Corporate Governance
AIN HOLDINGS INC.
Last Modified: July 31, 2024
AIN HOLDINGS INC.
Kiichi Otani, President and Representative Director
Contact: Corporate Planning Division (Public and Investor Relations)
TEL: +81-3-5333-1812
Securities Code: 9627
https://www.ainj.co.jp/corporate/

The state of corporate governance of AIN Holdings, Inc. (the “Company”) is described below.

I. Basic Views on Corporate Governance, Capital
Structure, Corporate Attributes and Other Basic
Information
1. Basic Views Updated
Dispensing pharmacy and cosmetic and drug store are the key business areas being developed by the AIN Group (theGroup). As this business is characterized by responsibilities for people’s health, we recognize it is indispensable tocontinue the sound and transparent business activities that prioritize compliance.
To achieve this goal, we have adopted theCompany with Corporate Auditors to oversee not only important decisionmaking in the management and the business execution, but also general corporate management.
The Internal Audit Office which is independent from business management conducts internal audits covering all
management activities related to governance processes, risk management and control, and the Group serves to ensure
thorough compliance with relevant laws, internal rules and regulations.
In addition to the above, as part of our efforts to enhance corporate governance, we have formed a Compliance
Committee for the purpose of establishing, promoting, and embedding compliance system, a Risk Management
Committee for realizing comprehensive risk management from a group-wide perspective, and a Sustainability
Committee for the purpose of establishing, promoting, and embedding the Group's sustainability management system.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]
The Company complies with all principles of the Corporate Governance Code.

[Disclosure Based on the Principles of the Corporate Governance Code] Updated[Principle 1.4 Cross-shareholdings]
The Company holds shares that are expected to have synergistic effects on business alliances related to our businessand maintenance and enhancement of business transactions, and shares that are necessary for maintaining
relationships with local communities.
According to its policy, the Company in principle holds and maintains the cross-shareholdings which account for 5%
or less of the total assets recorded on the consolidated balance sheet, and if the total amount of shares exceeds such
percentage, the Company will promptly consider selling the shares.
In addition, the Company will examine at the Board of Directors whether the purpose of cross-shareholding isappropriate, whether the benefits and risks from each holding cover the Company’s cost of capital, and whether there
is any other effective use of funds, and decide whether to continue holding shares or reducing shares by selling them.
We do not uniformly judge whether to exercise the voting rights as to their cross-shareholdings, but consider anddetermine each proposal from the viewpoint of improving corporate value and enhancing shareholder returns byemphasizing dialogue with companies into which the Company makes investment.
[Principle 1.7 Related party transactions]
The Rules of the Board of Directors provide that the approval of the Board of Directors is required for conducting
transactions with any of the directors. In addition, in order to confirm conflicts of interest transactions by officers of
the Group, the Company regularly confirms with each officer whether the existence or nonexistence and the content oftransactions between officers of the Group and their related parties and the Group.
[Supplementary Principle 2.4.1 Ensuring diversity in promotion of mid-career hires, etc.]
The Company is actively putting in place various measures and systems such as performance evaluation systems andframeworks to support the development of different career paths, regardless of gender, age, nationality, backgroundand other attributes.
The Company will continue to improve systems and working environments and support career development byselecting managerial candidates from a wider a pool of employees and by providing them with opportunities in newroles and divisions.

With respect to promoting female employees to managerial positions, the Company is accelerating efforts to overhaul
the Group’s corporate culture. By fiscal 2026, ending April 2026, the Company aims to increase ratio of female
directors to at least one-third and managerial positions to 40%. As of April 2024, women accounted for 36.4% of theCompany’s directors and 36.8% of managerial positions.
With respect to promoting non-Japanese employees, the Company has not set measurable targets, as almost all theGroup’s business operations are conducted in Japan.
The Company has also not set measurable targets for mid-career hires in managerial roles, as the Group’s
requirements for new technologies and skills vary due to changes in the external environment and other factors.
Information about the Company’s diversity initiatives is disclosed on the website.
Diversity and inclusion: https://www.ainj.co.jp/corporate/sustainability/social/employees/diversity.html (Japanese
only)[Principle 2.6 Roles of corporate pension funds as asset owners]
The Personnel Department and Finance Department of the Company, which coordinate with each other regarding
management of corporate pension funds, ensure the appropriateness of the management of corporate pension funds andcheck the soundness of pension funds management in general. In addition, persons in charge of pension funds
management participate in various seminars related to pension funds to improve their skills.
[Principle 3.1 Full disclosure](1) Company objectives (e.g., business principles), business strategies and business plans
The Company objectives and mid-to long-term business strategies are made available on the Company’s website andin the financial results briefing materials.
Group principles: https://www.ainj.co.jp/corporate/english/about/principle.html
Financial results briefing materials: https://www.ainj.co.jp/corporate/english/ir-library.html(2) Basic views and guidelines on corporate governance
These are provided in this Report “I-1 Basic Views.”(3) Board policies and procedures in determining the remuneration of the senior management and directors by the
Board of Directors
The remuneration consists of monthly remuneration, bonuses and non-monetary remuneration. Bonuses are
determined after comprehensive consideration of consolidated operating income and ROE for each period and value
not directly manifested by financial value including such as contribution to environmental and social issues in eachperiod, as well as dividends, balance with employee bonuses, trends of other companies in the same industry, and past
payment history.
The specific details for amounts of remuneration for each individual is commissioned to the President and Representative
Director within the scope of determined parameters by resolution of the Board of Directors after the Nomination andRemuneration Committee prepares a draft of the range of monthly remuneration for each position, the content of evaluationof performance related to bonuses, and the amount of non-monetary remuneration for each position.
The majority of the Nomination and Remuneration Committee members are independent
outside directors with the aim of enhancing the fairness, transparency and objectivity of proceedings related to thedetermination of the amount of remuneration for directors.
(4) Board policies and procedures in the appointment/dismissal of the senior management and the nomination of
directors and corporate auditors’ candidates by the Board of Directors
Candidates of the senior management and directors are comprehensively appointed/dismissed or nominated on thebasis that they are capable of making accurate and prompt decisions and that each of them achieves popularity andensures thorough compliance with laws and regulations and corporate ethics by taking into account the balance
between knowledge, experience and abilities among the senior management and the Board of Directors as a whole.
In addition, we have established a Nomination and Remuneration Committee, the majority of whose members are
independent outside directors with the aim of enhancing the fairness, transparency and objectivity of proceedings
related to the appointment/dismissal of directors. The appointment/dismissal of directors will be determined after
deliberation by the Nomination and Remuneration Committee
Candidates of corporate auditors are appointed from the comprehensive viewpoint of placing the right person in theright place, while ensuring balance of various perspectives between knowledge on financing and accounting,knowledge on the Company’s business and corporate management.
Based on the above policy, directors and corporate auditors are decided by resolution of the Board of Directors.
(5) Explanation on individual appointment/dismissal of the senior management and appointment and the nominationof individual directors and corporate auditors’ candidates
Reasons for individual appointment/dismissal and nomination in the appointment/dismissal of officers and thenomination of directors’ candidates are disclosed in the Notice of Convocation of the General Meeting of
Shareholders, etc[Supplementary Principle 3.1.3 Initiatives on sustainability, etc.]
After organizing our management issues, we identify materiality and disclose information about sustainability andinformation based on TCFD recommendations on our website. We also disclose information on human capital andother initiatives along with our management strategy.
Materiality (Material issues): https://www.ainj.co.jp/corporate/english/sustainability/about/materiality.html
Sustainability: https://www.ainj.co.jp/corporate/english/sustainability/
Responding to climate change issues (Disclosure based on the TCFD recommendations):
https://www.ainj.co.jp/corporate/english/sustainability/environment.html#climate-change
For Individual Investors: https://www.ainj.co.jp/corporate/ir/stockholder/#profile (Japanese only)[Supplemental Principle 4.1.1 Roles and responsibilities of the Board]
The Board of Directors establishes the Rules of the Board of Directors and other internal regulations to clarify mattersthat the Board of Directors should make decisions and those that the management should do.
The Board of Directors decides whether decision-making authority on matters other than execution of importantbusiness operations is granted to the management in light of the size and nature of the transaction, and such decision isprovided in internal regulations.
[Principle 4.9 Independence standards and qualification for independent outside directors]
When appointing candidates for independent outside directors, the Board of Directors prioritizes not only externalrequirements under the Companies Act but also their abundant experience and extensive knowledge in the company
management. Regarding the independence of outside directors, we make assessments in accordance with the independence
standards established by the Tokyo Stock Exchange and "Independence Criteria for outside directors and outside corporate
auditors" set by the Company. The Company’s Independence Criteria is as follows:An outside director and/or an outside corporate auditor of the Company (hereinafter referred to as the “outside officer”) will
be determined as sufficiently independent from the Company if the said outside officer satisfies the requirements set forth
below:
1. Presently or at any time within the past ten years, the person has never been an executing person of the Company ora consolidated subsidiary (hereinafter referred to as the “AIN Group.”)
2. Presently or at any time within the past five years, the person has not fallen under any of the following items:(1) A person who directly or indirectly holds 10% or more of voting rights of the Company, or its executing person;(2) A person of a company of which the AIN Group holds directly or indirectly 10% or more of the total voting rights,
or its executing person;(3) A counterparty which has transactions principally with the AIN Group (total amount of transactions with the AINGroup exceeding 2% of annual consolidated sales of the party), or its executing person;(4) A principal counterparty of the AIN Group (total amount of transactions with the party exceeding 2% of annual
consolidated sales of the AIN Group), or its executing person;(5) A consultant, accounting professional or legal professional who has been paid by the AIN Group a large amount ofmoney exceeding the greater of 10 million yen or 2% of the gross income of the person or other assets in addition to
the remuneration for directors. (in the event that the consultant, accounting professional or legal professional is anorganization such as an artificial person or association, a person who belongs to such organization is included);(6) A person/organization who receives a donation of a large amount of money exceeding the greater of 10 million
yen or 30% of the gross expense of the person/organization from the AIN Group, or an executive person;(7) A person who is a major lender of the AIN Group (total amount of borrowings from the person exceeding 2% of
total consolidated assets of the AIN Group), or its executing person;(8) A person who belongs to auditing firm, which is an accounting auditor of the Company;(9) An executing person in other company of which the executing person of the Company is an outside officer of theother company
3. If an executing person of the Company or a person listed Clause 2 of this criteria is correspond to an important person(director except outside director, corporate auditor except outside corporate auditor, executive officer, department manager
and higher management grades), a person is not a spouse of, relative within the second degree of relationship with said
person.
[Principle 4.10.1 Establishment of advisory committees with independent outside directors in key roles]
To enhance fairness, transparency and objectivity in processes for the appointment/dismissal of directors anddetermining remuneration for directors, the Company has established a non-mandatory Nomination and Remuneration
Committee as an advisory body for the Board of Directors. The committee discusses succession plans, director andcorporate auditor remuneration systems and other matters. The Nomination and Remuneration Committee has asystem in which a majority of its members are independent outside directors to ensure their independence and toenable them to provide accurate advice and recommendations.
[Supplementary Principle 4.11.1 Policy on the Board of Directors’ balance of knowledge, experience and skills,
diversity and size]
When appointing directors, the Board of Directors endeavors to have a view on the appropriate balance covering
every function and every business department of a company, the right person in the right place for prompt andappropriate decision-making, and diversity as a whole.
The Company currently appoints eleven directors including outside directors, and this is considered to be an
appropriate size for prompt and appropriate decision-making. Policies and procedures are described in Principle
3.1(4).
The skills matrix for the Board of Directors is disclosed in the Notice of Convocation of the General Meeting of
Shareholders and on the Company’s website, etc.
IR Library : https://www.ainj.co.jp/corporate/english/ir-library.html
Corporate Governance Skill matrix: https://www.ainj.co.jp/corporate/english/governance.html[Supplemental Principle 4.11.2 Concurrent roles at other listed companies held by directors and corporate auditors]
Important concurrent posts of each director and corporate auditor, including those at other listed companies, aredisclosed in the “Status on Corporate Officers” in the business report (Notice of Convocation of the General Meetingof Shareholders), and “Status on Officers” in the securities report.
[Supplementary Principle 4.11.3 Ensuring the overall effectiveness of the Board of Directors]
For purposes of enhancing effectiveness of the Board of Directors, the Board of Directors annually conducts a self-assessment of 17 items in a questionnaire for directors on a five-point scale (5: Very satisfactory, 4: Satisfactory, 3:
Average, 2: Not very satisfactory, 1: Not satisfactory) , and corporate auditors also evaluate the Board using the samequestionnaire. As for the evaluation for the fiscal year ended April 30, 2024, each item in the questionnaire forinternal directors, outside directors and corporate auditors is evaluated at “3: Average” or more, and accordingly, theCompany analyzes and evaluates that the Board of Directors functions effectively in general. However, in order tofurther stimulate discussion at the management level, the company recognize that it is expected to devise a more
understandable way of organizing the issues and explaining methods and materials.
[Supplementary Principle 4.14.2 Training policy for directors and corporate auditors]
The Company appoints directors and corporate auditors who fully perform the required roles and responsibilities(including legal responsibilities) and are familiar with the Company’s business, finance and organization, andprovides them with a continuing opportunity of training.
The Company gives directors opportunities to attend lectures by internal and external lecturers regarding theCompanies Act and the circumstances of the times and participate in external seminars, aiming to acquire legal
knowledge and promote understanding of the roles and responsibilities of directors.
The Company also gives corporate auditors opportunities to attend lectures by internal and external lecturers andparticipate in external seminars in order to promote the acquisition of necessary knowledge and the understanding ofroles and responsibilities.
The Company bears the expenses for such training.
[Principle 5.1 Dialogue with shareholders]
Directors in charge of investor relations (IR) and shareholder relations (SR), and the Corporate Planning Division
oversee dialogue with shareholders and investors, and are actively implementing such dialogue through a variety of
initiatives including financial results briefings. Internal related departments that support dialogue have established asystem to realize constructive dialogue by coordinating with each other, such as planning opportunities of dialogue
and sharing necessary information.
Measures to promote opportunities for dialogue include financial results briefings for investors which are explained by
the representative director and the relevant directors and explanations for individual investors. We will further
enhance opportunities for dialogue based on the opinions and requests of shareholders and investors that we havegained through such opportunities.
Opinions and requests that we have obtained through dialogue are relayed to the management and related departments
as necessary to share information.
[Action to implement management that is conscious of cost of capital and stock price]
The Company has not formulated a medium-term management plan at this time.
However, we accurately grasp the long-term target level considering the cost of capital using the cost of equity and WACC.
Through daily SR and IR activities, we strive to explain the qualitative and quantitative basis for the profitability, capitaland human resource investment in both dispensing pharmacy business and cosmetic and drug store business in order toachieve the target.
[Status of dialogue with shareholders]
The ditrctors in charge of SR and IR, and the Corporate Planning Division oversee other departments related to SR and IR
activities, such as Accounting Department, Personnel Department , Administrative Department, and Finance Department,
and ensure daily coordination among these departments.
The Company semiannually holds financial results briefings for analysts and institutional investors, at which therepresentative director and the dirctors in charge of IR provide explanations, and actively gives IR interviews at the
Corporate Planning Division such as telephone interviews and small meetings for investors. The Company also considers
conducting overseas IR activities as appropriate, in light of demand from overseas investors and overseas conditions.
The period prior to the announcement of financial results is a silent period during which dialogue with shareholders andinvestors is restricted and internal information management is strictly enforced.

2. Capital Structure
Foreign shareholding ratio

30% or more

[Status of Major Shareholders] Updated
Name / Company name

Number ofshares owned

Percentage(%)

Kiichi Otani

3,239,704

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

3,116,100

9.17
8.82

Seven & i Holdings Co., Ltd.

2,750,000

7.78

OASIS JAPAN STRATEGIC FUND LTD.

2,633,282

7.45

OASIS INVESTMENTS II MASTER FUND LTD.

1,911,622

5.41

North Pacific Bank, Ltd.

1,743,700

4.94

Retirement Benefit Trust managed by Mizuho Trust & Banking Co.,Ltd.
(Marubeni Corporation account)
The Hokkaido Bank, Ltd.

1,594,500

4.51

1,472,000

4.17

Custody Bank of Japan, Ltd. (Trust account)953,800

2.70

Oasis Japan Strategic Fund Ltd.

729,595

2.07

Controlling shareholder (except
for Parent Company)―――

Parent company

None

Supplementary explanation Updated
1. Major Shareholder data as of April 30, 2024.
2. All shares held by The Master Trust Bank of Japan, Ltd. (Trust account) and Custody Bank of Japan, Ltd. (Trustaccount) are in connection with the respective bank’s trust business.
3. Shares held in the Retirement Benefit Trust managed by Mizuho Trust & Banking Co., Ltd. are held for fiduciary
services purposes.
4. According to the Large Shareholding Report (change in holding report) provided for public inspection on June 16,2023, Sprucegrove Investment Management Ltd. held 4,451,950 shares as of June 12, 2023 (shareholding ratio of
12.57%). However, as the Company cannot confirm the actual number of shares held, the above list of Major
Shareholders is based on the number of shares held recorded in the Register of Shareholders.
5. According to the Large Shareholding Report (change in holding report) provided for public inspection on May 1, 2024,
Oasis Management Company Limited held 5,274 thousand shares as of April 23, 2024 (shareholding ratio of 14.89%).
However, as the Company was not able to confirm the actual number of shares held as of the end of the fiscal year underreview, the above list of major shareholders is based on the number of shares held recorded in the Register of
Shareholders. In addition, the Company submitted an Extraordinary Report (Change in Major Shareholder) on May 2, 2024,
because Oasis Management Company Limited is considered to be a major shareholder according to the description in thecompany's Large Shareholding Report (change in holding report), which is available for public inspection as of May 1,
2024.

3. Corporate Attributes
Listed stock market and market
sectionTokyo Stock Exchange Prime Market and Sapporo Securities Exchange

Fiscal year-end

April

Type of business

Retail trade

Number of employees(consolidated) as of the end of
the preceding fiscal year

1,000 or more

Sales (consolidated) in thepreceding fiscal year

100 billion yen or more but less than 1 trillion yen

Number of consolidated
subsidiaries as of the end of the 10 or more but less than 50 companies
preceding fiscal year

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling
Shareholders―――

5. Other Special Circumstances which may Have Material Impact on Corporate Governance

The Company dispatches its personnel as directors or corporate auditors to the subsidiaries to participate in thedecision-making in management through the Board of Directors.
In addition, we are striving to strengthen corporate governance through field audits by the Company’s Internal Audit
Office, corporate auditors and accounting auditors.

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

Company with Corporate Auditors[Directors] Updated
Maximum number of directors
stipulated in the Articles ofIncorporation Updated
Term of office of directors
stipulated in the Articles ofIncorporation15

1 yearChairperson of the Board
UpdatedRepresentative Director other than President and Chairperson

Number of directors

11

Status on election of outside
directors

ElectedNumber of outside directors
Updated5

Number of outside directors
appointed as an independent
director Updated

5Outside Directors’ Relationship with the Company (1) Updated
Name
Noriko Endo

Attribute

Relationship with the Company (※)
a

b

c

d

e

From other companies

Hideki Kuriyama

ScholarMariko Watahiki

Attorney

Nobumichi Hattori

From other companies

Shigeki Kimura

From other companies

f

g

h
△

※ Categories for “Relationship with the Company”※ “○” when the director presently falls or has recently fallen under the category;“△” when the director fell under the category in the past
※ “●” when a close relative of the director presently falls or has recently fallen under the category;“▲”when a close relative of the director fell under the category in the pasta. Executive of the Company or its subsidiaries
b. Executive or non-executive director of a parent company of the Company
c. Executive of a fellow subsidiary company of the Company
d. A party whose major client or supplier is the Company or an executive thereof
e. Major client or supplier of the Company or an executive thereof
f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or otherproperty from the Company besides compensation as a director/corporate auditor
g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal
entity)h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) (thedirector himself/herself only)

i

j

k

i. Executive of another company in cases where an executive of the Company is an outside director/corporate auditorof such other company (the director himself/herself only)
j. Executive of a company or organization that receives a donation from the Company (the director himself/herself
only)
k. Others

Outside Directors’ Relationship with the Company (2) Updated

Name

Designation as
independent
director

Noriko Endo○

Hideki
Kuriyama○

Supplementary explanation of
the relationship

Ms. Endo had been the Company’s
advisor until May 2018 but the Company
has judged that there is no impact as theannual advisor fee was not considerable
amount of not more than ten million yen.

Not applicable.

Reasons for appointment
Ms. Endo has a wealth knowledge through her journalistic
activities as the editor of an economic magazine withresponsibility for numerous sectors, including retail anddistribution. She is also well-versed in energy andenvironmental problems as a result of her research into
public policy as it pertains to energy, in which area she
possesses a wide range of insights. In addition, through her
experience as an outside Director of other listed companies
she has developed a deep knowledge of corporate
management in the IT, telecommunications, railroad, realestate, and other businesses. Since being appointed outside
Director of the Company, at meetings of the Board of
Directors and at other times she has offered advice mainly
on business strategy and compliance.
The Company proposes Ms. Endo as a candidate foroutside Director because of her knowledge in financial
affairs, legal and compliance, and sustainable management,
and because the Company believes that she is qualified forthe position of Director to continue to make decisions on
management policy and corporate strategy and to supervise
the execution of business operations. The Company
designated her as an independent officer because she isjudged to have no conflicts of interest with generalshareholders in accordance with the independence
standards established by the Tokyo Stock Exchange and"Independence Criteria for outside directors and outside
corporate auditors" set by the Company.
Mr. Kuriyama has a wide range of knowledge andexperience regarding governance and human resource
development in organizations, having served as a manager
of a professional baseball team and of the Japan national
baseball team, and as a professor of faculty of businessadministration at a university, among other roles. Sincebeing appointed outside Director of the Company, at
meetings of the Board of Directors and at other times hehas offered advice mainly from the perspective ofinvesting in human capital management.
The Company proposes Mr. Kuriyama as a candidate foroutside Director because of his knowledge in sustainable
management such as organizational governance andhuman capital management, and because the Company
believes that he is qualified for the position of Director tocontinue to make decisions on management policy andcorporate strategy and to supervise the execution ofbusiness operations. The Company designated him as anindependent officer because he is judged to have noconflicts of interest with general shareholders inaccordance with the independence standards establishedby the Tokyo Stock Exchange and "Independence Criteria
for outside directors and outside corporate auditors" set by
the Company.

Mariko
Watahiki○

Nobumichi
Hattori○

Shigeki Kimura ○Voluntary establishment ofcommittee(s) corresponding to

Ms. Watahiki has many years of experience as a judge,
and in addition to having resolved numerous civil cases,
including some related to corporate legal and labor issues,
she has served as the president of multiple high courts. She
has a thorough understanding of compliance andgovernance, and a long track record of involvement inorganizational management in such areas as personnel
management, human resources development and crisis
management. She has also experience as Chairperson of
Third-party Investigation Committee. The Company
proposes Ms. Watahiki as a candidate for outside Director
Not applicable.
because of her knowledge in legal affairs and compliance,and because the Company believes that she is qualified forthe position of Director to make decisions on management
policy and corporate strategy and to supervise theexecution of business operations.
The Company designated her as an independent officer
because she is judged to have no conflicts of interest withgeneral shareholders in accordance with the independence
standards established by the Tokyo Stock Exchange and"Independence Criteria for outside directors and outside
corporate auditors" set by the Company.
Having gained experience in the supervision of the M&A
advisory business at a major U.S. investment bank, Mr.
Hattori is currently engaged in teaching M&A, corporate
valuation, and other concepts at a graduate institute ofeducation, and is well-versed in corporate valuation in thecapital markets. In addition, his experience as an outside
Director at other listed companies has given him a deep
knowledge of corporate management in the retail industry
and other areas. The Company proposes Mr. Hattori as a
candidate for outside Director because it believes that his
Not applicable.
knowledge in financial affairs makes him qualified for the
position of a Director who performs the function ofsupervising the decision making of the Company’s
management policies and corporate strategies and theexecution of business.
The Company designated him as an independent officer
because he is judged to have no conflicts of interest withgeneral shareholders in accordance with the independence
standards established by the Tokyo Stock Exchange and"Independence Criteria for outside directors and outside
corporate auditors" set by the Company.
As a Director of a major retailer, Mr. Kimura not only hasabundant knowledge of management roles but also
possesses wide-ranging insights and experience in suchareas as management accounting, and risk management.
Furthermore, he served as an outside Director of theCompany between July 2017 and July 2019, and during
this period offered advice mainly on finance, compliance
The description is omitted pursuant to the and governance at meetings of the Board of Directors andat other times. The Company proposes Mr. Kimura as a
Company’s “Immaterial Criteria for the
candidate for outside Director because of his management
judgement that the relationship with theexperience, knowledge in financial affairs, legal andCompany is unlikely to affectcompliance, and the Cosmetic and Drug Store Business,shareholder’s decision concerning theexercise of voting rights” (refer to [Matter and because the Company believes that he is qualified forthe position of Director to make decisions on management
concerning Independent Officers] Other
matters concerning independent officers). policy and corporate strategy and to supervise theexecution of business operations.
The Company designated him as an independent officer
because he is judged to have no conflicts of interest withgeneral shareholders in accordance with the independence
standards established by the Tokyo Stock Exchange and"Independence Criteria for outside directors and outside
corporate auditors" set by the Company.

Establishednomination committee or
remuneration committee
Committee’s Name, Composition, and Chairperson’s Attributes Updated
Committee’s
nameCommittee
equivalent tonominationcommittee
Committee
equivalent toremunerationcommittee

Total
committee
members

Outsidedirectors

Internal
directors

Full-timemembers

OutsideOther
experts

Chairperson

nomination andremuneration
3
committees

-

1

2

-

-

Outsidedirectors

nomination andremuneration
3
committees

-

1

2

-

-

Outsidedirectors

Supplementary Explanation
The committee members of the Nomination and Remuneration Committee are appointed by aresolution of the Board of Directors, and more than half of them comprise independent directors.

Corporate Auditors
Establishment of the board ofcorporate auditors

Established

Maximum number of corporate
auditors stipulated in the Articles
of Incorporation

4

Number of corporate auditors3

Cooperation among Corporate Auditors, Accounting Auditors and Internal Audit Office Updated
Corporate auditors and accounting auditors exchange opinions for each accounting audit to improve theaccuracy of audits by corporate auditors related to laws and regulations, the Articles of Incorporation,
and accounting. In addition, accounting auditors and corporate auditors exchange opinions on the resultsof audits of our subsidiaries to strengthen mutual cooperation. The Internal Audit Office cooperates with
the Board of Corporate Auditors and the accounting auditors to coordinate overlapping operations andimprove the quality of operations, and reports directly to the President and Representative Director, theBoard of Directors, and the Board of Corporate Auditors concerning the status of activities, including theresults of audits.

Status on appointment of outside
corporate auditors

Appointed

Number of outside corporate
auditors

2

Number of outside corporate
auditors appointed as anindependent director

2

Outside Corporate Auditors’ Relationship with the Company (1) Updated
Name

Attribute

Ayako Sano

Attorney

Minako Mizutani

Tax accountant

Relationship with the Company (※)
a b c d e f g h i j k l m※ Categories for “Relationship with the Company”※ “○” when the director presently falls or has recently fallen under the category;“△” when the director fell under the category in the past
※ “●” when a close relative of the director presently falls or has recently fallen under the category;“▲” when a close relative of the director fell under the category in the pasta. Executive of the Company or its subsidiaries
b. Non-executive director or accounting advisor of the Company or its subsidiaries
c. Executive or non-executive director of a parent company of the Company
d. Corporate auditor of the parent company of the Company
e. Executive of a fellow subsidiary company of the Company
f. A party whose major client or supplier is the Company or an executive thereof
g. Major client or supplier of the Company or an executive thereofh. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property
from the Company besides compensation as a director/corporate auditor
i. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)
j. Executive of a client or supplier company of the Company (which does not correspond to any of f, g, or h) (thedirector himself/herself only)
k. Executive of another company in cases where an executive of the Company is an outside director/corporate auditor ofsuch other company (the director himself/herself only)
l. Executive of a company or organization that receives a donation from the Company (the director himself/herself only)
m. Others

Outside Corporate Auditors’ Relationship with the Company (2) Updated

Name

Ayako Sano

Minako Mizutani

Designation as
an Independent
Officer○○

Supplementary explanationof the relationship

Not applicable.

Ms. Sano has a practical background in asecurities company and wide-ranging
knowledge of corporate legal affairs as
an attorney at law, in addition to which she
has insights into taxation and experience indefending cases involving
economic crimes. As outside Director ofother companies she has also been involvedin the operation of whistleblowing
systems and in the management of asustainability committee, as well as having
experience as the chair of a special
committee to investigate proposals for
MBOs and delisting. The Company
proposes Ms. Sano as a candidate for outside
Corporate Auditor because of her knowledge
in financial affairs, legal and compliance,and because the Company
believes that she is qualified for the positionof Corporate Auditor to audit the executionof duties by Directors of theCompany.
The Company designated her as anindependent officer because she is judged tohave no conflicts of interest with generalshareholders in accordance with theindependence standards established by the
Tokyo Stock Exchange and "Independence
Criteria for outside directors and outside
corporate auditors" set by the Company.

Not applicable.

Due to her experience as a tax accountant,
Ms. Mizutani has abundant specialist
experience in finance and accounting.
The Company proposes Ms. Mizutani as a
candidate for outside Corporate Auditor
because of her knowledge in financial
affairs, and because the Company believes
that she is qualified for the position of
Corporate Auditor to audit the execution ofduties by Directors of the Company.
The Company designated her as anindependent officer because she is judged tohave no conflicts of interest with generalshareholders in accordance with theindependence standards established by the
Tokyo Stock Exchange and "Independence
Criteria for outside directors and outside
corporate auditors" set by the Company.

[Matter concerning Independent Officers]
Number of Independent Officers
UpdatedReasons for appointment

7

Other matters concerning independent officers(Independence Standards)
For detail of Company’s “Independence Criteria for outside directors and outside corporate auditors,” please refer to“1. Basic views [Disclosure Based on the Principles of the Corporate Governance Code] [Principle 4.9 Independence
standards and qualification for independent outside directors]” in this report.
(Immaterial Criteria for the judgement that the relationship with the Company is unlikely to affect shareholder’s
decision concerning the exercise of voting rights)
In the event that an outside director or an outside corporate auditor of the Company (hereinafter referred to as the“outside officer”) satisfies the requirements set forth below, the Company judges that the attribute information of theoutside officer is unlikely to affect shareholder’s decision concerning the exercise of voting rights:
1. A counterparty with the total amount of transactions with the AIN Group not exceeding 1% of the annual
consolidated sales of the AIN Group nor the sales of the party in the previous fiscal years, or its executing person.
2. A person that has received a donation not exceeding 10 million yen from the AIN Group in the previous fiscal
years, or its executing person.
The Company omits the description of the applicable circumstances of transaction and donation which are within thescope of the Immaterial Criteria.

[Matter concerning Incentives]
Implementation of measuresconcerning incentives for directors

Introduced Performance-linked Remuneration and Others

Supplementary explanation
The Company has introduced performance-linked remuneration for directors. For details, please refer to "II. 1.
Organizational Composition and Operation [Matter concerning Directors' Remuneration] Content disclosed out of thepolicy for determining the amount of remuneration or the method to calculate this amount" in this report.

Eligible persons for stock options

Supplementary explanation―――[Matter concerning Directors' Remuneration]
Status of disclosure (of individual
directors' remuneration)

No individual remuneration is disclosed.

Supplementary explanation
The Company discloses the total remuneration amount of each of its internal and outside directors in the business
report (Notice of Convocation of General Meeting of Shareholders) “Status of Officers of the Company” andsecurities report “Remuneration of Directors” .

Policy established to determine theamount of remuneration or method to
calculate this amount

Yes

Content disclosed out of the policy for determining the amount of remuneration or the method to calculate thisamount(Basic Policy)
The remuneration for directors of the Company is a remuneration system consisting of monthly fixed remunerationaccording to roles and responsibilities, bonuses which are performance-linked remuneration and non-monetary
remuneration for recognizing the same perspectives on sustainable growth as shareholders. However, the remunerationof outside directors shall be a remuneration system suitable for the roles and responsibilities of supervising themanagement of the Company from an independent and objective standpoint.
(Monthly remuneration decision policy)
Monthly remuneration shall be determined after comprehensive consideration of position, responsibilities, years in
office, balance with employee wages, trends of other companies in the same industry, and past payment history.
(Bonus decision policy)
Bonuses are determined after comprehensive consideration of consolidated operating income and ROE for each period
and value not directly manifested by financial value including such as contribution to environmental and social issues
in each period, as well as dividends, balance with employee bonuses, trends of other companies in the same industry,and past payment history.
(Non-monetary remuneration decision policy)
Non-monetary remuneration shall be paid by restricted stock (RS), and a standard amount of monetary remuneration
claim determined by position and responsibility shall be granted each year up to a total of 50 million yen, withallocation of common stock through in-kind contribution of monetary remuneration claim. The number of shares of
the Company’s common stock to be allocated as restricted stock remuneration shall be no more than 50,000 shares per
year.
(Remuneration composition ratio)
Taking into consideration the characteristics of the business, business environment, and trends of other companies, thecomposition ratio of remuneration for directors other than outside directors is designed so that the composition ratioof monthly remuneration, bonuses, and non-monetary remuneration is approximately 70:20:10. Only monthly
remuneration will be paid to outside directors.
(Decision policy for details of individual remuneration)
The specific details for amounts of remuneration for each individual is commissioned to the President andRepresentative Director within the scope of determined parameters by resolution of the Board of Directors after the
Nomination and Remuneration Committee prepares a draft of the range of monthly remuneration for each position, thecontent of evaluation of performance related to bonuses, and the amount of non-monetary remuneration for eachposition. The Nomination and Remuneration Committee is comprised of a majority of independent outside directors
for the purpose of enhancing the fairness, transparency, and objectivity of the procedures for determining remuneration
for directors with matters pertaining to remuneration of directors determined based on the above policy.

[System for Supporting outside directors (outside corporate auditors)]
Full-time directors or corporate auditors are in charge of the system for supporting the outside directors (outside
corporate auditors), and the Administrative Department serves to share necessary information in advance with them.
The staff in the administrative departments assists in the necessary clerical work depending on the nature of the work.

2. Matters concerning Functions of Business Execution, Audit and Supervision, Nomination andRemuneration Decisions (Overview of Current Corporate Governance System) Updated
1. Board of Directors
The Board of Directors is composed of at least 1/3 independent outside directors, from the viewpoint of strengthening
its supervisory function. In addition, the Company establishes skill sets for its management strategies and supervisory
functions that contribute to the enhancement of corporate value over the medium to long term, and ensures that thecomposition of the Board of Directors takes into consideration the balance of diversity of the skills, genders, and otherattributes of each officer. In order to enhance corporate value over the medium to long term, the Board of Directors
formulates management policies and plans, makes decisions on the execution of important business operations,supervises and evaluates the execution of business operations by directors, and develops internal controls, risk
management systems, etc., thereby contributing to ensuring the soundness of management.
The Board of Directors met 12 times in fiscal 2024, and held discussions related mainly to matters such as businessstrategies, compliance, risk management, status of internal audits, initiative related to materiality and the strategies ofhuman capital management. Outside directors participate in management with appropriate advice from diverse
perspectives, in addition to advice based on their respective skills when making important decisions for the Company,
while also effectively exercising their supervisory functions through their high level of independence. The attendanceof each officer in fiscal 2024 is as follows.
Name

AttendanceKiichi Otani

12/12（100%）

Masahito Sakurai

2/2（100%）

Shoichi Shudo

12/12（100%）

Toshihide Mizushima

12/12（100%）

Miya Oishi

12/12（100%）

Rieko Kimei

12/12（100%）

Hidehiro Awaji

2/2（100%）

Masato Sakai

4/6（67%）

Nobuyuki Takakura

10/10（100%）

Kaori Ishikawa

10/10（100%）

Noriko Endo
（Outside Director）
Junro Ito
（Outside Director）
Shigeru Yamazoe（Outside Director）
Hideki Kuriyama（Outside Director）
Koichi Kawamura（Standing Corporate Auditor）
Akira Ibayashi（Outside Corporate Auditor）
Osamu Muramatsu（Outside Corporate Auditor）

11/12（92%）
12/12（100%）
12/12（100%）
10/12（83%）
12/12（100%）
12/12（100%）
12/12（100%）

Note: Attendance is described based on number of meetings held during their tenure.
At present, the Board of Directors consists of 11 members (seven men and four women), including five outside directors,
and is chaired by Mr. Shoichi Shudo, Representative Senior Managing Director. The details of each skill of the Boardof Directors of the Company, the reasons for selecting skills, the skill matrix, etc., are posted on the Company's website.
Corporate Governance Skill matrix: https://www.ainj.co.jp/corporate/english/governance.html

2. Board of Corporate Auditors
The Board of Corporate Auditors conducts audits of the execution of duties by directors, while also exchanging
opinions with accounting auditors for each accounting audit, and striving to improve the accuracy of audits by corporate
auditors concerning laws, regulations, the Articles of Incorporation, and matters related to accounting. In addition, theBoard of Corporate Auditors accompanies audits of subsidiaries by accounting auditors, thus working to strengthen
auditing functions.
Outside corporate auditors work with the standing corporate auditor to formulate audit policies and plans, inspect
important documents related to management, audit financial statements and reference documents, audit proposals
submitted to the General Meeting of Shareholders, check the status of the execution of business operations by directors,
and provide advice, suggestions, and recommendations to directors and the Board of Directors through discussions at
meetings of the Board of Corporate Auditors. In order to cooperate with the Internal Audit Office, the Board of
Corporate Auditors participates in regular internal audit meetings once a quarter and receives reports.
The Board of Corporate Auditors met 12 times in fiscal 2024, and engaged in activities mainly concerning matters suchas the formulation of audit policies and plans, the preparation of audit reports, ensuring the appropriateness ofaccounting audits, agreement with the evaluation and remuneration of accounting auditors, and checks of the status of
the development and operation of internal control systems. The Board of Corporate Auditors consult to conduct auditsof the Board of Directors and the business execution to ensure that business operations are conducted with compliancein mind, and the Board of Corporate Auditors monitor, supervise, and advise on specific measures. The attendance ofeach corporate auditor in fiscal 2024 is as follows.
Name

Attendance

Koichi Kawamura（Standing Corporate Auditor）
Akira Ibayashi（Outside Corporate Auditor）
Osamu Muramatsu（Outside Corporate Auditor）

12/12（100%）
12/12（100%）
12/12（100%）

Furthermore, at present, the Board of Corporate Auditors consists of three members, including two outside corporate
auditors, and Mr. Koichi Kawamura serves as a standing corporate auditor. He has been engaged in accounting
procedures, preparation of financial statements, audit operations, etc., as the Department Manager of Accounting of a
key subsidiary of the Company and a corporate auditor of that company, and has abundant knowledge of finance andaccounting. Ms. Ayako Sano has wide-ranging knowledge of corporate legal affairs as an attorney at law, in addition
to which she has insights into taxation. Ms. Mizutani Minako has abundant specialist experience in finance andaccounting due to her experience as a tax accountant, and each corporate auditor possesses sufficient knowledge offinance and accounting.
3. Nomination and Remuneration Committee

The Company has established the Nomination and Remuneration Committee as a voluntary advisory body in order toenhance the fairness, transparency, and objectivity of procedures related to the nomination, remuneration, etc., of
directors and enhance corporate governance. The Board of Directors has resolved that at least half of the members of
this committee will be independent officers. For the purpose of contributing to the establishment of appropriate
management systems and ensuring the transparency of management, this committee mainly deliberates the appointment
and dismissal of directors, succession plans, and remuneration for officers, and it expresses its views to the Board of
Directors.
At present, the Nomination and Remuneration Committee consists of three directors, including two independent outside
directors. In fiscal 2024, the committee met twice, and deliberated director candidates, the skills matrix, succession
plans, and remuneration for officers. The attendance of each committee member in fiscal 2024 is as follows.
Name

AttendanceKiichi Otani ◎2/2（100%）

Noriko Endo (Outside Director)

2/2（100%）

Shigeru Yamazoe (Outside Director)

2/2（100%）

Note. ◎ after the name indicates the chairperson.
Furthermore, at present, the Nomination and Remuneration Committee is chaired by Ms. Mariko Watahiki, independent
outside director and consists of three members including Ms. Noriko Endo, independent outside director, and Mr. Kiichi
Otani, President and Representative Director.

4. Board of Managing Directors
The Board of Managing Directors consists of the President and Senior Managing Directors, and has been established
for the purpose of deliberating and deciding on matters delegated by the Board of Directors and other importantmanagement matters in order to enhance the speed of management decision-making.
5. Management meetings
Management meetings consist of directors, the standing corporate auditor, executive officers, and department managersof the Group, and are held twice a month for the purpose of monitoring practical matters. Through discussions
concerning the execution of business operations in each division, management meetings exercise a function of mutual
checking.
6. Compliance Committee
The Company has established the Compliance Committee for the purpose of establishing, disseminating, and ensuring
the entrenchment of the Group's compliance system, and its composition is based on a resolution by the Board of
Directors.
The committee holds regular meetings once every six months, and also holds irregular meetings as needed. It deliberates
and considers matters such as the Group's policies and measures related to the promotion of compliance, measures toprevent recurrence of serious compliance violations, and policies for handling individual reports, and reports or submits
its views to the Board of Directors. In addition, with regard to reports, from the viewpoint of protecting whistleblowers,
a “compliance hotline” contact point for whistleblowers has been established by delegation to an external organization.
As necessary, the committee obtains legal assessments, views, etc., from external attorneys, including when responding
to reports, and engages in deliberations and consideration.
At present, the Compliance Committee is chaired by the President and Representative Director, with a Representative
Senior Managing Director as vice chair (in charge of operational support), and two Representative Senior Managing
Directors, the director in charge of risk management, and the standing corporate auditor as members. Its secretariat is
the Risk Management Office.
Furthermore, when deliberating and considering individual reports, depending on the content of the report, related
officers and the Presidents of related Group companies, as well as other officers and employees designated by the chairor vice chair of the committee as equivalent responsible persons participate in meetings of the committee as
extraordinary members.
7. Risk Management Committee
The Company has established the Risk Management Committee for the purpose of achieving unified risk managementfrom a group-wide perspective and preventing the overlooking of new risk events arising from changes in the businessenvironment, and thereby achieving comprehensive risk management. Its composition is based on a resolution by the
Board of Directors. In addition, attorneys and other external experts in risks surrounding companies provide advice asappropriate.The committee mainly reviews risk items and assessments and manages progress in each department incharge of risk.
At present, the Risk Management Committee is chaired by the President and Representative Director, and it consists ofthe director in charge of risk management and managers of each department in charge of risk. Its secretariat consists of
the Division Manager of the Risk Management Office, the Division Manager of Operational Support, Department
Manager of the Administrative, Division Manager of the Corporate Planning, and Department Manager of theSustainability Management.
8. Sustainability Committee
The Company has established the Sustainability Committee for the purpose of establishing, disseminating, and ensuring
the entrenchment of the Group's sustainability management system, and its composition is based on a resolution by the
Board of Directors.
The committee mainly deliberates and considers matters related to the promotion of sustainability management, andsubmits and reports important matters related to sustainability management to the Board of Directors.
At present, the Sustainability Committee is chaired by the President and Representative Director, with a Representative
Senior Managing Director as vice chair, and each Division Manager, the Division Manager of the Risk Management
Office, the Division Manager of the Facility Design, the Division Manager of the Internal Audit Office, the Division
Manager of the Corporate Planning, the Department Manager of the Corporate Alliances, and Presidents of key
subsidiaries as members. Its secretariat is the Sustainability Management Department.
9. Status of internal audits
The Company has established an Internal Audit Office that is independent of business management, in order to enhanceand strengthen internal audit functions. The scope of internal audits extends to all management activities related togovernance processes, risk management, and control. The Internal Audit Office engages in activities such as drafting
audit plans, conducting audit procedures for all divisions of the Group at least once a year in principle, and preparing
audit reports and improvement instructions. In addition to regular audits of business operations, the Internal Audit
Office conducts personal information protection audits concerning matters such as the status of the operation of thepersonal information protection system.
The Internal Audit Office cooperates with the Board of Corporate Auditors and the accounting auditors to coordinate
overlapping operations and improve the quality of operations, and reports directly to the President and Representative
Director, the Board of Directors, and the Board of Corporate Auditors concerning the status of activities, including theresults of audits.
In addition, the Internal Audit Office reports the status of internal audits at management meetings, and endeavors to
improve compliance through individual guidance and repeats of audits in cooperation with each business division of
the Group.
As of May 1, 2024, the Internal Audit Office consisted of 12 persons.
10. Accounting auditor
The Company has appointed Ernst & Young ShinNihon LLC as its corporate auditor and has been continuously auditedby the firm since the fiscal year ended April 30, 1992. In the fiscal year ended April 30, 2024, the certified public
accountants who audited the Company are Mr. Naohiko Kataoka and Mr. Wataru Araki.
11. Limited Liability Contracts
The company has entered into an agreement with each outside director and each corporate auditor to limit their liability
for damages under Article 423, Paragraph 1 of the Companies Act, pursuant to the provisions of Article 427, Paragraph
1 of thesame Act and the Articles of Incorporation. The maximum amount of compensation for damages under such contracts
is limited to the amount stipulated in laws and regulations.

3. Reasons for Adopting Current Corporate Governance System Updated
The Board of Directors, which is the current important decision-making body of the Company, is composed of elevenmembers. The outside directors participate in the management of the Company with appropriate advice from amultifaceted perspective in making important decisions.
The Company has five outside directors and the head of the Internal Audit Office is in charge of internal control andinternal audit. The person in charge of internal audit and internal control cooperates with the Board of Corporate
Auditors in a position equivalent to that of the Directors. Such person effectively maintains a system that ensures theconfidence of the shareholders and the investors by giving a report on internal audit and internal control at the meetingsof the Board of Directors when required.
In order to clearly separate management decision-making and supervisory functions from business execution functions,the Company has adopted an executive officer system to vitalize the Board of Directors and enhance the ability andflexibility of business execution.
In addition to the above, the business execution in each department is discussed at the management meetings to monitor
their practical operations, which serves to provide mutual checks among the departments.

III Implementation of Measures for Shareholders andOther Stakeholders
1. Initiatives to Vitalize General Shareholder Meetings and Smooth Exercise of Voting Rights Updated
Supplementary explanation
Early notification of General
Shareholders Meeting

The Company sends the notice of convocation three weeks prior to theGeneral Meeting of Shareholders.

Scheduling AGMs avoiding thepeak day

The Company is a company that closes its books in April, and, holding theGeneral Meeting of Shareholders at the end of July, organizes it on a date that
does not overlap with general shareholder meetings of other companies.

Allowing electronic or magnetic
exercise of voting rights

The Company adopts Smart Voting utilizing smartphones, in addition to thewebsite for the exercise of voting rights, as methods to exercise voting rights
via the Internet.

Participation in Electronic
Voting Platform and otherefforts to enhance the voting
environment for institutional
investors

The Company has been utilizing the Electronic Voting Platform since theGeneral Meeting of Shareholders held in July 2017.

Provision of convocation notice(summary) in English

Before dispatching the notice of convocation, the Company posted the noticeof convocation in English (full text) on its website.

2. Investor Relations Activities
Explanation by
the Representative

Supplementary explanation
Preparation and publication of
disclosure policy

The disclosure policy is posted on our website.
Disclosure policy:
https://www.ainj.co.jp/corporate/ir/disclosure-policy.html(Japanese only)

Periodic presentation for analysts
and institutional investors:

In principle, a briefing session is held for each settlement
and interim settlement.

IR Information on website

In addition to financial closing documents, a video of thelast briefing session for analysts and institutional
investors is also available on our website.
IR information: https://www.ainj.co.jp/corporate/english/

Creation of an IR-related dept.
(IR Personnel)

The Corporate Planning Division is in charge of IR-related
services.

Yes

3. Initiatives to Ensure Due Respect for Stakeholders
Supplementary explanation
Provisions on Respect for the
Positions of Stakeholders inInternal Rules

The AIN Group Basic Financial Reporting Policy provides for timely
disclosure of information that contributes to investors' decisions, which
ensures transparency and fairness in information disclosure.
The Company conducts a range of measures in line with its Environmental
Protection Action Policy. For more details, please visit our website.
Protect the environment and reduce environmental impact:
https://www.ainj.co.jp/corporate/english/sustainability/environment/.html

Environmental preservation
activities and CSR activities

The Company has been actively conducting CSR activities for some time,such as establishing endowed courses at national universities and conducting
joint research projects to advance research in the field of medicine.
Information about these initiatives is disclosed on the Company’s website.
Development of the insurance pharmacies:
https://www.ainj.co.jp/corporate/sustainability/social/industrydevelopment.html (Japanese only)Other<Policy on diversity>
Please refer to [Supplementary Principle 2.4.1] (Ensuring diversity inpromotion of mid-career hires, etc.)

IV Matters Related to Internal Control System
1. Basic Views on Internal Control System and Progress of System Development
Pursuant to the Companies Act of Japan and the Regulation for Enforcement of the Companies Act, the Company
shall set forth the following basic policies on the development of systems required to ensure the appropriateness ofthe business conducted by the corporate group consisting of the Company and its subsidiaries (hereinafter referred toas the "Group"):
1. System to ensure that the execution of duties by the directors and the employees complies with relevant laws andthe Articles of Incorporation(1) The Board of Directors shall, pursuant to the provisions of the relevant laws, the Articles of Incorporation and theRules of Board of Directors, make decisions on important matters relating to the business execution and supervise theexecution of duties by the directors.
(2) In order to maintain and enhance the supervisory function of the directors in the execution of their duties, theGroup shall continuously appoint outside directors in consideration of independence adopt the executive officer
system in consideration of the execution function and the supervisory function.
(3) The officers and the employees of the Group (hereinafter referred to as the "Officers and Employees") shall, in
accordance with the Group’s Code of Conduct, strive for corporate activities with common sense and ethics, always
recognizing that they are engaged in the health-related business as well as complying with the relevant laws, theArticles of Incorporation, etc.
(4) For the purpose of fulfilling the duties of the Group in accordance with the relevant laws, the Articles ofIncorporation and the Group’s internal rules and enhance compliance therewith, the Company shall create theCompliance Committee to manage compliance throughout the Group.
(5) The Group shall develop the Compliance Hotline that enables direct notification to outside contractors in order todetect and correct violations of the relevant laws and other compliance-related problems as early as possible.
(6) Based on the “Anti-insider Trading Rules”, the Group shall conduct thorough management on the undisclosed
material facts, make appropriate efforts to disclose information as required, and develop a system to prevent insider
trading.
(7) The corporate auditors shall, as an independent organization, audit the execution of duties by the directors,
including the construction and operation status of the internal control system.
(8) The Internal Audit Office shall, from a viewpoint independent from the business execution organizations, conduct
audits on the status of compliance by the Officers and Employees with the relevant laws, the Article of Incorporationand the like.
(9) The Group shall declare in the Group’s Code of Conduct that it has no relationship with any anti-social forces,
shall develop the “Rules for Dealing with Anti-social Forces” and shall strive as a whole organization to block
involvement from anti-social forces in cooperation with the police, corporate lawyers, etc.
2. Systems related to the retention and management of information relating to the execution of the duties by the
directors
The Company shall, in accordance with the “Document Handling Rules,” retain and manage information relating to
the execution of duties by the directors appropriately, by recording such information in writing or in electromagnetic
media in a manner that is accessible from the directors and the corporate auditors as required.
3. Rules and other systems related to management of the risk of loss
(1) The Company shall formulate the “Risk Management Rules” and the “Risk Management Guidelines” both ofwhich stipulate the risk management for the entire Group, shall designate the departments in charge for each risk
category and shall manage the risks for the entire Group exhaustively and comprehensively.
(2) The Company shall create the Risk Management Office as a section that supervises the risk management status of
all group companies and shall manage issues and countermeasures relating to the promotion of group-wide risk
management.
(3) The Internal Audit Office shall conduct field audits to inspect the compliance by and effectiveness of the risk
management system of the Group.
(4) The Company shall formulate the “Group’s Business Continuity Plan (BCP)” in order to ensure the continuity ofthe businesses of the Group in the event of a crisis and shall ensure that all Officers and Employees are fully aware ofit.
4. System for ensuring efficient execution of duties by the directors(1) Each director of the Group shall execute one’s allocated area of duties at one’s own responsibility pursuant to the“Rules for Segregation of Duties.” The Internal Audit Office and the Board of Corporate Auditors shall check
whether the directors follow the above appropriately.
(2) The Company shall develop the management plan of the Group, and, for the purpose of giving shape to such plan,
shall set management targets and allocate budget for the entire Group for each business year.
5. Systems to ensure the propriety of business activities in the Group and systems to give reports to the Company onmatters concerning the execution of the duties by the subsidiaries’ directors(1) In order to ensure the propriety of business activities as a corporate group, the Company shall apply the “Rules
for Management of Affiliated Companies” to each of its subsidiaries, which obliges them to give periodic reports on
their important management matters requiring careful decision-making (including facts of occurrence).

(2) The Company shall hold a group management meeting regularly attended by the directors of the Company and ofits subsidiaries and shall oblige the subsidiaries to report any significant event at such meeting.
6. Matters concerning the employee if the corporate auditors have requested that an employee be appointed to assist
with their duties
In the event that the corporate auditors request to appoint an employee who assists them in their duties, the Company
shall appoint an appropriate employee as an assistant to them after consultation with them.
7. Matters concerning independence of the employee described in the preceding clause from the directors and mattersconcerning ensuring effectiveness of instructions given to the employee who should assist the duties of the corporate
auditors(1) In order to ensure the independence of the employee described in the preceding clause from the directors, theCompany shall inform the corporate auditors of personnel changes or evaluations of such employee in advance andshall request their opinions.
(2) The Company shall specify in the “Corporate Audit Standards” the authority to give directions and instructions to
the employees who should assist the corporate auditors.
8. The following systems and other systems relating to reporting to the Company’s corporate auditors(1) System to require the Company’s directors and employees to give reports to the corporate auditors
・ In the event that the directors detect any fact which is likely to cause significant damage to the Company in thecourse of the business execution, they shall report the matters relating to such fact to the corporate auditors.
・ The Internal Audit Office shall report the execution of its business to the corporate auditors on a regular basis.
・ The corporate auditors shall request reports from the directors or the employees if deemed necessary to fulfill theirduties.
(2) System to report to the corporate auditors from the directors, the corporate auditors and the employees of thesubsidiaries or from the persons who are reported such directors, the corporate auditors and the employees
・The Officers and Employees of the Group shall give an appropriate report promptly when they are requested by
the corporate auditors of the Company to report on the matters concerning the execution of their duties.
・ The Officers and Employees of the Group shall report to the corporate auditors if they find any fact which islikely to cause substantial damage to the Company in the course of the execution of the business.
・ The Internal Audit Office shall report the execution of its business to the corporate auditors on a regular basis.
・ The Risk Management Office, which is in charge of the whistle-blowing system, shall report the status of whistleblowing from the Officers and Employees of the Group to the corporate auditors of the Company on a regular basis.
9. System to ensure that the persons who have made a whistle-blow set forth in the preceding clause will not betreated unfavorably on the basis of making such whistle-blow
The Company shall prohibit from treating the Officers and Employees of the Group who have made a whistle-blow
to the corporate auditors of the Group unfavorably on the grounds of such whistle-blow and shall ensure that all
Officers and Employees of the Group are fully aware of it.
10. Matters concerning the policy for expenses and debts arising from the execution of duties by the corporate
auditors(1) In the event that a corporate auditor requests to make an advance payment of expenses or disposal of debts thatarise in connection with the execution of their duties, the Company shall dispose of such expenses and debts inaccordance with the Corporate Audit Standards.
(2) In the event that the Board of Corporate Auditors requests outside experts, such as attorneys and certified public
accountants, to fulfill their duties, the Company shall bear the cost thereof.
(3) The Board of Corporate Auditors shall budget in advance for expenses deemed necessary to fulfil their duties.
11. Other systems to ensure effective audits by the corporate auditors
In the event that the corporate auditors determine it necessary to cooperate with outside experts, such as attorneys
and certified public accountants, in order to fulfill their duties, the Company shall request such cooperation.

2. Basic Concept for Elimination of Antisocial Forces and Status Thereof
In the Group’s Code of Conduct, the Company shall declare to all its employees that we conform to social norms and asense of justice and have no relationship with anti-social forces or similar organizations. At the same time, theCompany shall collect necessary information and shall ensure safety by taking practical preventive measures under theRules for Dealing with Anti-social Forces, by attending training sessions targeted for persons in charge of preventing
unjust demands held by the National Center for the Elimination of Boryokudan and by working in close cooperation
with police authorities and lawyers. The Administrative Department is taking the lead in working to block
involvement from anti-social forces on an organizational basis.

V Other
1. Introduction of Anti-takeover Measures
Introduction of anti-takeovermeasures

None

Supplementary Explanation―――

2. Other Matters Concerning Corporate Governance System Updated<Overview of the timely disclosure system>
The Company’s current system for timely disclosure of corporate information is as follows.
The Company discloses its corporate information in a timely manner jointly by the Operational Support Division and
the Corporate Planning Division under the supervision of the Representative Senior Managing Director in charge of
operational support, who is the officer in charge of information disclosure.
(1) The head of each division in charge promptly reports to the division manager of the Operational Support any
information or facts that may fall under the category of material information. The division manager of the Operational
Support examines the possibility of the occurrence or determination of material facts.
(2) The division manager of the Operational Support, after consulting with the officer in charge of information
disclosure, examines whether such information should be disclosed in accordance with the Regulations for Timely
Disclosure, etc. Then, with regard to the material information of the Company and the information or facts that should
be disclosed, the general manager prepares for disclosure after thorough and prompt exchange of information with the
Corporate Planning Division and relevant divisions.
(3) After the President makes final confirmation on appropriateness of such disclosure and the Board of Directors
resolves the same (excluding matters relating to some facts of occurrence), the Corporate Planning Division shall
implement the procedures for timely disclosure.
Corporate Governance System Updated