The Board of Directors is constituted by Seven directors, two of whom are outside directors.
Based on the regulations of the Board of Directors, the directors hold regular meetings every month, and extraordinary
meetings are held as necessary. As the highest management decisionmaking body, the Board of Directors makes
resolutions on management policies and material issues and also supervises the execution of duties by the directors.

Executive Officer system
The Company has adopted the executive officer system in order to more clearly segregate the monitoring/supervision of
the Company's business management, which is the duty and responsibility of the directors, from the execution of thebusiness, and has 10 Executive Officers as of the end of November 2019. Executive Officers are elected by the Board of
Directors, and the Management Meeting, which is made up of the Executive Officers, discusses matters to be resolved at
the board meetings in advance and holds consultations on the material issues to be decided by the CEO.

Nominating and Compensation Advisory Committee
The Company established the Nominating and Compensation Advisory Committee voluntarily as a consultative body to theBoard of Directors to ensure appropriateness and transparency in such matters as the process of selecting candidates inconnection with director election proposals submitted to the general meeting of shareholders and resolutions of the Boardof Directors relating to allocation of remuneration, etc. to individual directors. The constituent members of the committee
include a representative director (one person), a full-time director (one person), outside director(s) (independent
director(s), one person or more), and a full-time audit & supervisory board member (outside audit & supervisory board
member, one person). An outside director who is a committee member will assume the office of the chair of committee.
The Board of Directors will continue to fulfill its mandate from the Company's shareholders and investors by respecting therecommendations of the committee to the maximum extent and developing an appropriate governance system.

Three-way auditing (coordination of audits by corporate auditors, internal
audits, and audits by the accounting auditor)
The Audit & Supervisory Board Members carry out an efficient and effective audit under
Audits by corporate
auditors

an annual audit plan in cooperation with the accounting auditor and the Internal
Auditing Department. The full-time Audit and Supervisory Board Members regularlyinterview each fulltime Director and head of each department and check the status ofbusiness execution. They also regularly exchange opinions with Independent Directors.
As a department directly controlled by the President, the Internal Auditing Department

Internal audits

carries out an audit of the entire Group under an annual plan and helps correct
inadequacies by recommending actions and conducting follow-up activities, including
giving specific guidance.

Audits by theaccounting auditor

The accounting auditor carries out an audit under an annual audit plan. It carries out
not only a fiscal year end audit but also quarterly reviews (accounting auditor: Shinsoh
Audit Corporation).

26

Status of Outside Directors
The Company has three outside directors and four outside audit & supervisory board members.With regard to thenomination of Outside Directors, the Company elects persons who can oversee the management from an independent andobjective standpoint and be expected to provide constructive advice and recommendations to Directors concurrently
serving as Executive Officers. In nominating Outside Audit & Supervisory Board Members, the Company elects persons
who can be deemed to audit the operation of the Board of Directors and execution of duties of Directors from an
independent standpoint, and who are expected to provide constructive advice and recommendations for the increase of
corporate value with their knowledge.

The reasons for selection of Independent officer
Outside Directors
namereasons
Outside Director Kenichi Shohtoku has contributed to strengthening thegovernance system of the Company and the Group by providing valuable advice
on various occasions including the Board of Directors meetings and liaison
meetings with the Audit & Supervisory Board Members of the Company since
assuming office of Outside Director of the Company in February 2012, whileleading SCS Global Consulting (S) Pte Ltd as a representative director. In

Kenichi Shohtoku

addition, with respect to the overseas activities, etc. of the Company, theCompany benefits from his suggestions based on the expertise cultivated throughhis abundant overseas experiences mainly in consulting as a certified public
accountant. In view of the growth of the Group in terms of management over the
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Hiroyuki Kobayashi

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27

Outside audit & supervisory board member
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Hitoshi Yagi

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Toshinori Kuroda

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Tatsuki Nagano

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