Corporate Governance Report
CORPORATE GOVERNANCENIPPON GAS Co, Ltd.

Last Update:June, 25, 2024

NIPPON GAS Co., Ltd.
Kunihiko Kashiwaya, Representative Director, Chief Executive Officer
Contact: +81(0)3-5308-2116
8174
Securities code:
https://www.nichigas.co.jp/en
The corporate governance of NIPPON GAS Co., Ltd. (the “Company”) is described below.

I. Basic Views on Corporate Governance, Capital Structure, Corporate Attributes, and OtherKey Information
1. Basic Views
NIPPON GAS Co., Ltd. (the “Company”) views corporate governance as a system to achieve the sustainablegrowth and enhancement of its corporate value over the medium- to long-term. The Company believes thatmanagement with a resolution to discard what it has achieved and an intention to create change while ensuring
management discipline will lead to the enhancement of corporate value, and it has developed the governancesystem as a mechanism to achieve this goal.
<Corporate governance system>
・The Company elected a corporate governance system of a company with an Audit Committee. This isbecause the Company believes that a system that allows each corporate auditor to exercise audit authority in a
speedy manner is appropriate, considering the size of its business and the organizational structure of thecompany, while emphasizing a well-balanced control of its unique business model by both internal and external
directors.
・The Board of Directors is composed of two-thirds internal directors, as the Company believes that decisionmaking by directors who have in-depth knowledge of the business is important. On the other hand, theNomination and Remuneration, Environmental, etc., Committee ("NR&E Committee") (formerly ESG
Management Promotion Committee), in which a majority of members are composed of non executive officers
and the chairman is an outside director, has been consulting with the Board of Directors regarding nomination
and remuneration functions.
・This system ensures the soundness, transparency, and efficiency of management, and ensures theappropriateness of operations.
The NR&E Committee, under the name of the ESG Management Promotion Committee, has been advising on
ESG-related matters and reporting to the Board of Directors since 2020 as an advisory body to the Board of
Directors. As a result of discussions on the purpose of its activities, the Committee has decided to change its
name to the NR&E Committee, confirming that the most important matters to consider are nomination(personnel) and remuneration, which form the core of the monitoring function of the Board of Directors, andthe environment, which is a key of medium- to long-term strategies. The Company believes that this namechange will clarify the purpose of the Committee's activities and make the governance system easier tounderstand for stakeholders.
The Company recognizes that relationships of trust with all stakeholders, including shareholders and investors,
customers, business partners, employees, and local communities, are essential for the enhancement ofcorporate value over the medium- to long-term and strives to maintain interactive communication. For
constructive dialogues with shareholders and investors, the Company has developed a system to allow the top
executive and other officers to actively participate in the dialogues, while the department specialized ininvestor relations will respond to individual interviews as a contact. Useful opinions acquired throughdialogues with shareholders and investors are shared by the Board of Directors and discussed with the Board
members.
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Reasons for Non-compliance with the Principles of the Corporate Governance Code
Based on the revised Corporate Governance Code of June 2021, including matters regarding the Prime Market.
The Company complies with all principles of the Corporate Governance Code.
Disclosure Based on the Principles of the Corporate Governance Code[Principle 1-3] (Basic Capital Policy)
The Company recognizes capital policy as a strategy to maximize the performance of shareholders’ equity. The
Company has set ROE as its most important financial KPI and recognizes that improving ROE is an importantmanagement objective. This is because ROE serves as a fundamental measure of investment returns for its
shareholders and a straightforward indicator of how efficiently the management has increased the entrusted
shareholders’ equity. To enhance ROE, the Company is committed to a capital policy of not holding unnecessary
shareholders’ equity while improving ROIC. Without significantly increasing its overall asset size, the Company
will continue to accumulate higher profit generating assets, such as LP gas and IT-related assets, and optimize
the capital-to-asset ratio by reducing it, aiming for ROE of 22% in the fiscal year ending March 31, 2026. The
Company's policy is to maximize the improvement of ROIC by not holding unnecessary shareholders’ equity
beyond an appropriate level. This, in turn, contributes to the enhancement of ROE to the greatest extent possible.
Regarding shareholder returns, after the construction of its LP gas hub filling plant and other projects, theCompany has continued to maintain a level of almost 100% of net profit every year as it is able to grow without
additional large-scale investments and does not need to accumulate shareholders' equity. In the three-year plan,
the Company has further evolved its return policy by optimizing the capital-to-asset ratio and returning additional
capital, thus exceeding 100% of net income. Regarding the breakdown of returns, the Company complies
emphasis on dividends, and regarding share buybacks, the Company will make purchases at appropriate timings
considering the stock price and other factors, providing the best conditions for its shareholders. For details on
the capital policies, refer to [Principle 5-2] (Formulation and Announcement of Management Strategies andPlans) [Supplementary Principle 5-2①] and "Action to Implement Management that is Conscious of the Cost of
Capital and Stock Price."[Principle 1-4] (Cross Shareholding)
The Company has a policy of not holding cross-shareholdings. The Company believes that cross-shareholdings
held by the Company hinder the improvement of return on assets, and that the elimination of cross-shareholdings
held by counterparties will lead to better corporate governance for the Company. Based on this belief, theCompany promptly undertook a review of its cross-shareholdings and, by the end of January 2022, had dissolved
all cross-shareholdings, including those held by other counterparties.
1 Elimination of other companies' stocks held by the Company (cross shareholding)
The Company undertook a review of its cross shareholdings, in the fiscal year ended March 31, 2017, and begandissolving cross shareholdings, mainly with financial institutions in which the Company had a large balance ofholdings. From the fiscal year ended March 31, 2021, the Company also began terminating its crossshareholdings in gas equipment-related companies, which are strongly related to its energy business, andeliminated all cross shareholdings by the end of January 2022. As a result, the Company sold stocks in 18
companies over the five years from the fiscal year ended March 31, 2018 to the fiscal year ended March 31,
2022.
2 Elimination of the Company's stocks held by other companies (cross shareholding)
Our business partners agreed with our policy of dissolving cross-shareholdings, and they also dissolved theshares they held in the Company for policy purposes. The Company began with financial institutions and otherbusiness partners, and from the fiscal year ended March 31, 2021, gas equipment manufacturers agreed with ourpolicy, and by the end of January 2022, all shares held by other companies as cross-shareholdings were sold.
During the past 5 years from the fiscal year ended March 31, 2018 to the fiscal year ended March 31, 2022,
approximately 36 million (*1) of NICIGAS’ stocks owned by counterparties, which is equivalent to one third of
its issued shares, were sold. Consequently, the portion of tradable shares (*2) is raised by more than 20%.
(*1) The Company conducted a three-for-one share split of its ordinary stock on April 1, 2021. The said numberof shares is after the share split, excluding the treasury stock.
(*2) Tradable shares after reviewing the definition at “Development of Listing Rules for Cash Equity Market
Restructuring (second set of revisions)”.
For the Company’s policy for cross shareholding, refer to Article 7(Cross shareholding) of the Guidelines.
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[Principle 1-5] (Anti-Takeover Measures)
The Company abolished the corporate value enhancement plan (anti-takeover measures) at the 63rd General
Meeting of Shareholders held on June 28, 2017. In the event of a sincere proposal for a large-scale purchase of
the Company's shares by another company, the Company will consider that proposal sincerely from theperspective of the interests of its shareholders and other stakeholders and the medium- to long-term improvementof its corporate value. In addition, the Company will take appropriate measures in accordance with applicablelaws and regulations, such as providing information to enable shareholders to appropriately determine the meritsof the large-scale purchase, disclosing the Board of Directors' opinions, etc., and striving to ensure thatshareholders have sufficient time and information to consider the proposal.
[Principle 1-7] (Related Party Transactions)
Currently, there is no transaction between the Company and its Officers.
For the Company’s policy for related party transactions, refer to Article 10 (Related party transactions) of the
Guidelines.
[Principle 2-1] (Formulation of Management Philosophy as a Foundation for Enhancing Corporate Value over
the Medium- to Long-Term)<Management Philosophy>(1) Contributing to Local Communities
We support lives that are more comfortable for our customers by guaranteeing safe, reliable andappropriately priced energy with a small environmental footprint through supply methods optimized for
local communities, and contribute to environmental protection and disaster prevention efforts in thosecommunities. Furthermore, as a member of local communities, we take an active role in improving theirvalue, and we believe that by fulfilling our tax obligations, we also contribute to society.
(2) Aiming for Sustainable Corporate Growth
We believe that contributing to local communities and growing our customer base reinforce our businessfoundation, and we are working hard to improve long-term corporate value by ensuring reasonable profitsand making efficient investments. Furthermore, we will strive to improve shareholder value throughcontinual and stable dividends, accompanied by a strong internal control system.
(3) Holding Human Resources in High Regard
We believe that human resources, including our own employees, are crucial assets supporting ourcorporation. Operating in a manner that enables us to maximize the potential of our employees, so that we
can offer services that are tailor-made for our customers, is essential to sustainable corporate growth. The
happiness of our employees, business partners, and their families is the essential underpinning therein, andwe aim to further improve it through our business efforts.
[Principle 2-3] (Sustainability Issues, Including Social and Environmental Matters)[Supplementary Principle 2-3-①] （Initiatives for sustainability issues）
The Company believes that for a company to grow sustainably, in addition to securing profits, it is essential toco-prosper with the wide range of stakeholders surrounding the company, including the environment and society,and to establish a governance system to achieve such co-prosperity. The Company has established the NR&E
Committee as a voluntary advisory committee to the Board of Directors to emphasize sustainability in its
discussions. Policies for addressing sustainability issues are decided by the Board of Directors after discussion
by the Committee, and the Management Meeting and departments take the lead in addressing these issues.
*For the details and the status of information disclosure regarding these efforts, please refer to [Supplementary
Principle 3-1-③] (Initiatives on sustainability, etc.) below.
[Supplementary Principle 2-4-①] (Ensuring diversity in promotion to core human resources, etc.)
The Company believes that in order to respond to the diverse needs of local communities, achieve sustainablegrowth, and enhance corporate value over the medium- to long-term, it is important for employees with various
backgrounds and ideas to proactively think and take on challenges, deepen discussions from various perspective,
and complement one another while evolving the Company. Based on this belief, the Company is focusing on
creating an environment where individuals can maximize their abilities regardless of gender, age, nationality,
whether they are a new graduate or a mid-career hire, or educational background. The Company also fairly3

evaluates the willingness to take on challenges and promotes individuals to senior positions accordingly.
The Company’s targets and progress in this respect are as follows.
1. Promotion of Diversity(1) Career development for women:
The Company believes that restrictions on opportunities based on gender hinder the improvement of corporate
value, and it promotes the active participation of women. Although men make up approx. 80% of its workforce
due to physically demanding tasks such as transporting LP gas cylinders weighing approx. 90 kg, with the
expansion of its operations, including the New City Gas Business and the Electricity Business, women are
actively participating in various roles, such as sales, gas safety inspectors, and delivery personnel. In theadministrative departments, the participation of women is gradually increasing. This includes the Human
Resource Department General Manager and the Financial Department General Manager, both of whom are
Executive Officers. (The proportion of women in management positions at the Company’s headquarters iscurrently 21.4%.)
As of March 31, 2024, the ratio of female employees (including part-time and temporary employees) in the entire
Group is 20.4%, and the ratio of female managers is 3.6%. Through women's career development training andother initiatives, the Company is actively promoting the professional development of women, including selfdevelopment and skill improvement. The Company is also encouraging the active participation of women anddriving their ability-based advancement within the Company through the creation of positions.
KPI

TargetProgress (end of March 2024)

The ratio of women in managerial
positions of the Company

10.0%
until the end of March 2026

3.6%

The ratio of female employeesof the Company

23.0%
until the end of March 2026

20.4%

(2) Career development for foreign nationals:
The Company recruits and promotes talented individuals regardless of their nationality. As of the end of March
2024, there were 25 foreign nationals working (including temporary employees) in the Company. Foreign
nationals are actively participating in LP gas filling plants and negotiations utilizing the language of their countryof origin with partner companies.
(3)Active deployment of mid-career employees:
The ratio of mid-career hires at the Company is 56.5%, and the ratio of mid-career hires in managerial positions
is 52.7% (as of the end of March 2024). The Company will continue to actively recruit people with skills andabilities, and the willingness to take on the challenge of improving its corporate value, without being bound by
ratios.
(4)Generational diversity:
The Company promotes capable individuals regardless of age. For instance, the Company has had cases such asa twenty-some year old being appointed as head of its sales offices, and a 37-year-old being appointed as aregional head commanding over 200 people. In terms of recruitment, the Company widely hires individuals who
are willing to take on challenges to enhance its corporate value, regardless of age. In April 2024, the Company
hired 62 new employees, including 13 high school graduates, who are active in areas such as delivery, safety,
and sales. On the other hand, the senior generation utilizes their experience to excel in areas they are skilled in,such as sales, safety, and delivery. They also contribute to the education of younger employees and creating acommunicative workplace environment. Since 2021, the Company has extended the retirement age from 60 to65.
2. Internal environment improvement and human resource development policy
The Company believes that enhancing corporate value over the medium- to long-term requires an environment
where all employees can utilize their characteristics, align with their life purposes and stages, and maximize theirabilities with motivation. To this end, the Company has introduced various systems that allow flexible working
styles, such as shortened working hours, flextime, side jobs, maternity and childcare leave, and remote work, to4

create a workplace environment where each employee can fully demonstrate their abilities without being
restricted by location or time.
The Company also sets the rate of men taking childcare leave as an important indicator. This is because theCompany believes that the active participation of men in childcare and housework is indispensable for thepromotion of women’s participation that it is pursuing. The rate of men taking childcare leave is not only an
important indicator of its medium- to long-term growth but also a duty it actively undertakes as a member ofsociety to ensure the sustainable development of Japan as a country. In October 2022, the Company sets a targetof 30% for the rate of men taking childcare leave, and the rate has significantly improved to 36.1% in the fiscal
year ended March 31, 2023 and 50.8% in the fiscal year ended March 31, 2024, thanks to the introduction of asystem that facilitates the use of taking childcare leave by male employees and fosters a corporate culture thatencourages them to take such leaves.
Regarding human resource development, the Company recognizes that the driving force for enhancing corporate
value over the medium- to long-term is the power of each individual to continuously respond to changes in theinternal and external environment and continue to take on new initiatives. To add momentum to its management
strategies of Energy Solution and Platform, the Company will strengthen its investment in human capital andmaximize corporate value.
For details on its human capital strategy and human resource development activities, refer to pages 14-16 of its"Integrated Report 2023" (URL: https://www.nichigas.co.jp/en/ir/library/integrated-report) and its annual
securities reports.
[Principle 2-6] (Performance of Functions as Asset Owner of Corporate Pensions)
The Company does not adopt a corporate pension system and fall under an asset owner of corporate pension.
For the Company’s policy for Performance of Functions as Asset Owner of Corporate Pensions, refer to Article
11 (Performance of functions as asset owner of corporate pensions) of the Guidelines.
[Principle 3-1] (Appropriate Information Disclosure and Ensuring of Transparency)
The Company conducts the independently minded transmission of information on the following disclosures.
(i) The management philosophy, management strategies and management plans are disclosed in the Company’s
website, integrated reports, and materials for general meetings of shareholders, etc. and explained in businessstrategy meetings, etc.
· Management philosophy: “Management Philosophy” on the Company’s website(URL: https://www.nichigas.co.jp/en/corporate/philosophy)· Management strategies and management plans: “CEO Message” on the Company’s website(URL: https://www.nichigas.co.jp/en/corporate/message)· Capital Strategy: (URL: https://www.nichigas.co.jp/en/ir/library/capital)· Integrated reports (URL: https://www.nichigas.co.jp/en/ir/library/integrated-report)· Business Strategy Meeting (URL: https://www.nichigas.co.jp/en/ir/library/meeting)(ii) For the basic views and policies for corporate governance:
Refer to “Ⅰ. Basic Views on Corporate Governance, Capital Structure, Corporate Attributes, and Other Key
Information” “1. Basic Views” above and the Guidelines attached.
(iii) Policies and procedures for determining remuneration for Senior Management Executives and Directors:
Refer to Article 22 of the Guidelines.
(iv) Policies and procedures of the Board of Directors for the appointment and dismissal of Senior Management
Executives and the nomination of candidates for Directors and Corporate Auditors:
Refer to Article 21 of the Guidelines.
(v) Explanation of individual appointments, dismissals, and nominations by the Board of Directors based on theabove policies and procedures for the appointment and dismissal of Senior Management Executives and thenomination of candidates for Directors and Corporate Auditors:
The Notice of Convocation the 70th Ordinary General Meeting of Shareholders is posted in Stock
Information on the Company’s website (URL: https://www.nichigas.co.jp/en/ir/stock/meeting).
[Supplementary Principle 3-1-③] (Initiatives on sustainability, etc.)
The Company’s mission is contributing to local communities through the provision of energy. Toward enhancing
its corporate value over the medium- to long-term, the Company will address sustainability issues, such as socialand environmental challenges, while providing energy suited to the times.

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Policies for addressing sustainability issues will be decided by the Board of Directors after discussions by the
NR&E Committee, a voluntary advisory committee to the Board of Directors, and the Management Meeting anddepartments will take the lead in addressing these issues.
With regard to issues that have a significant impact on corporate value over the medium- to long-term, after aresolution by the Board of Directors, the Company established four material issues (materiality), and isstrengthening its efforts to address each of them.
The material issues of the Group: (1) building a decarbonized society, (2) developing human capital andpromoting diversity, (3) building the foundations of local communities, and (4) strengthening governance.
* For risks and opportunities associated with each issue, refer to the "Integrated Report 2023."- Climate change initiatives (TCFD, etc.)
The Company supports the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)
and disclosed its strategies to address climate change by identifying risks and opportunities resulting fromchanges in the business environment through scenario analysis while enhancing its corporate value. The"Integrated Report 2023" enhances scenario analysis and newly discloses quantitative impacts. Details of
initiatives are disclosed as appropriate in the integrated reports and other materials.
<Scenario analysis>

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- Investments in human capitalThe driving force for enhancing corporate value over the medium- to long-term is the power of each employee
to continuously respond to changes in the internal and external environment and take on new initiatives.
Considering the transition to a decarbonized and decentralized regional society, the Company will evolve its
business from purchasing and selling gas and electricity to: (1) an "Energy Solution" business that proposes
optimal energy use for each household and community, and (2) a "Platform" business for sharing its highly
efficient LP gas infrastructure with other companies (NICIGAS 3.0). To take on this new challenge, the Company
will strengthen investment in human capital and maximize corporate value. Specifically, the Company will focus
on skills for optimal use of energy/solution proposal capabilities, Platform/BtoB sales capabilities, and thedevelopment of further expertise in DX/digital, securing these skills through: i) human capital reallocation, ii)
collaboration partnership, and iii) reeducation (reskilling). Details of these efforts are disclosed in the above[Supplementary Principle 2-4①] (Ensuring diversity in promotion to core human resources, etc.), as well as in
its integrated reports and other materials as appropriate.
- Respect for human rights
Based on the recognition that respect for human rights is essential for the continuation and growth of its businessover the medium- to long-term, the Company manages the operations with consideration for the human rights ofeach stakeholder in the value chain in accordance with norms such as the International Bill of Human Rights,
the UN Guiding Principles on Business and Human Rights, and the Global Compact's Principles on Human
Rights. Details of its efforts to address human rights issues for each stakeholder are disclosed as appropriate in
the Integrated Report and other documents.
- Ensuring diversity
The Company is promoting the disclosure of information on its approach to ensuring diversity, goals, and policies
for human resource development and internal environment development to enhance diversity, as well as thestatus of implementation of these policies. Details of these efforts are disclosed in the above [Supplementary
Principle 2-4-①] (Ensuring diversity in promotion to core human resources, etc.), as well as in our integrated
reports and other materials as appropriate.
[Supplementary Principle 4-1-①] (Scope of delegation to management)
The Company stipulates in the Board of Directors Regulations the matters to be submitted to the Board of
Directors by management and the matters to be reported. Refer to Article 15 (Roles and responsibilities of theBoard of Directors) of the Guidelines.
[Supplementary Principle 4-1-③] (Succession plans for the CEO and other top executives)
The succession plans for the CEO and other top executives are discussed by the NR&E Committee and thendecided by the Board of Directors, ensuring an objective, timely, and transparent process.
[Supplementary Principle 4-2-①] (Roles and responsibilities of the Board of Directors, management
remuneration scheme)
Remuneration for Directors and Executive Officers of the Company consists of performance-linked
remuneration, which is basic remuneration linked to business performance such as consolidated operating
income, and a stock remuneration plan introduced to increase the Directors’ consciousness of linkage withshareholder value for the purpose of raising their awareness of the medium- to long-term enhancement ofcorporate value. The higher the position, the higher the proportion of stock remuneration. Outside Directors arepaid only fixed basic remuneration to appropriately fulfill their roles and they are not paid performance-linked
or stock remuneration.
For details on executive remuneration, refer to "II. Business Management Organization and Other Corporate
Governance Systems Regarding Decision-Making, Execution of Business, Oversight in Management, andIncentive" below.
[Supplementary Principle 4-2-②] (Roles and Responsibilities of the Board of Directors)
The Company's approach to sustainability is discussed by the NR&E Committee, and a basic policy is formulatedby the Board of Directors. The details of its initiatives are explained in the Integrated Report and at IR meetings.
The Board of Directors also oversees the allocation of management resources and the formulation andimplementation of business strategies aimed at improving corporate value over the medium- to long-term. Refer
to Article 15 (Roles and responsibilities of the Board of Directors) of the Guidelines.
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[Supplementary Principle 4-3-② and ③] (Objective, timely and transparent procedures for appointment anddismissal of CEO)The appointment and dismissal of the CEO and other top executives are discussed by the NR&E Committee
and then decided by the Board of Directors, ensuring an objective, timely, and transparent process.
[Principle 4-4] (Roles and Responsibilities of the Corporate Auditors and the Board of Corporate Auditors)
The Company has chosen to be a company with a Board of Corporate Auditors, composed of 1 full-time
Corporate Auditor and 2 independent Outside Corporate Auditors, for a total of three members. The reason for
selecting this structure is that while the Company places importance on having well-balanced control of its
unique business model by both Inside and Outside Directors, the Company believes that a system that allows
each Corporate Auditor to exercise their audit authority swiftly is appropriate, considering the size of its businessand the organizational structure of the company, while emphasizing a well-balanced control of its uniquebusiness model by both internal and external directors.
The Company believes that this system allows the Board of Corporate Auditors to exercise its own investigative
authority over the execution of duties by the Directors through the independent appointment of Corporate
Auditors, thereby fostering management with a greater sense of alertness and vigilance. The full-time Corporate
Auditor reports the status of business execution of all Group companies and the results of inspections to theOutside Corporate Auditors, who provide opinions and advice from an independent standpoint and professional
perspective. Through active exchanges of opinions based on this information, the Outside Corporate Auditors
monitor and verify the execution of duties by the Directors.
The Board of Corporate Auditors monitors and verifies the execution of duties by the Directors based on theaudit policies and plans, by attending important meetings such as Board of Directors meetings and regularly
exchanging opinions with the Directors.
The specific items reviewed by the Board of Corporate Auditors include the audit policies, audit plans,
anticipated business risks, status of establishment and operation of the internal control system as key audit items,
and the appropriateness of the audit methods and results of the Accounting Auditors.
Furthermore, the Company believes that collaboration with Accounting Auditors and the internal audit
department is important to improve the effectiveness of audits, and three-way audit meetings are held regularly
to report on the status of audits and exchange opinions from various perspectives and roles. On-site inspections
conducted by Accounting Auditors and the internal audit department are also actively attended. Opinion
exchange meetings with Outside Directors and group auditor liaison meetings are held to further strengthen
collaboration.
[Principle 4-8] (Effective Use of Independent Outside Directors)
Of the six directors of the Company, two are independent Outside Directors. To achieve sustained growth andimprovements in corporate value over the medium- to long- term, the Company considers it important, from amanagerial perspective, that Outside Directors express their opinions and encourage lively discussions at
meetings of the Board of Directors, utilizing their expertise and experiences from standpoints independent of theCompany. Two Outside Directors of the Company are fully qualified to fulfill roles and responsibilities that
contribute towards sustained growth and corporate value improvement of the Company, leading to more active
discussions at the Board of Directors meetings. The careers and skills of Outside Directors is posted in “Noticeof the 70th Ordinary General Meeting of Shareholders” (URL：https://www.nichigas.co.jp/en/ir/stock/meeting).
[Principle 4-9] (Criteria for Judgement of Independence of Independent Outside Directors and Their
Qualifications)
The Company’s criteria for judgment of independence of independent Outside Directors are governed by the
independence criteria established by the Tokyo Stock Exchange. Expecting their contributions to active
discussions at the Board of Directors meetings, the Company has appointed the following two individuals as
independent Outside Directors.
・Tsuyoshi Yamada: In addition to his deep knowledge of the Commercial Code, Companies Act, and financialrelated laws, he specializes in the study of the nature of dialogue between corporations and their shareholders.
・Eriko Satonaka: She has experience as a CHRO in human resources, labor relations, and human resources
strategy planning at operating companies.
The Company has appointed the following two individuals as independent Outside Corporate Auditors.
・Takao Orihara: He has served as a Director mainly in the financial department of Nomura Real Estate Holdings
and Nomura Real Estate Development, besides holding positions as a Director (audit & supervisory committee
member) and Corporate Auditor at Nomura Real Estate Holdings Inc., thus bringing both executive and auditing8

experience.
・Tatsunaga Fumikura: He has high expertise in accounting as a certified public accountant, has long served asa representative partner at a major audit firm, and has sufficient practical experience in auditing, including
auditing major companies.
[Supplementary Principle 4-10-①] (Use of voluntary schemes)
The Company has a Board of Corporate Auditors. Considering that independent Outside Directors do notconstitute the majority of the Board of Directors, the Company has established the NR&E Committee as avoluntary advisory committee with the aim of strengthening governance. This committee consists mainly of
independent Outside Directors, along with independent Outside Corporate Auditors, and thus the majority of theCommittee members are outside officers. It has the role of advising the Board of Directors on the nomination
and remuneration of the Chief Executive Officer (CEO) and senior management. The Committee will further
engage in discussions about the nomination of the CEO and other top executives and succession plans.
<Composition>
This Committee is composed of five members: 2 Outside Directors (Mr. Tsuyoshi Yamada and Ms. Eriko
Satonaka), 2 Internal Directors (Mr. Kunihiko Kashiwaya, Representative Director, Chief Executive Officer, and
Mr. Tomonori Tsuchiya, Representative Director, Senior Managing Executive Officer), and 1 Outside Corporate
Auditor (Mr. Takao Orihara). The majority of members being outside officers, and the Committee being chairedby an Outside Director (Tsuyoshi Yamada), the Company believes that this composition ensures the Committee's
independence.
<Matters Deliberated by the Committee> Based on consultations from the Board of Directors, this Committee
deliberates and advises on the following matters.
・ Nomination and remuneration of Directors and officers and other governance matters(1) Promoting the governance system for business activities that achieve management stability and healthy
growth(2) Personnel proposals for Directors, Representative Directors, Executive Directors, Executive Officers, andCorporate Auditors(3) Remuneration scheme for Directors, Representative Directors, Executive Directors, Executive Officers,
and Corporate Auditors, operation of that scheme, and remuneration limits (proposals for the General
Meeting of Shareholders), etc.
(4) System for the evaluation of Directors by third parties, operation of that system, etc.
(5) System and standards for succession planning (including the cultivation of the successor) and theirimplementation, etc.
・ Matters related to environmentally friendly business activities
・ Matters related to business activities that contribute to society
・ Other matters about which the Board of Directors inquires[Supplementary Principle 4-11-①] (Views on the Structure of the Board of Directors and the Board of Corporate
Auditors)
The Company has identified the skills the Company believes are necessary for its medium- to long-term
corporate value growth and created a skills matrix. The Company annually reviews the skills it believes arenecessary for corporate value growth, supplementing the skills and knowledge required by the Company throughthe participation of Outside Directors, thereby invigorating discussions and enhancing the effectiveness of theBoard of Directors.
The Independent Outside Directors include persons with experience in management of other companies.

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■The skill matrix of Directors and Corporate Auditors↓◎：Main skills○：Other skills[Supplementary Principle 4-11-②] (Directors’ and Corporate Auditors’ Concurrent Positions Held at Other
Companies)
The Company discloses concurrent positions of Directors and Corporate Auditors at other listed companies in
the Notice of the General Meeting of shareholders and annual securities reports, etc. Given that the number ofcompanies where they hold concurrent positions remains in a reasonable range, the Company has judged that theholding of concurrent positions will not cause any issues in their execution of duties as an officer of the Company.
[Supplementary Principle 4-11-③] (Overview of Analysis and Evaluation Results of the Effectiveness of theBoard of Directors as a Whole)〇Regarding the evaluation of each Director in the fiscal year ended March 31, 2024, the Company received anassessment from independent experts (evaluators) that the Directors have met the standards.
〇Evaluation of the Effectiveness of the Board of Directors in the Fiscal Year Ended March 2024: An evaluation
was conducted through a questionnaire sent to internal and outside directors with the involvement of a third party(Mitsubishi UFJ Trust and Banking Corporation). The result of the evaluation was that the 'effectiveness of theBoard of Directors is ensured.' In particular, the following points were positively valued.
・Appropriateness of Performance Indicators: The indicators used in performance reports to the Board of
Directors are appropriate and are verified each time. This leads to effective performance monitoring.
・Utilization of Dialogue with Shareholders and Others to Enhance Corporate Value: Sufficient dialogue withstakeholders, including institutional investors, is conducted, and the dialogue content is appropriately fed backto the Board of Directors and utilized to enhance corporate value.
As points to further strengthen the effectiveness of the Board of Directors, the following opinions were received:
・Ensure opportunities for discussions to adequately supervise the progress of strategies and the state of humanresources strategies
・Review the system for providing information on agenda items and strategies to be submitted to the Board of
Directors to ensure sufficient opportunities for deliberation on important matters
・Discuss and supervise the establishment and operation of risk management systems at the Board of Directors
to enhance their functionality
・Review agenda setting to leverage the insights of Outside Directors and consider establishing a system forexecutive study sessions
For the policy for the evaluation of effectiveness of the Board of Directors, refer to Article 24 (Assessment ofeffectiveness of the Board of Directors) of the Guidelines.
[Supplementary Principle 4-14-②] (Policy for Training of Directors and Corporate Auditors)
Refer to Article 26 (Policy for training of Directors and Corporate Auditors) of the Guidelines.
10

[Principle 5-1] (Policy for Constructive Dialogues with Shareholders)
Based on the recognition that constructive dialogues with shareholders and investors are necessary for the
medium- to long-term enhancement of corporate value, the Company has developed internal systems forproviding opportunities for such dialogues. Discloses the details of these initiatives in the Integrated Report.
“Integrated Report 2023” P.46 https://www.nichigas.co.jp/en/ir/library/integrated-report■Situation of dialogues with shareholders, etc.
<IR meetings>
・IR department, as a contact, responds to more than 300 times/ year IR meetings with institutional investors andanalysts. The Representative Director, Chief Executive Officer and other Officers are also actively involved in
the dialogues.
・For the IR meetings, less than 60% are with domestic institutional investors, and more than 40% are withoverseas institutional investors. In the IR meetings with overseas investors, interviews are held in English withno interpreters present in most cases. The inability to communicate directly in English is sometimes the reason
why IR meetings are not conducted. The Company believes that direct communication without the need forinterpretation, where executives and IR personnel with an understanding of the Company's internal affairs
engage in dialogue, deepens the conversation. The Company strives to disclose information fairly to domestic
and overseas institutional investors by translating important information into English as promptly as possible.
・Overseas IR meetings (Non-deal Roadshow): From 2023, the Company resumed overseas IR on-site meetingsand is conducting face-to-face dialogues with overseas institutional investors. Its management will continue to
directly dialogue with domestic and overseas investors to inform them of its business progress and strategies.
・With respect to explanatory meetings, the Company holds a result briefing in the form of a conference call on
the day of the results announcement, and the Senior Managing Executive Officer, Corporate Headquarters,
General Manager (CFO), provides explanations and answers questions from investors. In addition, theCompany holds business strategy meetings twice a year, in principle, where the Representative Director, Chief
Executive Officer and other Officers explain medium- to long-term business strategies and ESG initiatives. At
the business strategy meeting held in May 2024, Representative Director, Chief Executive Officer Kunihiko
Kashiwaya explained the Company’s medium- to long-term business strategy and the LP gas industry
consolidation. Representative Director, Senior Managing Executive Officer Keiichi Yoshida, who also serves
as Representative Director, President of Energy Sola Platforms Co., Ltd., explained the business strategy of theenergy platform company Energy Sola Platforms Co., Ltd. *Senior Managing Executive Officer, Sales
Headquarters, Deputy General Manager, Tomonori Tsuchiya, explained the energy retail business strategy.
(*Title is as of the time of the meeting.)
In addition, in April 2024, the Company held its first IR seminar for individual investors. In addition to an
explanation of the Company, the seminar provided participants with the opportunity to deepen theirunderstanding of the Company through discussions with institutional investors.
The video of the seminar can be viewed at "Business Strategy Meetings" on the Company’s website.
(URL: https://www.nichigas.co.jp/en/ir/library/meeting).
<Main topics of dialogue with shareholders/ investors and their interests>
・Medium- to long-term growth (Energy Retail, Platform)
・LP gas industry consolidation and the Company’s growth opportunity through the market consolidation
・Capital strategy and shareholder return policy
・Human capital strategy to enhance its corporate value
・Medium- to long-term initiatives to decarbonized society, etc.
<Feedback to the Board of Directors>
・Useful opinions acquired through dialogues with shareholders, etc. are appropriately shared by Management
Meeting and the Board of Directors (Each meeting is held once a month) and discussed by the Board members.
Additionally, shareholder movements based on the quarterly substantial shareholder survey, and the content of
dialogue of IR meetings are appropriately shared.
・Additionally, the details of annual dialogue with shareholders and initiatives by the IR department are reported
to the Board of Directors once a year for discussion with management to further enhance the level of dialogue
with shareholders.
・For example, in the three-year plan from the fiscal year ending March 2024 to the fiscal year ending March11

2026, announced on April 27, 2023, the Company announced shareholder return policy for the three years
period from the fiscal year ending March 2024 to the fiscal year ending March 2026, which was discussed andfinalized by the Board of Directors, considering the dialogue with investors.
The Company intends to promote constructive dialogue with shareholders by, for example, promoting
communication of the ideas of Outside Directors and Outside Corporate Auditors in addition to Internal
Directors. For the policy for constructive dialogues with shareholders, refer to Article 27 (Dialogue withshareholders) of the Guidelines.
[Principal 5-2] (Formulation and Announcement of Management Strategies and Plans)[Supplementary Principle 5-2-①](Formulation and announcement of management strategies and plans)
Now that the Group’s corporate structure going forward has been determined through the group reorganization,
the Company has embarked on the implementation of a three-year growth plan from the fiscal year ended March
31, 2024, to the fiscal year ending March 31, 2026. This plan emphasizes not only profit growth through businessexpansion but also initiatives to enhance corporate value through active balance sheet management. Specifically,
as in the past, the Company aims to increase ROIC from 9% in the fiscal year ended March 31, 2023, to 13% in
the fiscal year ending March 31, 2026, by accumulating high profit generating assets, such as LP gas and ITrelated assets, without significantly increasing the overall asset size. Concurrently, the Company will review the
optimal capital structure on the capital procurement side, reducing the capital-to-asset ratio from 48% in thefiscal year ended March 31, 2023, to 40% in the fiscal year ending March 31, 2026, aiming for an ROE of 22%
in the fiscal year ending March 31, 2026.
Regarding the allocation of acquired cash flows, the Company places equal importance on returning high levelsof value to all its shareholders and investing in high profit generating assets, striving to balance both aspects.
Over the three-year period from the fiscal year ended March 2024 to the fiscal year ending March 2026, theCompany anticipates cash inflow of 86 billion yen through cash-in (acquired cash from operating cash flows andincreased borrowings). From this cash, the Company plans to allocate 38.5 billion yen to growth investments
and 47.5 billion yen for shareholder returns. In the first year, the fiscal year ended March 31, 2024, the Company
made progress generally in line with its plan. Cash inflows were 30 billion yen, cash outflows were 24.5 billion
yen (including 11.4 billion yen for investments and 13.1 billion yen for shareholder returns), and the Company
increased its cash on hand by 5.5 billion yen to prepare for investments in and after the fiscal year ending March
31, 2025.
The Board of Directors is responsible for overseeing the allocation of management resources and theimplementation of strategies related to the business portfolio (*The details are disclosed in the Integrated Reportand other documents). At least every results announcement (quarterly), the Board of Directors discusses the
allocation of management resources and the status of business investments and portfolios, and the Company
discloses the details of these discussions in its Earnings Summary Supplemental Disclosure.
・Earnings Summary Supplemental Disclosure https://www.nichigas.co.jp/en/ir/library/financial-statements
・“Integrated Report 2023” P.23~26 https://www.nichigas.co.jp/en/ir/library/integrated-report■Action to Implement Management that is Conscious of the Cost of Capital and Stock Price【Disclosed in English】
The Company discloses on its own website explanatory materials of its capital strategy and explains its actions
to implement management that is conscious of cost of capital and stock price, as well as its capital strategy.
“NICIGAS’ Capital Strategy”
P.1 https://view.nichigas.co.jp/ir/library/capital/capital-strategy-en.pdf

12

2. Capital Structure
Foreign Shareholding Ratio

30% or more

Status of Major Shareholders
Name or Company Name

The Master Trust Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)
TEPCO Energy Partner, Incorporated
JAPAN POST INSURANCE Co.,Ltd.
Nippon Life Insurance Company
SUMITOMO LIFE INSURANCE COMPANYSTATE STREET BANK WEST CLIENT-TREATY 505234
JP MORGAN CHASE BANK 385781
THE BANK OF NEW YORK MELLON 140042
The Master Trust Bank of Japan, Ltd. (Board Incentive Plan Trust
Account 75844)
Name of Controlling Shareholder, if applicable(excluding Parent Companies)
Name of Parent Company, if applicable

Number of Shares Owned

Percentage (%)

19,056,400
10,472,000
4,380,000
3,509,500
2,186,760
1,775,200
1,526,900
1,429,018
1,238,261

16.86
9.27
3.88
3.11
1.93
1.57
1.35
1.26
1.10

1,219,485

1.08

None
None

Supplementary Explanation

The status of major shareholders above is as of the end of March 2024.
The Company owns 2,305,996 shares as treasury stock which is excluded from the number of shares held by
13

major shareholders above. The treasury stock does not include 1,219,485 shares of the Company’s stock owned
by The Master Trust Bank of Japan, Ltd. in the “Executive Compensation BIP (Board Incentive Plan) Trust”(trust account).
In addition, the Company’s treasury stock is excluded in the calculation of the percentage figures.
3. Corporate Attributes
Listed Stock Exchange and Market Segment
Fiscal Year-End
Business Sector
Number of Employees (Consolidated) as of the Endof the Previous Fiscal YearNet Sales (Consolidated) for the Previous Fiscal Year
Number of Consolidated Subsidiaries as of the Endof the Previous Fiscal Year

Prime Market
March
Retail Trade
1,000 or more
¥100 billion or more and less than ¥1 trillion
Fewer than 10

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

5. Other Special Circumstances which May have a Material Impact on Corporate Governance
None

II. Business Management Organization and Other Corporate Governance Systems regarding
Decision-making, Execution of Business, and Oversight
1. Organizational Composition and Operation
Corporate Governance System
Company with Audit and Supervisory Board**Referred to as "Company with Kansayaku Board" in the Corporate Governance Code reference translation

Directors
Number of Directors Stipulated in Articles ofIncorporation
Directors' Term of Office Stipulated in Articles ofIncorporation
Chairperson of the Board
Number of Directors
Election of Outside Directors
Number of Outside Directors
Number of Independent Directors

15
1 yearPresident
6
Elected2
2

Outside Directors’ Relationship with the Company (1)Name

Relationship with the Company*
c
d
e
f
g
h
i

AttributesabjkTsuyoshi Yamada
LawyerEriko Satonaka
From another company*Categories for “Relationship with the Company”.
(Use “○” when the director presently falls or has recently fallen under the category; “△” when the director fell under the category
in the past; “●” when a close relative of the director presently falls or has recently fallen under the category; and “▲” when a close
relative of the director fell under the category in the past.)
a. Person who executes business of the Company or a subsidiary
b. Person who executes business or a non-executive director of a parent company
c. Person who executes business of a fellow subsidiaryd. Person/entity for which the Company is a major client or a person who executes business for such person/entity
e. Major client of the Company or a person who executes business for such clientf. Consultant, accounting expert, or legal expert who receives large amounts of cash or other assets in addition to director/Audit
and Supervisory Board Member compensation from the Company
g. Major shareholder of the Company (in cases where the shareholder is a corporation, a person who executes business of thecorporation)

14

h. Person who executes business for a client of the Company (excluding persons categorized as any of d, e, or f above) (applies toself only)
i. Person who executes business for another company holding cross-directorships/cross-auditorships with the Company (applies toself only)
j. Person who executes business for an entity receiving contributions from the Company (applies to self only)
k. OtherOutside Directors’ Relationship with the Company (2)NameTsuyoshi Yamada

Designation as
Independent
Director○

Supplementary Explanation of
the Relationship―

Reasons for Appointment

Reason for appointment as an
Outside Director:
Mr. Tsuyoshi Yamada is a licensed
lawyer, who in addition to his indepth knowledge of theCommercial Code, the Companies
Act, and law related to financial,also specializes in the nature of
dialogue between corporations andtheir shareholders. Additionally, as
the chair of the NR&E Committee,
he is responsible for formulating
the Company’s policies on
executive remuneration, andsuccession planning. Although he
has no direct experience incorporate management, as theCompany believes that his
knowledge will contribute to
management, governance, and risk
management based on an investors’
perspective, the Company has
appointed him as Outside Director.
Reason for nomination as anindependent officer:
Mr. Tsuyoshi Yamada was selectedby the Board of Directors following
approval from the NR&E
Committee, which is a voluntary
advisory committee. He is
nominated as an independent
officer because the risk of conflictof interest with generalshareholders is considered to benonexistent in view of his career.

Eriko Satonaka○

Reason for appointment as an
Outside Director:
Ms. Eriko Satonaka has expertise in
human resources and diversity
promotion at Nissan Motor Co.,
Ltd. and later at Benesse Holdings,
Inc. where she led human resource
development strategies and thedesign of the executive
compensation plan. She is currently―

15

CHRO of Avant Group, where she
supervises company-wide humanresources strategy. As the Company
believes that this experience willcontribute to the recruitment anddevelopment of the next generationof human resources and thepromotion of diversity, theCompany has appointed her as
Outside Director.
Reason for nomination as anindependent officer:
Ms. Satonaka was selected by the
Board of Directors following
approval from the NR&E
Committee, which is a voluntary
advisory committee. She isnominated as an independent
officer because the risk of conflictof interest with generalshareholders is considered to benonexistent in view of her career.
Voluntary Establishment of Committee(s) equivalent toNomination Committee or Remuneration Committee

Established

Status of Voluntarily Established Committee(s), Attributes of Members Constituting the Committee and the Committee
Chairperson
Committee’s
Name
Voluntarily
Established
Committee
Equivalent toNomination
Committee
Voluntarily
Established
Committee
Equivalent toRemuneration Committee

All
Members

Full-timeMembers

InsideDirectors

OutsideDirectors

OutsideExperts

NR&E
Committee

5

0

2

2

1

0

Outside Director

NR&E
Committee)

5

0

2

2

1

0

Outside Director

Other

Chairperson

Supplementary Explanation

The outside expert who is a member of the NR&E Committee is Takao Orihara, an Outside Corporate Auditor.
Audit and Supervisory Board Member**Referred to as "kansayaku" in Corporate Governance Code reference translation
Establishment of Audit and Supervisory Board
Established
Number of Audit and Supervisory Board Members
4
Stipulated in Articles of Incorporation
Number of Audit and Supervisory Board Members
3

Cooperation among Audit and Supervisory Board Members, Accounting Auditors and Internal Audit Departments

16

The Board of Corporate Auditors consists of three corporate auditors (including two Outside Corporate
Auditors). The Board of Corporate Auditors meets monthly prior to the Board of Directors meetings and asneeded. The Board of Corporate Auditors also holds quarterly three-way audit meetings with the accounting
auditors, and the audit office, which is the Company’s internal audit department, and auditors of the groupcompany to discuss audit policies, audit plans, key audit items, etc., and to exchange information on the statusof each audit, etc., with the close collaboration to ensure effective and efficient audits. In addition, a full-time
Corporate Auditor conducts audits by attending the Internal Control System Committee (the Group Risk
Management Committee and the Group Compliance Committee) and other important meetings, inspecting
documents for final decisions and always exchanging information with the Audit Office to execute efficient
audits.
Appointment of Outside Audit and Supervisory
Board Members
Number of Outside Audit and Supervisory Board
Members
Number of Independent Audit and Supervisory
Board Members

Appointed
22Outside Audit and Supervisory Board Members' Relationship with the Company (1)Name

Relationship with the Company*
e
f
g
h
i
j
k

Attributes

a
b
c
d
l
m
Takao Orihara
From another company
Tatsunaga Fumikura
CPA*Categories for “Relationship with the Company”.
(Use “○” when the director presently falls or has recently fallen under the category; “△” when the director fell under the category
in the past; “●” when a close relative of the director presently falls or has recently fallen under the category; and “▲” when a close
relative of the director fell under the category in the past.)
a. Person who executes business of the Company or a subsidiaryb. A non-executive director or an accounting advisor of the Company or its subsidiaries
c. Person who executes business or a non-executive director of a parent company
d. An Audit and Supervisory Board Member of a parent company of the Company
e. Person who executes business of a fellow subsidiaryf. Person/entity for which the Company is a major client or a person who executes business for such person/entity
g. Major client of the Company or a person who executes business for such clienth. Consultant, accounting expert, or legal expert who receives large amounts of cash or other assets in addition to director/Audit
and Supervisory Board Member compensation from the Company
i. Major shareholder of the Company (in cases where the shareholder is a corporation, a person who executes business of thecorporation)j. Person who executes business for a client of the Company (excluding persons categorized as any of f, g, or h above) (applies toself only)
k. Person who executes business for another company holding cross-directorships/cross-auditorships with the Company (applies
to self only)
l. Person who executes business for an entity receiving contributions from the Company (applies to self only)
m. OtherOutside Audit and Supervisory Board Members' Relationship with the Company (2)Name

Takao Orihara

Designation as
Independent Audit
and Supervisory
Board Member○

Supplementary Explanation of
the Relationship―

Reasons for Appointment

Reason for appointment as an
Outside Corporate Auditor:
Mr. Takao Orihara has experience infinance and corporate planning at
Nomura Real Estate Development,
and participated in the managementof Nomura Real Estate Holdings andNomura Real Estate Development
17

for nine years, mainly as a Director
in charge of finance. He
subsequently held other positions
including Director (Audit &Supervisory Committee member)and Corporate Auditor at Nomura
Real Estate Holdings, Inc. for sevenyears. As the Company believes that
his experience as an executive andauditor at listed companies, etc. willcontribute to the accurate auditing of
the Company, it has appointed him
as Outside Corporate Auditor.
Reason for nomination as anindependent officer:
Mr. Orihara was selected by the
Board of Directors following
approval from the NR&E
Committee, which is a voluntary
advisory committee. He is
nominated as an independent officer
because the risk of conflict ofinterest with general shareholders is
considered to be nonexistent in viewof his career.
Tatsunaga Fumikura○―

Reason for appointment as an
Outside Corporate Auditor:
As a company with a Board of
Corporate Auditors, the Company
believes that it is necessary for
Outside Corporate Auditors to havesufficient knowledge in finance,accounting, legal affairs, and risk
management to ensure effective
corporate governance. Mr.
Tatsunaga Fumikura is appointed
because he possesses advanced
knowledge in accounting as acertified public accountant, has longserved as a representative partner ata major audit firm, and has ample
practical experience in audits,
including for large companies.
Reason for nomination as anindependent officer:
Mr. Fumikura was selected by the
Board of Directors following
approval from the NR&E
Committee, which is a voluntary
advisory committee. He is
nominated as an independent officer
because the risk of conflict ofinterest with general shareholders is
considered to be nonexistent in view18

of his career.

Matters Concerning Independent Directors and Independent Audit and Supervisory Board Members
Number of Independent Directors and Independent
Audit and Supervisory Board Members

4

Other Matters Concerning Independent Directors and Independent Audit and Supervisory Board Members

The Company’s criteria for judgment of the independence of its Outside Directors and Outside Corporate
Auditors are governed by the independence criteria established by the Tokyo Stock Exchange.
Incentives
Implementation Status of Measures related toIncentives Granted to Directors

Introduction of Performance-linked Remuneration Scheme, Other

Supplementary Explanation for Applicable Items

Remuneration for Directors and officers of the Company has been composed of performance-linked
remuneration, which is basic remuneration linked to the business performance such as consolidated operating
income, and a stock remuneration plan introduced to increase the Directors’ consciousness of linkage withshareholder value for the purpose of raising their awareness of the medium- to long-term enhancement ofcorporate value. The Company pays only the fixed basic remuneration to Outside Directors and corporate
auditors and does not pay performance-linked remuneration and stock remuneration for them to appropriately
undertake their roles.
1) Performance-linked remuneration

Individual basic remuneration for each Director and executive officer, which is linked to performance, iscalculated based on an evaluation of each individual by Independent Outside Evaluators.**Independent Outside Evaluators: Two university professors specializing in management. They have been
engaged to conduct evaluations since 2015 after the officer in charge of the Human Resource Department
determined that they are highly knowledgeable in performance evaluation, which is the basis for calculating
management and executive compensation. They are well versed in our business operations as well as the skills
possessed and challenges faced by our officers, making them able to determine appropriate KPIs.
<Evaluation Process>1. Each Director and Executive Officer conducts evaluation interviews with independent outside evaluators
after the end of the fiscal year to discuss the challenges undertaken and achievements made.
2. The independent outside evaluators conduct quantitative and qualitative evaluations for each item required
for the roles and duties of each Director and Executive Officer based on the interview results. The quantitativeevaluation is made based on the operating income of the Company and the status of achievement of the KPIs
set by each Officer at the beginning of the evaluation period. The qualitative evaluation is made based on items
such as contribution to the enhancement of corporate value, the formulation of policies and the penetration ofstrategies, the cultivation and discovery of successors, and expertise and foresight. Emphasis is placed on theability to drive change without being bound by past customs or previous successes.
3. After the results of the independent outside evaluation are confirmed by the General Managers of each
Headquarters, the Representative Director, Chief Executive Officer and the Managing Executive Officer incharge of Human Resource Department determine the basic compensation concept for each individual basedon the independent outside evaluation, and the NR&E Committee approves these contents. Based on theapproved principles, the Representative Director, Chief Executive Officer and Managing Executive Officer incharge of the Human Resource Department engage in discussions to make the final decision on individual basic
remunerations.
2) Non-monetary remuneration (Stock Compensation)

The stock-based compensation is provided to Directors and Executive Officers as a medium- to long-term
incentive plan, targeting a period of five business years, with a maximum limit of 851 million yen and 690,000
shares (post-stock split). The purpose of this plan is to enable Directors and Executive Officers to share19

medium- to long-term profit value with shareholders. In the stock remuneration, the BIP trust is used, andpoints calculated based on the position factor and the monthly amount of basic remuneration that will change
according to the degree of achievement of consolidated operating income and others will be granted. The points
are accumulated during the term of office and can be received as the eligible stock-based compensation uponretirement for each of the Directors and Executive Officers of the Company and its subsidiaries covered under
the stock-based compensation system. Subject to the approval of the Company’s Board of Directors, the termof this stock- based compensation may be extended for the same period every five fiscal years.
3) Policy on ratio of remuneration, etc.

The ratio of basic remuneration, which is linked to performances such as consolidated operating income andother business results, to stock-based compensation is determined by the position coefficient determined foreach position in the internal guideline. The higher the position, the higher the proportion of stock remuneration.
4) Policy on timing and conditions for granting remuneration, etc.

Individual remuneration for Directors and Executive Officers determined through the process described in (1)above will be reflected beginning with the payment in July of each year in line with the term of office of
Directors and Executive Officers.
5) Matters concerning delegation of determination of remuneration, etc.

-

-

-

Name, position and/or responsibility in the Company of the person to be delegated
Mr. Kunihiko Kashiwaya, Representative Director, Chief Executive Officer
Mr. Keiichi Ozaku, Managing Executive Officer, in charge of Human Resource Department
The reason for said delegation is that the Representative Director, Chief Executive Officer and theManaging Executive Officer in charge of the Human Resource Department are deemed appropriate toevaluate each Director and Executive Officer while taking into consideration the Company’s overall
performance and other factors
Description of authority to be delegated
The authority to determine basic remuneration for each individual based on an independent outside
evaluation, subject to the approval of the NR&E Committee and the Board of Directors on the approachto determining remuneration.
Details of measures to ensure that delegated authority is properly exercised
The concept of individual basic remuneration determined by the Representative Director, Chief Executive
Officer and the Managing Executive Officer in charge of the Human Resource Department based on an
independent outside evaluation is reported to the NR&E Committee, and the NR&E Committee approves
its contents, thereby ensuring that the delegated authority is properly exercised.

Persons Eligible for Stock Options―

Supplementary Explanation for Applicable Items―

Director Remuneration
Status of Disclosure of Individual Directors’
Remuneration

Disclosure for Selected Directors

Supplementary Explanation for Applicable Items

The 61st Ordinary General Meeting of Shareholders held on June 25, 2015 passed a resolution setting the limitof remuneration for Directors at the annual amount of JPY 400 million or less (of which annual remuneration
for Outside Directors is JPY 30 million or less, and excluding employee salaries). The 61st Ordinary General
Meeting of Shareholders held on June 25, 2015 also passed a resolution setting the limit of remuneration for
Corporate Auditors at the annual amount of JPY 70 million or less.

20Remuneration for Officers in the fiscal year ended in March 2024(April 1, 2023 to March 31, 2024).

■

Category of officer

Directors(excluding Outside
Directors)
Corporate Auditors(excluding Outside
Corporate Auditors)
OutsideDirectors/Corporate
Auditors

Total amount of
remuneration(JPY mil.)

Total amount by type of remuneration（JPY mil.）Non-monetary
Basic
remuneration
Retirement
Bonus
remuneration(Stockbenefits
compensation)

Number of
officers
covered(persons)

267

187

80

-

-

4

14

14

0

-

-

1

32

32

0

-

-

7

*No directors concurrently serve as an employee.
*The above Non-monetary remuneration is the amount of provision for allowance for stock remunerationin the fiscal year under review.
■

Total amount of consolidated remuneration for Directors for whom the total amount of consolidated
remuneration is JPY 100 million or more
Total amount of
Amount by type of consolidated remuneration
consolidated(JPY mil.)Bonusremuneration
Category Category of
Basic
Non-monetary
Name
(JPY
mil.)
of officer
company
remuneration
remuneration(Stockcompensation)
Company
Shinji
107
74
33
Director
submitting
Wada
this report

Policy on Determining Remuneration Amounts andCalculation Methods

Established

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods

Refer to the “Supplementary Explanation” in “Incentives” above.
Support System for Outside Directors (and/or Outside Audit and Supervisory Board Members)
There is no full-time staff for Outside Officers, but the general affairs department and the audit office support
Outside Directors and Outside Corporate Auditors, respectively.
2.

Matters Concerning Functions of Business Execution, Auditing and Supervision, Nomination, andRemuneration Decisions (Overview of Current Corporate Governance System)
Overview of the current system
1. Business execution system
In addition to the Board of Directors, the Company has established a Management Meeting to which theauthority for business execution is delegated. It discusses and implements specific measures for the
management plans and strategies resolved by the Board of Directors, thereby realizing agile business execution.
Furthermore, as a voluntary advisory committee to the Board of Directors, the Company has established the
NR&E Committee. The Committee holds discussions and reports to the Board of Directors on key themes suchas important personnel decisions, remuneration, long-term management challenges and sustainability priorities
from the perspective of ESG management, along with specific measures and progress made in addressing them,as well as executive remuneration and succession planning.

21

〇The Board of Directors: Six Directors, including two independent Outside Directors (Mr. Shinji Wada,
Chairman, Director, Executive Officer, Mr. Kunihiko Kashiwaya, Representative Director, Chief Executive
Officer, Mr. Keiichi Yoshida, Representative Director, Senior Managing Executive Officer, Mr. Tomonori
Tsuchiya, Representative Director, Senior Managing Executive Officer, Mr. Tsuyoshi Yamada, Outside
Director, Ms. Eriko Satonaka, Outside Director).
〇Management Meeting: A decision-making body for business execution, composed of the following members(10 men, 0 women)
・NICIGAS: Chairman Executive Officer, Chief Executive Officer, General Managers and Deputy General
Managers both of the Sales Headquarters and the Corporate Headquarters, full-time Corporate Auditor
・Group Company President, Executive Officers
In principle, the members meet once a month to receive reports on the status of business operations from eachdepartment (4-5 agenda items per month) and discuss and implement specific measures for management plans
and strategies resolved by the Board of Directors, thereby enhancing agile business execution. In the fiscal
year ended March 2023, an Investment Committee has been established as a subordinate body, and investments
exceeding 30 million yen are reviewed by this Committee prior to the Management Meeting. The progress ofinvestments is monitored regularly, and updates are provided to the Management Meeting accordingly.
〇The NR&E Committee: This Committee, which serves as a voluntary advisory body to the Board of
Directors, is composed of five members, the majority of whom are outside directors. The Committee holds
discussions and reports to the Board of Directors on key themes such as medium- to long-term management
challenges and sustainability priorities from the perspective of ESG management along with measures andprogress made in addressing them, as well as executive remuneration and succession planning. In order toenhance corporate value over the medium- to long-term, it will deepen discussions on executive remuneration,
succession planning (including the cultivation of the successor), and human resources strategies.
<Member of the NR&E Committee>
Chairman：Mr. Tsuyoshi Yamada, Outside Director
Member ：Ms. Eriko Satonaka, Outside Director：Mr. Takao Orihara, Outside Corporate Auditor：Mr. Kunihiko Kashiwaya, Representative Director Chief Executive Officer：Mr. Tomonori Tsuchiya, Representative Director, Senior Managing Executive Officer
2. Auditing system
The Company’s Board of Corporate Auditors consists of 1 Full-Time Corporate Auditor (Mr. Kenji Manaka)and 2 independent Outside Corporate Auditors (Mr. Takao Orihara and Mr. Tatsunaga Fumikura).
* For the career histories of Mr. Takao Orihara and Mr. Tatsunaga Fumikura, refer to [Audit and Supervisory
Board Member] in 1. Organizational Composition and Operation under II. Business Management Organization
and Other Corporate Governance Systems Regarding Decision-Making, Execution of Business, and Oversightin Management above.
The Board of Corporate Auditors monthly holds meetings before meetings of the Board of Directors and holds
an extraordinary meeting as needed. The Corporate Auditors attend the meetings of the Board of Directors toaudit the proceedings and content of resolutions and actively express opinions, and also conduct audits of thebusiness execution of Directors, Executive Officers and the heads of departments and sections. In addition, theBoard of Corporate Auditors audits the business execution of Directors by maintaining close cooperation withthe accounting auditor and the audit office, which is an internal control unit, including receiving a report on
the implementation status of audits from them.
Name of certified public accountants who provided accounting audit services (audit corporations they belong
to, the number of years of continuous audit)
Mr. Kiyoshi Asada (Kyoritsu Shinmei Audit Corporation, 5 years) and Mr. Yasumasa Iwakiri (Kyoritsu
Shinmei Audit Corporation, 4 years), as well as other nine certified public accountants certified public
accountant as an assistant engage in accounting audit services.

22

3. Reasons for Adoption of Current Corporate Governance System
・The Company elected a corporate governance system of a company with an Audit Committee. This isbecause, the Company believes that a system that allows each Corporate Auditor to exercise audit authority ina speedy manner is appropriate, considering the size of its business and the organizational structure of thecompany, while emphasizing a well-balanced control of its unique business model by both internal and external
directors.
・The Board of Directors is composed of two-thirds internal directors, as the Company believes that decisionmaking by directors who have in-depth knowledge of the business is important. On the other hand, the NR&E
Committee, in which a majority of members are composed of non executive officers and the chairman is an
outside director, has been consulting with the Board of Directors regarding nomination and remuneration
functions.
・This system ensures the soundness, transparency, and efficiency of management, and ensures theappropriateness of operations.

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize General Meeting of Shareholders and Facilitate Exercise of Voting Rights
Supplementary Explanation
Early Posting of Notice of the General Meetingof Shareholders

Scheduling of the General Meeting of
Shareholders on a Non-Peak Day
Electronic Exercise of Voting Rights
Participation in a Platform for the Electronic
Exercise of Voting Rights and Other
Initiatives to Enhance Environment for
Institutional Investors to Exercise Voting
RightsProvision of Notice (or Summary of Notice)of the General Meeting of Shareholders in
EnglishOther

For the 70th Ordinary General Meeting of Shareholders (held on
June 25, 2024), electronic provision was started on May 31, 2024
(Friday), and the documents were mailed on June 5, 2024
(Wednesday).
The 70th Ordinary General Meeting of Shareholders was held on
Tuesday, June 25, 2024, avoiding the days when meetings are mostconcentrated.
The Company has introduced the exercise of voting rights byelectromagnetic means
The Company participates in a platform for the electronic exercise
of voting rights operated by ICJ, Inc.

An English version of the notice is prepared and posted on thecompany website and the Listed Company Search page on thewebsite of the stock exchange where the Company is listed, on thesame day as the Japanese version.
The Notice of Convocation and the Notice of Resolutions are postedon the Company website.

2. Status of IR-related Activities
Supplementary Explanation

Formulation andPublication ofDisclosure Policies

Regular Investor
Briefings held for
Analysts andInstitutional Investors

The Company established a policy for information disclosure to
stakeholders by establishing the Disclosure Policy. This Policy isposted on the Company's website(URL: https://www.nichigas.co.jp/en/disclosure).
The Company holds a result briefing in the form of a conference callon the day of the results announcement. Senior Managing Executive
Officer, Corporate Headquarters, General Manager, provides
explanations and answers questions from investors. In addition, theCompany holds business strategy meetings twice a year, in principle,
where the Representative Director, Chief Executive Officer and otherofficers explain business strategies and ESG initiatives.
・Business Strategy Meeting: Held in April 2023, and May 2024. The
23

Explanation by arepresentative
director or arepresentative
executive officerHeldvideos of the meetings are disclosed in “Financial Statements
Explanatory Meeting” on the Company’s website(URL: https://www.nichigas.co.jp/en/ir/library/meeting).
At the business strategy meeting held in May 2024, Representative
Director, Chief Executive Officer Kunihiko Kashiwaya explained theCompany’s medium- to long-term business strategy and the LP gas
industry consolidation. Representative Director, Senior Managing
Executive Officer Keiichi Yoshida, who also serves as Representative
Director, President of Energy Sola Platforms Co., Ltd., explained thebusiness strategy of the energy platform company Energy Sola
Platforms Co., Ltd. *Senior Managing Executive Officer, Sales
Headquarters, Deputy General Manager, Tomonori Tsuchiya, explained
the energy retail business strategy. (*Title is as of the time of themeeting.)・Outside Directors Roundtable: In February 2024, the Company held
its first outside director roundtable. Outside Director Tsuyoshi Yamada
explained to shareholders and analysts the role of Outside Directors at
the Company and the discussions held at the Board of Directors
meetings.
・Seminar for Individual Investors: In April 2024, the Company held
its first IR seminar for individual investors. In addition to an
explanation of the Company, the seminar provided participants with theopportunity to deepen their understanding of the Company throughdiscussions with institutional investors.

Regular Investor
Briefings held forOverseas Investors

Online Disclosure of
IR Information
Establishment of
Department and/or
Placement of aManager in Charge ofIR

In addition to individual IR meetings, the Company holds small
meetings for overseas investors (IR meetings attended by 5-10
participants) and explains its business strategies and ESG initiatives tooverseas investors via Zoom and other platforms. In 2023, theCompany resumed overseas IR activities for the first time in about three
years, with executives including the Representative Director, Chief
Executive Officer meeting directly with investors in Europe, theAmericas, and Asia. Additionally, the Company creates and distributes
English versions of its business strategy meeting videos to make themaccessible to overseas investors.
Materials related to financial results, the growth story, IR news, andthe video of explanatory meetings are posted on the website(URL: https://www.nichigas.co.jp/en/ir).
The Corporate Strategy/IR Department is a contact point.

Held

3. Status of Measures to Ensure Due Respect for Stakeholders
Supplementary Explanation
Establishment of Internal
Rules Stipulating Respect
for the Position of
Stakeholders

The Code of Conduct for Nippon Gas Group Officers and Employees, the Basic
Policy for Harassment Prevention Measures in the Workplace of the Nippon Gas
Group, and the Multi-Stakeholder Policy, among other policies, stipulate respect for
stakeholders. The Company also conducts internal compliance awareness surveys andharassment prevention training. In addition, the Company tries to interactively
communicate with the stakeholders. As part of its internal reporting system, theCompany has established internal and external consultation channels, as well as acontact point for Corporate Auditors, to enable early detection and response to casesof harassment, compliance violations, and other related matters.

Implementation of〇 Initiatives for a decarbonized society
24

Environmental
Preservation Activities
and CSR Activities, etc.

As an energy company responsible for the last mile, the Company is committed tomeeting the social challenge of reducing CO2 emissions. The Company will evolveits business into Energy Solutions to reduce its customers' CO₂ emissions.
Additionally, by sharing its Platform, the Company aims to reduce emissions acrossthe entire industry, enhancing corporate value over the medium- to long-term andachieving net zero CO₂ emissions by 2050.
<CO₂ Emissions Reduction Targets>
The Company has set targets to be achieved by 2030 and are actively working towards
them.
・Target 1: CO2 emissions from the LP gas industry (through the LPG Network
Service) Approx. 50% reduction
The Company aims to reduce CO₂ emissions through highly efficient LPG operations(halving CO₂ emissions compared to other companies). By sharing its operations as"LPG Network Service" with other companies, the Company aims to halve CO₂
emissions across the entire industry.
・Target 2: CO2 emissions per household: Approx. 50% reduction
For customers who use both its gas and electricity services, the Company will
reduce CO₂ emissions through energy optimization for each household anddecarbonization of power sources.
・Target 3: Reduction contribution: Approx. 1.45 million t-CO2 (by 2030)
The Company aims to reduce CO₂ emissions by approx. 1.45 million tons by 2030
through both highly efficient LPG operations (halving CO₂ emissions compared toother companies), energy optimization for each household, and decarbonization of
power sources (compared to conventional levels).
<Business strategy to realize net-zero CO₂ emissions>
The Company aims to achieve net-zero CO₂ emissions by 2050 through the following
initiatives.
1) Expansion of Energy Solutions
Step 1: Expand sales of electricity and gas as a package, focusing on family
households.
Step 2: Promote the decarbonization of power sources and popularize energy
equipment such as hybrid gas-electric water heaters, solar power generation, andstorage batteries, enabling customers to manage their own energy (transformation into
smart homes).
Step 3: Connect smart homes to the power distribution network and control energy
equipment to optimize energy use across the entire community, realizing a Smart City.
2) Reduction by introducing new technologies
The Company will also invest in and form alliances with ventures specializing in theenvironment technology, and cooperate with gas equipment manufacturers, etc., andintroduce new technologies. In order to promote collaboration in the field of storage
batteries, the Company has entered into a capital and business alliance with Power X.
This partnership has accelerated its efforts in providing Energy Solutions. In addition,
the Company will introduce and demonstrate new technologies in the new areas ofrenewable energy (natural energy), CCUS (CO₂ capture, utilization, and storage),hydrogen energy, ammonia, carbon-free methane, DME (dimethyl ether), and othertechnologies that are being developed for commercial use, while evaluating theirpractical applicability.
〇 Initiatives for biodiversity, etc.
As a company that provides energy for the last mile, the company is committed toadvancing its efforts towards biodiversity and other environmental initiatives.
Moving forward, the Company will organize the interactions between its business and25

nature within its value chain based on the TNFD framework, analyze significant risks
and opportunities, and amplify disclosures about its initiatives.
Currently, its specific efforts towards biodiversity and other environmental initiatives
include enhancing safety in areas with high flood risk (double latching of LP gas
safety belts), promoting the efficient use of resources through the digitalization ofoperations, and reducing waste.

Formulation of Policies,
etc. on Provision ofInformation to
Stakeholders

The Company’s specific initiatives for ESG and SDGs are disclosed in “Integrated
Report 2023”(URL: https://www.nichigas.co.jp/en/ir/library/integrated-report) and “Financial
Statements Explanatory Meeting” on the Company’s website(URL: https://www.nichigas.co.jp/en/ir/library/meeting).
The Company also plans to launch a "Sustainability Page" on the Company’s website
in the summer of 2024.
The Company’s Disclosure Policy sets forth its information disclosure principles, andthe Company discloses information to stakeholders in a timely and appropriatemanner in accordance with the Financial Instruments and Exchange Act and otherrelevant laws and regulations, as well as the Securities Listing Regulations of theTokyo Stock Exchange.
For internal systems for the timely disclosure of corporate information, please see "V2. Other Matters Concerning the Corporate Governance System" below.

Other

26

IV. Matters Concerning the Internal Control System
1. Basic Views on Internal Control System and Status of Development
1. Internal control system
To ensure the appropriateness of its operations, the Company has established the Internal Control System
Committee (Chairperson: Representative Director, Chief Executive Officer), under which the company hasorganized the Group Risk Management Committee (Chairperson: Corporate Headquarters, General Manager),
the Group Compliance Committee (Chairperson: Corporate Headquarters, General Manager), the Information
Disclosure Committee (Chairperson: Corporate Headquarters, General Manager), and the Internal Control
Working Group (Chief Supervisor: Legal Department, General Manager).
The Internal Control Working Group oversees financial matters and evaluates each business process andexercises control over the entire company. Group companies also select evaluation committee members toassess each business process and discuss improvements based on these evaluations.
With respect to the status of lawyers and other third parties, the Company cooperates with seven law firms. It
builds a mechanism for the legal control function to work by checking with them when a legal judgment isnecessary, in order to contribute to compliance management.
2. System to ensure that the execution of duties by the Directors and employees conforms to laws, regulations
and the Articles of Incorporation• The Company is a company with a Board of Corporate Auditors. With legality audits by Corporate Auditors
as the basis of compliance management, the Company has constructed a framework for proactive andflexible business execution by strengthening the monitoring and advisory functions by Outside Directors
and clarifying responsibilities for business execution and delegating power as a result of adopting the
Executive Officer system. Based on this framework, the Company ensures the soundness and transparent
management.
• The Company established the "Code of Conduct for the Nippon Gas Group Officers and Employees" forofficers, employees, and others to ensure fair and proper management and a system to fulfill the social
responsibilities of companies.
• With regard to dealing with antisocial forces, the Group established a policy based on the Code of Conduct
for the Nippon Gas Group Officers and Employees which involves "taking a resolute stance against
antisocial forces and their organizations that adversely affect social order and safety and clearly rejecting
and eliminating involvement in such forces and organizations."• The Company established a system for internal control over financial reporting in cooperation with external
experts to ensure consistency with the Companies Act, the Financial Instruments and Exchange Act, andTokyo Stock Exchange regulations.
• To strengthen the compliance, the Company established an internal reporting system, the "Group Helpline”(with internal, external and Auditor’s contact points). The Company has established a system for the early
detection, avoidance, minimisation and prevention of recurrence of compliance violation risks, ensuringthat the content of reports is kept confidential, that the privacy of informants is protected and they are nottreated unfairly.
For the basic policy on whistle-blowing, refer to Article 12 (Relationships with Stakeholders) of the
Guidelines.
3. System for management of information on the execution of duties by the Directors• Information on important decisions in the execution of duties, financial information, compliance risk
information, etc. (including electromagnetic information): The Company appropriately manages said
information in accordance with internal rules and regulations, and maintains a system that allows relevant
parties to view said information in an appropriate manner.
• Information security: The Company has established the Basic Policy for Information Security of the Nippon
Gas Group. The Information Security Team (Chief Supervisor: Representative Director, Senior Managing
Executive Officer, Program leaders: Legal Department, General Manager, Information Technology
Department, General Manager) addresses issues in this area from a risk management perspective.
• Personal information protection: The Company has established a Personal Information Protection Policy
and internal regulations, ensuring a system for the appropriate and secure acquisition, storage, andmanagement of personal information.
• Information disclosure: The Company has established a Disclosure Policy and internal regulations(Information Disclosure Rules) for the disclosure of important information. The Information Disclosure
27

Committee, chaired by the Corporate Headquarters, General Manager, ensures proper, timely, and fair
information disclosure in accordance with the requirements of laws and regulations and the rules of stock
exchanges.
4. Regulations concerning the management of the risk of loss and other relevant systems• The Company identifies the significance of risks from the perspectives of frequency of occurrence andimpact on business, and prepares appropriate countermeasures in advance to minimize impact when losses
occur. The Company maintains awareness of its risks across the organization. Additionally, the Company
has established the Group Risk Management Committee to ensure appropriate responses from both
qualitative and quantitative perspectives, and manages risks in accordance with the Group Risk
Management Regulations. The Group Risk Management Committee reports on situations to theManagement Meeting and the Board of Directors as necessary. The Company constantly reviews theeffectiveness of risk management.
• In peacetime, the Group Risk Management Committee assesses risks of the Group and determines required
and sufficient response guidelines. It develops a system to reduce risks that should be controlled by ensuringthat the Officers’ and employees’ training is properly provided.
• In anticipation of large-scale disasters and other situations that may cause significant damage to its business,
the Company is working to develop a Business Continuity Management (BCM) system. The company isalso creating a Disaster Countermeasures Manual for readiness to emergencies.
• For the event of emergencies such as natural disasters, crimes, or unauthorized access to information
systems, the Company has established a system for promptly reporting the situation and setting up a
countermeasures headquarters to take necessary actions.
5. System to ensure that duties will be executed efficiently by the Directors• The Board of Directors: The Company makes a decision on important matters and supervises the executionof duties by holding every month.
• The Management Meeting: In order to ensure the efficient execution of duties, the Management Meeting
consisting of Executive Officers at the level of Deputy General Manager or above is held at least once amonth.
• A Group Executive Officers Meeting: It is attended by full-time Directors, full-time Corporate Auditors,
General Managers of branches and headquarters, and presidents of subsidiary companies is held every
month, to establish a system for timely reporting on basic and important matters related to businessexecution.
• Through the implementation of IT, the Company is promoting operational streamlining and organizational
downsizing.
• To ensure appropriate information sharing and communication between executives and employees, a systemfor promptly communicating management policies to employees. Under this system, meetings attended bymanagers and executives at the section manager level and above are held at least once a month to share
management strategies, business environment, and business progress.
*For outlines of each meeting body, please refer to 2. Matters Concerning Functions of Business Execution,
Auditing, and Supervision, Nomination and Remuneration Decisions (Overview of Current Corporate
Governance System) under II. Business Management Organization and Other Corporate Governance
Systems regarding Decision-making, Execution of Business, and Oversight above.
6. System to ensure the appropriateness of business operation of the corporate group comprising the Company
and its subsidiaries• System to report matters concerning the execution of duties by the Directors of subsidiaries to the Company- The Company established the Nippon Gas Group Company Management Regulations for the managementof subsidiaries, which require reporting to, and approval from the Company on important matters, as well
as regular sharing of business management information. The Company ensures the properness of operations
through a system for the efficient performance of duties by Directors of subsidiaries and a system for thecompliance with laws and regulations and the Articles of Incorporation by the performance of duties byDirectors and employees of subsidiaries.
- The Company established a system for reporting to the Company, such as prompt reporting to the Company
through a system of cooperation that includes subsidiaries in the event of an emergency.

28

- The audit office, which is responsible for the Company's internal audits, conducts audits of subsidiaries andthe Legal Department reviews internal control activities.
- The Company ensures the smooth sharing of information throughout the Group and to ensure theappropriateness of operations of the entire Group.
• Regulations concerning the management of the risk of loss of subsidiaries and other relevant system- The Company established the Group Risk Management Regulations and has built a system tocomprehensively manage the risks of the Group.
• System to ensure that duties will be executed efficiently by the Directors of the subsidiaries- The subsidiaries submit mid-term and annual business plans to the Company, and the Company manages
the performance of the subsidiaries on a consolidated basis.
• The Company is working to consolidate and rationalize administrative operations within the Group,
promote the appropriate assignment of human resources, and develop a system for the smooth execution ofbusiness operations.
7. Matters concerning an employee who should assist with the duties of Corporate Auditors and the employee’s
independence• If a Corporate Auditor decides to appoint an employee to assist with their duties, the Company shall work
to ensure the independence and the effectiveness of instructions of the employee by appropriately
determining the number and the position of the employee(s) and whether their service will be exclusive or
concurrent, and obtain consent from the Board of Corporate Auditors on the personnel transfer andevaluation of the employee(s).
8. Reporting system to the Corporate Auditors and system to ensure that audits will be conducted effectively
by the Corporate Auditors• System for the Directors and employees of the Company to report to the Corporate Auditors- The Company established a system to immediately report to the Corporate Auditor any fact that may causesignificant damage to the Company or any violation of the Articles of Incorporation, laws, or regulations.
- The Company established a Group Helpline (contact point for Corporate Auditors) to ensure theindependence and transparency from the management.
• System for the Officers and employees of subsidiaries or persons who received a report from them to reportto the Corporate Auditors of the parent company- The Company established a system under which Directors, employees, etc. of subsidiaries report to theCompany's Corporate Auditors any facts that they discover that may cause significant damage to theCompany or its subsidiaries. In addition, when requested by the Company's Corporate Auditors to reporton matters concerning the execution of business operations, Officers, Directors, employees, etc. of
subsidiaries shall promptly make appropriate reports. In addition, the Group's internal audit department
established a system to report the results of internal audits of subsidiaries to the Company's Corporate
Auditors.
• System to ensure that a person who made a report to the Corporate Auditors will not experience detrimental
treatment as a result- The Company shall establish internal regulations to the effect that officers and employees who made areport to the Corporate Auditors will not experience detrimental treatment as a result.
• Matters concerning the policy for the treatment of expenses or obligations arising from the execution ofduties by the Corporate Auditors- The Company shall secure a budget for audit expenses.
9．System to ensure the reliability and appropriateness of financial reporting• The Company regards ensuring the reliability and appropriateness of financial reporting as a criticalmanagement responsibility. The basic policy of the Company is to establish an appropriate internal control
system for the entire Group under the leadership of the Representative Directors.
• To ensure the reliability and appropriateness of financial reporting, the Audit Office and the Financial
Department verify on the status of development and operation of internal control systems and make anappropriate report to the Board of Directors and the Board of Corporate Auditors. In this way, the Company
has developed a system for the Board of Directors and the Board of Corporate Auditors to be able tocontinuously monitor the situation.

29

2. Basic Views on Measures for Eliminating Anti-Social Forces and Status of Development（1）Basic views on eliminating anti-social forces- With regard to dealing with antisocial forces, the Group established a policy based on the Code of Conduct
for the Nippon Gas Group Officers and Employees which involves "taking a resolute stance against
antisocial forces and their organizations that adversely affect social order and safety and clearly rejecting
and eliminating involvement in such forces and organizations."（2）Status of efforts for eliminating anti-social forces- The Company has no relationship with antisocial forces or related organizations that threaten the order andsafety of society. Furthermore, the Group firmly rejects any demands from them and maintains a policy of
not conducting any transactions with companies, organizations, or individuals that are associated with suchforces or related organizations. In the event that the Company receives undue demands from antisocial forces
or related groups, the Company, under the leadership of the Legal Department, in charge of the matters, works
closely with the police, law firms, etc., to ensure that the Company responds appropriately.

30

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

Not Adopted

Supplementary Explanation for Applicable Items

The Company abolished the corporate value enhancement plan (anti-takeover measures) at the 63rd General
Meeting of Shareholders held on June 28, 2017. Even after abolishing the plan, the Company shall takeappropriate measures based on the Financial Instruments and Exchange Act, the Companies Act and otherrelevant laws and regulations, including the efforts to secure time and information for the shareholders to
conduct an examination in such a way as requesting that a person who tries to conduct a large-scale purchaseof the Company’s shares to provide necessary and sufficient information for the shareholders to use appropriate
judgment regarding whether the large-scale purchase is appropriate and to disclose the opinions of theCompany’s Board of Directors.
2. Other Matters Concerning the Corporate Governance System―■The Corporate Governance System is as follows.

31

■Internal system for timely disclosure of corporate information is as follows.

1． Basic policy for the timely disclosure of corporate information
・ The Company’s basic policy is to disclose its corporate information based on the Financial Instruments andExchange Act and other relevant laws and regulations as well as the Securities Listing Regulations of the Tokyo
Stock Exchange, recognizing that timely, appropriate, and fairly information disclosure to the stakeholders is afundamental part of formulating a sound capital market.
・ For the handling of important information under insider trading regulations, which is subject to timely disclosure,
the Company established internal regulations (the Insider Trading Management Regulations) that manages
important facts under insider trading regulations and clarified matters to be observed regarding the managementof insider information in the Code of Conduct for the Nippon Gas Group Officers and Employees.
2． Internal systems for timely disclosure of corporate information
・ The Company established the Information Disclosure Committee (Chairman: Corporate Headquarters, General
Manager) to determine important information, the need for disclosure and disclosure methods. Corporate
Headquarters, General Manager is in charge of information on finance and accounting, and the Information
Disclosure Committee is in charge of the drafting and disclosure of specific content for other information to be
published according to its supervision.
・ The Company shall promptly follow procedures on the Timely Disclosure network (TDnet) of the Tokyo Stock
Exchange and will post disclosure information on its website.
32

(1) Information on corporate decisions
Information on corporate decisions shall be disclosed after the resolution of the Board of Directors or theManagement Meeting in accordance with the Regulations of Administrative Authority. In an emergency, it
shall be disclosed by obtaining approval from the Representative Directors, Chief Executive Officer.
(2) Information on occurrence of important matters
If important matters concerning the operation, business or property of the Company that could have a material
impact on the judgment of shareholders and investors on securities have occurred, they shall be actively
disclosed by the Chairman of the Information Disclosure Committee (Corporate Headquarters, General
Manager) after obtaining approval from the Representative Director, Chief Executive Officer.
(3) Financial and other disclosure information
Disclosure information on financial results shall be prepared by the Financial Department, and disclosed after
the resolution of the Board of Directors. In addition, Corporate Strategy/IR Department shall work to improve
the quality of communication with shareholders and investors by preparing supplementary materials forfinancial information.

33

Corporate Governance Guidelines

June 25, 2024

Nippon Gas Co., Ltd.

34

Chapter 1 General Provisions
Article 1
PurposeThe purpose of the Corporate Governance Guidelines (the “Guidelines”) is to specify the framework for andmanagement policies regarding corporate governance of Nippon Gas Co., Ltd. (the “Company”) and the Nippon
Gas Group (the “Group”) for the purpose of maintaining sustainable growth and realizing the improvement ofcorporate value over the medium- to long-term in accordance with the management philosophy of the Group.
Article 2
Management philosophy
The Group’s management philosophy is as described below.
(1) Contributing to Local Communities
Support lives that are more comfortable for our customers by guaranteeing safe, reliable and appropriately
priced energy with a small environmental footprint through supply methods optimized for local
communities, and contribute to environmental protection and disaster preparedness efforts in thosecommunities. Furthermore, as a member of local communities, we take an active role in improving theirvalue, and we believe that by fulfilling our tax obligations, we are also contributing to society.
(2) Aiming for Sustainable Corporate Growth
We believe that contributing to local communities and growing our customer base reinforce our businessfoundation, and we are working hard to improve long-term corporate value by ensuring reasonable profitsand making efficient investments. Furthermore, we are striving to improve shareholder value throughcontinual and stable dividends, accompanied by a strong internal control system.
(3) Holding Human Resources in High Regard
We believe that human resources, including our own employees, are crucial assets supporting ourcorporation. Operating in a manner that enables us to maximize the potential of our employees, so that we
can offer services that are tailor-made for our customers, is essential to sustainable corporate growth. The
happiness of our employees, business partners, and their families is the essential underpinning therein, andwe aim to further improve it through our business efforts.
Article 3
Fundamental concept regarding corporate governance
The Group believes that seeking to improve sustainable corporate value based on the management philosophy
described in the preceding article will build relationships of trust with and meet the expectations of shareholders,and investors, customers, business partners, employees, local communities and others (“Stakeholders”). Basedon its management philosophy, the Company seeks to interactively communicate with the Stakeholders and tobuild a corporate governance system that is effective as the basis for ensuring transparency of its management.
The Company believes that constructive dialogue with shareholders and investors is particularly important forenhancing corporate value over the medium- to long-term. Therefore, the Company strives to understand theperspectives of shareholders and investors and respond appropriately.

Chapter 2

Securing Rights and Equal Treatment of Shareholders

Article 4
General meeting of shareholders
The Company regards the general meeting of shareholders as the highest decision-making body and shallensure an adequate period for shareholders to exercise their rights and establish an environment in whichshareholders can appropriately exercise their voting rights. Moreover, considering that meeting of shareholders
is an opportunity for constructive dialogue with shareholders, the Company shall hold general meetings ofshareholders at a location with good access, by avoiding as much as possible the days when general meetingsof shareholders of other listed companies are concentrated. In the event that the Board of Directors determinesthat it is not appropriate, in light of the interests of shareholders, to hold a general meeting of shareholders at
a designated venue due to the spread of an infectious disease or the occurrence of a natural disaster, the Boardof Directors may hold a general meeting of shareholders without a designated venue. The Company shalldisclose reference documents and other materials on its web pages. For shareholders who are unable to attend
a general meeting of shareholders, it shall adopt the method of sending voting instructions forms to suchshareholders and the method of using the Internet.
35

2.

3.
4.

2.

If a shareholder indicates in advance his/her intention to exercise voting rights of shares held under the nameof a trust and banking company, etc., the Company shall discuss the treatment of the matter with the trust andbanking company, etc. Diverse exercise of voting rights based on instructions from substantial shareholders ismade available by the Company.
Taking into consideration the ratio of institutional investors and overseas investors in its shareholders, theCompany shall introduce a platform for electronic exercise of voting rights and disclose the English version
of notice of convocation of general meeting of shareholders (reference materials) on its web pages.
In the event that a substantial number of negative votes has been cast at a general meeting of shareholders
against a proposal by the Company, it shall analyze the reasons for the opposing votes from the substantial
number of shareholders at a meeting of the Board of Directors held after the close of the general meeting ofshareholders and take measures for response, including referring to policies of voting advisory companies, etc.
Article 5Securing equal treatment of shareholders
The Company shall hold financial results briefings no less than four times a year and business strategy
meetings no less than twice a year, in principle, and with regards to business strategy meetings, post the videoof the briefings on its web pages for viewing by all shareholders equally. Moreover, regarding rights ofminority shareholders prescribed by the Companies Act, the Company shall give due consideration in
facilitating exercise of minority shareholder rights by stipulating the method of exercising their rights in its
Share Handling Regulations.
In order to substantially secure equal treatment of all shareholders and contribute to appropriate exercise of
their rights, the Company shall implement necessary information disclosure as appropriate by providing
documents whose disclosure is legally required and by posting information, including English translation, on
its web pages and integrated reports.
Article 6
Capital policies
Regarding capital policies, which are targeted at raising the optimum amount of capital that will maximize theperformance of shareholders’ equity, the Company shall raise capital based on the stage of its business. The
Company shall also increase the performance of shareholders’ equity by allocating cash generated from its
business to investments to enhance its corporate value in the medium- to long-term and by returning it toshareholders to strengthen shareholder returns without holding unnecessary shareholders’ equity.
The Company shall provide explanations of its capital policies through individual investor relations interviews,
financial results briefings held twice a year in principle, business strategy meetings, integrated reports andother means.
Article 7
Cross shareholding
The Company has a policy of not holding its cross shareholdings, in principle, and cross-holds shares forstrategic holding purposes only if doing so is deemed to be consistent with the Group's medium- to long-term
strategies.
Article 8
Protection of shareholders’ rights
When the Company implements capital policies that involve changes in control or significant dilution, it shallfully consider the interests of existing shareholders, and the Board of Directors shall discuss and decide upon
the necessity of such policies from the perspective of shareholders. The Company shall provide sufficient
explanations to shareholders to demonstrate that these capital policies contribute to the enhancement of theCompany’s corporate value.
Chapter 3

Relationships with Stakeholders

Article 9
Code of conduct
The Company established the Code of Conduct for the Nippon Gas Group Officers and Employees forstakeholders to realize the Company’s management philosophy. To foster a corporate culture and climate inwhich the rights of stakeholders are respected, each of the Officers and employees shall recognize theimportance of conducting sound business activities in compliance with laws, regulations and social norms.
The Company believes that this business attitude will build sound trade relations with stakeholders as well as
contribute to the development of society and lead to the earning of a high degree of trust and recognition fromsociety through the Group’s business activities.

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Article 10
Related party transactions
In planning a transaction with Officers, major shareholders or other related parties, the Company shall observe
the Company Act, other relevant laws and regulations, the Regulations of the Board of Directors and otherinternal rules, and obtain the approval of the Board of Directors, as necessary. The approval of the Board of
Directors shall be subject to confirmation of the appropriateness and economic rationality of the contemplatedtransaction, including whether the content thereof is based on general trading conditions.
2. When a transaction approved by the Board of Directors is executed, the content thereof shall be reported at a
meeting of the Board of Directors in accordance with relevant laws and regulations, and internal rules. The
Company established a monitoring system for preventing the exacerbation of concerns that the interests of theCompany and common interests of shareholders would be impaired.
Article 11
Performance of functions as asset owner of corporate pensions
The Company is not considered an asset owner of corporate pensions because the Company has not introduceda corporate pension system.
Article 12
Relationships with Stakeholders
The Group considers that amicable relationships with shareholders are important for sustained growth of acorporation and this concept is stipulated in the Group’s management philosophy.
2. The Group believes that the active roles of diverse human resources can be a significant engine for a
corporation’s growth.
3. The Group shall establish the Group Help Line (internal contact: Audit Office, external contact: a law firm,
corporate auditor’s contact: a Full-time Corporate Auditors), an internal whistle-blowing system, by
establishing the Group Helpline Regulations. Further, the Company shall establish a system for early detection,
prevention of recurrence, and minimization of risks, and conduct compliance-focused management, giving
utmost consideration to the privacy of whistleblowers, including officers and employees of the Group, andexplicitly stipulating in its internal rules that the content of whistleblower reports shall be kept confidential
and that dismissal or any other disadvantageous treatment of whistleblowers shall be prohibited.

Chapter 4

Information Disclosure

Article 13
Information disclosure
Considering that disclosure of important financial and non-financial information is necessary for obtaining theappropriate understanding of Stakeholders, the Company shall implement appropriate information disclosure
pursuant to the Companies Act, the Financial Instruments and Exchange Act, other relevant laws andregulations and the rules prescribed by the Tokyo Stock Exchange, positively disclose in information provision,other than disclosure required under laws and regulations, and ensure that information provided by theCompany is clear and highly useful for all the stakeholders.

Chapter 52.

3.

Corporate Governance System

Article 14
Institutional design
The Company regards the enhancement of transparent management, the realization of Stakeholder satisfaction
through the fulfillment of its management philosophy and the permanent improvement of corporate value asimportant management tasks.
The Company has elected to operate as a company with a board of corporate auditors. It shall establish an
optimized governance system that is highly transparent to Stakeholders by ensuring that the Board of Directors,
which includes no less than two Outside Directors, makes final decisions regarding important issues througheffective use of Corporate Auditors’ functions based on close collaboration with the Board of Corporate
Auditors, which includes no less than two Outside Corporate Auditors, and enhancing the function to supervise
management.
In addition to the Board of Directors, the Company shall also establish Management Meeting to which theauthority for the execution of business realizing the content of its resolutions is to be delegated. Further, as acomplementary mechanism to the Board of Directors, the Company shall establish the NR&E Committee asa voluntary advisory committee. Based on these systems, the Company shall realize the sustained corporate
value improvement through the evolution of its offensive and defensive management and by quickly and37

flexibly responding to changes in the business environment, with the Group working together as one.

2.

3.
4.

5.

6.
7.

2.
3.

2.

3.

Article 15
Roles and responsibilities of the Board of Directors
The Board of Directors comprises Internal and Outside Directors, and it shall be an appropriate size thatenables prompt decision making and supervision.
Matters to be referred for discussion in meetings of the Board of Directors shall be stipulated in the Regulationsof the Board of Directors. Moreover, the Company advances the transfer of authority to Management Meetingand departments responsible in accordance with the Regulations of Management Meeting and the Regulationsof Administrative Authority in order to expedite decision making in the execution of business. The Board of
Directors oversees the effectiveness of overall business operations in order to promote efficient businessexecution.
The Board of Directors shall communicate major directions in corporate strategies and management plans, etc.
based on the management philosophy and provide an environment that supports the management team toassume appropriate levels of risk.
The Board of Directors shall formulate a management plan according to changes in the business environmentand shall confirm the degree of attainment of the said plan. If there is a shortfall, its causes and corrective
measures shall be disclosed in reports, etc. and reflected in the management plan for the next and following
year.
In terms of internal control, the Company has established the Internal Control System Committee and its
subordinate organs, which include the Group Compliance Committee, the Group Risk Management
Committee, the Information Disclosure Committee, and the Internal Control Working Group, putting in placea structure for the execution of business in an efficient manner. The Internal Control Working Group overseesinternal control over financial reporting and appoints its members to assess the development and operation ofGroup-wide control and of each business process. Internal control reports based on the Financial Instruments
and Exchange Act are referred to the Board of Directors, which uses them to confirm the effectiveness ofinternal control. The Board of Directors evaluates the operation of the internal control system and reviews thesystem.
The Board of Directors shall formulate the Company's final policy on sustainability initiatives as discussed by
the NR&E Committee and supervise the execution of operations in accordance with such policy.
To implement the matters described in the preceding paragraphs, the Board of Directors shall have a structurewith an optimal scale that consists of members who have extensive capabilities in a balanced way.
Article 16
Operation of the Board of Directors
A meeting of the Board of Directors shall be conducted by a chair in such a manner that promotes and ensures
free, vigorous and constructive discussion about issues and questions presented by the Outside Directors or
Outside Corporate Auditors.
The secretariat of the Board of Directors shall deliver meeting materials to the Board members in advance,and provide other information as necessary, upon request from Outside Directors or Outside Corporate
Auditors.
Schedules for meetings of the Board of Directors shall be determined in an annual plan.
Article 17
Roles of Corporate Auditors and the Board of Corporate Auditors
Based on the recognition of their fiduciary responsibility to shareholders and with the aim for continuous
improvement of corporate value of the Company, Corporate Auditors shall audit, as an independent organ, theDirectors’ performance of their duties.
To ensure fair decision making, Corporate Auditors shall participate in meetings of the Board of Directors,
examine contents of agenda and provide advice for facilitating discussions. Moreover, Corporate Auditors
shall provide information to and exchange opinions with Outside Directors at meetings of the Board of
Directors and through other opportunities for the purpose of contributing to Outside Directors’ efforts to collectinformation.
Corporate Auditors shall implement the following measures for improving audit functions:(1) Exchange of information, etc. in collaboration with the Audit Office and the accounting auditor and byholding Three-Way Auditing; and(2) Full-time Corporate Auditors shall conduct audits of lawfulness of the Company’s business operations
by means of participation and declaration of opinions in the Management Meeting, Internal Control
System Committee and other important meetings, on-site audits of the Company’s business offices,
38

4.

5.
6.

exchange of opinions with Representative Directors, interviews with Executive Officers and division
managers and inspection of important management documents and through the use of various othermethods, according to audit policies and plans determined by the Board of Corporate Auditors.
The Board of Corporate Auditors shall consist of all Corporate Auditors including the Outside Corporate
Auditors and it shall prepare audit reports. In addition, the Board shall determine in accordance with laws andregulations and the Articles of Incorporation, etc. various matters, including audit policies and methods ofinvestigating the status of the Company’s business operations and financial affairs and other mattersconcerning the Corporate Auditors’ performance of their duties.
The Company shall appoint one or more Corporate Auditors who have appropriate knowledge and insight
regarding financial affairs and accounting.
The Board of Corporate Auditors shall seek to collaborate with the Audit Office and managers of eachdepartment in conducting audits and with accounting auditors’ firms to hold regular discussions.
Article 18
Responsibilities and obligations of Directors and Corporate Auditors
Recognizing their fiduciary responsibility to shareholders, Directors and Corporate Auditors shall holddialogues with Stakeholders through various opportunities and conduct themselves based on the perspectivethat improvements in corporate value will contribute to the interests of shareholders.
Article 19
Roles and responsibilities and obligations of Independent Outside Directors
Based on their professional knowledge, Independent Outside Directors of the Company shall participate indiscussions about agenda submitted to the Board of Directors, including those regarding management policies,
investment, human resources (appointment and dismissal of top-level executives) and approval of conflict-ofinterest transactions, express opinions and engage in voting, thereby conducting supervision over important
decision making, etc. of the Board of Directors. Moreover, Independent Outside Directors shall monitor any
conflict of interests between the Company and the management team or controlling shareholders, etc. andexpress their opinions regarding agenda, etc. involving minority shareholders, etc., from their standpoint
independent from the management team.

2.
3.
4.

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3.

Article 20
Accounting auditor
The Board of Corporate Auditors shall formulate criteria for the selection of accounting auditors in theRegulations of the Board of Corporate Auditors and confirm the independence of the accounting auditor bytaking into consideration the opinions of Outside Corporate Auditors.
The Board of Corporate Auditors shall endeavor to secure audit schedules and systems and ensure theimplementation of appropriate audits by the accounting auditor.
The accounting auditor, the Board of Corporate Auditors and Audit Office shall hold Three-Way Auditing
regularly (quarterly, in principle). Moreover, at the request of the accounting auditor, interviews shall be held,
as appropriate.
In the event that the accounting auditor finds fraud, etc., it shall report to the Board of Corporate Auditors. The
Company shall establish a system under which opinions of lawyers shall be sought depending on theimportance of these issues and such events shall be disclosed promptly as necessary.
Article 21
Policies and procedures for appointment and dismissal of Directors, etc. and nomination ofcandidates for Directors and Corporate Auditors
Candidates for Directors, man Executive Officers (“Directors, etc.”) and Corporate Auditors shall be
nominated from among those persons, regardless of gender, age and nationality, who can fully carry out theirduties by sufficiently taking into consideration each candidate’s personality, insight, etc. All Executive Officers
shall be mandate-based Executive Officers.
The nomination and dismissal of candidates for Directors and Executive Officers shall be proposed to theBoard of Directors by the NR&E Committee, which is an advisory body to the Board of Directors, following
discussion, and the Board of Directors shall approve the proposal. The nomination and dismissal of candidates
for Corporate Auditors shall be proposed to the Board of Corporate Auditors by the NR&E Committee, after
deliberation, and upon obtaining the consent of the Board of Corporate Auditors, the Board of Directors shallapprove the proposal. Proposals for the appointment of candidates for Directors and Corporate Auditors andthe dismissal of Directors and Corporate Auditors which have been approved by the Board of Directors shallbe submitted to a general meeting of shareholders.
Criteria for assessing the independence of outside Officers of the Company shall be governed by the
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4.
5.

independence standards prescribed by Tokyo Stock Exchange.
At least two Independent Outside Directors shall be appointed as part of the members of the Board of Directors.
Career backgrounds, etc. of each Director and Corporate Auditor and reasons for the election of candidates for
Outside and Internal Directors and Corporate Auditors shall be disclosed in reference materials attached to
notices of general meeting of shareholders and integrated reports, etc. Reference materials attached to noticesof general meeting of shareholders shall be posted under IR News on the Company’s web pages. In addition,
career summaries, etc. of mandate-based Executive Officers shall be described in integrated reports.
Article 22
Policies and procedures for determining remuneration for Directors, etc.
Performance-linked portions are included in the monthly compensation of Directors, etc. Remuneration for
Directors, etc. is determined by the Representative Director, Chief Executive Officer and the Officer in chargeof the Human Resource Department, who receive a mandate from the Board of Directors based on theevaluation of independent outside evaluators with deep insights into management, after receiving the approval
from the NR&E Committee. Moreover, the Company has introduced a BIP (Board Incentive Plan) trust system
under which stock-based compensation comprises a certain ratio of remuneration with the aim that the
Directors, etc. share common interest with shareholders over the medium- to long-term.

Chapter 6

Preconditions for Ensuring Effectiveness of the Board of Directors and the Board of Corporate
Auditors

Article 23
Concurrent holding of positions
The status of concurrent holding of important positions by Directors and Corporate Auditors and by candidates
for Directors and Corporate Auditors shall be disclosed in notices of general meeting of shareholders andsecurities reports.
Article 24
Assessment of effectiveness of the Board of Directors
The Company shall assess the effectiveness of the Board of Directors according to the following process anddisclose a summary of the results.
- Each Director of the Company shall assess the performance of his/her own duties, etc. every fiscal year andreceive an appraisal upon an interview with an independent third-party expert (member of evaluationcommittee) based on the self-assessment.
・ With the involvement of a third party, a questionnaire shall be administered to members of the Board of
Directors regarding items such as (1) the structure and operation of the Board of Directors, (2) strategy andimplementation, (3) risk and crisis management, (4) corporate ethics, and (5) dialogue with shareholders.
・ Based on each Director’s self-assessment of their performance and the results of the above questionnaire,the overall effectiveness of the Board of Directors shall be analyzed and assessed after obtaining analysis
results from a third-party financial institution.

Chapter 7

2.
3.

Obtainment of Information and Support System

Article 25
Access to internal information by Directors and Corporate Auditors
Directors and Corporate Auditors may obtain information regarding the Company as necessary.
The contact point for requests for documents from Outside Directors and Outside Corporate Auditors shall be
the secretariats of the Board of Directors and the Board of Corporate Auditors.
The Company shall establish a system to ensure that Outside Directors, Corporate Auditors or the Board of
Corporate Auditors may seek advice from outside specialists at the expense of the Company when it is deemednecessary for the performance of their duties.
Article 26
Policy for training of Directors and Corporate Auditors
The Company has set the rule that a Director shall acquire information, knowledge and insight required as an
Officer of the Company by utilizing external training, etc. The Company shall support the training by bearing
the training cost. In addition, compliance training sessions shall be given to Directors and Corporate Auditors
by a corporate lawyer at least once a year. Moreover, several Directors shall be dispatched to a higher-levelspecialized training institution each year with the aim of developing their competencies for becoming membersof the management team in the future. Further, in order to help Outside Directors and Outside Corporate
40

Auditors to fully perform their functions, the Company shall provide, on a continuous basis, information
regarding the status of the business, financial affairs, organizations, etc. of the Group to respective Outside
Directors and Outside Corporate Auditors according to their job functions. Corporate Auditors of the Company
shall become members of Japan Audit & Supervisory Board Members Association and participate in various
training sessions held by the Association.

Chapter 82.

3.

Policy on Constructive Dialogue with Shareholders

Article 27
Dialogue with shareholders
The Company recognizes the importance of constructive dialogue with shareholders outside of the general
meeting of shareholders, and shall create various opportunities for such dialogues. According to theCompany’s basic policies, Representative Directors and other Officers shall listen to shareholders, provide
easy-to-understand, explicit explanations of the management policy and endeavor to appropriately handle
dialogue with shareholders.
Senior Managing Executive Officer, Corporate Headquarters, General Manager, shall be responsible forreceiving requests for interviews from shareholders, investors, etc. and shall make arrangements so that
Representative Director, Chief Executive Officer and other Officers positively respond to such requests. In
addition, the Company established a section dedicated to investor relations within Corporate Headquarters inorder to provide support regarding financial affairs, business, legal affairs, etc., including those of affiliatedcompanies. In addition to individual interviews, the Company shall hold financial results briefings four times
a year and business strategy meetings two times a year and post the video of the briefings under IR News on
its web pages. Moreover, it shall invite investors to hold IR events at random times. Further, useful opinions
and requests from shareholders and investors acquired through its investor relations activities and management
issues shall be appropriately reported to the management team, the Board of Directors, etc. to use them forbusiness improvement.
In implementing these initiatives, the Company shall not transmit any unpublished important facts toshareholders in dialogues with them from the perspective of complying with insider trading regulations, etc.
Article 28
Formulation and announcement of management strategies and plans
In light of changes in the world such as the deregulation of energy and diversifying needs, the Company shall
explicitly disclose its basic strategies based on expected capital costs. Basic strategies and earnings plans forthe medium- to long-term based on the basic strategies shall be disclosed in the Company’s integrated reports,
etc.

Chapter 9

Establishment, revision and abolition

Article 29
The establishment, revision and abolition of these Guidelines shall require a resolution of
the Board of Directors.
Established on January 27, 2016
Revised on June 28, 2017
Revised on June 28, 2018
Revised on December 13, 2018
Revised on June 24, 2020
Revised on June 24, 2021
Revised on December 2, 2021
Revised on June 22, 2022
Revised on June 27, 2023
Final revision on June 25, 2024

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