[Translation]

Corporate Governance Report
TRANSACTION CO., Ltd.

Last updated: December 7, 2023

TRANSACTION CO., Ltd.
Satoshi Ishikawa
Chairman and Representative Director
Contact: Corporate Planning Department +81-3-5468-9033
Securities code: 7818
https://www.trans-action.co.jp.e.zy.hp.transer.com/
The corporate governance of TRANSACTION CO., Ltd. is as described below:

I.

Basic Views on Corporate Governance, Capital Structure, Corporate Attributes and Other
Basic Information

1. Basic views
In order to fulfill its social responsibilities as a corporation, the TRANSACTION Group (the “Group”) regards
enhanced corporate governance as one of its top management priorities. With the objective of pursuing long-term,sound and sustainable growth and enhanced corporate value over the medium- to long-term, the Group iscommitted to ensuring transparency, soundness, and compliance in management for its various stakeholders,
including shareholders and customers.
[Reasons for Non-compliance With the Principles of Japan’s Corporate Governance Code]Update[Supplementary Principle 2-4-(1) Basic views/ targets/ status for ensuring diversity, including the hiring of women,
foreign nationals, and mid-career workers as managers]
For the purpose of expediting initiatives for sustainability, the Group has identified as managerial challenges 16
materiality items (key issues) to be addressed from the perspective of “business,” “the environment,” “society,”and “governance” as outlined below. As such, in seeking to disseminate its corporate philosophy, action guidelines,
and corporate slogan, the Group accordingly enlists a policy that entails proactively adopting diverse humancapital and values regardless of nationality, gender or creed to improve corporate activities and value, andpromoting the development of human capital over the medium- to long-term, with a clear personnel evaluation
system and job level-based education programs that correspond to job titles.
To ensure diversity in hiring core human capital, the Group performs evaluations not based on individual attributes
but based on individual ability.
Matters regarding the hiring of women, foreign nationals, and mid-career workers as managers are as stated in“[Supplementary Principle 3-1-(3) Disclosure of initiatives related to sustainability, investment in human capital,
intellectual property, etc.], (2) Investment in human capital, (i) Strategy.”
Due to some overlap between female managers and non-Japanese (foreign) managers, the Group sets the target
as the percentage of female/non-Japanese managers (including employees who have become naturalized Japanesecitizens) under the 4th medium-term management plan released on October 20, 2022, with a target of “35.0%”
set for the fiscal year ending August 31, 2025 vs. 29.3% for the fiscal year ended August 31, 2022 (actual). It is
32.1% as of August 31, 2023. In addition, the new target for the percentage of female managers is set as 30.0%
for the fiscal year ending August 31, 2025 vs. 26.4% for the fiscal year ended August 31, 2023 (actual).
Since the early days of its founding, the Group has hired new graduates, as well as mid-career workers, forbusiness expansion and structural reinforcement, based on their experience and ability, etc., regardless ofnationality and gender. Furthermore, the Group continued to actively hire diverse personnel, regardless of theirnationality, gender, or whether they are new graduates or mid-career workers. For this reason, it recognizes that it
does not need to implement new measures or set individual targets for hiring foreign nationals, or mid-career
workers as managers. The Group will continue to actively hire diverse personnel, regardless of their nationality,
gender, or whether they are new graduates or mid-career workers.
Given its history (background) and present condition, as of the time of updating this report, the Group does not
set any individual “voluntary and measurable targets” for hiring “foreign nationals,” and “mid-career workers” asmanagers.
-1-[Translation]
Regarding the policies on the development of human capital and an internal work environment to ensure diversity
and the progress thereof, the Group continues to hire new graduates and mid-career workers, enhances job levelbased training programs that correspond to job titles as well as training courses for candidates for promotion, andarranges personnel exchanges between the group companies. On top of these efforts, it works to adopt andoverhaul various allowances, introduce a staggered work hours system effective from September 2022, extend the
maximum period of eligibility for shortened work hours for childcare purposes for as long as a child has yet toenter the fourth grade of elementary school effective from January 2023, implement systemic changes such as
doing away with the upper limit on the number of half-days of annual paid leave that may be taken and reducing
annual scheduled working hours effective from September 2023, and developing a pleasant work environment for
employees by changing office layouts based on various ways of working and introducing systematization andother approaches.
[Supplementary Principle 4-10-(1) Ensuring appropriate involvement and advice by independent outside directors
with respect to particularly material matters such as nomination and remuneration, through the establishment of
independent advisory committees]
The Board of Directors of the Company consists of five Directors who are not Audit & Supervisory Committee
members and three Directors who are Audit & Supervisory Committee members, and four members (one Director
who is not Audit & Supervisory Committee member and all three Directors who are Audit & Supervisory
Committee members) are independent outside directors. One Director (independent outside director) who is not
an Audit & Supervisory Committee member was appointed at the 37th Annual General Meeting of Shareholders
held on November 29, 2023, increasing the number of directors by one. As such, four of eight of the Directors are
independent outside directors.
Independent outside directors do not account for a majority of the Board of Directors. However, in order to ensure
the objectivity and transparency of procedures for determining remuneration for Directors who are not Audit &Supervisory Committee members, improve the supervisory functions of the Board of Directors, and further
enhance the corporate governance system, the Company has established the Remuneration Committee, an optional
committee the majority of which is composed of independent outside directors. At the Remuneration Committee
meetings, two Directors (independent outside directors) who are Audit & Supervisory Committee membersdelegated by the Board of Directors and Chairman and Representative Director engage in the deliberation anddetermination of remuneration for Directors who are not Audit & Supervisory Committee members; thus,
appropriate involvement is ensured. The Company confirms that the Board of Directors has adopted a resolution
on the policy for determining the details of individual remuneration, etc. for Directors, and that the details
determined by the Remuneration Committee based on delegation by the Board of Directors are in line with thepolicy.
The nomination of Directors is adequately deliberated and determined at the Board of Directors meetings with theattendance of independent outside directors, who are in an independent and objective position and provide
appropriate involvement and advice and exercise their voting rights.
The details of the Remuneration Committee, which is an optional advisory body to the Board of Directors, are as
described in supplementary information in [Optional committees] under section “II. Business Management
Organization and Other Corporate Governance Systems for Management Decision-Making, Execution, andSupervision” of this report.
[Disclosure Based on the Principles of Japan’s Corporate Governance Code]Update[Supplementary Principle 1-2-(4) Creation of an environment to support the electronic exercise of voting rights
and preparation of an English translation of convocation notices]
Since the Annual General Meeting of Shareholders held in November 2022, the Company has supported theelectronic exercise of voting rights and participated in an electronic voting platform. It has also published an
English translation of the convocation notice of the General Meeting of Shareholders (convocation notice in anarrow sense and reference materials for the Meeting) on the Company website and the Tokyo Stock Exchange
website. The details are as stated in “1. Measures to energize general meetings of shareholders and facilitate theexercise of voting rights” under section III of this report.
[Principle 1-4 Strategically-held shares]
The Company’s basic policy is to hold certain shares strategically only when it judges that its business relationshipor collaboration with an investee company can be strengthened through business alliance as part of its
management strategy and thereby serve to increase the corporate value of the Group over the medium to long-2-

[Translation]
term. For strategically-held shares, business performance, etc. are reviewed and reported to the Board of Directors
on a periodic basis, and consistency between the purpose of the shareholdings and business transactions, and risks
and costs entailed in the shareholdings are closely examined before the Board of Directors decides whether tomaintain the shareholdings. When exercising voting rights, the Company makes comprehensive judgments oneach proposal in order to ensure an appropriate response, with a view to improving the medium-to-long-term
corporate value of the investee company as well as the corporate value of the Company and the group companies.
Given its current collaborative relationships with the issuers of the existing strategically-held shares, the Company
sees adequate rationality in such shareholdings.
[Principle 1-7 Transactions with related parties]
Transactions with Directors, conflict-of-interest transactions, and competing transactions must be approved by
the Board of Directors in accordance with the Regulations of the Board of Directors. For transactions with relatedparties, individual survey sheets are distributed to Directors of the Company and directors and auditors ofconsolidated subsidiaries on an annual basis to check whether they have had any related parties or suchtransactions. The Audit & Supervisory Committee also verifies the status of each Director using a letter ofconfirmation on an annual basis.
Transactions with related parties are disclosed in accordance with relevant laws and regulations such as theCompanies Act and the Financial Instruments and Exchange Act, or the rules established by the Tokyo Stock
Exchange.
[Principle 2-6 Functioning as asset owners of corporate pension funds]
The Group does not adopt a defined benefit pension plan as its corporate pension program. The Group adopts anoptional defined contribution pension plan as part of employee benefits and periodically offers opportunities toreview investment products or for employees to obtain information related to asset management, in an effort tocoordinate with fund management institutions by sharing information, etc.
[Principle 3-1 Sufficiency of disclosure information](i) The Company’s aims (management philosophy, etc.), management strategy, management plan
The Group’s corporate philosophy and the like are as stated in “2. Other matters regarding Corporate
Governance Systems, etc., (1) Corporate philosophy and basic policy on timely disclosure” under section “V.
Others” of this report. The management strategy and management plan are disclosed in financial statements
briefing session material twice a year or in the medium-term management plan. Please refer to the Company
website as well.
Corporate philosophy
https://www.trans-action.co.jp.e.zy.hp.transer.com/company/philosophy.html
Corporate slogan
https://www.trans-action.co.jp.e.zy.hp.transer.com/company/ci.html
Corporate governancehttps://www.trans-action.co.jp.e.zy.hp.transer.com/company/corporategovernance.html
Skills matrix of Directors
https://www.trans-action.co.jp.e.zy.hp.transer.com/company/directo-skill-matrix.html
Sustainability (Materiality, the Company’s initiatives and ESG data)
https://www.trans-action.co.jp.e.zy.hp.transer.com/business/sustainability/
Financial statements briefing session material
https://www.trans-action.co.jp.e.zy.hp.transer.com/ir/presentation.html
Medium-term management plan
https://www.trans-action.co.jp.e.zy.hp.transer.com/ir/strategy.html(ii) Basic views and policy on corporate governance
The Group’s basic views on corporate governance are as stated in “1. Basic views” under section I of thisreport.
(iii) Policy and procedures for determining remuneration for top-level executives and Directors-3-[Translation]
The Company’s policy and procedures for determining remuneration for Directors are as stated in “Disclosureof policy on determining the amount and calculation method of remuneration (details)” in “1. Organizational
structures and operations, [Director remuneration]” under section II of this report.
(iv) Policy and procedures for appointing/dismissing top-level executives and nominating candidates for
Directors/Audit & Supervisory Board Members
For inside Directors, regardless of age/gender/nationality, the Company nominates qualified candidates withexpertise, experience and knowledge as businesspersons, which are qualities required to enhance the Group’s
corporate value, and who, as Directors, are capable of fulfilling the fiduciary responsibility delegated byshareholders. For outside Directors, the Company nominates qualified candidates with extensive knowledge
and practical experience, who are capable of raising issues and providing advice on overall management,
including growth strategy and governance enhancement, from an independent and objective point of view.
Based on this policy, the Board of Directors carefully reviews and selects candidates to be submitted to theGeneral Meeting of Shareholders as proposals. Further, in such General Meeting of Shareholders, the Audit& Supervisory Committee makes a statement on the nomination of Directors who are not Audit & Supervisory
Committee members.
For dismissal, where any wrongdoing or serious violation of laws and regulations is found in the execution ofduties or where the Company judges that he/she cannot fully perform his/her duties, he/she is dismissed upona resolution of the Board of Directors after deliberation.
(v) Explanations on individual appointments/dismissals and nominations when the Board of Directors
appoints/dismisses top-level executives and nominates candidates for Directors/Audit & Supervisory Board
Members
The reasons for the election of all the candidates for Directors are described in the reference materials for the
convocation notice of the General Meeting of Shareholders. The reasons for the election of outside Directors
are also disclosed in the securities report (in Japanese only).
[Supplementary Principle 3-1-(2) Promotion of providing English language disclosures bearing in mind the ratioof foreign shareholders]Since October 2022, summaries of financial results, summaries of quarterly financial results, financial statements
briefing session material (second quarter and fiscal year), medium-term management plans, and review of themedium-term management plan have been translated into English and disclosed on the Company website. This
report has been also translated into English since December 2022 and disclosed on the Company website, etc. The
details are as stated in “2. IR activities” under section III of this report.
[Supplementary Principle 3-1-(3) Disclosure of initiatives related to sustainability, investment in human capital,
intellectual property, etc.](1) Initiatives related to sustainability
The Group is committed to initiatives for the realization of a sustainable society through its business activities,
under the corporate philosophy and action guidelines outlined below:<Corporate philosophy>
To make social contributions by offering earth-conscious products through manufacturing
To make contributions to enriched lifestyles (life culture) by offering attractive products in terms of their“design,” “quality,” and “price”
To continue producing new creations with a cosmopolitan mind/sense and out-of-the-box thinking<Action guidelines>
To continue to be a company that not only complies with laws but also is respected by society
To maintain a free and open corporate culture in order to continue to be a company that is in harmony withsymbiosis
To realize welfare/well-being for customers, employees and shareholders, and more broadly, for society,through its corporate activities
The corporate slogan, “taking on a challenge is fun,” which was coined based on our wish/desire to continue
offering something of value to customers down the road without ever becoming content with the status quo
but with a strong drive for new “challenges,” is shared among each of our officers and employees.

-4-[Translation]
For the purpose of expediting initiatives for sustainability, the Company has identified as managerial
challenges 16 materiality items (key issues) to be addressed from the perspective of “business,” “theenvironment,” “society,” and “governance.”
The Group’s materiality for achieving SDGs, the Company’s initiatives and ESG data are posted on the
Company website.
https://www.trans-action.co.jp.e.zy.hp.transer.com/business/sustainability/(2) Investment in human capitalWith the aim of continuously growing as a corporation and contributing to the enhancement of corporate value
and the realization of a sustainable society, the Group continues to work on initiatives that secure andstrengthen human capital, and promote diversity through the dissemination of its corporate philosophy, action
guidelines and corporate slogan, with respect to its materiality of “respect for human rights,” “human capitaldevelopment,” “promoting diversity,” and “work-life balance.”(i) Strategy
The Group’s policies on the development of human capital, including diversity of human capital, and aninternal work environment are as described below.
a. Policy on the development of human capital
In seeking to disseminate its corporate philosophy, action guidelines, and corporate slogan, the Groupaccordingly enlists a policy that entails proactively adopting diverse human capital and values regardless ofnationality, gender or creed to improve corporate activities and value, and promoting the development of
human capital over the medium- to long-term, with a clear personnel evaluation system and job level-based
education programs that correspond to job titles.
For strengthening human capital development, the Group adopts job level-based training programs that
correspond to job titles as well as training courses for candidates for promotion, and arranges personnel
exchanges between the group companies, among others. In addition, for the purpose of developing nextgeneration management, it also provides a framework to experience what it is like to serve as a director of an
operating company and opportunities to visit and participate in debates over the medium-term strategy
conducted as part of an overnight program, etc. for the purpose of developing senior (manager-level)
employees.
b. Policy on the development of internal work environment
In seeking to promote empowerment of its female employees, the maximum period of eligibility for shortened
work hours for childcare purposes has been extended such that it may be taken for as long as a child has yet
to enter the fourth grade of elementary school, effective from January 2023. The Group has been developing
a pleasant internal work environment for its employees, such as introducing a staggered work hours systemeffective from September 2022, doing away with the upper limit on the number of half-days of annual paid
leave that may be taken and reducing annual scheduled working hours effective from September 2023, in
addition to changing office layouts based on various ways of working and introducing systematization, among
others.
Matters taken to improve employee welfare are as described below.
･ Fiscal year ended Aug. 2023
Increase in position allowances, increase in base amount for bonuses, payment of inflation allowance,
allowances for non-managerial sales positions, allowances for non-managerial positions at subsidiary
Kraftwerk Co., Ltd., increase in child allowances as childcare support･ Matters implemented during the fiscal year ending Aug. 2024
Payment of year-end bonuses in September 2023 and increase in monthly base salaryc. Ensuring diversity of human capital
Since the early days of its founding, the Group has hired new graduates, as well as mid-career workers, forbusiness expansion and structural reinforcement, based on their experience and ability, etc., regardless ofnationality and gender. Furthermore, the Group continued to actively hire diverse personnel, regardless of
their nationality, gender, or whether they are new graduates or mid-career workers. Going forward, for theperspective of proactively incorporating diverse human capital and values the Group will continue strategic
recruitment activities by considering the balance between new graduates and mid-career workers.
･ Hiring of women as managers-5-[Translation]
Female employees accounted for 54.3% of all employees, and 26.4% of all managers at the end of August2023. Because of its nature of business, the Group has judged it will be immensely beneficial to utilize
perspectives unique to women in the management, and it will actively continue to appoint its female
employees to managerial positions and work on creating an environment conducive to such ends.
･ Hiring of foreign nationals as managers
Non-Japanese (foreign) employees accounted for 9.0% of all employees and 5.7% of all managers (10.3%
and 9.4%, respectively, when including employees who have become naturalized Japanese citizens) at the endof August 2023. The Group hires foreign nationals and appoints them to managerial positions based on theirexperience and ability, etc., regardless of nationality. In addition, the Group hires foreign nationals andappoints them to managerial positions by considering strategic necessity with respect to the relevant divisions
from the perspectives of outsourcing production to and importing from suppliers in China and other Asian
countries.
･ Hiring of mid-career workers as managers
Mid-career workers accounted for 42.0% of all employees and 55.7% of all managers at the end of August2023. The Group will continue to hire mid-career workers and appoint them to managerial positions based on
their experience and ability, etc., regardless of nationality and gender, for business expansion and structural
reinforcement.
(ii) Benchmarks and targets
The Group’s benchmarks, targets, and results are as described below.
Fiscal year ended
Benchmarks
August 31, 2023
(actual)Target year

Targets

Fiscal year
ending Aug.
30.0%
2025
Fiscal year
Percentage of childcare leave taken by
50.0%
ending Aug.
100.0%
male full-time employees (Notes 2 and 3)
2028
Fiscal year
Percentage of childcare leave taken by
107.7%
ending Aug.
100.0%
female full-time employees (Notes 2 and 3)
2025
Fiscal year
Wage difference between male and female
79.6%
ending Aug.
85.0%
full-time employees (Note 2)
2028(Notes) 1 This applies to the overall Group including the Company and its overseas consolidated
subsidiaries.
2 This applies to the Company and its domestic consolidated subsidiaries, excluding overseas
consolidated subsidiaries.
3 The percentage of childcare leave taken may exceed 100% because an employee who gave birthor an employee whose spouse gave birth in a past fiscal year may take childcare leave in thecurrent fiscal year.
Percentage of female managers (Note 1)

26.4%(3) Investment in intellectual property
The Group promotes the “improvement of products/services,” “reinforcement of price competitiveness,” and“offering of products corresponding to social trends,” as stated in its materiality issues, and offers eco-friendly
products through “manufacturing things.” At the same time, it makes efforts to continue offering attractive
products in terms of design, quality and price, which also respond to social trends.
<Eco-products>
Development of environmentally friendly products such as bags made of Fairtrade certified cotton and organic
cotton, Eco Mark certified products, recycled material products such as recycled fabric and recycled ABS,
biomass plastic and natural material products, etc., in response to “finished goods demand arising from thepromotion of SDGs.”-6-

[Translation]<Lifestyle products>
Development of products under the concept of offering attractive products in terms of design and quality andmaking contributions to enriched lifestyles (life culture)<Wellness products>
Development of products under the concept of “maintaining a clean and refreshing daily life”
The Company holds the names of brands and products acquired through the development of these products
as intellectual property, such as patent rights, copyrights (design rights), and trademarks, and engages inbusiness activities.
(4) Risks and opportunities related to climate change
Recognizing “environmental” issues as one of the key issues to be prioritized, the Group has set“environmental contribution through products” and “recycling promotion and CO2 emission reduction” as its
materiality issues. Since its foundation, it has focused on the development and supply of “Eco-products” suchas eco bags, tumblers, and thermos bottles. It strengthens the development and supply of eco-friendly products,
not only by simply developing products made of environmentally-friendly materials or recyclable materials
but also with philosophies “stop using disposable things” and “use reusable products,” and under the themeof “consider the environment from manufacturing.” These environmentally friendly products related to SDGs
are disclosed as “Eco-products.”
On May 31, 2023, the Company established the Sustainability Committee as an advisory body to the Boardof Directors for the purpose of strengthening initiatives for sustainability centered on addressing climatechange in looking toward achieving the Group’s sustainability targets. On the same day, we expressed our
support for the recommendations of the Task Force on Climate-related Financial Disclosures (hereinafter
called “TCFD”). The TCFD recommendations constitute an internationally standardized framework forcomparable disclosure of climate-related information and accordingly recommend that all enterprises furnish
disclosure in accordance with the four recommended disclosure categories of “governance,” “strategy,” “riskmanagement,” and “metrics and targets.”
As the Group promotes initiatives to address climate change, it will actively disclose information enlisting
the TCFD recommendations as guidelines for assessing the appropriateness of its response to climate change.
The content of this report has been disclosed in the securities report (in Japanese only) submitted in November
2023.
(i) Governancea. Roles and oversight system of the Board of Directors
The Group makes disclosures on matters determined by the Board of Directors with respect to policy, key
issues and targets related to sustainability, encompassing initiatives to address climate change risk inaccordance with its framework for the TCFD recommendations, etc.
The Group has established the Sustainability Committee, which is chaired by the President and Representative
Director. The committee is held twice a year for the purpose of identifying and ensuring appropriate
management of material climate-related risks and opportunities. The President and Representative Director
assumes ultimate responsibility for managerial decisions pertaining to environmental issues.
At its meetings, the Sustainability Committee discusses, determines, and periodically manages and monitors
progress with respect to climate change-related risks and business opportunities, targets, and specificinitiatives, and accordingly considers remedial actions as necessary. The Board of Directors engages inmanagement and oversight regarding the content of reports it receives from the Sustainability Committee on
the status of initiatives and progress toward achieving targets.

-7-

[Translation]b. System for promoting sustainability
Board of Directors
Consult

Cooperation

ReportSustainability
Committee

Management meetings

ReportInstruction

ReportCompliance Risk
Management Committee

ReportInstruction

Administration
divisions

Business divisions(ii) Strategy
a. Details of risks and opportunities over the short, medium, and long term
Assuming various situations that could potentially arise due to the realization of a low-carbon society or
climate change, the Group conducts scenario analysis with respect to physical risks, taking into account factorsthat include business activities, time periods, and assets in order to ascertain the validity of strategies and thechallenges involved.
In addition, the Group evaluates transition risks based on potential scenarios associated with legal
developments, technological advancement, and market conditions, thereby enabling it to recognize and takeaction with respect to climate-related risks and opportunities affecting its business activities.
The scenario analysis is conducted enlisting a short-term time horizon extending to the year 2025, which
serves as the implementation period of the 4th medium-term management plan, a medium-term time horizon
extending to the year 2030, and a long-term time horizon extending to the year 2050.
Short term
Mediumterm
Long term

Until 2025, the implementation period of the 4th medium-term
management plan
Until 2030
Until 2050

b. Description of risks and opportunities and their degree of impact on business, strategy, and financial
planning
The Group conducts scenario analysis with the objectives of understanding the climate change-related risks
and opportunities affecting the Group and their impacts, and considering resilience of the Group’s strategy
and the need for further measures based on assumptions regarding the world in the year 2030.
The Group has identified climate-related risks and opportunities aligned with the TCFD recommendations.
Furthermore, the Group has identified transition risks and physical risks brought about by climate change, as
well as opportunities arising from initiatives to appropriately address climate change. In addition, the Group
has assessed the climate-related risks and opportunities that have been identified in terms of their potential
impact on the Group and their likelihood of occurrence, and their materiality.
The following three levels of qualitative financial impact are provided in disclosing such information.
Major

Impact on the Group’s business and finance is likely to be extremely significant

Moderate

Impact on the Group’s business and finance is likely to be somewhat significant

Minor

Impact on the Group’s business and finance is likely to be immaterial-8-[Translation]c. Summary of the Group’s climate-related risks and opportunities
A summary of the Group’s climate-related risks and opportunities is as described below.
Types of climate-related risks andopportunities

Occurrence

Summary of climate-related risks andopportunities

Financial
impact• Introduction of carbon taxes and othergovernment policies

Government
policy andregulation

Short tomediumterm• Increase in energy costs due to more
stringent regulation• Increase in energy procurement costs

Minor

due to rising demand for renewableenergy associated with geopoliticalrisks• Increase in operational costs as aresult of adapting to high-efficiency
energy-saving equipment• Increase in energy procurement costs
due to more widespread adoption ofMedium toTechnology
long term
Risks

new zero-carbon energy, including

ModeratehydrogenTransition
risks

•

Rising prices due to reduced supply of
raw materials of crude oil origin suchas plastic, accompanying a reduction in
the volume of crude oil used

• Increase in renewable energy
procurement costs due to an increasein consumption of electricity derived
from renewable energy

Markets

Short tomediumterm• Loss of growth opportunities due todelays in responding to market
changes, including an increase indemand for low-carbon products• Loss of growth opportunities due todelays in addressing increased risk ofinfectious disease caused by climatechange-9-Major

[Translation]

Types of climate-related risks andopportunities

Occurrence

Summary of climate-related risks andopportunities

Financial
impact• Diminished reputation due to delays
in addressing environmental issues
and delays in responding todiversifying consumer behavior• Diminished reputation due to delays
Reputationand inadequacies in addressing

Short tomediumterm

investor demands for disclosure ofMinor

environmental information• Adverse effect on recruitment of those
newly entering the workforce, on
recruitment of career professionals, and on
employee engagement due to diminishedreputation in the eyes of stakeholders• Loss of sales opportunities accompanying adiminishing supply of products due toincapacitated or reduced production of
production site suppliers due to natural
disaster caused by climate change or risingprocurement costs due to the resulting needAcuteMedium to•long term

to secure alternative products
Loss of product sales opportunities

Major

arising from logistics route
disconnected due to natural disaster
caused by climate change

Physicalrisks• Decrease in revenue due to production
facility damage, inoperability or
downsizing due to natural disaster causedby climate change• Increase in procurement costs due todestabilization of agricultural production ofChronic

Medium tolong term

cotton, flax, etc. resulting from increased
rainfall and changes in weather patterns• Increase in health-related problems
among employees due to infectious
disease caused by climate change- 10 -

Minor

[Translation]

Types of climate-related risks andopportunities

Occurrence

Summary of climate-related risks andopportunities

Financial
impact• Decrease in energy consumption due
to enhancing energy-saving
Resource efficiency

measuresMedium tolong term • Decrease in energy procurement

Minor

costs as a result of shift to offices
with substantial environmental value• Decrease in energy procurement
costs as a result of introduction of
the latest high-efficiency energy
Energy source

equipment
Short to• Decrease in renewable energy
long term
procurement costs due toModeratedevelopment of new government
policy and systems related torenewable energy
Opportunities• Increase in revenue as a result of anincrease in demand forenvironmentally-friendly products,
including products with certification
mark such as products made ofupcycled materials, biomass-based

Products and services

Short tomediumterm

plastics and Fairtrade certified
products, and Eco Mark certified
products• Increase in revenue due toheightened consumer awarenessaccompanying mounting interest inenvironmentally-friendly products• Increase in revenue as a result of
launch of products that comply withmore stringent regulations- 11 -Major

[Translation]

Types of climate-related risks andopportunities

Occurrence

Summary of climate-related risks andopportunities

Financial
impact• Improvement of profitability as aresult of restructuring of the businessportfolio and expansion of themarket for low-carbon products• Increase in revenue as a result of products
being selected by environmentally

Markets

Medium tolong term

conscious customers accompanying a shift
to products with high environmental value

Major• New growth opportunities obtained
as a result of more stringent
regulations• New growth opportunities obtained
as a result of addressing increased
risk of infectious disease caused byclimate change

Resilience

Mediumterm• Improvement of energy resilience asa result of promoting renewable

Major

energy and energy savings(iii) Risk management
The Group regards its risk management as important initiatives for enhancing corporate value, and it has
accordingly established the Sustainability Committee, and managed risk. The Sustainability Committeemonitors risk, assesses the probability of that risk materializing, and evaluates the materiality of risk, andtakes responsive measures, reflecting its findings in the Group’s management strategy.
Moreover, the Sustainability Committee reports risks recognized and assessed to the Compliance Risk
Management Committee, which manages such risks alongside other risks.
(iv) Metrics and targets
Under the 4th medium-term management plan, the Group has set goals for renewable energy as a percentage
of electricity consumption (Group-wide basis), targeting 50% by 2025 and 100% by 2050.
Having joined “Renewable Energy 100 Declaration: RE Action (Note)” in October 2021, the Group set
minimum goals of having renewable energy account for 50% and 100% of its electricity consumption by 2030
and 2050, respectively. It accordingly seeks to achieve these goals ahead of the target deadline to the extent
possible. The Group also moved up, by five years, the target deadline for achieving the goal of having
renewable energy account for 50% of its electricity consumption, from 2030 to 2025, in the “4th Mediumterm Management Plan (FY8/23 to FY8/25)” released on October 20, 2022, the following year.
Initiatives toward achieving these goals have entailed powering offices with renewable energy, installing solar
panels at a Group factory operated by subsidiary Kraftwerk Co., Ltd. in August 2023, and switching over topartial use of renewable energy with respect to power consumed in factories. Going forward, the Group plans
to install solar panels at the second factory to be scheduled for completion of construction in June 2024.
(Note) Renewable Energy 100 Declaration: RE Action is an initiative for promoting 100% use of renewableenergy by having companies, municipalities, educational institutions, healthcare facilities, and othersuch organizations express their commitment and actions toward shifting to renewable energy for
100% of their electricity consumption.
･ CO2 emissions, electricity consumption, and renewable energy as a percentage of electricity consumption- 12 -

[Translation]
CO2 emissions of the Group (including its overseas subsidiaries) (estimated values for Scope 1 and Scope 2),
electricity consumption, and renewable energy as a percentage of electricity consumption are as described
below. The Group will continue to work on improving the accuracy of data calculation.
Fiscal year ended
Aug. 2022

Fiscal year ended
Aug. 2023

396

333

843,215

843,502

CO2 emissions (t-CO2)
Electricity consumption (kWh)Renewable energy as a percentage of
0.0%
14.6%
electricity consumption(Notes) 1 CO2 emissions are calculated using the “Emission factor by electric utility operator” releasedby the Ministry of Environment and the Ministry of Economy, Trade and Industry, the “List of
calculation methods and emission coefficients in calculations, reports and publication system”
released by the Ministry of the Environment, and data released by the Ministry of Ecology andEnvironment of the People’s Republic of China.
2 Figures presented do not include CO2 emissions and electricity consumption of one retail store
for which information is not available out of the five retail stores operated by the Company’s
subsidiary Trade Works Co., Ltd.
[Supplementary Principle 4-1-(1) Outline of the scope of delegation to management]
The matters to be resolved by the Board of Directors of the Company include those set forth in laws andregulations or in the Articles of Incorporation, as well as the execution of important business. The
criteria/standards for such decisions are stipulated in the Regulations of the Board of Directors and clearly definedin the Board of Directors Submission and Reporting Criteria as those for matters to be discussed by the Board of
Directors according to their level of impact on and importance for management.
The Decision-Making/Approval Authority Regulations also set out the decision-making/approval authority formatters arising from business operations.
[Supplementary Principle 4-8 Qualification for and composition of independent outside directors]
The Board of Directors of the Company consists of five Directors who are not Audit & Supervisory Committee
members and three Directors who are Audit & Supervisory Committee members. Of those eight Directors, four
Directors, including one Director who is not an Audit & Supervisory Committee member and three Directors who
are Audit & Supervisory Committee members, are independent outside directors who meet the criteria for
independence stipulated by the Tokyo Stock Exchange, and the ratio of such outside directors is more than onethird of the total of Directors.
[Principle 4-9 Criteria for assessing the independence of independent outside directors and their qualification]
When nominating candidates for independent outside directors, the Company selects persons who meet theindependence criteria specified by the Tokyo Stock Exchange.
[Supplementary Principle 4-11-(1) Views on the balance, etc. of overall knowledge/experience/abilities of theBoard of Directors]
Pursuant to the Articles of Incorporation, the Company sets the number of Directors to no more than 15 (including
setting the number of Directors who are not Audit & Supervisory Committee members to no more than 10 andthe number of Directors who are Audit & Supervisory Committee members to no more than 5). The Board of
Directors consists of eight Directors in total, four Executive Directors, one Director who is not Audit &Supervisory Committee member and three Directors who are Audit & Supervisory Committee members. The
composition of the Board of Directors allows for diversity in terms of knowledge, experience, abilities, etc., andincludes three women. One Director who is not Audit & Supervisory Committee member and three Directors who
are Audit & Supervisory Committee members are outside Directors, who meet the independence criteria specified
by the Tokyo Stock Exchange and are thus appointed as independent officers. With their varied knowledge andexperience in accounting, finance, laws, corporate management, etc., they are able to perform audit andsupervisory functions and offer comprehensive advice on Group management. As for Executive Directors, for the- 13 -

[Translation]
purpose of promoting efficiency in group management, representative directors of the major Group subsidiaries
concurrently serve as Directors of the Company.
The skills, etc. possessed by Directors of the Company are listed in the “Skills Matrix of Directors” on the
Company website.
https://www.trans-action.co.jp.e.zy.hp.transer.com/company/directo-skill-matrix.html[Supplementary Principle 4-11-(2) Concurrent positions of Directors and Audit & Supervisory Board Members]
Candidates for Directors and significant concurrent positions of Directors are disclosed each year in the business
report, reference materials for the convocation notice of the General Meeting of Shareholders, the securities reportand others.
[Supplementary Principle 4-11-(3) Implementation of analysis and evaluation of the overall effectiveness of theBoard of Directors]
The Company recognizes that the Board of Directors performs its expected supervisory functions as it is composedof eight Directors, including one Director who is not Audit & Supervisory Committee member (independent
outside director) and three Directors who are Audit & Supervisory Committee members (all three are independent
outside directors). At the 37th Annual General Meeting of Shareholders held on November 29, 2023, one Director(independent outside director) who is not an Audit & Supervisory Committee member was appointed, increasing
the number of directors by one.
For the purpose of reviewing the present state of the functions of the Board of Directors to boost its effectiveness,
the Company has conducted an effectiveness evaluation of the Board of Directors every year since the fiscal year
ended August 31, 2021. The following is a summary of the method and results of the effectiveness evaluation for
the fiscal year ended August 31, 2023:(1) Method of evaluation
A survey/questionnaire was issued to seven Directors who were members of the Board of Directors (including
Audit & Supervisory Committee members). (The survey/questionnaire was structured with multiple questions
divided into six categories. The directors answered each question based on a five-point scale and madecomments freely for each question category and wrote an overall summary at the end.) The results of theevaluation were reported by the full-time Audit & Supervisory Committee member to the Board of Directors,
based on the results collected and reported by an external institution. The Board of Directors then verified thefindings, identified issues, and had a full discussion about a policy to make further improvements, etc.
For the record, in order to secure frank opinions and objective analysis, the collection and counting of thesurvey/questionnaire was outsourced to an external institution.
(2) Summary of the results
As a result, the Company confirmed that the Board of Directors is operated effectively, and that its
effectiveness increased from the previous year. Evaluations with respect to each of the categories werepositive across the board. Particularly high marks were assigned to overall operation of the Board of Directors,
including composition of the Board of Directors and the function of the independent outside directors, andalso with regard to feedback provided to the Board of Directors regarding opinions furnished through dialogue
with institutional investors, etc.
Evaluation results indicated improvement over the previous year, with better marks having been assigned withrespect to discussions on matters such as management strategy and the medium-term management plan.
However, there were also opinions expressing the view that further enhancement is needed regarding time
devoted to deliberations and information required for deliberations. Additionally, the results indicated that theissue of developing the next generation of managerial professionals remains a topic warranting further
discussion.
Based on these results, the Company will pursue further enhanced effectiveness of the Board of Directors bycontinuously making improvements.
[Supplementary Principle 4-14-(2) Policy on training for Directors and Audit & Supervisory Board Members]
For Directors, including outside Directors, to perform their roles and duties, the Company provides and arranges
opportunities for learning essential knowledge about the Company, such as its business, finances andorganizations, expected roles and duties as an officer of a listed company, and knowledge about relevant
laws/regulations and compliance, as well as for training, which is updated as necessary on a continual basis, atthe expense of the Company. When outside Directors take office, the business lines and organizational structures- 14 -

[Translation]of the Group are explained to them, and information is provided as needed thereafter. For internally-appointed
Directors, when and after they assume office, opportunities for internal training or training by outside lecturers
such as lawyers are provided for them to fully understand their expected roles and duties as Directors.
[Principle 5-1 Policy on constructive dialogue with shareholders](1) Policy on constructive dialogue with shareholders
The Company believes that it is important to develop a system to facilitate constructive dialogue with shareholders
and investors for sustainable growth and enhanced corporate value and assigns IR operations forshareholder/investor support to the Corporate Planning Department. In addition, the General Affairs Department
also provides support for shareholders as a point of contact.
Enlisting a framework whereby the Corporate Planning Department and the General Affairs Department act asdirect points of contact and operations are supervised by the Director in charge of the administration division,actual dialogue with shareholders and other investors is, in principle, handled by the Representative Directors, theDirector in charge of the administration division, and the General Manager of Corporate Planning Department.
In order to be able to have productive/fulfilling dialogue with shareholders and investors, the Corporate Planning
Department and the General Affairs Department gather information and exchange opinions on a regular basis, andcooperate in preparing disclosure materials, whose content is reviewed with Chairman and Representative
Director, President and Representative Director, and a Director in charge of the administration division. They also
work together to gather information and exchange opinions based on their own expertise, in connection withdisclosures and explanations about the Group companies, their operations, account closings, and so on.
For shareholders and investors, the disclosure of easy-to-understand information about the Company’s business,within a reasonable scope, is ensured at the General Meeting of Shareholders. Financial results briefings are held
twice per year, while letters/communications to shareholders, disclosures via the Company website, interviews
with institutional investors, telephone interviews, etc. are conducted so that they can deepen the understanding of
the Company’s management strategy and business environment. Since October 2022, summaries of financial
results, financial statements briefing session material, medium-term management plans, and convocation notices
in a narrow sense as well as reference materials for the General Meeting of Shareholders have been translated into
English and disclosed on the Company website, etc. This report has been also translated into English and disclosed
on the Company website, etc.
The outcomes of IR activities, including topics discussed in the dialogue with shareholders/investors as well as
opinions, are compiled and reported to top-level executives, as needed. Additionally, the content of questions andopinions raised during financial results briefings (held subsequent to disclosure of second quarter results andannual results) and in the course of dialogue with institutional investors held subsequent disclosure of quarterly
financial results are reported and shared twice a year in meetings of the Board of Directors, and actively applied
to aspects of operations such as the Company’s management strategy and investor relations.
In order to ensure substantial equality for shareholders and investors, the Company makes efforts to provide fair
information disclosures. Material information about the Company is disclosed in a timely and impartial manner,and information control is ensured so that it is not given only to certain shareholders/investors.
(2) Dialogue with shareholders
The Company actively engages in IR activities for the purpose of facilitating constructive dialogue with its
domestic and overseas shareholders, investors, analysts, etc., based on its awareness that dialogue with suchshareholders, investors, analysts, etc. helps give rise to the Group’s sustainable growth and further enhancementof corporate value. The Company held two financial results briefings with explanation provided by the Chairman
and Representative Director for the fiscal year ended August 31, 2023, one of which was in April 2023 (second
quarter, online format) and the other of which was in October 2023 (fiscal year, hybrid format). Those who
attended the financial results briefings include fund managers, buy-side analysts, and sell-side analysts. In addition,
following the earnings announcements for each quarter (first quarter to third quarter) and the fiscal year, theChairman and Representative Director, President and Representative Director, Director in charge of theadministration division, and General Manager of Corporate Planning Department conducted individual meetings
with institutional investors (fund managers and analysts) and sell-side analysts. This involved dialogue covering
a wide range of topics, including characteristics of the Group’s business model, prevailing business conditions,strategies for growth going forward, effects of the external environment and associated response, and requests inrelation to ESG and information disclosure.
Results of financial results briefings and dialogue on an individual basis are as described below.
Financial results briefings
Two times
Dialogue on an individual basis
90 times- 15 -

[Translation]
Please refer to “III. Implementation of Measures for Shareholders and Other Stakeholders, 2. IR activities” forother implementation summary of the financial results briefings.
[Management that is conscious of cost of capital and stock prices]
The Group has formulated a three-year medium-term management plan and released it as the “TRANSACTION
Group 4th Medium-term Management Plan (FY8/23 to FY8/25)” in October 2022. Under the medium-term
management plan, the Group has set quantitative targets for net sales, operating profit, operating profit margin,
ordinary profit, and profit attributable to owners of parent. It has also drawn up an investment plan containing an
investment summary and total investment amounts. In October 2023, the Group revised the performance targets
under the medium-term management plan (upwardly revised) based on the financial results for the fiscal year
ended August 31, 2023, and also set and released a new target for ROE (consolidated) of 20.0% or above for the
fiscal year ending August 31, 2025. The Group’s ROE was 22.3% for the fiscal year ended August 31, 2023, and
the Group confirms that it has achieved return on capital that exceeds cost of capital. In addition, PBR as of August
31, 2023 was 3.5.

- 16 -

[Translation]

2. Capital structure

UpdatePercentage of shares held by foreign investors[Major shareholders]

10% to less than 20%

UpdateNumber of shares held
(shares)

Ownership interest (%)

Satoshi Ishikawa

8,694,000

29.85

Custody Bank of Japan, Ltd. (Trust account)

2,628,100

9.02

Aoi Ishikawa

2,169,000

7.45

Arata Ishikawa

2,164,000

7.43

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

1,843,400

6.33

Chikako Ishikawa

864,000

2.97

Development Bank of Japan Inc.

772,400

2.65

Nippon Life Insurance Company

762,600

2.62

TRANSACTION Group Employee
Shareholding Association

500,000

1.72

BBH FOR FIDELITY LOW-PRICEDSTOCK FUND (PRINCIPAL ALL SECTORSUBPORTFOLIO)

396,189

1.36

Name of shareholder

Existence of controlling shareholders (excl. parent company)—

Existence of parent company

None

Supplementary information—

3. Corporate attributes
Listed stock exchange and market segment

Tokyo: Prime

Fiscal year end

End of AugustType of business

Other products

Number of employees at the end of the previous fiscal year
(consolidated)

500 to less than 1,000

Sales during the previous fiscal year (consolidated)¥10 billion to less than ¥100 billion

Number of consolidated subsidiaries at the end of theprevious fiscal year

Less than 10 companies

4. Guidelines for measures to protect minority shareholders in the event of transactions with controllingshareholders—

5. Other particular conditions that may materially affect corporate governance—- 17 -

[Translation]

II. Business Management Organization and Other Corporate Governance Systems forManagement Decision-Making, Execution, and Supervision
1. Organizational structures and operations
Organizational form
[Directors]

Company with an Audit & Supervisory Committee
UpdateNumber of Directors pursuant to the Articles ofIncorporation

15

Term of Directors pursuant to the Articles ofIncorporation

1 yearChairperson of the Board of Directors

Chairman (excluding concurrently serving as President)

Number of Directors

8Election of outside Directors

ElectedNumber of outside Directors

4

Number of outside Directors designated as
independent officers

4

Relationship with the Company (1)NameUpdateRelationship with the Company (*)

AttributesaYoriko Aelvoet

From another company

Toshiro Sasaki

From another company

Takeo Tochimoto

Certified Public Accountant

Yumiko Matsuo

Attorney at law

b

c

d

e

f

g

h

i

j

k

* Categories for Relationship with the Company* ○ indicates that the person presently falls or has recently fallen under the category. △ indicates that the person
fell under the category previously.
* ● indicates that the person’s immediate family member presently falls or has recently fallen under the category(except h to j). ▲ indicates that the person’s immediate family member fell under the category (except h to j)previously.
a. An executive officer of the Company or its subsidiaryb. An executive officer or non-executive director of the parent of the Company
c. An executive officer of a fellow subsidiary of the Company
d. A person whose primary customer/supplier is the Company or who is an executive officer thereof
e. A primary customer/supplier of the Company or an executive officer thereof
f. A consultant, accounting expert or legal expert who receives significant monetary consideration or otherassets from the Company, in addition to remuneration as a Director
g. A principal shareholder of the Company (if the principal shareholder is a legal entity, an executive officerof such legal entity)h. An executive officer of the customer/supplier of the Company (which does not fall under any of d, e, or f)(the Director himself/herself only)
i. An executive officer of a company, between which and the Company outside Directors are appointed on areciprocal basis (the Director himself/herself only)
j. An executive officer of an entity that receives a donation from the Company (the Director himself/herself
only)
k. Other- 18 -

[Translation]
Relationship with the Company (2)NameMember of
Audit &
Supervisory
Committee

Yoriko Aelvoet

Toshiro Sasaki

Takeo Tochimoto

Yumiko Matsuo

UpdateIndependent
officer

○

○

○

○

○

○

○

Supplementary information

Reasons for election

No special notes.

She is expected to contribute to theenhancement of corporate governanceby providing useful advice, etc. from a
professional and multifaceted
perspective as well as providing her
opinions on the overall management of
the Company Group from an objective
and independent standpoint as she
possesses a high level of expertise andbroad knowledge of marketing andmanagement based on her wealth ofexperience, primarily in the IP andcontent business industry, and theimportance of her knowledge has been
increasing in the major businesses of
the Company Group recently.

No special notes.

Based on his extensive experience andknowledge as a company owner and anauditor, he is expected to contribute toensuring the soundness and adequacyof the Company’s management, by
drawing on his valuable input andcandid assessments of the Company’s
operations.

No special notes.

By drawing on his extensive
experience at the Bank of Japan aswell as broad knowledge as a certified
public accountant, he has provided anumber of companies with advice andsupervision on management from an
independent point of view. Suchwealth of experience should, in termsof diversity in corporate management,
contribute to ensuring the soundness
and adequacy of the Company’s
management.

No special notes.

With her expertise and considerable
practical experience as a lawyer, she
has provided many companies withadvice and supervision on
management from an independent
standpoint and thus is expected tocontribute to ensuring the soundness
and adequacy of the Company’s
management.

- 19 -

[Translation][Audit & Supervisory Committee]
Committee members and attributes of chairperson

UpdateTotal members(persons)

Full-timemembers(persons)

Inside Directors(persons)

OutsideDirectors(persons)

Chairperson

3

1

0

3

Outside Director

Audit &
Supervisory
Committee

Existence of Directors and employees who assist with theduties of the Audit & Supervisory Committee whenrequiredNone

Reasons for adopting the current system
The Audit & Supervisory Committee does not have specific employees who assist with its duties as it performs
audits in coordination with the Internal Audit Office. When the Audit & Supervisory Committee needs them,certain employees are assigned upon discussion with the Committee, and such assignment must be agreed to by
the Committee. The Internal Audit Office staff also provides assistance, where necessary, upon receiving
directions related to matters concerning audit operations. In such cases, the employee is supervised by the Audit& Supervisory Committee and maintains his/her independence from Directors who are not Audit & Supervisory
Committee members.
Cooperation between the Audit & Supervisory Committee, independent auditors, and the internal audit division
For coordination between the Audit & Supervisory Committee and the Internal Audit Office, they exchange
opinions when drafting an annual internal audit plan, and reports on audit results are submitted by the Office to
the Committee on a monthly basis during the fiscal year. For coordination between the Audit & Supervisory
Committee and independent auditors, they exchange opinions at the time of quarterly account closing and yearend account closing and share information at the time of audits during the fiscal year to confirm financial
positions, revisions to laws, etc. Furthermore, the Audit & Supervisory Committee and the Internal Audit Office
are both present, if necessary, at inventory clearance at the time of account closing, and the Office makes a reporton internal audits as appropriate, in an effort to ensure proactive coordination with independent auditors.
[Optional committees]
Establishment of optional committees
equivalent to Nominating Committee orRemuneration Committee

Established- 20 -

[Translation]
Status of establishment of optional committees, committee members, and attributes of chairperson of thecommittee
Optional committee equivalent toNominating Committee

Optional committee equivalent toRemuneration Committee

Name of the committee–

Remuneration Committee

Total members (persons)–

3

Full-time members (persons)–2

Inside Directors (persons)–1

Outside Directors (persons)–2

Outside experts (persons)–0

Other (persons)–0

Chairperson–

Inside Director

Supplementary information

Update[Remuneration Committee](1) Roles and structures
In order to ensure the objectivity and transparency of procedures for determining remuneration for Directors
who are not Audit & Supervisory Committee members, improve the supervisory functions of the Board of
Directors, and further enhance the corporate governance system, the Company has established theRemuneration Committee as an optional advisory body to the Board of Directors. The Remuneration
Committee consists of three members who are elected by the Board of Directors, and a majority of themembers must be independent outside directors (Audit & Supervisory Committee members). The
Chairperson is appointed by the Board of Directors.
Regarding the policy and method of determining remuneration, etc. for Directors who are not Audit &Supervisory Committee members and individual remuneration amounts, etc., in accordance with the policy
for determining the details of individual remuneration, etc. for Directors adopted by the Board of Directors,
Chairman and Representative Director and Directors who are Audit & Supervisory Committee members(independent outside directors), who constitute the Remuneration Committee delegated by the Board of
Directors, deliberate on and decide the scope of the delegation based on the resolution of the General Meetingof Shareholders and the resolution of the Board of Directors.
(2) Activities
The Committee met five times in the fiscal year ended August 31, 2023:･ Deliberated and determined the individual remuneration, etc. for the Directors who are not Audit &Supervisory Committee members (revised in December 2022)･ Confirmed the remuneration for the directors of subsidiaries･ Confirmed the summary of stock compensation (medium-term incentives)･ Discussed the future remuneration system
The attendance of the members was as follows:
Satoshi Ishikawa (Chairman and Representative Director)
5/5 (attendance rate: 100%)
Toshiro Sasaki (Outside Director / Full-time Audit & Supervisory
5/5 (attendance rate: 100%)
Committee member)
Takeo Tochimoto (Outside Director / Audit & Supervisory
5/5 (attendance rate: 100%)
Committee member)- 21 -

[Translation][Independent officers]

UpdateNumber of independent officers

4

Other matters relating to independent officers
The Company has designated all four outside Directors as independent officers, as they are all qualified as
independent officers.
[Incentives]
Implementation of measures to provide
incentives to Directors
Supplementary information☑ Adoption of performance-linked remuneration plan
☑ Other

UpdatePlease refer to “Disclosure of policy on determining the amount and calculation method of remuneration (details)”in “1. Organizational structures and operations, [Director remuneration]” under section II.
Grantees/recipients of stock options
Supplementary information—[Director remuneration]☑ Individual remuneration is not disclosed

Status of disclosure
Supplementary information

UpdateDirector remuneration in the fiscal year ended August 31, 2023
(Thousand yen)
Total amount of
remuneration

Fixed
remuneration

Performancelinked
remuneration

Non-monetary
remuneration,etc. (stockcompensation)

Number of
Directors whoaregrantees/recipients(persons)

Directors who are not Audit &Supervisory Committee
members

123,570

72,502

41,4309,637

4

Directors who are Audit &Supervisory Committee
members(outside Directors)

17,10017,100

–

–

4

Total

140,670

89,602

41,4309,637

8(Outside Directors)(17,100)(17,100)

(–)

(–)

(4)

- 22 -

[Translation]
Existence of policy on determining the amountand calculation method of remuneration

Yes

Disclosure of policy on determining the amount and calculation method of remuneration (details) Update
At the Board of Directors meeting held on February 26, 2021, the Company adopted a resolution on the policy
for determining the details of individual remuneration, etc. for Directors. The policy is as described below.
Additionally, at the Board of Directors meeting held on December 6, 2023, the policy for determining the content
of performance-linked remuneration was revised. The details of this revision are stated in “b. Performance-linked
remuneration.”(1) Basic policy on remuneration, etc. for Directors
The basic policy on remuneration for the Directors of the Company is to set up a remuneration system linked
to shareholder returns so that it fully functions as an incentive to increase Director motivation for continuousand medium-to-long-term improvement of earnings and the achievement of sustainable improvement in thecorporate value of the entire Group, in accordance with the management policy, in an environment whererisk taking is allowed, and to set individual Director remuneration at a proper level in view of their respective
duties.
Remuneration for Directors, except outside Directors and Directors who are Audit & Supervisory Committee
members (hereinafter called “Executive Directors”), is composed of “fixed remuneration,” “performancelinked remuneration,” which is linked to short-term earnings, and “stock compensation,” which is a mediumterm incentive that is provided on condition that certain targets are met. Remuneration for non-Executive
Directors, outside Directors, and Directors who are Audit & Supervisory Committee members consists onlyof fixed remuneration, given their duties.
(2) Composition of remuneration for Executive Directors
a. Fixed remuneration
The amount is determined by comprehensively considering a Director’s rank, roles, years of experience,changes in the business environment, etc.
b. Performance-linked remuneration
For the purpose of increasing awareness regarding improving earnings on a fiscal year basis and clarifying
the results and responsibilities of Directors, the amount is determined based on earnings figures. Morespecifically, using two figures as earnings figures, namely, the consolidated profit before income taxes andthe sum of profit before income taxes of the operating companies that a Director is in charge of, and inaccordance with the “standard for performance-linked remuneration” that defines the amount of
remuneration corresponding to earnings figures, it is determined in proportion to the actual results for theprevious fiscal year. The consolidated profit before income taxes is applied to remuneration for
Representative Director and the Director in charge of the administration division of the Company. On theother hand, with respect to remuneration for Directors who concurrently serve as the representative directorof an operating company, the consolidated profit before income taxes and the sum of profit before income
taxes of the operating company and other operating companies that he/she is in charge of are both applied.
These figures are used because they are emphasized in enhancing the Group’s profitability, and because theresults and responsibilities of Directors should be clearly defined.
Content of revision resolved on December 6, 2023
For the purpose of increasing awareness regarding improving earnings on a fiscal year basis and clarifying
the results and responsibilities of Directors, the amount is determined based on earnings figures. Morespecifically, using two figures as earnings figures, namely, the sum of profit before income taxes of all
operating companies and the sum of profit before income taxes of the operating companies that a Director
is concurrently serving at and is in charge of, and in accordance with the “standard for performance-linked
remuneration” that defines the amount of remuneration corresponding to earnings figures, it is determinedin proportion to the actual results for the previous fiscal year. In the case of the Representative Director of
the Company, the sum of profit before income taxes of all operating companies is applied. In the case of
Directors who are concurrently serving as the Representative Director of operating companies, the sum of
profit before income taxes of all operating companies, and the sum of profit before income taxes of that
operating company and the operating companies that the Director is concurrently serving at and is in charge- 23 -

[Translation]of are applied, and in the case of Directors who are concurrently serving as Director of an operating company,
the sum of profit before income taxes of all operating companies, and the sum of profit before income taxesof the operating companies that the Director is concurrently serving at are applied. These figures are usedbecause they are emphasized in enhancing the Group’s profitability, and because the results andresponsibilities of Directors should be clearly defined.
c. Non-monetary remuneration, etc. (stock compensation)
As an incentive to achieve targets under the medium-term management plan and increase motivation tocontribute to enhancing corporate value more than before, non-monetary remuneration, etc. is provided in
the form of shares with a transfer restriction (with performance conditions). When such compensation is
granted, a certain performance condition is set as a condition for lifting of the transfer restriction so that it
functions as an incentive to achieve targets. The amount and the number of shares to be granted aredetermined by considering a Director’s rank, expected roles, stock price movements, etc.
The details of the stock compensation with a transfer restriction (with performance conditions) granted to
Executive Directors based on the stock compensation with a transfer restriction plan adopted in accordancewith the resolution of the 33rd Annual General Meeting of Shareholders held on November 28, 2019, are as
follows. Regarding stock compensation for the current fiscal year, stock compensation for the period from
September 2022 to November 2022 is associated with the allotment dated December 25, 2019, and stockcompensation for the period from December 2022 to August 2023 is associated with the allotment dated
December 28, 2022. Consolidated net income is adopted as a figure for performance conditions because theCompany emphasizes the payout ratio when making a decision on dividends for shareholders.
• Resolution on allotment dated November 28, 2019 (allotment dated December 25, 2019)(a) Transfer restriction period
From December 25, 2019 to the time of retiring from the position of director or auditor of the Company or
its subsidiaries(b) Conditions for lifting of transfer restriction
An eligible director has continuously remained in the position of Director of the Company during the period
from December 25, 2019 to immediately before the conclusion of the 36th Annual General Meeting of
Shareholders (FYE 2022/8), and the aggregate consolidated net income stated in the securities report of theCompany for the three fiscal years from the 34th fiscal year (FYE 2020/8) to the 36th fiscal year (FYE
2022/8) amounts to ¥5.31 billion or more.
The performance condition that serves as a condition for lifting of the transfer restriction stated above has
been achieved given that the aggregate consolidated net income for the 34th fiscal year (FYE 2020/8) to the36th fiscal year (FYE 2022/8) amounts to ¥5.90 billion.
• Resolution on allotment dated December 6, 2022 (allotment dated December 28, 2022)(a) Transfer restriction period
From December 28, 2022 to the time of retiring from the position of director or auditor of the Company or
its subsidiaries(b) Conditions for lifting of transfer restriction
An eligible director has continuously remained in the position of Director of the Company during the period
from December 28, 2022 to immediately before the conclusion of the 39th Annual General Meeting of
Shareholders (FYE 2025/8), and the aggregate consolidated profit stated in the securities report of theCompany for the three fiscal years from the 37th fiscal year (FYE 2023/8) to the 39th fiscal year (FYE
2025/8) amounts to ¥8.23 billion or more.
d. Policy for determining the percentage of remuneration
To encourage Executive Directors to take on challenges, the structure is based on performance-linked
remuneration, which is linked to short-term earnings and stock compensation with a transfer restriction as
an incentive to achieve medium-term management plans, with a certain amount of fixed remuneration as abase. Considering the balance of each type of remuneration, Chairman and Representative Director andDirectors (independent outside directors) who are Audit & Supervisory Committee members, who constitutethe Remuneration Committee delegated by the Board of Directors (the “Remuneration Committee
members”), determine the details of the individual remuneration, etc. for Directors.

- 24 -

[Translation](3) Resolution of the General Meeting of Shareholders related to the determination of remuneration for Directors
The maximum amount of remuneration for Directors who are not Audit & Supervisory Committee members
was approved at ¥200 million per year (including a maximum of ¥20 million per year for outside Directors;
for a total of five Directors at the time of the resolution, including one outside Director) at the 30th Annual
General Meeting of Shareholders held on November 29, 2016. In addition, at the 33rd Annual General
Meeting of Shareholders held on November 28, 2019, the total amount of monetary compensation claims to
be issued for the grant of shares with a transfer restriction to Executive Directors was approved at up to ¥60
million per year (for a total of four Directors at the time of the resolution), separately from the foregoing
maximum remuneration amount, with the total maximum number of common shares as 80,000. Employee
salary for the employee who concurrently serves as a Director is not included in the maximum remuneration
amount or the total amount of monetary compensation claims.
The maximum amount of remuneration for Directors who are Audit & Supervisory Committee members
was approved at ¥50 million per year (for a total of three Directors at the time of the resolution, including
three outside Directors) at the 30th Annual General Meeting of Shareholders held on November 29, 2016.
(4) Process of determining the amount of remuneration, etc. for Directors
In order to ensure the objectivity and transparency of procedures for determining remuneration for Directors
who are not Audit & Supervisory Committee members, improve the supervisory functions of the Board of
Directors, and further enhance the corporate governance system, the Company has established theRemuneration Committee, which is composed of three members, a majority of whom are independent
outside directors (Audit & Supervisory Committee member), as an optional advisory body to the Board of
Directors. For individual remuneration, etc., the determination of the details is delegated to the Remuneration
Committee members based on the resolution of the Board of Directors. They are authorized to determine theamount of fixed remuneration for Directors and the amount of performance-linked remuneration based on
the actual results of the business that each Director is in charge of.
The Board of Directors has established the Remuneration Committee Regulations so that authority isappropriately exercised by the Remuneration Committee members. The Regulations provide that theCommittee shall consist of three members, including one Representative Director, and two Directors(independent outside directors) who are Audit & Supervisory Committee members and constitute a majority,and that the Committee shall report on the execution of its duties to the Board of Directors, and so on. The
Board of Directors judges that the details of individual remuneration, etc. for the current fiscal year havebeen adequately deliberated and determined by the Remuneration Committee based on the policy adopted
by the Board of Directors, and that they are in line with the foregoing policy.
Meanwhile, for stock compensation with a transfer restriction, the number of shares to be individually
allotted to Directors is resolved by the Board of Directors in view of the decision made by the Remuneration
Committee.
The remuneration, etc. for Directors who are Audit & Supervisory Committee members is determined atmeetings of the Audit & Supervisory Committee, within the scope of the resolution of the General Meetingof Shareholders.
The Remuneration Committee met five times in the fiscal year ended August 31, 2023, with all members inattendance. The individual remuneration, etc. for the current fiscal year for Directors who are not Audit &Supervisory Committee members was reviewed and decided on by the Remuneration Committee, based on
the proxy resolution of the Board of Directors meeting held on November 29, 2022. The stock compensation(medium-term incentives) summary was also confirmed, the future remuneration system was discussed, andthe remuneration for directors of subsidiaries was confirmed.
The following are the members of the Remuneration Committee:
Chairperson
MemberMemberChairman and Representative Director
Outside Director (Full-time Audit &Supervisory Committee member)
Outside Director (Audit & Supervisory
Committee member)- 25 -

Satoshi Ishikawa
Toshiro Sasaki
Takeo Tochimoto

[Translation][Support system for outside Directors]
The General Affairs Department provides support for outside Directors, such as giving advance notice of theBoard of Directors meetings and materials, in an effort to facilitate deliberations and resolutions at the meetings
as well as to ensure effective administration. Other necessary reports and communications are made, as
appropriate, on a cooperative basis by full-time Audit & Supervisory Committee members and the General
Affairs Department to avoid any information gap.

2. Matters pertaining to functions relating to business execution, auditing and supervision, nomination,and decisions regarding remuneration (outline of the current corporate governance system) Update
In order to increase transparency and objectivity related to the Group’s management and further strengthen the
supervisory functions of the Board of Directors and corporate governance to further enhance corporate value, theCompany has adopted the structure of a company with an Audit & Supervisory Committee, establishing the Boardof Directors, Audit & Supervisory Committee, and independent auditors as an entity under the Companies Act,
along with the Remuneration Committee, Management Meeting, Compliance Risk Management Committee,
Sustainability Committee, and Internal Audit Office.
(1) Board of Directors
The Board of Directors consists of five Directors who are not Audit & Supervisory Committee members (oneof whom is an outside Director and an independent officer) and three Directors who are Audit & Supervisory
Committee members (all of whom are outside Directors and independent officers). It meets on a monthly
basis, with ad-hoc meetings held as necessary, decides material management matters in accordance with laws,
the Articles of Incorporation, and the Regulations of the Board of Directors, and receives reports on businessexecution from Directors who are not Audit & Supervisory Committee members in order to supervise their
execution of duties. One Director (outside Director and independent officer) who is not an Audit &Supervisory Committee member was appointed at the 37th Annual General Meeting of Shareholders held on
November 29, 2023, increasing the number of directors by one. As such, there are four outside Directors whoare independent officers.
Each Director who is not Audit & Supervisory Committee member performs his/her duties properly, incompliance with laws and the Articles of Incorporation and based on resolutions of the Board of Directors,
and mutually monitors the validity and conformity with laws and the Articles of Incorporation of the executionof duties by other Directors who are not Audit & Supervisory Committee members.
Directors who are Audit & Supervisory Committee members monitor the ideal state of governance and its
operation status and audit and supervise the execution of duties by Directors who are not Audit & Supervisory
Committee members, by attending key managerial meetings such as the Board of Directors meetings,
Management Meetings, Compliance Risk Management Committee meetings, and Sustainability Committee
meetings, and receiving reports from or interviewing employees or Directors who are not Audit & Supervisory
Committee members.
The Board met 16 times in the fiscal year ended August 31, 2023. Composition of the Board of Directors,
attendance at Board of Directors meetings, and specific matters for consideration are as described below.
Composition of the Board of Directors and attendance at Board of Directors meetings
Title
Name
Attendance
Chairman and Representative
Director (Chairperson)

Satoshi Ishikawa

President and Representative
Director

Keiichi Chiba

Director

Yoshinari Kitayama

16/16 (attendance rate: 100%)

Director

Yukiko Iguchi

16/16 (attendance rate: 100%)

Director (Full-time Audit &Supervisory Committee
member)Toshiro Sasaki

16/16 (attendance rate: 100%)
16/16 (attendance rate: 100%)

16/16 (attendance rate: 100%)- 26 -

[Translation]
Director (Audit & Supervisory
Committee member)

Takeo Tochimoto

Director (Audit & Supervisory
Committee member)

Yumiko Matsuo

16/16 (attendance rate: 100%)
16/16 (attendance rate: 100%)

Director (Audit & Supervisory
Ryuji Ueda
3/3 (attendance rate: 100%)
Committee member)(Note) The number of meetings of the Board of Directors of which Ryuji Ueda was eligible to attend
differs from that of the other Directors given that he retired at the conclusion of the 36th Annual
General Meeting of Shareholders held on November 29, 2022.
Matters for consideration･ Progress on matters regarding business management of the Group･ Formulation of single-year budget and medium-term management plan･ Matters regarding capital investment･ Matters regarding sustainability･ Holdings of strategically-held shares and exercise of voting rights･ Matters regarding corporate governance and internal controls
The Board of Directors formed opinions, engaged in discussions, and adopted resolutions regarding matterssuch as those listed above.
(2) Audit & Supervisory Committee
The Audit & Supervisory Committee consists of one full-time outside Director and two outside Directors, andall three members are independent officers. The full-time outside Director serves as the Chairperson. By
holding monthly regular meetings, and ad-hoc meetings as necessary, for exchanging views on audit results,
etc. and cooperating with independent auditors and the Internal Audit Office, the Committee is engaged in
effective auditing activities. For the purpose of facilitating these activities and reinforcing the audit andsupervisory functions of the Committee, one full-time Audit & Supervisory Committee member has been
appointed. Two non-full-time (part-time) members possess substantial knowledge about the fields of finance,accounting, and law through their professional background and considerable practical experience as a banker,
certified public accountant, and attorney at law.
The Committee met 14 times in the fiscal year ended August 31, 2023.
Composition of the Audit & Supervisory Committee and attendance at Audit & Supervisory Committee
meetings
Title
Name
AttendanceDirector (Full-time Audit &Supervisory Committee
member)Toshiro Sasaki

14/14 (attendance rate: 100%)

Director (Audit & Supervisory
Committee member)

Takeo Tochimoto

14/14 (attendance rate: 100%)

Director (Audit & Supervisory
Committee member)

Yumiko Matsuo

14/14 (attendance rate: 100%)

Director (Audit & Supervisory
Ryuji Ueda
3/3 (attendance rate: 100%)
Committee member)(Note) The number of meetings of the Audit & Supervisory Committee of which Ryuji Ueda waseligible to attend differs from that of the other Directors given that he retired at the conclusionof the 36th Annual General Meeting of Shareholders held on November 29, 2022.
Matters for consideration
Matters for consideration include those with respect to design of and allocation of duties for audit plans,
preparation and submission of audit reports, determination of content of the proposal related to the electionof the independent auditor and evaluation of the independent auditor, determination of opinion on proposal- 27 -

[Translation]for election of Directors who are not Audit & Supervisory Committee members and Directors who are Audit& Supervisory Committee members (including the substitute Director who is an Audit and Supervisory
Committee Member), confirmation regarding the structure and operations of internal control systems,
confirmation regarding Board of Director matters to be resolved and matters to be reported, confirmation
regarding audits by the Internal Audit Office, and opinion exchange with the respective Representative
Directors and Directors.
(3) Internal Audit Office
As an independent department that reports directly to Chairman and Representative Director, the Internal
Audit Office consists of one person. In accordance with the Internal Audit Rules, audits are categorized intobusiness operation audits, accounting audits, and audits on efficiency and economy, compliance, and internal
controls, and conducted onsite at least once a year, in principle, in the divisions of the Company and thedivisions and sales offices of subsidiaries, in line with an annual audit plan that is approved by Chairman and
Representative Director and reported to the Board of Directors. Audit results are reported to the Chairman
and Representative Director, and subsequently reported to the Audit & Supervisory Committee. They are also
reported directly to the Board of Directors by the Internal Audit Office.
(4) Independent auditors
For accounting audits, under the audit engagement agreement signed between Grant Thornton Taiyo LLC andthe Company, Grant Thornton Taiyo LLC expresses its opinions on financial statements and internal controls
from an independent and fair point of view.
(5) Remuneration Committee
In order to ensure the objectivity and transparency of procedures for determining remuneration for Directors
who are not Audit & Supervisory Committee members, improve the supervisory functions of the Board of
Directors, and further enhance the corporate governance system, the Company has established theRemuneration Committee as an optional advisory body to the Board of Directors. The Remuneration
Committee consists of three members who are elected by the Board of Directors, and a majority of themembers must be independent outside directors (Audit & Supervisory Committee members). The Chairperson
is appointed by the Board of Directors. Regarding the policy and method of determining remuneration, etc.
for Directors who are not Audit & Supervisory Committee members and individual remuneration amounts,
etc., in accordance with the policy for determining the details of individual remuneration, etc. for Directors
adopted by the Board of Directors, Chairman and Representative Director and Directors who are Audit &Supervisory Committee members (independent outside directors), who constitute the Remuneration
Committee delegated by the Board of Directors, deliberate on and decide the scope of the delegation basedon the resolution of the General Meeting of Shareholders and the resolution of the Board of Directors.
The Committee met five times in the fiscal year ended August 31, 2023. Composition of the Remuneration
Committee, attendance at Remuneration Committee meetings, and specific matters for consideration are as
described in “[Optional committees], Supplementary information,” “[Remuneration Committee], (2)Activities,” and “[Director remuneration], (4) Process of determining the amount of remuneration, etc. for
Directors.”(6) Management Meeting
Composed of the Company’s Directors (full-time) and full-time Audit & Supervisory Committee members,presidents of subsidiaries, and heads of departments/offices of the Group companies, the Management
Meeting is held on a monthly basis primarily to confirm the budget status regarding the execution of material
matters related to the Group’s management and to report on and review the Group’s business operations, forthe purpose of sharing managerial information and boosting efficiency in business execution.
The Meeting was held 14 times in the fiscal year ended August 31, 2023.
(7) Compliance Risk Management Committee
Chaired by Chairman and Representative Director of the Company and composed of Directors (full-time)
who are not Audit & Supervisory Committee members of the Company, as well as full-time Audit &Supervisory Committee members, presidents/directors/auditors of subsidiaries, and heads ofdepartments/offices of the Company, the Compliance Risk Management Committee meets four times per year,with ad-hoc meetings held as necessary. The Committee makes efforts to ensure the management ofcompliance risks in the Group’s business activities and secure continuous and stable business growth and- 28 -

[Translation]
eliminate and alleviate conflict-of-interest factors among stakeholders, in compliance withlaws/ordinances/the Articles of Incorporation/basic policy on developing internal control systems/internal
rules/other rules required in society in general.
The Committee met four times in the fiscal year ended August 31, 2023. At its regular meeting held every
three months, the Committee confirmed key risks along with associated measures and their implementation,
taking into account the Group’s status since the previous meeting, and evaluated key risks. In addition, theCommittee also confirmed implementation of compliance risk management processes within the Group anddiscussed associated measures.
(8) Sustainability Committee
On May 31, 2023, the Sustainability Committee was established as an advisory body to the Board of Directors
for the purpose of strengthening initiatives for sustainability in looking toward achieving the Group’s
sustainability targets. The Committee is chaired by the President and Representative Director and is composedof Directors who are not Audit & Supervisory Committee members of the Company (full-time), as well as afull-time Audit & Supervisory Committee member, and officers and employees of the Group who have been
appointed by the Chairperson as the Committee members. It meets at least twice a year, in principle, with adhoc meetings held as necessary. In seeking to promote the Group’s initiatives for sustainability, the Committee
formulates and promotes policies, plans, and targets related to sustainability, gathers, analyzes, and evaluates
information, and reports the initiatives to the Board of Directors.
The Sustainability Committee met one time during the current fiscal year, with all five members in attendance.
During the meeting the Sustainability Committee’s purpose, activity policy, etc. were confirmed, and theCommittee discussed about issues on disclosures aligned with recommendations of the TCFD endorsed by
the Company as well as matters for future discussion.
Composition of Sustainability Committee
Title
Name
Chairman and Representative Director
Satoshi Ishikawa
President and Representative Director
Keiichi Chiba(Chairperson)
Director
Yoshinari Kitayama
Director
Yukiko Iguchi
Director (Full-time Audit & Supervisory
Toshiro Sasaki
Committee member)

3. Reasons for adopting the current corporate governance system
The Company has adopted the current system because it believes that it can strengthen supervisory functions overthe Board of Directors/Directors and corporate governance, by establishing the Audit & Supervisory Committee
and granting voting rights at the Board of Directors meetings to Directors who are Audit & Supervisory Committee
members, and that it can ensure transparency, soundness, and compliance with laws in management and achieve
further enhanced corporate value through mutual coordination between the bodies, including the Audit &Supervisory Committee.

- 29 -

[Translation]

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to energize general meetings of shareholders and facilitate the exercise of voting rights
Update

☑

☑

☑

☑

☑

Supplementary information
The convocation notice of the General Meeting of Shareholders ismailed three weeks prior to the date of the Meeting and disclosed on the
Early distribution ofCompany website and the Tokyo Stock Exchange website from the day
convocation notice of thewhen it is mailed. The convocation notice of the 37th Annual General
General Meeting of
Meeting of Shareholders dated November 29, 2023 was mailed on
Shareholders
November 7 and posted on the Company website and the Tokyo Stock
Exchange website on the same day.
In order to improve convenience for shareholders, the Company
Exercise of voting rights bysupports the exercise of voting rights by electronic means such as
electronic means
websites and platforms for voting designated by the Company.
Measures for participation in
The Company participates in an electronic voting platform operated byelectronic voting platforms and ICJ, Inc.
other improvement of the voting
environment for institutional
investors
The convocation notice in a narrow sense and reference materials for theProviding convocation notices in Meeting are translated into English and posted on the websites of the
English (summary)Company, the Tokyo Stock Exchange, etc. together with the Japaneseversion.
The Company makes efforts to energize the General Meetings of
OthersShareholders, by presenting business reports using projectors/slides andvoice-over narration, etc. at the Meetings.

2. IR activities

UpdateSupplementary information

Holding Regular Investor☑ Briefings for Analysts andInstitutional Investors

Explanation byRepresentative<Investor briefing summary>
Dates
Twice a year (April (second quarter) and October(fiscal year)), including online format
Speaker
Chairman and Representative Director
Content
Yes(1) Summary of financial results and forecast of
business performance(2) Future management strategy(3) Business description and business model, etc.
ParticipantsInstitutional investors (fund managers, analysts), sellside analysts, media representatives, etc.

- 30 -

[Translation]
Supplementary information<IR information>
https://www.trans-action.co.jp.e.zy.hp.transer.com/ir/
Account closing information, summaries of financial
results, quarterly financial results, financial statements
briefing session material, medium-term management
plans, securities reports, quarterly reports, convocation
notices of the General Meeting of Shareholders, noticesof resolutions, letters/communications to shareholders,financial highlights, status of dividends, shareholder
benefit plans, IR calendars, timely disclosure materials,
PR information, etc. are posted. Summaries of financial
results, convocation notices in a narrow sense andreference materials for the General Meeting of
Shareholders, financial statements briefing session
material, and medium-term management plans are also
published in English. This report has been alsotranslated into English and disclosed on the Company
website, etc.
<Sustainability>
https://www.transaction.co.jp.e.zy.hp.transer.com/business/sustainability/☑ Posting IR materials on website• Materiality (key issues) and the Company’s
initiatives
https://www.transaction.co.jp.e.zy.hp.transer.com/business/sustainability/
materiality.html• ESG data
https://www.transaction.co.jp.e.zy.hp.transer.com/business/sustainability/esg-data.html<Corporate governance>
https://www.transaction.co.jp.e.zy.hp.transer.com/company/corporategove
rnance.html
Basic views on and system for corporate governanceCorporate governance reports<Skills matrix of Directors>
https://www.transaction.co.jp.e.zy.hp.transer.com/company/directo-skillmatrix.html<Officer in charge of IR>
Director Yoshinari Kitayama<Department in charge of IR>
Establishment of department☑ and/or manager in charge of IR Corporate Planning Department<Contact for IR administrations>
General Manager of Corporate Planning Department
Masaru Sugaya- 31 -

[Translation]

3. Measures to ensure due respect for stakeholders

Establishing provisions
concerning due respect for☑ stakeholders in internal rules,
etc.

Implementation of☑ environmental conservation
activities, CSR activities, etc.

Formulation of policy on☑ information provision to
stakeholders

UpdateSupplementary information
The Company adheres to the following as its action guidelines: “tocontinue to be a company that not only complies with laws but also is
respected by society,” “to maintain a free and open corporate culture tocontinue to be a company in harmony with symbiosis,” and “to realize
welfare/well-being for customers, employees and shareholders, andmore broadly, for society, through its corporate activities.”
Due respect for stakeholders is also set forth in the “Basic Compliance
Policy,” “Materiality for Achieving SDGs,” and others.
For the purpose of expediting initiatives for sustainability, the Company
has identified as managerial challenges 16 materiality items (key issues)
to be addressed from the perspective of “business,” “the environment,”“society,” and “governance.”
Please refer to the following for initiatives for sustainability, including
materiality, the relationship between SDGs and the operations of theCompany and ESG data.
https://www.transaction.co.jp.e.zy.hp.transer.com/business/sustainability/• One of the Group’s corporate philosophies is “to make social
contributions by offering earth-conscious products throughmanufacturing,” and the Group is committed to the conservation of
the earth’s environment through its business. Since its foundation, it
has operated its business through “manufacturing (things),” with afocus on the development and supply of “Eco-products.” It
strengthens the development and supply of eco-friendly products, notonly by simply developing products made of environmentallyfriendly materials or recyclable materials but also with philosophies“stop using disposable things” and “use reusable products,” and under
the theme of “consider the environment from manufacturing.”• In October 2021 the Group participated in “Renewable Energy 100
Declaration: RE Action” and set a minimum goal of having renewableenergy account for 50% of the Group-wide electricity consumption by
2030 and 100% by 2050. The Group moved up, by five years, thetarget deadline for achieving the goal of having renewable energy
account for 50% by 2025, in the “4th Medium-term Management Plan
(FY8/23 to FY8/25)” released on October 20, 2022.
• On May 31, 2023, the Sustainability Committee was established as anadvisory body to the Board of Directors for the purpose ofstrengthening initiatives for sustainability in looking toward achieving
the Group’s sustainability targets. On the same day, we expressed our
support for the recommendations of the TCFD. The Group will
actively disclose information enlisting the TCFD recommendations as
guidelines for assessing the appropriateness of its response to climatechange.
Regarding information disclosure to stakeholders, with the provision on“timely and fair disclosure of corporate information tocustomers/suppliers, employees and shareholders in pursuit oftransparent management” set forth in the “Basic Compliance Policy,” theCompany performs timely, appropriate, and fair information disclosure.

- 32 -

[Translation]

IV. Matters related to Internal Control Systems, etc.
1. Basic views on internal control systems and progress of system development
Internal control is a process to be carried out by everyone in a company in order to achieve its four goals:
effectiveness and efficiency in business operations, credibility of financial statements, compliance with laws
related to business activities, and asset safeguarding. Based on such recognition, regarding the development ofsystems, etc. for ensuring proper business operations, the Company has set down the “Basic Policy on Building
Internal Control Systems,” as outlined below:(1) System to ensure that the execution of duties by directors/employees of the Company and its subsidiaries
conforms to laws and the Articles of Incorporation(i) The Group companies have clearly defined job authority and duties/responsibilities for sound check andbalance functions to interact between and within organizations.
(ii) The Group has established the “Basic Compliance Policy” as a basic policy on compliance and a code of
conduct for directors and employees and ensures to communicate that compliance with laws is the basisof all corporate activities.
(iii) The Group has established and operates the Compliance Risk Management Committee to review material
matters, etc. related to Group-wide compliance and provides directors and employees with compliancetraining, as needed, in an effort to foster compliance awareness.
(iv) The Group has established the “Compliance Consultation Desk” (contact: General Affairs Department)
as a whistle-blowing system to detect and correct compliance issues early through a self-purification
process and the “Compliance Helpline,” for which the legal counsel of the Company serves as a point ofcontact.
(2) System for the storage and management of information relating to the execution of duties by Directors of theCompany
The Board of Directors meeting minutes, approval requests, and other information relating to the executionof duties by Directors are properly managed and stored in accordance with the “Document Management
Rules.” Directors and Audit & Supervisory Committee members may view this information at any time.
(3) Rules on the management of risk of loss to the Company and its subsidiaries and other systems(i) The Group has established the “Risk Management Rules,” which stipulate the management of andresponse to various risks arising from the execution of business to ensure the security of management andpursue enhanced corporate value.
(ii) In the event of a contingency (unforeseen situation) that causes a grave impact on management andbusiness operations, a special task force, etc. will respond to the crisis in accordance with the “Crisis
Management Rules.”(4) System to ensure efficient execution of duties by directors of the Company and its subsidiaries(i) In accordance with the “Regulations of the Board of Directors,” regular Board meetings are held on amonthly basis, with ad-hoc Board meetings held as necessary. As a body that receives reports and reviews
management plans and measures of the Group companies, their progress, and material matters in business
operations, the Management Meeting is held on a monthly basis, with Directors (full-time), full-time
Audit & Supervisory Committee members, presidents of subsidiaries, and heads of departments/officesof the Group companies in attendance.
(ii) The Group companies formulate a medium-term management plan and annual budget plan for each year
based on their own business environments and clarify their own targets to achieve/challenges.
(5) System to ensure proper business operations in the corporate group consisting of the Company and its
subsidiaries(i) In accordance with the “Subsidiary Management Rules,” the Company makes efforts to ensure proper andefficient business operations and make improvements across the Group and provides appropriate guidanceand supervision as the parent company.
(ii) With the General Affairs Department controlling group-wide compliance management and the Corporate
Planning Department controlling risk management, the Group takes appropriate measures at the Group
companies in connection with these operations and provides necessary guidance and support to them.

- 33 -

[Translation](iii) Internal Audit Office conducts internal audits of the Group companies in accordance with the “Internal
Audit Rules” and promptly submits a report on such results to Chairman and Director. Reporting channels
to the Board of Directors and to the Audit & Supervisory Committee are secured as well.
(6) Matters regarding employees who assist with the duties of the Audit & Supervisory Committee of theCompany when required and matters regarding the independence of such employees from Directors of theCompany
When the Audit & Supervisory Committee needs employees to assist with its duties, the Company assigns
staff to provide such assistance upon discussion with the Committee, and such assignment must be agreed toby the Committee. For the present, Internal Audit Office staff shall provide assistance, where necessary, uponreceiving directions related to matters concerning audit operations from the Audit & Supervisory Committee.
When following the directions of the Audit & Supervisory Committee, the Internal Audit Office staff member
is supervised by the Audit & Supervisory Committee and thus maintains his/her independence from Directors(excluding those who are Audit & Supervisory Committee members).
(7) System for directors/employees of the Company and its subsidiaries to report to the Audit & Supervisory
Committee and systems for other reporting to the Audit & Supervisory Committee(i) Audit & Supervisory Committee members attend key managerial meetings such as the Board of Directors
meetings and Management Meetings to receive reports on decisions (matters to be determined) andmatters of concern to the Group.
(ii) If an event that causes a grave impact on the Group companies occurs or might occur, any illegal or
fraudulent act by officers/employees is found, or any other matters for which the Audit & Supervisory
Committee require reporting take place, directors and employees shall promptly report such details to the
Audit & Supervisory Committee.
(iii) The Group prohibits a person who makes a report to the Audit & Supervisory Committee from being
treated disadvantageously on account of the report.
(8) If an Audit & Supervisory Committee member makes a request to the Company for an up-front payment ofan expense under Article 399-2, Paragraph 4 of the Companies Act for the execution of his/her duties, theCompany promptly processes such expense or debt, except when the expense or debt incurred in connection
with the request is deemed not necessary for the execution of duties by the Audit & Supervisory member.
(9) Other systems to ensure effective execution of audits by the Audit & Supervisory Committee of the Company(i) Directors and employees of the Group companies deepen their understanding of the Audit & Supervisory
Committee audits and make efforts to develop the auditing environment in order to ensure theeffectiveness of the audits.
(ii) The Audit & Supervisory Committee exchanges views with (respective) Representative Directors of theCompany on a periodic basis and ensures close coordination with independent auditors and the Internal
Audit Office, in an effort to communicate appropriately and carry out effective audit operations.

2. Basic views towards the elimination of antisocial forces and progress of related efforts
Upholding the “exclusion of antisocial forces” as its basic policy in the “Basic Compliance Policy,” the Groupfirmly excludes antisocial forces that threaten public order and safety. In line with this policy, the Group assigns
staff in charge of legal affairs to the General Affairs Department of the Company, who conduct an antisocial-force
check on customers/suppliers/outsourcing service providers (contractors)/vendors for administration divisions, tomake sure to prevent any transactions with antisocial forces.
Furthermore, the Company has joined Tokubouren (association of special violence prevention measures) and built
systems for close cooperation with authorities/parties concerned, including the police.

- 34 -

[Translation]

V. Others
1. Adoption of defense against takeover bids
Adoption of defense against takeover bids

None

Supplementary information—

2. Other matters regarding Corporate Governance Systems, etc.

Update<Overview of timely disclosure system>
The Company’s structure regarding the timely disclosure of Company information is as follows:(1) Corporate philosophy and basic policy on timely disclosure
As a fabless manufacturer, the Group conducts consistent business operations from planning/design toproduction (contract-based production)/product quality management/distribution, in the manufacturing of“Eco-products,” “Lifestyle products,” and “Wellness products.” The Group’s business lines such asenvironmentally friendly Eco-products (SDGs products), Lifestyle products that support “tangible goods
consumption” originating from intangible goods consumption, and Wellness products associated with the
reduction of health risks are closely linked to the economy, society, environment, and human health due totheir nature. To fulfill its social responsibilities, the Company believes that it must earn the confidence of the
public at large, including a variety of stakeholders such as customers, shareholders, and investors.
Based on this recognition, the Company upholds the following as its corporate philosophy:
・ To make social contributions by offering earth-conscious products through manufacturing
・ To make contributions to enriched lifestyles (life culture) by offering attractive products in terms of their“design,” “quality,” and “price”
・ To continue producing new creations with a cosmopolitan mind/sense and out-of-the-box thinking
The Group’s social roles are not only fully understood by officers/employees, but constantly shared anddisseminated through occasions such as welcoming ceremonies, internal training courses, and meetings.
Under the corporate slogan, “taking on a challenge is fun,” the Group’s officers and employees are working
together to maximize corporate value by making social contributions through manufacturing and towardbuilding a responsible company.
The Group has the “Basic Compliance Policy,” which is a code of conduct for companies, officers, andemployees to adhere to in order to engage in corporate activities, and has set out the “timely and fair disclosureof corporate information to customers/suppliers, employees, shareholders, etc. in pursuit of transparent
management” as a policy on information disclosure to stakeholders. In accordance with the Policy, the Group
is fully aware that the disclosure of timely and appropriate company information to investors is fundamental
to healthy securities markets and strives to enhance internal systems for making appropriate disclosure ofprompt, accurate and fair company information, always from an investor’s point of view. In this way, theGroup is sincerely committed to timely and appropriate disclosure of company information for investors.
(2) Company structure regarding timely disclosure
In its internal system for timely disclosure, with Chairman and Representative Director as a chief officer, theDirector in charge of the Corporate Planning Department as an information management officer, and the
Corporate Planning Department as a controlling division for information management, the Company has
adopted procedures for “information collection,” “analysis and judgment,” “reporting/disclosure,” and“education,” as outlined below:(i) Information collection
In order to promptly and exhaustively collect information of different types/features dispersed in theGroup’s divisions (departments/offices of the Company and subsidiaries), the head of eachdepartment/office of the Company and the president and the head of department/office of each subsidiary
are appointed as information management officers. In addition, the information management officer- 35 -

[Translation]
makes a report to the controlling division for information management on information judged as requiring
review for disclosure, in accordance with the Timely Disclosure Rules and relevant laws/regulations.
In addition, the controlling division for information management, through subsidiary management
operations, attends meetings held at each subsidiary as an observer, as necessary, in an effort to improve
the accuracy and freshness of the information about subsidiaries.
(ii) Analysis and judgment
The information collected from the divisions of the Company and subsidiaries by the controlling division
for information management is reported by the information management officer to the chief officer. The
chief officer and the information management officer then have discussions on whether the information
constitutes a material fact under the Timely Disclosure Rules or relevant laws/regulations, or needs to be
voluntarily disclosed for investor convenience, in order to ensure the timeliness, legitimacy, and accuracyof disclosure.
After the foregoing discussions, the chief officer makes a decision on timely disclosure: its necessity,
details, timing, and method.
(iii) Procedures for reporting/disclosure
Based on the decision on disclosure by the chief officer, the information management officer conducts
disclosure of timely information through the financial instruments exchange and publishes the disclosed
information on the website or by the determined method.
(iv) Education
Company information management and in-company education about timely disclosure are conducted by
the head of the controlling division for information management based on the instructions of theinformation management officer.
For in-company education/training, the corporate philosophy and the Insider Trading Management Rules
are posted on the intranet, and educational training courses are held for officers/employees of the Group,
including subsidiaries, to ensure the communication of rules on the management of various information,
the prevention of leakage and unauthorized use, and the systems/procedures for timely disclosure.
(3) Monitoring related to timely disclosure
At the Company, business operations are monitored through internal audits by the Internal Audit Office.
Internal Audit Office audits the timely disclosure of company information to see if the information is disclosed
in a timely, lawful, and accurate manner in accordance with the Timely Disclosure Rules, relevant
laws/regulations, and the Insider Trading Management Rules, from the point of view of business operations
and compliance auditing.
The results of internal audits are reported to Chairman and Representative Director in the form of an audit
report and notified to the head of the Corporate Planning Department, which is an audited division. The Boardof Directors and the Audit & Supervisory Committee also receive the report.
The head of the audited division prepares a response to the findings, etc. listed in the audit report, by themethod specified in the Internal Audit Rules, and submits it to an audit manager, who compiles the submitted
responses and reports them to Chairman and Representative Director.
In addition, the audit manager checks the response(s) to the findings, etc. in a timely manner, and summarizes
and reports such results to Chairman and Representative Director.
(4) Handling of information for timely disclosure and insider trading management
The Company has the Insider Trading Management Rules, which set out the handling of material facts, toensure the prevention of insider trading. Regarding material facts for timely disclosure, the Group ensuresinformation management and strictly prohibits their unauthorized use. If the relevant fact is deemed toconstitute an undisclosed material fact, the trading of the Company’s shares, etc. is prohibited until the fact ismade public.

- 36 -

[Translation][Figure: Corporate Governance System]

UpdateGeneral Meetings of Shareholders

Appointment/dismissal

Appointment/dismissal

Appointment/dismissal

Board of Directors
Remuneration Committee

Eight Directors (four of whom are outside Directors)

Election

Five Directors

Three Directors (two of whom areoutside Directors (Audit &(except Directors who are Audit & Supervisory Committee

Reportmembers)

Audit and(one of whom is outside Director)

supervise

Supervisory Committee members))
Chairperson of the Remuneration

Audit

Election

Audit & Supervisory Committee
Three Audit & Supervisory
Committee members
Cooperation(three of whom are outside Directors)

Accounting Auditors(Audit corporation)

Audit

Committee

Accounting audit

Cooperation

Election/removal andsupervise

Reports on businessexecution

ReportCooperation
Accounting audit

Domestic subsidiaries

Consult

Audit

Board of Directors

Sustainability Committee
Five Directors (one of whom is outside
Director)
ReportChairman and Representative Director

Election/removal andsupervise

Auditors

Reports on business execution

President and Representative Director

Instruction
Compliance Risk M anagement Committee

Instruction

ReportReportBusiness execution divisions

Instruction

M anagement meetings
ReportForeign subsidiaries
Instruction

Internal Audit Office
ReportInstruction

Audit

President and Director, and Chairman

M anagement

Instruction

ReportAudit
Business execution divisions

ReportBusiness execution divisions
Report

The Company

Subsidiaries- 37 -

[Translation][Overview of Timely Disclosure System]

Company Information Disclosure Flow

Information about financial
results(including subsidiaries)

Information about decisions
resolved(including subsidiaries)

Information about material events(including subsidiaries)

PR information(including subsidiaries)

Information management manager (Divisions of the Company and subsidiaries)

Controlling division for information management (Corporate Planning Department)

Information management officer (Director in charge of the Corporate Planning Department)[Discussions on whether to disclose information and the content, and period and method of such disclosure]
Chairman and Representative Director and Information management officer (Director in charge of the Corporate Planning Department)[Decisions on whether to disclose information and the content, and period and method of such disclosure]
Chairman and Representative Director

Board of Directors

Report (Post-facto)

Information management officer (Director in charge of the Corporate Planning Department)

TD netFinancial instruments
exchange

Post-disclosure on TD net

Japan National Press Club
Shareholders, investors and capital market- 38 -The Company’s website