Basic Policy for the Internal Control System

Our company name “Valuence” is a coined word combining the words “Value,” “Intelligence,” and“Experience.” As the name implies, we aim at co-prosperity with our shareholders, customers, business
partners, employees, and society as a whole, as well as our sustainable growth and maximization of ourcorporate value, as a company that appreciates value, creates new value, and provides value that changes
the lives of every person involved in our business.
In order to achieve this, recognizing that the appropriate establishment and operation of an internalcontrol system is an important management issue to enhance and strengthen corporate governance, theboard of directors has decided on a basic policy for the establishment of an internal control system while
establishing related internal rules.
Moreover, as a mechanism for verifying whether the established internal control system is operating as
designed and producing results, in addition to checks by the board of directors, we periodically review theinternal control system in order to establish and strengthen the internal discipline control system of theentire company group and to respond to external risks.

1. System for Ensuring the Execution of Duties by Company and Subsidiary Directors,
Executive Officers, and Employees in Compliance with Laws, Regulations, andArticles of Incorporation(1) The company management philosophy is to fulfill the social responsibility to shareholders,customers, business partners, local communities, employees, and all other stakeholders throughachieving sustainable growth and ongoing corporate value improvement. To this end, the company
has established Compliance Rules to ensure officers and employees observe a strict compliancewith laws, regulations, and the articles of incorporation. Further, the Internal Audit Office conducts
internal audits of the company and subsidiaries. The company strives to build stronger internalcontrol systems by improving the risk management structure, which includes an internal reportingsystem.
(2) The company has established Compliance Regulations and Code of Conduct to ensure employees
comply strictly with laws, regulations, and the articles of incorporation. The company also maintains
a system for the ongoing improvement of internal control functions related to compliance.
(3) The company has established Internal Reporting Regulations to provide a system for internalreporting related to any acts discovered that are in violation of compliance. The company has
established an internal contact point, as well as a third-party agent (consulting attorney), to whom
reports may be made.

2. Systems for the Storage and Management of Information Related to the Executionof Duties by Directors
The company practices the appropriate storage and management of the proceedings of the general
meeting of shareholders and meetings of the board of directors, as well as important information anddocuments related to management and business execution in compliance with laws, regulations, the Boardof Directors Rules, the Executive Management Meeting Rules, the Approval Regulations, the Records
Management Rules, and other internal rules and related manuals.

3. Rules and other Systems to Manage the Risk of Loss by the Company and its
Subsidiaries(1) The company has established the Risk Management Committee, chaired by the representativedirector, which makes determinations on systems and policies for risk management and evaluates
and, if necessary, improves risk management structures within the company group, including
subsidiaries. The company’s Legal Division serves as the risk management division, controllingrisk management activities in addition to verifying and revising the Risk Management Rules.
(2) The company shall establish an emergency response system, including a business continuity plan
(BCP), to prepare against large-scale disasters.

4. Systems to Ensure Company and Subsidiary Directors Execute Duties Efficiently(1) To ensure directors of the company and its subsidiaries execute their duties efficiently, the company
has established the Board of Directors Rules, which provides for the operation of the Board ofDirectors. Regular Board of Director meetings are held once a month to make important decisions
and oversee the status of business execution. Extraordinary Board of Director meetings are also
held when deemed necessary.
(2) By adopting an executive officer system, directors focus on management functions such as
speeding up management and strengthening the supervisory function to clarify responsibilities for
execution through delegation of business execution authority to executive officers.
(3) In accordance with the Board of Directors Rules, the Board of Directors that includes outside
directors determines execution policies for management, matters prescribed by laws andregulations, and other important management matters, and supervises the status of businessexecution.
(4) In order to ensure fairness, transparency, and objectiveness in the decision-making process todetermine matters such as the nomination and compensation of directors, etc. at the Board ofDirectors, as well as to strengthen accountability, the company establishes an optional Nomination

and Compensation Committee comprised of multiple independent outside directors. Thecommittee reports the results of its deliberation on the nomination and compensation, etc. ofdirectors, etc. to the Board of Directors.
(5) The Board of Directors shall use technology-based information systems for rapid and accurate
access to business information.

5. Systems to Ensure Appropriate Business Management for the Corporate Group,
Consisting of the Company and its Subsidiaries(1) The company, through the measures such as the compliance policy of the Valuence Group, shallprovide guidance and support for the development of legal compliance systems and other systems
to ensure the appropriateness of operations of subsidiaries.
(2) The company shall improve the soundness and efficiency of management by dispatching directors
and members of the Audit and Supervisory Committee to subsidiaries as necessary. The generalaffairs department shall oversee the management of the business operations of subsidiaries, andsubsidiaries shall report to the company on matters to be approved as stipulated in the AffiliatedCompany Management Rules, periodically report information on the progress of business
operations, and share business management information and crisis management information toensure the appropriateness of the business execution system.
(3) Important matters related to the business operations of subsidiaries shall be deliberated by thecompany’s Executive Management Meeting and submitted to the Board of Directors in accordancewith the Affiliated Company Management Rules.
(4) In the event that the representative director becomes aware of the occurrence of a risk of loss at asubsidiary, the director shall immediately report to the Board of Directors of the company on matterssuch as the nature of the risk, the extent of the loss to be incurred, and the impact on the company.
(5) The Internal Audit Office shall periodically audit the company and its subsidiaries in accordancewith the Internal Audit Rules.

6. Matters Related to Directors and Employees Requested to Assist the Audit andSupervisory Committee in the Execution of its Duties (“Assistants”); MattersRelated to Directors Independence Who Supervise the Said Directors andEmployees (Excluding Directors Who are Audit and Supervisory CommitteeMembers); Matters Related to Ensuring Practicability of Instructions to Assistants
as per Directors and Employees Requirement(1) The company does not have directors or employees assigned to assist members of the Audit andSupervisory Committee in their duties. However, the company may appoint or assign directors oremployees when it is necessary.
(2) The appointment or transfer of directors or employees assisting members of the Audit andSupervisory Committee requires approval by the Audit and Supervisory Committee.
(3) Directors and employees assigned to assist in the duties of the Audit and Supervisory Committee
shall be considered as under the authority of the committee, and directors (excluding directors who
are members of the Audit and Supervisory Committee) shall not have the authority to direct thesaid directors or employees. Evaluations of these directors or employees shall reflect the opinionsof Audit and Supervisory Committee members.

7. System for Directors (Excluding Directors who are Members of the Audit andSupervisory Committee) and Employees to Report to the Audit and Supervisory
Committee, Other Systems Related to Reporting to the Audit and Supervisory
Committee(1) Members of the Audit and Supervisory Committee attend meetings of the Board of Directors, aswell as important meetings such as those of the Executive Management Meeting, and receive
reports related to matters of importance to the company, matters that may have a negative impact
on the company.
(2) Directors who are members of the Audit and Supervisory Committee shall receive reports asnecessary from the Corporate Planning Department and the Internal Audit Office.
(3) Directors and employees report important matters discussed at the board of director meetings andother important meetings, the status of internal audits, and other important matters deemednecessary to the Audit and Supervisory Committee.
(4) Directors and employees shall provide necessary reports and information promptly to the Audit andSupervisory Committee upon request.

8. System for Directors, Members of Audit and Supervisory Committee, Employees ofCompany Subsidiaries, and Persons Receiving Reports from Such Individuals toReport to the Audit and Supervisory Committee; Other Systems Related toReporting to the Audit and Supervisory Committee
Directors, members of Audit and Supervisory Committee and employees of company subsidiaries shallreport promptly to the Audit and Supervisory Committee upon discovery of important matters having amaterial impact on subsidiary management or business performance or significant violations of laws,
regulations, or articles of incorporation that may cause significant damage to the company. Directors,
members of Audit and Supervisory Committee and employees of company subsidiaries shall provide
necessary reports and information promptly to the Audit and Supervisory Committee upon request.

9. System to Ensure Individuals Reporting to the Audit and Supervisory Committee
are not Subjected to Disadvantageous Treatment
The company’s Internal Reporting Rules provide that individuals who submit reports shall not be
subjected to any manner of disadvantageous treatment. This rule applies likewise to individuals whoprovide reports to the Audit and Supervisory Committee as described in the paragraph above.

10. Policy on Matters Regarding Expense Prepayments, Redemptions, Other Expenses,
or Disposition of Debt Resulting from the Execution of Duties by Members of theCompany’s Audit and Supervisory Committee
When a member of the Audit and Supervisory Committee requests that the company prepays expenses,
the company shall promptly pay such expenses or debt to the said member after a discussion with therelevant department, except where such expenses or debt is proven unnecessary to the execution of duties
by the Audit and Supervisory Committee.

11. Other Systems to Ensure Internal Audits by Members of the Audit and Supervisory
Committee are Performed Effectively
Members of the Audit and Supervisory Committee hold regular conferences with the representative
director to ensure communication and exchange opinions. Further, members of the Audit and Supervisory
Committee share information and exchange opinions with financial statement auditors and the Internal
Audit Office as necessary for ongoing substantive improvements in audits.

12. Systems to Ensure Reliability of Financial Reporting
The company recognizes the close interconnection among the four objectives of internal control systemfrom the standpoint of financial reporting reliability: operational effectiveness and efficiency, financial
reporting reliability, compliance with laws and regulations related to business activities, and asset
maintenance. Accordingly, company management works to establish, evaluate, and continuously improve
internal controls related to financial reporting through enacting internal control systems and reporting ofoverall audits by internal auditors, etc.

13. Establishment of a System to Eliminate Anti-Social Forces

The company rejects and eliminates relationships with anti-social forces and their organizations that
may threaten social order and safety. Further, directors and employees constantly remain vigilant of antisocial forces. When a case arises, the company establishes a system whereby the total organization can
promptly handle situations in close partnership with related government institutions and legal specialists,
pursuant to the Rules for Response to Anti-Social Forces and the Manual for Response to Anti-SocialForces.

Supplementary Provisions
1. Enacted on October 20, 2016; effective on the same date.
2. Revised on November 22, 2019; effective on the same date.
3. Revised on November 20, 2020; effective on the same date.
4. Revised on May 27, 2021; effective as of June 1, 2021.