Corporate Governance Report
CORPORATE GOVERNANCE

ONWARD HOLDINGS CO., LTD.

Last Update:May. 24, 2024

Onward Holdings Co., Ltd.
Michinobu Yasumoto, President and CEO+81-3 -4512-1030
Contact:
8016
Securities code:
https://www.onward-hd.co.jp/en
The corporate governance of Onward Holdings Co., Ltd. (the “Company”) is described below.

I.

Basic Approach to Corporate Governance, Capital Structure, Corporate Profile, and Other
Basic Information

1.

Basic Approach
The Onward Group believes that responding promptly to changes in its business environment and ensuring a level of corporate
governance that enhances the health, fairness, transparency, and compliance of its management and operations are one of its mostimportant responsibilities and central to increasing corporate and shareholder value.
In its basic management policy, the Onward Group has defined its business domain as “a world of fashion that gives refreshment
and beauty to people’s lives.” By offering “fashion” as an integral part of consumer culture, the Group creates new lifestyles andvalues that contribute to the enrichment of life for all people. In the Group's medium- to long-term management vision,“ONWARD VISION 2030”, which was formulated in April 2021, the Group established a new mission statement "Enriching andadding color to people's lives while caring for the planet", which builds on its existing management philosophy by combining asustainable management philosophy that values enriching and adding color to the global environment. As the businessenvironment surrounding the Group undergoes major structural changes, we will keep moving forward as a "lifestyle and culture
creation company" contributing to enriching and adding color to lifestyles while coexisting with the planet through ourmanagement policy of "Evolving into a customer-centric company, making the best use of employees' diverse strength".

Reasons for Non-compliance with the Principles of the Corporate Governance Code[Target code]
It is based on the code revised in June 2021.

In addition, we implement all the principles established in the Corporate Governance Code.

Disclosure Based on the Principles of the Corporate Governance Code Updated
The Company has established the “Corporate Governance Policy” (hereinafter referred to as the “Policy”) by a resolution of
the Board of Directors to show the basic approach and basic policy regarding corporate governance.
The Policy is posted on the Company’s website.
URL: https://www.onward-hd.co.jp/en/company/policy_en.pdf

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[Principle 1-4 Cross-shareholdings]
Please refer to Chapter 2, Article 4 (Cross-shareholdings) of the Policy.

[Principle 1-7 Related-party transactions]
Please refer to Chapter 2, Article 5 (Related-party transactions) of the Policy.

[Supplementary Principle 2-4-1 Ensuring diversity in the promotion, etc., of core human resources]
The Company positions evolving into a company where diverse and unique personnel can exhibit their strengths as one of
the growth strategies, and is striving to evolve into a company where diverse and unique personnel can exhibit their strengths
by training in-house personnel who will spearhead change, or recruiting personnel externally, and promoting organizationaland HR platform reform.
Within this movement, regarding the promotion of female managers, we have set a goal of 50% women in leadership
positions in fiscal 2030, and as of February 29, 2024, 27.2% of the leadership positions were filled by women. To this end,
we have adopted the “Mentor system” to nurture female senior management candidates, and in fiscal 2022, as a trial run,certain executive officers (mentors) were given training including training in interview skills and carried out mentoring of
female general managers (the mentees). In fiscal 2024, the Company intends to further expand the mentoring to include
more female managers.
A target value for foreign employees has not been set since the Group’s principal business domain is the apparel businessand lifestyle business in Japan. However, we will consider this factor along with future reviews of our business portfolio,
etc.
As for mid-career employees, we have not set a specific goal regarding their appointment. However, in order to exercise themanagement strategy, we will continue to recruit highly-skilled professionals and promote them to managers in required
business domains.

[Principle 2-6 Roles of corporate pension as asset owner]•The asset management policy is to strive to secure the expected interest rate on pension financing sufficient enough tomaintain a sound pension system in the future.
•The policy asset composition ratio will be formulated from a medium- to long-term perspective after hearing opinions frompersons with specialized knowledge and experience in asset management operations, and the ratio will be verified annually,
and reviewed as necessary.
•The financial condition of our corporate pension is sound and we do not take excessive risks in asset management.
•All of the outsourced operators for our corporate pension accept Japan’s Stewardship Code. Regarding the outsourced
operators, we hold quarterly operation report meetings and carry out quantitative evaluations.
•We allocate personnel with appropriate qualifications to our corporate pension office, while working to improve their
qualifications by having them attend external seminars, etc., among others.

[Principle 3-1 Enhancement of information disclosure]2

(1) The Company's goals (management philosophy, etc.), management strategy, management plan
Please refer to Chapter 4, Article 10 (Ensuring appropriate disclosure and transparency) of the Policy.
Please refer to our medium- to long-term management vision “ONWARD VISION 2030” (Revised edition) for management
strategies and management plans.
"ONWARD VISION 2030” (Revised edition) is posted on the Company’s website
https://www.onward-hd.co.jp/en/ir/management/ONWARDVISION2023_withAppendix.pdf(2) Basic approach and basic policy regarding corporate governance
Please refer to Chapter 1, Article 1 (Basic philosophy on corporate governance) of the Policy.
(3) Policies and procedures for the Board of Directors to determine remuneration for executives and Directors
Please refer to Chapter 5, Article 18 (Remuneration of corporate officers) of the Policy.
(4) Policies and procedures for the Board of Directors to elect and dismiss management executives and nominate candidates for
Directors and Audit & Supervisory Board Members
Please refer to Chapter 4, Article 12 (Policy and procedures for nominating director candidates) and Article 13 (Policy andprocedures for nominating candidates for Audit & Supervisory Board Members) of the Policy.
(5) Explanation of individual selection, dismissal, and nomination when the Board of Directors elects and dismisses management
executives and nominates candidates for Directors and Audit & Supervisory Board Members
Please refer to the Reference Document for the General Meeting of Shareholders in “Notice of Convocation of the 77th
Annual General Meeting of Shareholders” for the reasons for the election of individual candidates for Directors and Audit& Supervisory Board Members.
“Notice of Convocation of the 77th Annual General Meeting of Shareholders” is posted on the Company’s website.
URL: https://www.onward-hd.co.jp/en/ir/stocks/Notice%20of%20Convocation%20of%20The%2077th%20Annual%20G
eneral%20Meeting%20of%20Shareholders.pdf[Supplementary Principle 3-1-3 Initiatives, etc., for sustainability]
The Company views the promotion of sustainable management as a vital theme constituting the core of corporate activities.
Accordingly, we will promote sustainable management that pursues coexistence with the global environment based on our
mission statement of “enriching and adding color to people’s lives while caring for the planet.” In August 2022, the Company
announced its support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and wehave been disclosing information based on the TCFD framework. For details, please refer to “Onward Group Disclosure of
information in line with TCFD recommendations.”“Onward Group Disclosure of information in line with TCFD recommendations” is posted on the Company’s website.
URL: https://www.onward-hd.co.jp/en/sustainability/environment/tcfd2022_en.pdf
In addition, regarding human capital, we are enhancing training and education for employees to promote the Group evolving
into a “customer-centric company, making the best use of employees’ diverse strengths.” We will continue to actively carry out
investments in career advancement and upskilling of employees, including position-specific training for strengthening
management ability, profession-specific training such as merchandiser education on material and quality control, and practicaltraining and distance-learning for personal development. On the work environment side, we have been promoting workstylereform through the Work Style Design Project since 2019. We are also working to enhance operational efficiency andproductivity and to achieve work-life balance through initiatives such as operational digital transformation (DX) through the3introduction of electronic and online tools, the new system for taking leave and childcare leave, and the promotion of bottomup type management.
As for investments in intellectual property rights, etc., we consider intellectual property rights, including underlying trademark
rights and patents for product design and manufacturing technology, as one of the most important assets for the Company, which
operates the brand business, and therefore, we are actively investing in these areas through the development of new brands andnew businesses. A management policy for the handling of trademark and other intellectual property rights held by the Company
was set out in the Compliance Manual which outlines ways of conducting compliance activities and ethical standards to befollowed as defined in Article 6 (Formulation and implementation of code of conduct) of the Corporate Governance Policy.
Also, we continuously promote educational enlightenment activities, including disseminating information through our internal
intranet and in-house training. Furthermore, the Legal Affairs Division acts as a contact point to consult outside professionals
such as lawyers and patent attorneys as necessary, and the Company has established a system for responding to infringement of
its intellectual property rights by a third party appropriately.

[Supplementary Principle 4-1-1 Scope of delegation to management]
Please refer to Chapter 5, Article 15 (Roles and responsibilities of the Board of Directors) of the Policy.

[Principle 4-9 Independence criteria and qualities of Independent Outside Directors]
Please refer to Chapter 4, Article 12 (Policy and procedures for nominating director candidates) of the Policy and(Attachment) “Independence Standards for Outside Directors and Outside Audit & Supervisory Board Members.”[Principle 4-10-1 Establishment of the Nomination Committee and the Compensation Committee]
To enhance the independence and objectivity of the functions of the Board of Directors regarding the nomination andcompensation of Directors, and aiming to further enhance the corporate governance system, the Company has established avoluntary Nomination and Compensation Committee as an advisory body to the Board of Directors.

(Authority and Roles of the Nomination and Compensation Committee)
The following matters on which the Board of Directors consulted the committee will be discussed and reported to the Boardof Directors.
(1) Approach to the composition of the Board of Directors(2) Policy and criteria for the appointment and dismissal of Directors(3) Matters concerning the appointment and dismissal of Directors(4) Criteria for the appointment of Outside Directors (independence criteria, term of office, qualification conditions, etc.)(5) Policy and criteria for the selection and dismissal of Representative Directors(6) Matters concerning the selection and dismissal of Representative Directors(7) Policy and criteria for the selection and dismissal of Directors with Titles(8) Matters concerning the selection and dismissal of Directors with Titles(9) Matters concerning the selection and dismissal of members of the Nomination and Compensation Committee(10) Compensation system for Directors and policy for determining compensation(11) Details of individual Directors’ compensation

4

(12) Matters concerning the formulation and operation of successor plans(13) Proposals for General Meetings of Shareholders (proposals for the appointment and dismissal, proposals forcompensation)(14) Other matters that the Board of Directors deems necessary
Furthermore, the Nomination and Compensation Committee has the authority to have persons other than the members attend
its meetings and request their reports and opinions as necessary.

(Approach to the independence of the Committee structure)
The committee consists of three or more members who are Directors, selected by a resolution of the Board of Directors, andthe majority of them are selected from among Independent Outside Directors to ensure independence and objectivity.

[Supplementary Principle 4-11-1 Approach to balance, diversity, and size of the Board of Directors]
Please refer to Chapter 4, Article 12 (Policy and procedures for nominating director candidates) and Article 13 (Policy andprocedures for nominating candidates for Audit & Supervisory Board Members) of the Policy.
In addition, please refer to “Notice of Convocation of the 77th Annual General Meeting of Shareholders” for the reasons forthe election of the current Directors and Audit & Supervisory Board Members and their skills matrix.
“Notice of Convocation of the 77th Annual General Meeting of Shareholders” is posted on the Company’s website.
URL: https://www.onward-hd.co.jp/en/ir/stocks/Notice%20of%20Convocation%20of%20The%2077th%20Annual%20G
eneral%20Meeting%20of%20Shareholders.pdf[Supplementary Principle 4-11-2 Status of concurrent positions of Directors and Audit & Supervisory Board Members with
officers of other listed companies]
Please refer to Chapter 5, Article 20 (Concurrent positions as corporate officers of other listed companies) of the Policy.

[Supplementary Principle 4-11-3 Evaluation of the effectiveness of the Board of Directors]
Please refer to Chapter 5, Article 21 (Ensuring the effectiveness of the Board of Directors) of the Policy.
(Summary of the Board of Directors Evaluation and Results)
1. Scope of evaluations•All Directors and Audit & Supervisory Board Members
2. Procedures for evaluations•Self-evaluation via questionnaire•Support for evaluations provided by external advisor
3. Overview of results of analysis and evaluation of Board of Directors’ effectiveness in fiscal 2023
•We have judged that the Board of Directors sufficiently exercised its functions for formulating management strategies andtargets, resolving management issues, and overseeing persons responsible for business execution in accordance with
Onward’s Corporate Governance Basic Policy.
•It has been judged that the current composition, discussion quality, operations, etc. of the Board of Directors are generally
appropriate.

5•In particular, “diversity of the Board of Directors,” “monitoring of the status of business execution,” and “number of agenda
items and materials for the Board of Directors’ meetings” will continue to be considered in the next fiscal year, in addition
to its efficient operation, in order to further improve the effectiveness of the Board of Directors.

[Supplementary Principle 4-14-2 Training of Directors and Audit & Supervisory Board Members]
Please refer to Chapter 5, Article 22 (Training for Directors and Audit & Supervisory Board Members) of the Policy.

[Principle 5-1 Policy on constructive dialogue with shareholders]
Please refer to Chapter 6, Article 23 (Policy on constructive dialogue with shareholders) of the Policy.
The status of dialogue with shareholders is posted on the Company's website.
URL : https://www.onward-hd.co.jp/en/ir/stocks/dialogue.html[Action to Implement Management that is Conscious of Cost of Capital and Stock Price (under consideration)]
We aim to achieve net income of ¥10 billion or more in fiscal 2026 by promoting growth strategies, including proactive
growth investments, to implement management that is conscious of cost of capital and stock price. With regard to capitalefficiency, we will implement a financial strategy that focuses on capital efficiency, including by utilizing financial leverage,
and will target ROE of at least 10% and ROIC of at least 7% in fiscal 2026, well above the cost of shareholders' equity andthe weighted average cost of capital (WACC). In addition, we will step up shareholder returns by making enhanced dividend
distribution a top priority and raising the dividend payout ratio from at least 35% to at least 40% starting in fiscal 2024.
Please refer to "ONWARD VISION 2030" (Revised edition) for specific measures.
"ONWARD VISION 2030” (Revised edition) is posted on the Company’s website.
URL：https://www.onward-hd.co.jp/en/ir/management/ONWARDVISION2023_withAppendix.pdf

2. Capital Structure
Foreign Shareholding Ratio

10% or more and less than 20%

Status of Major Shareholders Updated
Name or Company Name

Number of Shares Owned

Percentage (%)

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

12,598,800

9.28

Kashiyama Scholarship Foundation

8,710,970

6.41

Custody Bank of Japan, Ltd. (Trust account)

5,785,900

4.26

Onward Holdings Business Partners’ Shareholdings Association

5,438,900

4.00

Nippon Life Insurance Company

4,671,441

3.44

SMBC Nikko Securities Inc.

2,931,589

2.15

Isetan Mitsukoshi Ltd.

2,301,829

1.69

GOVERNMENT OF NORWAY

2,220,562

1.63

Sumitomo Life Insurance Company

1,601,000

1.17

Yakult Honsha Co., Ltd.

1,500,000

1.10

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Name of Controlling Shareholder, if applicable―――(excluding Parent Company)
Name of Parent Company, if applicable

None

Supplementary Explanation―――

3. Corporate Attributes
Listed Stock Exchange and Market Segment

Prime Market

Fiscal Year-End

February

Business Sector

Textiles & Apparels

Number of Employees (Consolidated) as of the Endof the Previous Fiscal YearNet Sales (Consolidated) as of the End of thePrevious Fiscal Year
Number of Consolidated Subsidiaries as of the Endof the Previous Fiscal Year

4.

1,000 or more

¥100 billion or more and less than ¥1 trillion

10 or more and fewer than 50

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

5. Other Special Circumstances which May have Material Impact on Corporate Governance
―――

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II.

Business Management Organization and Other Corporate Governance Systems regarding
Decision-making, Execution of Business, and Oversight in Management

1.

Organizational Composition and Operation
Corporate Governance System

Company with Audit & Supervisory Board**Referred to in the Corporate Governance Code reference translation as “Company with Kansayaku Board”

Directors
Number of Directors Stipulated in Articles ofIncorporation
Directors' Term of Office Stipulated in Articles ofIncorporation

7

1 yearChairperson of the Board

President

Number of Directors

6

Election of Outside Directors

ElectedNumber of Outside Directors

2

Number of Independent Directors

2Outside Directors’ Relationship with the Company (1)Name
Akira Kawamoto

From another company

Yoshie Komuro (Name in

From another company

familyregister:

Relationship with the Company*

Attributes

a

b

c

d

e

f

g

h

i

j

k

YoshieIshikawa)*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& 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)h. Person who executes business for a client of the Company (excluding persons categorized as any of d, e, or f above) (applies
to self only)
i. Person who executes business for another company holding cross-directorships/cross-auditorships with the Company (applies
to self only)
j. Person who executes business for an entity receiving contributions from the Company (applies to self only)
k. Other8Outside Directors’ Relationship with the Company (2)Designationas
Independent
Director

Name
Akira

○

Supplementary
Explanation of the
Applicable Relationship

Reasons for Appointment
We have elected him as an Outside Director because we are―――

Kawamoto

expecting him to use his extensive experience gained whileworking for the government for many years and diverse
knowledge and insight from his academic experience toenhance the Company’s management. In addition, since wehave determined that there is no risk of conflict of interest withgeneral shareholders, we have also registered Director
Kawamoto as an Independent Director based on the request of
the stock exchange.

Yoshie Komuro
(Name

○

We have elected her as an Outside Director because we are

―――

in

expecting her to use her expertise as a corporate manager andfamily register:

experience and insight developed through serving as an expert

Yoshiesitting in various government affiliated councils to enhance the

Ishikawa)

Company’s management. Since we have determined that there
is no risk of conflict of interest with general shareholders, wehave also registered Director Komuro as an Independent
Director based on the request of the stock exchange.

Voluntary Establishment of Committee(s) equivalent toEstablished

Nomination Committee or Compensation Committee

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

All
Members

Full-timeMembers

InsideDirectors

OutsideDirectors

OutsideExperts

3

0

1

2

0

0

Inside Director

3

0

1

2

0

0

Inside Director

Other

Chairperson

Nomination andCompensation
Committee
Nomination andCompensation
Committee

Supplementary Explanation

9

The “Nomination and Compensation Committee” was established as an advisory body to the Board of Directors on February
26, 2021, for the purpose of contributing to strengthening the oversight function of the Board of Directors and enhancing theCompany’s corporate governance structure, by ensuring the transparency and objectivity of evaluation and decision-making
processes related to Director nomination and compensation. The “Nomination and Compensation Committee” functions as botha nomination committee and a compensation committee.

Audit & Supervisory Board Member**Referred to in Corporate Governance Code reference translation as “kansayaku”
Establishment of Audit & Supervisory Board
Number of Audit & Supervisory Board Members
Stipulated in Articles of Incorporation
Number of Audit & Supervisory Board Members

Established44

Cooperation among Audit & Supervisory Board Members, Accounting Auditors, and Internal Audit Department
Audit & Supervisory Board Members confirm the annual audit plan with the Accounting Auditor. We also hold debriefing
sessions on the summary of audit results at the end of the quarter and year end, and exchange opinions as necessary.
In addition, we hold meetings with the internal audit department at least once a quarter and conduct regular monitoring to ensurethat an efficient and legal corporate structure is established.

Appointment of Outside Audit & Supervisory Board
Members
Number of Outside Audit & Supervisory Board
Members
Number of Independent Audit & Supervisory Board
Members

Appointed

22Outside Audit & Supervisory Board Members’ Relationship with the Company (1)NameAttributes

Ryu Umezu

Attorney

Mitsuyo Kusano

From another company

Relationship with the Company*
a

b

c

d

e

f

g

h

i

j

k

l

m

*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 aclose 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 & 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

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g.
h.

Major client of the Company or a person who executes business for such client
Consultant, accounting expert, or legal expert who receives large amounts of cash or other assets in addition to Director/Audit& 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
to self 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 & Supervisory Board Members’ Relationship with the Company (2)Name

Ryu Umezu

Designationas
Independent
Audit &
Supervisory
Board
Member○

Supplementary
Explanation of the
Applicable Relationship

Reasons for Appointment

We have elected him as an Outside Audit & Supervisory Board―――

Member because we are expecting him to use his extensive
knowledge, insight, and expertise from his experience as an
attorney, particularly his extensive insight and experience
pertaining to capital market transactions and financialtransactions in audits of the Company. In addition, since wehave determined that there is no risk of conflict of interest withgeneral shareholders, we have also registered Outside Audit &Supervisory Board Member Umezu as an Independent Audit &Supervisory Board Member based on the request of the stock
exchange.
Mitsuyo○

We have elected her as an Outside Audit & Supervisory Board―――

KusanoMember because we are expecting her to use her wide-ranging
experience and extensive knowledge based on her achievementsin the media industry over many years and her service as anexpert sitting in various affiliated councils in audits of theCompany. In addition, since we have determined that there is norisk of conflict of interest with general shareholders, we havealso registered Outside Audit & Supervisory Board Member
Kusano as an Independent Audit & Supervisory Board Member
based on the request of the stock exchange.

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

4

Audit & Supervisory Board Members

Other Matters Concerning Independent Directors and Independent Audit & Supervisory Board Members
The Company has designated all Outside Directors and Outside Audit & Supervisory Board Members as Independent Directors
and Independent Audit & Supervisory Board Members stipulated by the Tokyo Stock Exchange and has registered them with theexchange.

Incentives
Implementation Status of Measures related toIncentives Granted to Directors

Introduction of Performance-linked Compensation System

Supplementary Explanation for Applicable Items
Regarding compensation (bonuses) for Directors, we have adopted a performance-linked bonus determination method based onstandards including the consolidated performance of the Group.

Persons Eligible for Stock Options

Supplementary Explanation for Applicable Items―――

Director Compensation Updated
Status of Disclosure of Individual Directors’

Disclosure for Selected Directors

Compensation

Supplementary Explanation for Applicable Items Updated
The compensation of the six Directors of the Company (including tow Outside Directors) for fiscal 2023 is as follows.
i. Basic compensation¥175 million (including ¥24 million for Outside Directors)

ii. Compensation for the purpose of acquiring company stock ¥53 million (for Directors excluding Outside Directors)iii. Bonuses¥104 million (for Directors excluding Outside Directors)

The above compensation amount includes compensation for the term of office of the relevant Director until his or her retirement.

Furthermore, the Company discloses individual compensation of persons receiving total consolidated compensation of ¥100
million or more, as follows.
a.

Michinobu Yasumoto, President and CEO - Total payment: ¥112 million(Breakdown: Basic compensation ¥50 million, bonus ¥37 million, and compensation for the purpose of acquiring company
stock ¥24 million)

12

Policy on Determining Compensation Amounts andthe Calculation Methods Thereof

Established

Disclosure of Policy on Determining Compensation Amounts and the Calculation Methods Thereof
Policies for determining the amounts of and calculation methods for the compensation for Directors and Audit & Supervisory
Board Members are as follows.
1. Policies for determining the amounts of the compensation for Directors and Audit & Supervisory Board Members
Compensation paid to Directors and Audit & Supervisory Board Members comprises fixed basic compensation, compensation
for the purpose of acquiring Company stock, and performance-linked bonuses.
i. Basic compensation
Basic compensation paid to Directors and Audit & Supervisory Board Members is determined based on predefined standards
that take into account factors such as full-time or part-time status, roles, ranks, years of service, and individual performance
evaluations. The amounts of compensation paid to Directors are determined by the Board of Directors while the amounts ofcompensation paid to Audit & Supervisory Board Members are determined through discussions among Audit & Supervisory
Board Members.
ii. Compensation for the purpose of acquiring company stock
In June 2015, the Company replaced the previous stock compensation-type stock options with compensation for the purposeof acquiring Company stock, with the aim of improving the motivation and morale of Directors to raise stock price andimprove business performance. Compensation for the purpose of acquiring Company stock is paid to Directors (excluding
Outside Directors).
iii. Bonuses
Performance-linked bonuses are paid to Directors (excluding Outside Directors) based on the Company’s consolidated
performance, etc., for the relevant fiscal year.

2. Resolutions by the General Meeting of Shareholders with regard to compensation for Directors and Audit & Supervisory
Board Members
The amount of compensation paid to the Directors of the Company was set at “¥500 million or less per year (¥30 million orless for Outside Directors)” by the resolution of the 60th Annual General Meeting of Shareholders held on May 24, 2007.
Compensation amounts are determined by the resolution of the Board of Directors within this limit.
In addition, at the 74th Annual General Meeting of Shareholders held on May 27, 2021, it was resolved to revise only theamount of compensation for Outside Directors from “¥30 million or less per year” to “¥50 million or less per year.”
The amount of compensation paid to Audit & Supervisory Board Members was set at “¥60 million or less per year” by the
resolution of the 48th Annual General Meeting of Shareholders held on May 25, 1995. Compensation amounts are determinedthrough discussions among the Audit & Supervisory Board Members within this limit.
The number of Directors and that of Audit & Supervisory Board Members at the time of the respective resolution was seven(7) and four (4), respectively.

13

3. Performance indicators and method for determining the amount of performance-linked compensation
Bonuses are paid as performance-linked compensation. The purpose of this compensation is to reflect single-year businessperformance in compensation, raise motivation for improving business performance, enhance awareness towards achieving
management targets, and clarify merits evaluation compared to performance results.
The amount of bonuses is based on the amounts derived on the basis of companywide performance in accordance with thesame standards used to calculate the bonuses of general employees, and the amount is determined based on performance
evaluations that comprehensively take into account the degree of achievement compared to target indicators for management
accounting, including net sales and profit and loss in the areas of responsibility assigned to each Director as set at the beginningof each fiscal year.
Performance evaluations are determined at financial account settlement meetings attended by Directors, Audit & Supervisory
Board Members, and Executive Officers.

Support System for Outside Directors and/or Outside Audit & Supervisory Board Members
Although full-time staff is not assigned for Outside Directors and Outside Audit & Supervisory Board Members, the President's
Office is in charge of supporting information transmission and other duties.
For Outside Audit & Supervisory Board Members, in addition to the President's Office, the staff of Audit & Supervisory Board
Members is also in charge of supporting them.

2.

Matters Concerning Functions of Business Execution, Auditing and Supervision, Nomination, andCompensation Decisions (Overview of Current Corporate Governance System) Updated(a) Directors and the Board of Directors
In order to further clarify the management responsibilities of Directors, to increase opportunities to gain the confidence ofshareholders, and to put in place an optimal and flexible management framework that is capable of responding to changes in thebusiness environment in a timely manner, the Company has set the term of Directors at one year. In addition, two of the six
members of the Board of Directors (five men and one woman) are appointed from outside the Company and selected on the basisof their high level of independence. This initiative is aimed at reinforcing the supervisory function of the Board.
In fiscal 2023, the Board of Directors met 12 times (four separate meetings were held in the form of document correspondence).

(b) Audit & Supervisory Board Members and the Audit & Supervisory Board
The Company has adopted an Audit & Supervisory Board structure, under which the Company has appointed four Audit &Supervisory Board Members (three men and one woman), two of whom are Outside Audit & Supervisory Board Members. Staff
has also been assigned to assist Audit & Supervisory Board Members in carrying out their duties and to strengthen theirsupervisory function. Each Member audits and monitors the performance of Directors. Responsibilities include reviewing the
documentation of important decisions and attending important meetings, such as Board of Directors’ meetings, Group financial
account settlement meetings, and budget committee meetings, in accordance with audit policies and the roles established by the
Audit & Supervisory Board. In addition, the Internal Control Office and business departments conduct periodic monitoring in aneffort to establish an effective and lawful corporate structure.
The Audit & Supervisory Board meets with the Representative Directors and the Accounting Auditor on a regular basis to shareand exchange information and opinions. This initiative is also designed to ensure a structure is in place that is capable of14

conducting audits in an effective manner. Moreover, the Audit & Supervisory Board receives reports from each Member inaccordance with audit policies and the roles. Deliberations are undertaken and resolutions are made based on this information as
required.
In fiscal 2023, the Audit & Supervisory Board met 16 times.

(c) Nomination and Compensation Committee
The Company established the Nomination and Compensation Committee as an advisory body to the Board of Directors on
February 26, 2021, for the purpose of contributing to strengthening the oversight function of the Board of Directors and enhancing
the Company’s corporate governance structure, by ensuring the transparency and objectivity of evaluation and decision-making
processes related to Director nomination and compensation.
The Nomination and Compensation Committee functions as both a nominating committee and a compensation committee.

(d) Onward Group Compliance Committee
The Board of Directors has established the Onward Group Compliance Committee as an organization for overseeing theCompany’s compliance structure.
Together with the Compliance Division, the Onward Group Compliance Committee conducts effective training and awarenessraising activities, takes steps to spread understanding of the Compliance Manual, enhances the Company’s compliance structure
to ensure functionality, and performs compliance-related checks.

(e) Business Execution Structure
The Onward Group has adopted a holding company structure that allows the Company’s Board of Directors to engage instrategic decision-making and supervise operating companies. At the same time, the Group has separated the supervisory andexecution functions in order to clarify the responsibilities and authority of each operating company and to facilitate accelerated
strategic decision making.
When matters that require urgent attention arise, the Board of Directors convenes as necessary. In this manner, the Onward
Group has a system in place that ensures a swift and appropriate response to rapid changes in the business environment.
Moreover, the Group has introduced an executive officer system (five male executive officers but no female representation at
this time) with the aim of clarifying management decision-making and business execution functions. In order to facilitate flexible
decision making on a Groupwide basis, the Onward Group Strategy Meeting, which primarily comprises Directors and operating
officers from Group companies, is in place to review the management strategies and important management matters of operatingcompanies and confirm the status of operations.
The Onward Group also has advisory contracts with a number of attorneys to receive legal advice.

(f) Accounting audit status
The Company has entered into an audit contract with Ernst & Young ShinNihon LLC., and conducts audits as appropriate. The
names of certified public accountants who executed business in the fiscal year ended February 29, 2024 are as follows.
Michiyo Hirose, Designated Limited Liability Partner and Engagement Partner
Hayato Kobayashi, Designated Limited Liability Partner and Engagement Partner
Taku Inoue, Designated Limited Liability Partner and Engagement Partner

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The number of years of continuous audit is omitted because all three are within seven years.
The composition of assistants involved in the Company’s audit work is as follows.
Certified public accountants

13 persons

Other

25 persons(g) Overview of the details of the limited liability contract
In order for the Company to welcome useful human resources as Outside Directors and for Outside Audit & Supervisory Board
Members to fulfill the expected roles, the current Articles of Incorporation stipulates that it is possible to conclude a contract with
Outside Directors and Outside Audit & Supervisory Board Members to limit their liability for damages to the Company to acertain extent.
The details of the said limited liability contract are as follows.
•If Outside Directors and Outside Audit & Supervisory Board Members become liable for damages to the Company due tofailure to perform their duties, they shall be liable for damages up to the minimum liability amount stipulated in Article 423,
Paragraph 1 of the Companies Act, based on the provisions of Article 427, Paragraph 1 of the same Act.
•The above liability limitation is permitted only when the relevant Outside Directors and Outside Audit & Supervisory Board
Members acted in good faith without gross negligence in performing the duties that caused the liability.

(h) Overview of directors and officers liability insurance•The Company has entered into a directors and officers liability insurance (“D&O insurance”) policy, which covers damage andcosts incurred when Directors and officers have become liable for damages arising due to their performance of duties.
•The full amount of the insurance premiums for D&O insurance is borne by the Company.
•If each candidate is elected and assumes the office of Director, the Company plans to include each of the Directors as the insured
under the D&O insurance policy.
•The term of the D&O insurance policy is one year, and the Company plans to renew the policy before the expiration of that termby resolution of the Board of Directors.

3. Reasons for Adoption of Current Corporate Governance System
The Company deliberates and decides on important management decisions through lively discussions at the Board of Directors
meetings, etc., which include multiple highly independent Outside Directors. Outside Directors aim to facilitate appropriate
decision making by the Board of Directors and strengthen its management supervision function from a practical, objective, andprofessional perspective based on extensive experience as academic experts and corporate managers. In addition, the “Nomination
and Compensation Committee” has been voluntarily established as an advisory body to the Board of Directors.
The Company has close cooperation between the Audit & Supervisory Board, which includes multiple highly independent
Outside Audit & Supervisory Board Members, and the Board of Directors, and aims to further strengthen the supervisory function
for management while utilizing the functions of Audit & Supervisory Board Members.
Furthermore, we have built a multifaceted internal control system, including through strengthening the organization andauthority of the internal audit department, and coordination between Audit & Supervisory Board Members or the internal audit
department and the Accounting Auditor, and we believe that the current system is a highly transparent governance system fordomestic and overseas investors.

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III.
1.

Implementation of Measures for Shareholders and Other Stakeholders
Measures to Vitalize the General Meetings of Shareholders and Facilitate Exercise of Voting Rights

UpdatedSupplementary Explanation
Early Posting of Notice of Convocation of the

We sent the notice approximately three weeks before the date of the 77th

General Meeting of Shareholders

Annual General Meeting of Shareholders held in May 2024.

Electronic Exercise of Voting Rights

Voting rights can be exercised via the Internet (via a computer or smartphone).
We have been participating in a platform for the electronic exercise of voting

Participation in a Platform for the Electronic

rights since 2008.

Exercise of Voting Rights and Other Initiatives

In addition, we are making efforts to improve the environment for exercising

to Enhance Environment for Institutional

voting rights, such as explaining the agendas to institutional investors as

Investors to Exercise Voting Rights

appropriate and posting a notice of resolution in both Japanese and English
after the General Meeting.

Provision of Notice (or Summary of Notice) of

An English translation of the notice of convocation (summary) is posted on the

the General Meeting of Shareholders in English

platform for the electronic exercise of voting rights and our website.

Other

2.

The notices of convocation (Japanese and English translation [summary]) areposted on our website.

Status of IR-related Activities
Explanation by arepresentative
director or arepresentative
executive officer

Supplementary Explanation

Regular Investor Briefings held for Analysts
and Institutional Investors

Held every quarter.

Held

Mid-to Long-term Management Vision, Summary ofMonthly

Net

Sales,

Earnings

Releases,

Results

Presentation Supplement, Securities Report, Notice ofOnline Disclosure of IR Information

Convocation of the General Meeting of Shareholders,
Notice of Resolution of the General Meeting of
Shareholders, Business Reports, Annual Reports, IR News
Release Materials, etc., are posted.

Establishment of Department and/or Placementof a Manager in Charge of IR

The Investor Relations (IR) Division has been established.

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3.

Status of Measures to Ensure Due Respect for Stakeholders
Supplementary Explanation
Establishment of Internal Rules Stipulating

The “Onward Group Compliance Manual” stipulates the basic stance of

Respect for the Position of Stakeholders

fulfilling responsibilities to each stakeholder.
As a lifestyle and culture-related company, the Group contributes to thecreation of prosperous human life and regards “conservation of the global
environment” as an important management issue, aiming to be a company thatis friendly to people and the environment. With “Thinking about this planet.
Wearing these clothes.” as an environmental concept, we continue to take on
the challenge of “coexistence between the planet and the people of the world”
through various corporate activities centered on fashion. For example, we arepromoting environmental and social contribution activities through initiatives
such as providing high-quality products that can be used habitually for a long

Implementation of Environmental Preservation

time, development of cutting-edge technologies, products, and services that

Activities and CSR Activities, etc.

reduce the burden on the environment, implementation of “Onward Green
Campaign” aiming to build an apparel circulation system, energy saving withincompany buildings, and forest conservation initiatives at the Tosayama Onward
Rainbow Forest, etc.
We are also engaged in social contribution activities in collaboration with theJapanese Red Cross Society. Specifically, we carry out support activities by
donating recycled blankets to disaster-stricken areas in Japan and overseas anddeveloping countries, donate a portion of sales of the Group’s official ecommerce site to the Japanese Red Cross Society, and participate in disasterprevention and mitigation projects, etc.
The “Onward Group Compliance Manual” stipulates the basic stance andFormulation of Policies, etc. on Provision ofaction guidelines for information disclosure to disclose accurate andInformation to Stakeholders

transparent management information in a timely and appropriate manner andto actively carry out IR activities.
Regarding the active status of women, we believe that it is an important issue
for the Company, a fashion company, to utilize women's sensibilities in product

Other

and sales measures.
The Company is promoting diversity management by electing a female
Director and an Audit & Supervisory Board Member and electing female
Directors and managers at subsidiaries and associates.

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IV. Matters Concerning the Internal Control System
1. Basic Views on Internal Control System and Status of Development
Pursuant to the Companies Act and the Ordinance for Enforcement of the Companies Act, the Company has stipulated thefollowing policy with respect to “the development of systems necessary to ensure that the execution of the duties by the
Directors complies with the laws and regulations and the Articles of Incorporation, and other systems prescribed by Ministry ofJustice Order as systems necessary to ensure the properness of operations of a Stock Company and operations of the group ofenterprises consisting of the Stock Company and its Subsidiary Companies.” Under this policy, the Company will build aninternal control system and an efficient and lawful corporate structure.

1. Systems necessary to ensure that the execution of the duties by the Directors complies with the laws and regulations and the
Articles of Incorporationi. The Board of Directors regards the Onward Group Compliance Regulations as a basic policy to thoroughly ensure that
Directors and employees comply with applicable laws and regulations as well as internal regulations.
ii. The Board of Directors established the Onward Group Compliance Committee as a supervisory organization for theGroup's compliance system, and the Representative Director was appointed as chairman of the committee as an officer
responsible for the same. The Corporate Planning Division is a unit that oversees compliance, and it promotes efforts to buildand develop a compliance system for the Onward Group in accordance with the Compliance Manual under the Onward
Group Compliance Regulations.
iii. The Onward Group Compliance Committee works to instill the compliance system.

2. Systems for the storage and management of information on the execution of duties by Directors
i. The Board of Directors stores and manages information appropriately in accordance with the Regulations on Managementof Regulations and the Document Management Regulations.
ii. Directors properly store and manage documents on the execution of their duties as well as important information in amanner appropriate for their duties.
iii. The Corporate Planning Division is a unit that oversees information management.

3. Regulations and other systems for managing risk of loss
i. To build a risk management system, the Board of Directors develops and operates a management system conforming to the
Onward Group Risk Management Regulations.
ii. The Corporate Planning Division is a unit that oversees the risk management system.
iii. The Corporate Planning Division devises a plan for the development of the risk management system, identification ofproblems, and the risk management system, reports the plan to the Board of Directors, and develops a system appropriate fornatural disaster risks, information system risks, and other risks that affect the continuation of our business in a highly
significant manner.
iv. The Board of Directors shall cooperate with outside experts, etc., as necessary and take appropriate risk measures.

4. System to ensure the efficient execution of duties by Directors
i. The Board of Directors strives to raise the efficiency of the execution of duties by Directors, Executive Officers, and19

employees in accordance with the Officer Work Regulations and the Duty Authority Regulations.
ii. To execute its duties efficiently, the Board of Directors appoints Executive Officers and performs supervision appropriately
in accordance with the Onward Group Ringi Processing Regulations.
iii. In order to reinforce the supervisory function of the Board of Directors and further enhance the corporate governancesystem, the Company has established the Nomination and Compensation Committee, the majority of which consists ofIndependent Outside Directors, as an advisory body to the Board of Directors, and ensures the transparency and objectivity ofthe evaluation and decision process for the nomination and remuneration of Directors.

5. System to ensure that the execution of duties by employees complies with laws and regulations and the Articles ofIncorporationi. The Onward Group Compliance Committee appoints operating company compliance officers.
ii. The Onward Group Compliance Committee engages in appropriate education and awareness raising activities incollaboration with the Corporate Planning Division, works to instill the Compliance Manual, enhances our compliancesystem so it functions properly, and checks it.
iii. In accordance with the Onward Group Whistleblowing Regulations, the Company has established and operates
communication and whistleblowing desks internally and externally (the Onward Group Whistle Line).
iv. The Internal Control Office formulates a plan to build a business execution system so that the business of each division is
executed appropriately and efficiently in accordance with laws and regulations, the Articles of Incorporation, regulations,manuals, and internal notices, and reports to the Board of Directors.

6. Systems necessary to ensure the properness of operations of the Company and operations of the group of enterprises
consisting of the Company and its Subsidiary Companies
The Board of Directors receives regular reports on the business activities of the Company and Onward Group companies andreviews and deliberates on important matters while respecting the autonomy of their business management for the purpose of
ensuring the properness of their business activities.
(1) System for reporting information on the execution of duties by Directors of subsidiaries to the Company
i. If any decision important for our business management is intended to be made, it must be reported to the Company inaccordance with the Onward Group Ringi Processing Regulations.
ii. Business performance must be reported to the Company on a regular basis.
iii. In the event of any important matter for our operations, it must be reported to the Company on an ad hoc basis.
(2) Regulations and other systems for managing risk of loss by subsidiaries
i. To build a risk management system, the Board of Directors develops and operates a management system conforming to the
Onward Group Risk Management Regulations.
ii. The Corporate Planning Division of the Company is a unit that oversees the risk management systems of subsidiaries.
iii. The Corporate Planning Division of the Company devises a plan for the development of the risk management systems of
its subsidiaries, identification of problems, and the risk management systems, reports the plan to the Board of Directors, anddevelops a system appropriate for natural disaster risks, information system risks, and other risks that affect the continuationof our business in a highly significant manner.
iv. The Board of Directors addresses risks appropriately by working closely with external experts as required.

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(3) System to ensure the efficient execution of duties by subsidiary Directors
i. The Board of Directors strives to raise the efficiency of the execution of duties by Directors, Executive Officers, andemployees of subsidiaries in accordance with the Officer Work Regulations and the Duty Authority Regulations for
subsidiaries.
ii. The Board of Directors of each subsidiary appoints Executive Officers and performs supervision appropriately inaccordance with the Onward Group Ringi Processing Regulations in order for subsidiary Directors to execute their duties
efficiently.
(4) System to ensure that the execution of duties by directors and employees of subsidiaries complies with laws andregulations and the Articles of Incorporationi. The Onward Group Compliance Committee appoints operating company compliance officers at subsidiaries.
ii. The Onward Group Compliance Committee engages in appropriate education and awareness raising activities for
subsidiaries in collaboration with the Corporate Planning Division, works to instill the Compliance Manual, enhances ourcompliance system so it functions properly, and checks it.
iii. In accordance with the Onward Group Whistleblowing Regulations, the Company has established and operates
communication and whistleblowing desks internally and externally (the Onward Group Whistle Line).
iv. The Internal Control Office of the Company formulates a plan to build a business execution system so that the business ofthe divisions at its subsidiaries is executed appropriately and efficiently in accordance with laws and regulations, the Articles
of Incorporation, regulations, manuals, and internal notices, and reports to the Board of Directors.

7. Matters on an employee appointed to assist with the duties of an Audit & Supervisory Board Member when so required by an
Audit & Supervisory Board Member.
If needed by an Audit & Supervisory Board Member, an employee required to assist him/her will be appointed as thesecretariat of the Audit & Supervisory Board.

8. Matters on the independence from Directors of the employee set forth in the preceding item
i. Prior approval of the Audit & Supervisory Board Member must be obtained for appointing or transferring an employee
required to assist him/her and for deciding matters on the authority to manage personnel affairs.
ii. A personnel evaluation of an employee required to assist an Audit & Supervisory Board Member is conducted by the Audit& Supervisory Board Member himself/herself.

9. Matters on ensuring the effectiveness of instructions given by Audit & Supervisory Board Members to employees required toassist with their duties
i. An assistant employee must comply with the instructions and orders of each Audit & Supervisory Board Member.
ii. Directors and employees must cooperate for developing the audit environment so that the duties of assistant employees are
performed smoothly.
iii. An assistant employee is allowed to obtain advice on audit operations from external experts, as required.

10. System for reporting to Audit & Supervisory Board Members(1) System for Directors and employees of the Company to report to Audit & Supervisory Board Members

21

i. The Representative Director and Directors in charge report on our business execution as well as important issues that affectour business management at important meetings such as a meeting of the Board of Directors.
ii. Directors, Executive Officers, and employees report to Audit & Supervisory Board Members promptly and appropriately if
so requested by them.

(2) System for Directors, Audit & Supervisory Board Members, and employees of a subsidiary and persons who have received
a report from them to report to Audit & Supervisory Board Members
Directors, Audit & Supervisory Board Members, and employees of a subsidiary and persons who have received a reportfrom them must report promptly and appropriately on the subsidiary's business execution and important issues that affect thesubsidiary's business management.

11. A system to ensure that a person who has made a report as set forth in the preceding item is not treated disadvantageously
on account of having made such report
The Company and its subsidiaries prohibit any person who has made a report from being treated disadvantageously on
account of having made such report, and make Directors, officers, and employees of the Group fully aware of such prohibition.

12. Matters on policies for procedures for advance payment or reimbursement of expenses arising from the execution of duties
by Audit & Supervisory Board Members and for processing expenses or obligations arising from the execution of suchdutiesWhen an Audit & Supervisory Board Member requests an advance payment of expenses arising from the execution of his/herduties, reimbursement of expenses paid or payment of an obligation incurred by him/her, the Company complies with therequest unless it is proven that such expenses have not been incurred in relation to the execution of his/her duties.

13. System to ensure that audits by Audit & Supervisory Board Members are conducted effectively
i. The Audit & Supervisory Board has a meeting with the Representative Director regularly and exchanges information andopinions.
ii. The Audit & Supervisory Board utilizes external experts as required in conducting an audit.

14. System to exclude organized crime groups
The Group refrains from having any relationship, including a business relationship, with organized crime groups (commonlyreferred to in Japan as “Anti-social Forces”). The entire organization will respond resolutely upon receiving any unreasonable
demand from any Anti-social Forces.

15. System to ensure the reliability of financial reporting
Under the direction of the Board of Directors, the Internal Control Office promotes efforts to build and develop an internal
control system for financial reporting pursuant to the Financial Instruments and Exchange Act and other applicable laws andregulations in order to ensure the properness of documents and other information on financial accounting.

22

2. Basic Views on Measures for Eliminating Anti-Social Forces and Status of Development
1. Basic approach
The “Onward Group Compliance Manual” stipulates basic stances and action guidelines for severing relationships with antisocial forces.

2. Status of development
The entire organization will take a resolute response to anti-social forces, and will respond to unreasonable demands in close
cooperation with the police, attorneys, and other specialists. In addition, when conducting a new transaction, we will make efforts
to collect information on the business partner, confirm whether or not it belongs to any anti-social forces, and if it is found thatthe business partner is an anti-social force after starting the transaction, we will strive to include an organized crime group
exclusion clause in the contract so that we can terminate the transaction immediately.

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

Not Adopted

Supplementary Explanation for Applicable Items

2. Other Matters Concerning the Corporate Governance System
Status of the internal system related to the timely disclosure of the Company’s corporate information

The Company recognizes that information disclosure is one of the important management issues. We are working to enhance
our internal system so that we can accurately and promptly disclose important information that is required to be disclosed by thetimely disclosure rules and other information that may affect investment decisions.
As a general rule, corporate information stipulated under the timely disclosure rules of the stock exchanges shall be disclosed
upon the approval of the Board of Directors.
At the Company, the Director in charge of finance, accounting, and investor relations is the information manager for timely
disclosure. The Accounting Division constantly collects information on laws and regulations, etc., related to timely disclosure,and in addition to understanding the content, checks with the Corporate Planning Division, Legal Affairs Division, IR Division,
Internal Control Office, General Affairs Division, President’s Office, and Human Resources Division as needed. In addition toregular audits from Audit & Supervisory Board Members and the Accounting Auditor, we also receive advice and guidance,
including from corporate attorneys and managing underwriters.

Our corporate governance system, internal control system, and risk management system are as follows.

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