Corporate Governance Report
Last Update: June 28, 2024

Fuyo General Lease Co., Ltd.
Hiroaki Oda, President and CEO
Contact: Corporate Communications Office: 03-5275-8891
Securities Code: 8424
https://www.fgl.co.jp/eng/
The corporate governance of Fuyo General Lease Co., Ltd. (the “Company”) is described below.

I.

Basic Views on Corporate Governance, Capital Structure, Corporate Profile andOther Basic Information

1. Basic Views
The Fuyo Lease Group believes that placing importance on relationships with shareholders, customers,
employees, local communities, and various other stakeholders and engaging in honest and fair businessactivities to achieve the performance targets of “Fuyo Shared Value 2026”, the medium-term management
plan for fiscal 2022 to fiscal 2026, in accordance with the Fuyo Lease Group’s Mission/Vision/Value are thefoundation of corporate governance and the most important task of management.
[Reasons for not Implementing the Principles of the Corporate Governance Code]
The Company has implemented each principle of the Corporate Governance Code.
[Disclosure Based on the Principles of the Corporate Governance Code]Our basic views on Corporate Governance, the governance structure, operating policy, and other aspects ofcorporate governance are set forth in our Corporate Governance Guidelines (hereafter, “Guidelines”), on the
Company’s website. They can be viewed at the following URL:
(https://www.fgl.co.jp/eng/sustainability/corporate/governance.html)[Principle 1.4 Basic Policy on Cross-Shareholding and the Exercise of Voting Rights Pertaining to CrossShareholdings]
See Article 7 in the Guidelines. An overview of due diligence on cross-shareholdings of listed companies by
the Board of Directors as of March 31, 2024 is disclosed in the Securities Report for Period 55.
(https://ssl4.eir-parts.net/doc/8424/yuho_pdf/S100TQ74/00.pdf)[Principle 1.7 Related Party Transactions]
See Article 8 in the Guidelines.
[Supplementary Principle 2-4 (1)] Ensuring diversity in the appointment core personnel(1) Approach to Ensuring Diversity
The Company believes that diversity of human resources is a key growth driver. Bringing together different
strengths, viewpoints and values generates the innovation that creates new value, and leads to sustainablegrowth for the Group. We are working to promote diversity and inclusion, aiming to create a workplacethat is fulfilling and rewarding for everyone to work in so that they can enhance their expertise, with thegoal of creating a workplace where every employee can maximize their full potential, regardless of age,sex, nationality, sexual orientation, gender identity, race, ethnicity or disability.
In particular, we consider the advancement of women to be an important management issue for our Groupin terms of securing talented human resources and responding to diversifying market needs. We arecomprehensively planning the hiring of new employees and the promotion of women to management
positions.
(2) Voluntary and Measurable Goals for Ensuring Diversity
The current status (as of the end of March 2024) and targets for women, non-Japanese, and mid-careerhires in our company are as follows.
①
Ratio of female employees in management positions Current: 32.2% / Goal: 35% or more (bythe end of FY 2026)②
Appointment of non-Japanese managers Current: 0 / Goal: About 2 (by the end of FY2030)③
Appointment of mid-career hire managers Current: 141 / Goal: Current status(3) Human resource development policy and internal environment policy and status to ensure diversity
We expect our employees to be "self-motivated individuals who think and act proactively on their own
initiative and have a desire to grow and we want our staff to develop into "personnel with a high level ofexpertise in each business area and the ability to create high added value" in order to enable sustainablegrowth with CSV at its center. To provide these people with the most assistance for their development,
we are actively investing in their human resource development. In particular, we are expanding our
educational programs to enhance the skills required and necessary for creating value from the bottom up in
all business areas, such as language, DX, and new finance, as well as the specialized skills that are thesource of high added value in each business area, such as energy, BPO, and healthcare. To further this, we
opened “Fuyo Shared Value Creation Center” a facility dedicated to training, in Toyosu, Koto Ward,
Tokyo, as an environment that allows us to focus more on learning. In addition, to develop self-reliant
human resources with a desire to grow, we have introduced an "in-house coaching certification program"for management-level employees, which is used to practice guidance of subordinates that elicits autonomy.
The cafeteria plan we started in fiscal 2022 has taken root and is utilized by employees for autonomous
learning, such as attending English conversation and business schools, and outsourced seminars.
For this item, please also refer to Article 22 of the Guidelines, the Securities Report and on the Company’s
website.
（https://www.fgl.co.jp/eng/sustainability/corporate/governance.html）(https://ssl4.eir-parts.net/doc/8424/yuho_pdf/S100TQ74/00.pdf)(https://www.fgl.co.jp/eng/sustainability/society/)[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]
In order to ensure the safe and efficient management of the contract-based corporate pension fund, theCompany established a Pension Asset Management Committee, which is chaired by the director in charge ofthe Human Resources Division and includes the general managers of the Human Resources Division, Finance
Division, Financial Planning Division, and Finance Business Division, as well as the chairman of theemployee labor union (with the participation of financial institutions, etc., as needed, as observers) in April
2024, in accordance with the basic policy for the management of pension assets, the Company manages its
reserves through investment institutions.

Management of both pension funds is entrusted to management firms that adhere to the Japanese Stewardship
Code and the Company monitors each firm contracted for management on a regular basis. In addition, in thePension Fund Association in which we are a member, the Company has established an operational system inwhich persons with expertise are assigned to the Asset Management Committee as members.
[Principle 3.1]
(1) Corporate Vision (Management Philosophy, etc.), Management Strategy, and Management Plan
The Group's Mission/Vision/Value, management strategies, and management plans, including theCompany's medium-term management plan and business overview by field, are disclosed in the Business
Report attached to the "Notice of the 55th Annual General Meeting of Shareholders", and on the
Company’s website.
(https://ssl4.eir-parts.net/doc/8424/ir_material6/186350/00.pdf)(https://ssl4.eir-parts.net/doc/8424/announcement/99708/00.pdf)(2) Basic Views and Basic Policy on Corporate GovernanceSee Provision 1., above, and the Guidelines.
(3) Policy and Procedure for Determining the Remuneration of Directors and Audit & Supervisory Board
Members
Please refer to Article 21 of the Guidelines and "Director Remuneration" below.
(4) Policy and Procedure for Nomination and Dismissal of Candidates for Directors and Audit &Supervisory Board Members
Please refer to Articles 10, 11 and 12 of the Guidelines.
(5) Providing Explanations for Individual Appointments and Nominations for the Positions of Director and
Audit & Supervisory Board Member
The reason for nomination is disclosed in the Reference Documents appended to the Notice of the 55th
Annual General Meeting of Shareholders for each candidate nominated for the position of director or
audit & supervisory board member. See the Company’s website.
(https://ssl4.eir-parts.net/doc/8424/ir_material6/229554/00.pdf)[Supplementary Principle 3-1 (3)] Approaches to Sustainability(1) Approaches to Sustainability
The Fuyo Lease Group works on solving social issues represented by the SDGs through our business
operations, and works on Sustainability issues based on the concept of CSV in order to achieve both thebuilding of a sustainable society and sustainable growth as a company. Our basic approach tosustainability and CSV is set forth in our "Basic Policy on Systems to Support Sustainable Value
Creation," and we have established a "CSV Promotion Committee" to promote these efforts.
＜Basic Policy on Systems to Support Sustainable Value Creation＞
In addition to meeting the expectations of society and our stakeholders, the Fuyo Lease Group iscommitted to building a sustainable society and achieving sustainable growth as a company through ourbusiness operations, and to addressing social issues such as the SDGs. To this end, we will position theconcept of CSV as the foundation of our management and strengthen it as a long-term strategy.
1.

Responding to climate change
In response to climate change issues, the Fuyo Lease Group is working to reduce greenhouse gas
emissions from its own operations. At the same time, we recognize the growing demand for renewableenergy and environmentally friendly products and services as a business opportunity and are working tohelp our customers decarbonize. In addition, as a measure to adapt to climate change, we are working tostrengthen our resilience in the event of an emergency by promoting BCP measures that assume risks
such as restrictions on corporate activities due to an increase in natural disasters. We will work
proactively to mitigate and adapt to climate change and achieve sustainable growth.

2. Respect for Human Rights
The Fuyo Lease Group will act in a manner that respects the dignity and basic human rights of all people,
including business partners, officers and employees, and will build a corporate culture filled with a spiritof respect for human rights.
3. Human Resource Strategy to Enhance Value
The Fuyo Lease Group believes that “Human Capital” are its greatest asset. We respect each employee
and his or her individuality, and we believe it is important for employees to ''job satisfaction'' and''motivated to work'', to grow through their work, and to lead fulfilling lives both physically and mentally.
We also believe that the sustainable growth of the Group will be achieved by encouraging the growth of
every employee and maximizing the use of their talents and abilities, thereby simultaneously enhancing
corporate value and creating social value.
4.

Contributing to the Community
The Fuyo Lease Group recognizes its deep relationship with local communities, and we want to continue
to grow together while fulfilling our role as a good corporate citizen that contributes to the developmentof local communities. The Group has established a social contribution policy and is engaged in social
contribution activities mainly in the areas of "environment," "local communities," "academia andresearch," and "support for disaster-stricken areas," while making use of the Group's know-how, products
and services.

5. Approach to Risk
The Fuyo Lease Group anticipates a variety of risks that could arise in the course of businessdevelopment and is taking steps to address them. Details of the Group's business and other risks aredisclosed in our Annual Securities Report, and the status of our response to these risks is regularly
reported to the Board of Directors.
6.

Ensuring compliance
The Fuyo Lease Group has positioned thorough compliance as a fundamental management principle, andwe are working to strengthen and enhance the compliance system to ensure strict adherence to all laws,
regulations and rules, as well as to carry out honest and fair corporate activities that do not violate social
norms.

the Fuyo Lease Group established “the Fuyo Lease Group Human Rights Policy” by approval of theBoard of Directors and disclosed it on the Company's website to clarify the Group's support forinternational standards and its commitment to fulfilling its responsibilities by promoting initiatives torespect human rights in its business activities.
(https://www.fgl.co.jp/eng/sustainability/society/human-rights/policy.html)(2) Investment in Human Capital
The Company invests in human capital with a focus on employee development and remuneration. With
regard to employee development, we believe that solving increasingly challenging social issues requires
proactive human resource development of a different perspective than in the past, and under our mediumterm management plan "Fuyo Shared Value 2026," we plan to increase our human resource developmentrelated expenses by 300% during the period. In addition to the knowledge and business skills required for
traditional leasing and finance, we will also increase the number of training programs aimed at raising thelevel of added value in each business area, such as language, digital transformation, and cutting-edge
finance. In addition, in order to strengthen the high level of expertise in each business area, we haveintroduced a cafeteria plan as part of our self-development system and are focusing on initiatives tosupport employee independence and motivation by strengthening support for participation in outside
seminars and attendance at language and certification schools. To further this, we opened “Fuyo Shared
Value Creation Center” a facility dedicated to training, in Toyosu, Koto Ward, Tokyo, as anenvironment that allows us to focus more on learning. Regarding the treatment of employees, theCompany strives for stable and steady improvement, taking into consideration the environment
surrounding the industry and the Company's business performance.
The Company's performance in terms of training and compensation is as follows① Performance in terms of training
・Training-related expenses: 199 million yen (as of March 31.2024, 249% compared to FY2021(the final year of the previous medium-term management plan))
・Dispatch of trainee to overseas subsidiary: 7 people (as of May 31.2024)
・Dispatch of employees for training in Japan for educational purposes (including secondment):
18 people (as of May 31.2024)② Performance in terms of compensation
・Average employee salary: 8.91 million yen (as of March 31.2024)(3) Investment in intellectual property
We manage our business portfolio based on a zone management approach and in the "incubation zone",which is set as one of the portfolios, we are promoting investments in new ventures and capital andbusiness alliances, as well as expanding our business domain through collaboration with ventures inwhich we have already invested in order to foster new businesses through investments in R&D-oriented
ventures,
In addition, as a measure to contribute to academia and research, as well as to culture and the arts, weinvest in funds that support the commercialization of university research results, and in funds that support
students who aspire to become artists.
Our approach to zone management and the results of our venture investments are disclosed in the
Integrated Report and the Company’s website.

（https://www.fgl.co.jp/eng/sustainability/download.html）（https://www.fgl.co.jp/eng/sustainability/society/）(4) Information Disclosure Based on TCFD Recommendations
We recognize climate change as a pressing issue in society, and in addition to reducing our own
greenhouse gas emissions, we are actively working to promote the decarbonization of society and ourcustomers through our business.
We have also expressed our support for the recommendations of the TCFD (Task Force on Climaterelated Financial Disclosures) in May 2019, we analyze the impact of risks and opportunities related toclimate change on our business activities based on the TCFD framework and disclose them on our
website.
（https://www.fgl.co.jp/eng/sustainability/environment/tcfd.html）[Supplementary Principle 4－1(1)] Overview of the Scope of Delegation to Management
See Article 9, Paragraph 4 in the Guidelines.
[Principle 4.9 ] Independence Standards for Outside Officers
See the Annex to the Guidelines 2 (Independence Standards).
[Supplementary Principle 4-10 (1)]The Company has established the Nomination and Remuneration Advisory Committee as a voluntary advisory
body to the Board of Directors (establishment date: November 5, 2015).
Including our approach to independence, details of the composition of the Nomination and Remuneration
Advisory Committee are described in "Status of Establishment of Voluntary Committees, Composition ofMembers, and Attributes of the Committee Chairperson .
[Supplementary Principle 4-11(1)] Views on the balance of knowledge, experience, and ability, diversity, andsize of the Board of Directors as a whole and Skill Matrix(1) Concept of composition of the Board of Directors, qualifications of directors, and nomination anddismissal procedures
Please refer to Articles 10 and 11 of the Guideline.
(2) Skills Matrix
The Company believes that in order to expand its business domain while appropriately responding todiscontinued and rapid changes in the business environment, it is important to have officers on the Boardof Directors who have a wide range of skills (knowledge, experience, ability, etc.) to practice effective
supervision while taking a broad view of such changes.
The areas (skills matrix) that we expect from each director and audit & supervisory board member, basedon their expertise and experience, in order to steadily implement the Group's medium-term management
plan and achieve its goals are as shown in Reference Material 2.

The Company will use the skills matrix to determine whether the current Board of Directors is composedof individuals who can fully demonstrate its effectiveness, and will also use it to select future directors,
etc.
[Supplementary Principle 4-11(2)] Concurrent Appointments of Directors and Audit & Supervisory Board
Members
Significant concurrent appointments of directors and audit & supervisory board members are disclosed in theBusiness Report and in the Reference Documents for the General Meeting of Shareholders in the Notice of the
55th Annual General Meeting of Shareholders.
（https://ssl4.eir-parts.net/doc/8424/ir_material6/229554/00.pdf）[Supplementary Principle 4-11(3)] Analysis and Evaluation of Overall Effectiveness of the Board of Directors
All directors and audit & supervisory board members were surveyed and interviewed as needed to analyze andevaluate the overall effectiveness of the Board of Directors. The Nomination and Remuneration Advisory
Committee, of which the majority is comprised of independent outside directors (with legal counsel assisting
the Board of Directors Operations Office), deliberated and reported on the results, and the Board of Directors
adopted a resolution. Five evaluation items were set: composition of the Board of Directors, role of the Boardof Directors, operation of the Board of Directors, support system for outside officers, and summary.
The outline of the analysis / evaluation results for FY2023 is as follows.
1.

The Board of Directors was found to be appropriate in all evaluation items, including size andcomposition, functions and roles, and operation, and its effectiveness was confirmed. However, it isnecessary to continue to steadily promote and further establish measures to improve the functions of theBoard of Directors and to constantly review the Board in response to changes in the internal and external
environment.

2.

The status of responses to the issues in the previous analysis and evaluation is as follows, confirming that
improvements in effectiveness have been made.

・Issue 1 ''Further Improvement of Board of Director Functions''：Risk management functions have beenfurther strengthened through actions like reporting on scenario analysis of risks in the case of a majordisaster and regular reporting on the state of the market and its effects on the company, including interest
rate and foreign exchange circumstances. In addition, the Board of Directors is steadily improving its
functions by providing enhanced and sophisticated information, such as detailed reports on humanresource portfolios, in the deliberation of succession planning (Succession Plan) by the Nomination andRemuneration Advisory Committee.
・Issue 2 ''Steady promotion of the medium-term management plan steadily and further deepening of CSV
management'：To further deepen the steady implementation of the mid-term management plan and theimprovement of CSV management, more opportunities have been established for reporting progress on
non-financial targets to the Board of Directors, including reports on employee engagement.
・Issue 3 ''Further Enhancement of information provision to outside officers''：Additionally, just as in theprevious fiscal year, the company has continued to improve the information it provides to outside officers
by organizing site visits (visits to customers and employee interactions) and by giving them the chance tohear from the company's legal advisors about the legal risks associated with the Group's businesses.
We also realized that the Board of Directors' functions needed to be further improved by improving thereports that are sent to the Board of Directors, improving the discussions on medium- and long-termthemes and CSV management, and giving outside officers more information. Furthermore, as mediumand long-term issues, the Company acknowledges the necessity of consistently enhancing the diversity of
the Board of Directors' membership and further enhancing Group governance.
Based on the results of the above analysis and evaluation, the Company's Board of Directors will makefurther efforts to improve the functions of the Board of Directors and further enhance its effectiveness.
[Supplementary Principle 4-14(2)] Policy on Training Directors and Audit & Supervisory Board Members
See Article 19 in the Guidelines.
[Principle 5.1 Policy on Establishing a Structure and Taking Steps to Promote Constructive Dialog with
Shareholders]
See Article 6 in the Guidelines.
[Principle 5-2, Supplementary Principle 5-2 (1)】 Formulate and Announce Management Strategies and Plans
With regard to management strategies and plans, the Company publishes its Medium-term Management Plan,business overview by field in the Business Report attached to the "Notice of the 55th Annual General Meetingof Shareholders.'', and on the Company’s website.
（https://ssl4.eir-parts.net/doc/8424/ir_material6/186350/00.pdf)(https://ssl4.eir-parts.net/doc/8424/ir_material6/229554/00.pdf＜Basic policy regarding the Group's business portfolio＞
In order to achieve sustainable growth, the Fuyo Lease Group will continue to invest management resources ingrowth markets and maintain a balance among multiple business domains of a certain revenue scale. The
management of our business portfolio is based on the "zone management approach," in which businessdomains are divided into four quadrants and managed to promote selection and concentration.
For more information on the "zone management approach," please refer to the Medium-term managementplan.
（https://ssl4.eir-parts.net/doc/8424/ir_material6/186350/00.pdf)<Action to Implement Management that is Conscious of Cost of Capital and Stock Price>
The Company's medium-term management plan, "Fuyo Shared Value 2026," was launched in FY 2022. By
incorporating the concept of Creating Shared Value (CSV), which aims to improve corporate value by usingbusiness to solve social issues, and by pursuing both financial (corporate value) and non-financial (social
value) targets equally, the Company hopes to achieve sustainable profit growth. For financial targets, theCompany has set ordinary profit, return on assets (ROA)(Ratio of ordinary profit to operating assets), equity
ratio, and return on equity (ROE) of 10% or more; and is promoting business operations with an awareness ofcapital profitability. As for non-financial targets, the Company has set goals for contributing to the realizationof a decarbonized and recycling oriented society, creating new value-creating time for customers, and strategic
human resource development and other materiality. Furthermore, the Company is working to create social
value through the execution of business.
The Company believes that sustainable profit growth through the steady implementation of these strategies set
forth in the medium-term management plan will lead to the realization of medium- and long-term improving
corporate value.

The Board of Directors will continue to regularly review and formulate initiatives based on analysis andevaluation of the current situation regarding cost of capital, capital profitability, and market valuation.
For more information about the medium-term management plan, [Fuyo Shared Value 2026], please refer to thefollowing.
(https://ssl4.eir-parts.net/doc/8424/ir_material6/186350/00.pdf)<Status of Dialogue with Shareholders>
For more information on this item, please refer to the Sustainability Site on our website.
(https://www.fgl.co.jp/eng/sustainability/society/ir/communication.html)

2. Capital Structure
Foreign Shareholding Ratio: From 10% to less than 20%[Status of Major Shareholders]Name / Company Name
Hulic Co., Ltd.
The Master Trust Bank of Japan, Ltd. (Trust Account)
Meiji Yasuda Life Insurance Company
Retirement Benefit Trust managed by Mizuho Trust & Banking
Co., Ltd. (Marubeni Corporation account);
Custody Bank of Japan, Ltd. as a Trustee of Retrust
Custody Bank of Japan, Ltd. (Trust Account)Sompo Japan Insurance Inc.
Azbil Corporation
Mizuho Bank, Ltd.
Nichirei Corporation
Tokio Marine & Nichido Fire Insurance Co., Ltd.
Controlling Shareholder (except for Parent
Company)―――

Parent Company

None

Supplementary Explanation―――

Number of Shares
Owned
4,218,200
2,737,700
2,555,900

Percentage (%)
13.96
9.06
8.46

1,512,300

5.01

1,216,400
1,002,400
1,000,000
907,900
416,600
400,040

4.03
3.32
3.31
3.00
1.38
1.32

3. Corporate Profile
Stock Market and Market Section Listed on

Tokyo Stock Exchange, Prime Market

Fiscal Year-end

MarchType of Business

Other financing business

Number of Employees (Consolidated) as of the
End of the Previous Fiscal YearSales (Consolidated) as of the End of thePrevious Fiscal Year
Number of Consolidated Subsidiaries as of the
End of the Previous Fiscal Year

More than 1,000
From ¥100 billion to less than ¥1 trillion
From 50 to less than 100

4. Policy on Measures to Protect Minority Shareholders When the Company Engages in Transactions
with Controlling Shareholder―――

5. Other Special Circumstances that May Have Material Impact on Corporate Governance
None

II. Business Management Organization and Other Corporate Governance Systems
Regarding Decision-making, Execution of Business, and Oversight inManagement
1. Organizational Composition and Operation
Organization Form

Company with an Audit & Supervisory Board[Board of Directors]
Maximum Number of Directors Stipulated in
Articles of Incorporation
Term of Office Stipulated in Articles ofIncorporation15
1 yearChairperson of the Board

Chairman

Number of Directors

9

Appointment of Outside Directors

Appointed

Number of Outside Directors

4

Number of Independent Directors

4Outside Directors’ Relationship with the Company (1)Name
Seiichi Isshiki
Hideo Ichikawa
Masayuki Yamamura
Hiroko Matsumoto

Attributes
From anothercompany
From anothercompany
From anothercompany
Professorab

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

j

k

△
△
△
△

○

○

* 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 past
a.
b.
c.
d.
e.
f.

Executive of the Company or its subsidiaries
Non-executive director or executive of a parent company of the Company
Executive of a fellow subsidiary of the Company
A party whose major client or supplier is the Company or an executive thereof
Major client or supplier of the Company or an executive thereof
Consultant, accountant or legal professional who receives a large amount of monetary consideration orother property from the Company besides remuneration as a director/audit & supervisory board member
g. Major shareholder of the Company (or an executive of the major shareholder if the shareholder is a legal
entity)h. Executive of a client or supplier of the Company (which does not correspond to d, e, or f) (the director
himself/herself only)
i. Executive of a company which has the same individual(s) as the Company appointed as outside
directors/audit & supervisory board members (refers only to the director)
j. Executive of a company or organization that has received a donation from the Company (refers only to thedirector)k. Others

Outside Directors’ Relationship with the Company (2)Name

Seiichi Isshiki

Hideo Ichikawa

Designation as
Independent
Director○○

Supplementary
Explanation of theRelationship<Outside Director
Attributes >Mr. Isshiki is a former
Representative Director
and President of JX
Nippon Oil & Energy
Corporation (currently
ENEOS Corporation.
). The Company hasroutine lease transactions
with JXTG Nippon Oil &Energy Corporation, butthese transactions
comprise less than one
percent of total annual
consolidated revenues.

<Outside Director
Attributes >Mr. Ichikawa is advisor at
Resonac Holdings
Corporation. The
Company has notransactions with theResonac Holdings
Corporation.

Reasons for Appointment
In addition to serving as
Representative Director & President& chief executive officer of JX
Nippon Oil & Energy Corporation,
Mr. Isshiki has served as a director of
JX Holdings, Inc. and Representative
Director & President of ENEOS
Celltech Co., Ltd. We believe that his
abundant experience and deep insightwill provide a perspective that is
independent of management and willcontribute to enhancing theeffectiveness of the decision-making
and oversight functions of the Boardof Directors.
<Reason for designation as anindependent officer>
He fulfills the Tokyo Stock
Exchange, Inc. requirements forindependent officers and poses norisk of a conflict of interest withgeneral shareholders.
We believe that his many years ofmanagement experience as
representative director and president,
chief executive officer, representative
director and chairman of the board,
director, chairman of the board ofShowa Denko K.K (Currently
Resonac Holdings Corporation). andhis abundant experience and deep
insight will provide a perspective thatis independent of management andwill contribute to enhancing theeffectiveness of the decision-making
and oversight functions of the Boardof Directors.
< Reason for designation as anindependent officer >He fulfills the Tokyo Stock
Exchange, Inc. requirements forindependent officers and poses norisk of a conflict of interest withgeneral shareholders.

Masayuki
Yamamura

HirokoMatsumoto○○<Outside Director
Attributes >Mr. Yamamura is acounselor to Nippon
Telegraph and Telephone
East Corporation (NTT
East). The Company hasroutine lease transactions
with the Nippon
Telegraph and Telephone
East Corporation, butthese transactions
comprise less than one
percent of total annual
consolidated revenues.
And, he is chairman of
The Telecommunications
Association, and thecompany has notransactions with theassociation. Additionally,
he is outside director ofTokyo Gas Co. Ltd., andthe company has notransactions with Tokyo
Gas Co. Ltd.
<Outside Director
Attributes >Ms. Matsumoto is theadministrator of Joshibi
University of Art and
Design; Fuyo does nothave regular leasingtransactions with theeducational institution.
The Company also
contributes funds to the
Fuyo Joshibi Venus Fund,which was jointly
established with theuniversity as part of its
social contribution efforts
to support students andpromote women's
activities, but the amountis less than 5 million yen
per year.
Yasunori Tsujita,
Chairperson of the Boardof Directors of theCompany, serves as adirector (part-time) of theuniversity, which has
several outside directors
who are not from theCompany.

We believe that his experience as
representative director and presidentof NTT East and chairman of theincorporated association and hisabundant experience and deep insightwill provide a perspective that is
independent of management and willcontribute to enhancing theeffectiveness of the decision-making
and oversight functions of the Boardof Directors.
< Reason for designation as anindependent officer >He fulfills the Tokyo Stock
Exchange, Inc. requirements forindependent officers and poses norisk of a conflict of interest withgeneral shareholders.

We believe that her experience as
after working for Toshiba
Corporation, school administrationand education as Administrator, VicePresident, Professor and Head of
Research Institute of Joshibi
University of Art and Design and herabundant experience and deep insightwill provide a perspective that is
independent of management and willcontribute to enhancing theeffectiveness of the decision-making
and oversight functions of the Boardof Directors.
< Reason for designation as anindependent officer >She fulfills the Tokyo Stock
Exchange, Inc. requirements forindependent officers and poses norisk of a conflict of interest withgeneral shareholders.

Voluntary Establishment of Committee(s)Corresponding to a Nomination Committee orRemuneration Committee

Established

Committee’s Name, Composition, and Designated Status of Chairperson

Committee’s Name

Committee Corresponding toNomination Committee
Nomination and Remuneration
Advisory Committee

Committee Corresponding to
Remuneration Committee
Nomination and Remuneration
Advisory Committee

All Committee Members

55

Full-time Members

00Internal Directors

11Outside Directors

44Outside Experts

00

Others00Chairperson

Internal Director

Internal Director

Supplementary Explanation• The Nomination and Remuneration Advisory Committee was established as the discretionary nominating
body of the Board of Directors to serve the dual functions of a nomination committee and remuneration
advisory committee (Date established: November 5, 2015).
• Nomination and Remuneration Advisory Committee members consist of directors, including all independent
directors (outside directors who meet the independence standards of the Company; the same applies
hereafter) and internal directors other than executive directors. A majority of committee members are
independent directors. The members of this Committee are selected by approval of the Board of Directors
and the Chairperson of this Committee is selected by deliberation of the Committee. In principle, thiscommittee is convened by the chairperson, and other committee members may request the chairperson toconvene a meeting, or may convene a meeting themselves. In principle, the contents of the Committee's
report are based on the unanimous consent of all Committee members present, and in cases where
unanimous consent cannot be obtained, decisions are made by a majority of the Committee members. The
Board of Directors is to approve and resolve the Company's management's decisions by respecting thecontents of the Committee's report. Based on the above, the Company believes that the Nomination andRemuneration Advisory Committee has sufficient independence.
• The committee deliberates on the following matters. The results of deliberations are reported to the Board of
Directors as necessary.
(1)

Selection of Chairperson of the Nomination and Remuneration Advisory Committee(2) Appointment of director candidates and audit & supervisory board member candidates, or dismissal of
directors and audit & supervisory board members(3) Remuneration for directors(4) Succession planning for the president and chief executive officer (president and executive officer)(5) Amendment or abolition of Corporate Governance Guidelines(6) Analysis and evaluation of effectiveness of the Board of Directors as a whole(7) Matters concerning advisors, etc. who assumed the post after retiring from representative director andpresident(8) Other matters referred by the Board of Directors• In FY2023, the meeting was held five times, and all committee members attended all meetings.
In FY2023, the Board of Directors mainly deliberated the following matters.
(i) Selection of candidates for Directors, etc.
(ii) Succession planning for the President (President and Chief Executive Officer)(iii) Remuneration for Directors (basic remuneration and performance-linked remuneration)(iv) Analysis and evaluation of the effectiveness of the Board of Directors as a whole(v) Conclusion of special advisory contract[Audit & Supervisory Board]
Establishment of Audit & Supervisory Board

Established

Maximum Number of Audit & Supervisory
Board Members Stipulated in Articles ofIncorporation

6

Number of Audit & Supervisory Board Members

4

Cooperation Among Audit & Supervisory Board Members, Accounting Auditors and the Internal Audit
Department
To ensure effective and efficient audits, audit & supervisory board members, accounting auditors, and theInternal Audit Department mutually share audit results and other information appropriately and in a timely
manner through reporting meetings, exchange of opinions, and other meetings.
The readiness status of the internal control system established and operated by the Internal Control
Department is monitored by the Internal Audit Department, audit & supervisory board members, andaccounting auditors, who exchange information on their respective audit results and monitor the system status.
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 Member’s Relationship with the Company (2)NameTakashi Yonekawa
Hiroshi Imoto

AttributesaFrom anothercompany
From anothercompany* Categories for “Relationship with the Company”

bc

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

l

m

○
○

* “○” when the audit & supervisory board member presently falls or has recently fallen under the category;“△” when the audit & supervisory board member fell under the category in the past
* “●” when a close relative of the audit & supervisory board member presently falls or has recently fallen
under the category;“▲” when a close relative of the audit & supervisory board member 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. Non-executive director or executive of a parent company of the Company
d. Audit & supervisory board member of a parent company of the Company
e. Executive of a fellow subsidiary 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 orother property from the Company besides compensation as an audit & supervisory board member
i. Major shareholder of the Company (or an executive of the major shareholder if the shareholder is a legal
entity)j. Executive of a client or supplier of the Company (which does not correspond to f, g, or h) (refers only tothe audit & supervisory board member)k. Executive of a company which has the same individual(s) as the Company appointed as outside
directors/audit & supervisory board members (refers only to the audit & supervisory board member)l. Executive of a company or organization that has received a donation from the Company (refers only to theaudit & supervisory board member)
m. Others

Outside Audit & Supervisory Board Member’s Relationship with the Company (2)NameTakashi
Yonekawa

Designation as
Independent Audit& Supervisory
Board Member

Supplementary Explanation of
the Relationship○<Outside Audit & Supervisory
Board Member Attributes>
Mr. Yonekawa is the former
Vice President and Executive
Officer of Sompo Japan
Insurance Co., Inc.; Fuyo has
regular leasing transactions
with the company, but theamount is less than 1% of thetotal annual consolidated sales.
He is also the President of
Yasuda Nipponkoa Health
Insurance Union and Fuyo has
regular leasing transactions
with the union, which is lessthan 1% of total annual
consolidated sales.
Additionally, he is the vicechairman of the National
Federation of Health InsuranceSocieties and the chairman of
the Tokyo Federation of the
National Federation of Health
Insurance Societies. The
Company has no transactions
with the both Federations.

Reasons of Appointment

To utilize the abundant
experience and high insight that
he has served as a Director andManaging Executive Officer,
Vice-President and Executive
Officer of Sompo Japan
Insurance Inc., to carry out
appropriate audits from an
independent and objective
standpoint.
＜Reason for designation as anindependent officer＞
As it meets the requirements forindependent officers set by the
Tokyo Stock Exchange andthere is no risk of conflicts ofinterest with generalshareholders.

Hiroshi Imoto○<Outside Audit & Supervisory
Board Member Attributes>
In June 2016, Mr. Imoto
retired as a full-time audit &supervisory board of memberof Japan Bank forInternational Cooperation Co.,Ltd.

By making use of Mr. Imoto’s
abundant experience and highlevel of insight as a member of
the Japan Bank for International
Cooperation's International
Management and Planning
Division, Industry Finance
Department, and Full-time
Audit & Supervisory Board ofMember, to carry out
appropriate audits from an
independent and objective
standpoint.
＜Reason for designation as anindependent officer＞
As it meets the requirements forindependent officers set by the
Tokyo Stock Exchange andthere is no risk of conflicts ofinterest with generalshareholders.

[Independent Officers (Directors/Audit & Supervisory Board Members)]
Number of Independent Officers

6

Other matters concerning independent officers―――[Incentives]
Incentive Policies for Directors

Introduction of performance-linked Remuneration andother forms of Remuneration

Supplementary Explanation
By increasing the link between directors' remuneration, company performance and shareholder value, we will
increase the motivation to improve performance and raise stock prices, and "ensure stable performance andgrowth as well as increase corporate value. In addition to the basic remuneration, we have introduced
performance-linked remuneration (annual bonus) and stock remuneration (stock benefit trust (BBT=Board
Benefit Trust)). For details of each remuneration, please refer to [Remuneration for Directors] " Disclosure of
Policy on Determining Remuneration Amounts or Calculation Methods ".
Recipients of Stock Options
Supplementary Explanation―――

[Director Remuneration]
Disclosure of Individual Directors’ Remuneration

Individual Remuneration is not disclosed.

Supplementary Explanation
Total amount of director Remuneration in fiscal 2023 : 361 million yen
Policy on Determining Remuneration Amounts or
Calculation Methods

Established

Disclosure of Policy on Determining Remuneration Amounts or Calculation Methods
The Company has determined by a resolution of the Board of Directors the method of deciding the "decision
policy regarding the content of individual remuneration of directors". When determining individual
remuneration for directors, the basic policy is to set the level at an appropriate level based on individual
responsibilities. In addition to basic remuneration paid as fixed remuneration, performance-linked
remuneration and stock remuneration are introduced as variable remuneration. Regarding the ratio of eachremuneration, the ratio of variable remuneration to basic remuneration 1 is set to 0.7 based on the average
ratio of listed companies. The breakdown of variable Remuneration is that the ratio of performance-linked
Remuneration to stock Remuneration is 5: 7, and the ratio of medium- to long-term incentives is increasing.
The basic remuneration is within the range of the remuneration limit approved at the general meeting ofshareholders, and the basic remuneration for each individual according to the position is based on the generallevel of employee remuneration and executive remuneration of the Company and the business condition of thecompany. The appropriateness and appropriateness of determining the amount is decided by a resolution of theBoard of Directors after deliberation and report by the Nomination and Remuneration Advisory Committee.
The basic remuneration may be temporarily reduced by a resolution of the Board of Directors after
deliberation and report by the Nomination and Remuneration Advisory Committee depending on thecompany's business performance and other reasons.
Performance-linked remuneration shall be based on 26% to 35% of the annual amount of basic remuneration,
depending on the position, within the range of remuneration approved at the general meeting of shareholders,and shall be in accordance with the executive performance-linked remuneration rules separately established by
the Company. The amount to be paid is determined by a resolution of the Board of Directors after deliberation
and reporting by the Nomination and Remuneration Advisory Committee within the range of 0 to 200% of thestandard amount, depending on the consolidated performance of the company in the fiscal year preceding thepayment date, the degree of contribution of each person to the company performance, the status of efforts toaddress medium- to long-term management issues, etc.
It consists of two parts: a part linked to applicable indicators such as the company's consolidated businessperformance (hereinafter referred to as "applied index linked portion") and a part reflecting the individual
evaluation of each director (hereinafter referred to as "individual evaluation portion "). The composition ratio
is determined for each position. The "applied index-linked portion" is calculated from financial metrics likebalance of operating assets, consolidated ordinary profit, consolidated ROA etc. The "individual evaluation
portion" is determined by the president based on the performance and qualitative evaluation of the section ofbusiness the director is in charge of.
Performance-linked remuneration may be reduced or not paid if the director inflicts great material loss to thecompany or if the director is on long-term leave due to illness treatment.

The performance indicators that form the basis for calculating the amount of performance-linked remuneration
are divided and set into financial items, which are important performance evaluation indicators, and nonfinancial items of environment and human capital investment, in order to achieve the medium-term
management plan "Fuyo Shared Value 2026". The financial items are consolidated ordinary profit,
consolidated ROA, consolidated shareholder’s equity ratio and consolidated ROE. Non-financial items are theamount invested in the promotion of decarbonization (non-consolidated) and human resources developmentrelated expenses (non-consolidated).
[Calculation method of performance-linked remuneration]
Performance-linked remuneration amount = payment standard amount for each position x performance-linked
payment coefficient (*)(*…Consolidated ordinary profit," "consolidated ROA," and "consolidated shareholder’s equity ratio" arecalculated by combining the percentage of achievement against the planned value and the ratio against thesame period of the previous fiscal year. Consolidated ROE" is 100% when achieved, and when not achieved, it
is calculated as the ratio of the actual value to the target value. Non-financial items are calculated based on thepercentage of achievement compared to the planned value. For directors under the Senior Managing Director,
the performance of the business under their jurisdiction and qualitative evaluation are taken into consideration,and the individual evaluation decided by the president is also reflected.)
For stock Remuneration, we have introduced a “stock benefit trust (BBT (= Board Benefit Trust)”), which isbased on the directors' stock benefit regulations resolved by the Board of Directors within the Remuneration
limit approved at the general meeting of shareholders. If a director retires after satisfying the eligibility
requirements, they will acquire the right to receive benefits of the Company's shares acquired by the Trustaccording to their position and term of office on the date of resignation. The number of points (1 point = 1
share of the Company's common stock) that will be used as the basis for the delivery of shares, etc. shall be
the total number of service points granted to the eligible directors by the time of their retirement from office,in principle, on each date of the General Meeting of Shareholders. If it is resolved for a director is to bedismissed at a general meeting of the shareholder, or if a director retires during tenor because of certain
misconduct, or if there is any inappropriate behavior that might damage the company during tenor, the director
will not have the right to receive benefits.
Internal directors who do not execute business operations are paid stock remuneration as fixed and variable
remuneration, and directors who chair the Board of Directors are paid a chairperson's allowance as fixed
remuneration in addition to base remuneration. For outside directors and outside Audit & Supervisory Board
Members who are supervisors, performance-linked remuneration and stock remuneration are not suitable, so
only fixed remuneration is provided.
Regarding the amount of individual remuneration for the directors of the Company, Hiroaki Oda, Director andCEO, who supervises and controls the business activities of each department as the chief executive officer andevaluates the directors in charge of each department, who based on the resolution of the Board of Directors, isentrusted with the determination of the amount of performance-linked remuneration to be paid to directors andthe specific details regarding the timing of payment. After deliberation and report by the Nomination andRemuneration Advisory Committee, the appropriateness of the evaluation method of performance-linked
remuneration and the appropriateness of the calculated remuneration amount should be examined and reported
so that the authority can be exercised appropriately; the Director and CEO decides the amount and timing of
performance-linked remuneration to be paid to each director.
[Support System for Outside Directors and/or Outside Audit & Supervisory Board Members]

Outside Officers (referring to Outside Directors and Outside Audit & Supervisory Board Members. The same
implies hereinafter.) have 3 persons belong to Board of Directors Operations Office in charge and thesecretariat and various communications for the in advance explanation for Board of Director agenda items areheld with outside officers.
The Company provides outside officers with advance delivery of proposals for meetings of the Board of
Directors and Audit & Supervisory Board, implementation of advance explanations of proposals attached to
the Board of Directors, provision of materials and minutes for management meetings, and organize site visits,
and provision of opportunities to attend external seminars.

[Retired Presidents/CEOs Holding Advisory Positions (Consultant, Advisor, etc.)]
Information on retired presidents/CEOs holding advisory positions (consultants, advisors, etc.)

Name

TakashiSato

Job title/
position

SpecialAdvisorResponsibilities

Employment terms(Full/part time,
with/without
Remuneration, etc.)

Date whenformer role aspresident/CEO
ended

Term

• Advice as requested
by management• Maintenance ofrelationships withcustomers andbusiness partners

Part-time, compensated

March 31, 2016

One-yearrenewable

Number of Retired Presidents/CEOs Holding
Advisory Positions (Consultant, Advisor, etc.)

1

Other Matters
The Company may permit the use of the title of "Special Advisor" as an honorary title for those who haveretired as President and Representative Director (for life, without remuneration in principle).
The Special Advisor does not attend meetings of the Company's Board of Directors, the Executive Committee
meetings or other internal meetings, and does not have the authority to make management decisions for theCompany. When specific duties are delegated to the Special Advisor, an advisory contract is concluded and afixed fee is paid in accordance with his/her role. Specific expected roles and the conclusion of advisory
contracts, etc. are determined by the President after deliberation (including reports on the status of activities at
the time of renewal) by the Nomination and Remuneration Advisory Committee, of which the majority iscomposed of independent outside directors. The Special Advisors with whom the Company has concluded
advisory contracts at present are as shown in the table above.
Renewal of advisory contracts with special advisors to whom specific duties are delegated shall, in principle,
be limited to six years, including the first year of conclusion.
In order to clarify the above details, the Company has established internal regulations pertaining to theadvisory system after deliberation by the Nomination and Remuneration Advisory Committee (date ofestablishment and enforcement: February 15, 2023).

2. Matters Concerning the Functions of Business Execution, Auditing, Oversight, and Nomination andRemuneration Decisions (Overview of Current Corporate Governance System)
The content of the management structure for executing the Company’s business, supervision and oversight,
and other organizational aspects of corporate governance are described below. Also see the Guidelines forfurther information concerning Points A, B and C. In regard to the nomination of officers, see “Committee’sName, Composition, and Designated Status of Chairperson” in Section II-1. For officer remuneration, also see[Director Remuneration] in Section II-1.
A.

Board of Directors
The Board of Directors consists of 9(nine) directors. It deliberates on and decides important mattersconcerning management and matters specified in laws and regulations, the Company’s Articles ofIncorporation, and the Board of Directors Regulations. In the composition of the Board of Directors,
internal directors other than the executive directors are to be selected, and the chairperson of the Board of
Directors is, in principle, to be selected from among the directors other than the executive directors.
4(four) independent directors are appointed to increase the objectivity and transparency and strengthen
the oversight function of Board of Directors. The Board of Directors has established the Board of
Directors Operations Office as a secretariat under the direct control of the Board of Directors.
The Board of Directors met 11 times in in fiscal 2023. The attendance record of each officer during fiscal
2023 is shown below.
Directors
Yasunori Tsujita, Hiroaki Oda, Keiji Takada, Yusuke Kishida, Seiichi Isshiki,
Hideo Ichikawa, Masayuki Yamamura, Hiroko Matsumoto attended 11 meetings.
Hiroshi Takahashi was elected at the 55th Annual General Meeting of Shareholders held on June 21 2024.
Audit & Supervisory Board Members
Masaharu Nakamura, Takashi Yonekawa, Hiroshi Imoto attended 11 meetings.
Masato Morikawa was elected at the 55th Annual General Meeting of Shareholders held on June 212024.
In FY2023, the following items were mainly resolved and reported.
(1) Fiscal year management plan and the medium-term management plan(2) Status of risk management, compliance program plan
(3) Policy and updates related to sustainability and CSV ((non-financial targets, contribution to
reduction of CO2 emissions), improving engagement figures) and drafting the Integrated Report(4) Status of internal audits(5) Individual transactions (investments, establishment of maximum credit limits for business partners,
etc.)(6) Matters stipulated in the Companies Act, Financial Instruments and Exchange Act,
Japan’s Corporate Governance Code of the Tokyo Stock Exchange etc., including the status of operationof internal control systems, Annual Securities Report, verification of the significance of policy
shareholdings, and the status of dialogue with shareholders.

B.

Nomination and Remuneration Advisory Committee
The Nomination and Remuneration Advisory Committee was established as a discretionary committee of
the Board of Directors.

For details, please refer to the item "Establishment of committees, composition of members, andattributes of the Chairperson.
C.

Audit & Supervisory Board
Our Audit & Supervisory Board consists of four auditors, including two full-time members and two parttime audit & supervisory board members who are also independent audit & supervisory board members.
According to the audit plan formulated by the Audit & Supervisory Board, each audit & supervisoryboard member audits execution of operations by directors by attending important meetings, reviewing
important documents, examining operations and assets, and reviewing the audit findings of the
independent accounting auditor and the Internal Audit Department among other relevant activities. The
audit policy for fiscal 2023 states that, in accordance with the Code of Audit & Supervisory Board
Member Auditing Standards, the Audit & Supervisory Board is an independent body which has received
the mandate for its responsibilities from shareholders. Audit & supervisory board members perform
audits from the following main perspectives to ensure healthy, sustainable growth of the Company andwork to establish a strong corporate governance system that can earn the trust of society.
The Audit & Supervisory Board met 14 times during fiscal 2023 and specific items for consideration,
including major resolutions and matters to be discussed, are as follows.
<Matters to be resolved>: Audit policy, plan, assignment of duties, consent to the proposal for theappointment of audit & supervisory board members, reappointment of accounting auditors, consent to the
remuneration of accounting auditors.
<Matters to be reported>: Reporting on the status of the operation of internal control systems, evaluationof internal control reports on financial reporting, results of visits by full-time audit & supervisory board
members to domestic and overseas offices and group companies.
<Matters to be deliberated and discussed>: Appropriateness of accounting auditors, prior consent to nonassurance services by accounting auditors, draft audit report by the Audit & Supervisory Board.

D.

Executive Committee
The Executive Committee is composed of Executive Officers with positions of managing executive
officer or higher, the heads of the Corporate Planning Division, Human Resources Division, and Business
Planning & Promotion Division as well as the presidents of major subsidiaries. Full-time audit &supervisory board members also attend meetings of the Committee on a regular basis. As a general rule,
the Executive Committee meets at least once a month to make decisions on operating activities andimplementation of measures delegated by the president, and to discuss important issues concerninginternal controls. Its aim is to improve the quality of management decisions and to speed up decisionmaking. The Executive Committee met 21 times during fiscal 2023.

E.

Compliance Committee
The officer in charge of compliance serves as the chairperson of the Compliance Committee and theofficer in charge of Group Legal and Compliance serves as vice chairperson. Full-time members include
the head of the relevant corporate divisions (planning and administrative management work), therepresentative directors and others from domestic subsidiaries, the general managers of the supervising
divisions of overseas subsidiaries, and outside lawyers are outside committee members. Additionally,
acting as an observer, full-time audit & supervisory board members and presidents of domestic

subsidiaries participate in the committee. The Legal & Compliance Division serves as the administrative
office for the Compliance Committee. Compliance Committee meetings are held once a quarter, andmatters relating to establishment of a compliance structure and furtherance of annual compliance plans
are debated and discussed. The matters debated and discussed at the committee meetings are reported andpresented to the Board of Directors and the Executive Committee, which take steps to establish andstrengthen the compliance structure.
F. CSV Promotion Committee
The Company has established the CSV Promotion Committee, which is chaired by the executive officer
in charge of planning and administration and includes the heads of related the corporate divisions as wellas the head of the business divisions (provision of products and function, promotion of relationshipmanagement and business support) as members. The CSV Promotion Committee in principle meetssemiannually to discuss and report on the formulation and revision of materiality plans, the formulation
and revision of plans for issues equivalent to materiality, and other important matters related to thepromotion of sustainability and CSV matters deliberated by the Committee are decided by the Executive
Committee, and important matters are reported to the Board of Directors at least once a year.
G.

Internal Audits
The internal audit function is administered by the Group Internal Audit Division (staffed by 11
employees). The Group Internal Audit Division conducts operational audits of all departments, offices,branch offices, and major subsidiaries, and plays a part in ensuring that internal controls are functioningin addition to examining their effectiveness. The audit policy for fiscal 2024 is as follows.
(1) Promote risk-based audits and objectively evaluate the effectiveness of internal controls, risk
management, and the compliance structure.
(2) Improve the function of evaluating the effectiveness of internal control on a group basis throughclose cooperation with the internal audit departments of each group company.
(3) Promote audits that contribute to management by expanding and strengthening the internal audit
function, and contribute not only to the preservation of corporate value but also to its enhancement
and creation.
The results of these operational audits are reported directly to the President and Audit & Supervisory
Board Members on a case-by-case basis by the General Manager of the Group Internal Audit Division
and are also reported regularly and directly at meetings of the Board of Directors, Audit & Supervisory
Board, and Executive Committee twice a year.

H. Accounting Audits
The Company’s consolidated and unconsolidated financial statements are audited by Ernst & Young
ShinNihon LLC, based on Article 193, Paragraph 2-1 of the Financial Instruments and Exchange Act.
There are no conflicts of interest between the Company and audit firm or the employees of the audit firm
performing the audit that are notable pursuant to the Certified Public Accountants Act. The names of thecertified public accountants (CPAs) who performed the accounting audit on our Company are listed
below.
Names of CPAs and Name of the Firm They are Affiliated With
<Name & Title of CPA>
<Name of Firm Affiliated With>
Yuji Ozawa, Managing Partner
Ernst & Young ShinNihon LLC

Toru Nakagiri, Managing Partner
Ernst & Young ShinNihon LLC* All personnel had seven years or less of continuous auditing experience.
* The audit firm has voluntarily taken steps to ensure that accounting audits of our Company will not be
performed by the same managing partners for more than a certain time period.
* Audit support staff included 8 CPAs and 27 assistant accountants and other staff.

3. Reasons for Adoption of Current Corporate Governance System
The Company has adopted the corporate form of a company with an Audit & Supervisory Board. By
establishing and operating the following systems, the Company is working to ensure that corporate governancefunctions effectively and enhances corporate value over the medium to long term.
Audit & supervisory board members work closely with the Internal Audit Division and the Internal Control
Department on audits. The Company also appoints outside auditors to ensure independence and a sufficient
corporate governance function. Furthermore, in order to improve the objectivity, transparency, and supervisory
function of the Board of Directors, the Company has established the following. The Company also appoints
multiple outside directors whose independence is demonstrated. These outside directors provide oversight andadvice on the execution of business from an external perspective to improve the oversight function of theBoard of Directors. The Nomination and Remuneration Advisory Committee, which is comprised of amajority of outside directors has also been established to ensure a highly transparent system of management
and eliminate arbitrariness. The Internal Audit Division reports the results of internal audits to the President
and CEO and directly to the Board of Directors.
The Company has introduced an executive officer system to speed up decision-making and improve
management efficiency by separating the management supervisory function and the executive function.

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Ensure Dynamic General Shareholder Meetings and Smooth Exercise of Voting Rights
Supplementary Explanations
Early Notification of General
Shareholder Meetings

The Notice of the 55th Annual General Meeting of Shareholders was sentout on May 31, 2024, six days prior to the legally mandated deadline (21days prior to the meeting date).

Scheduling General
Shareholder Meetings on Days
When Numerous Other
Companies Are Not Holding
TheirsThe 55th Annual General Meeting of Shareholders was held on June 21,
2024.

Electronic Exercise of Voting
Rights Permitted

The Company has permitted the exercise of voting rights via the Internet
since the 37th Annual General Meeting of Shareholders held on June 27,
2006.

Participation in an Electronic
Voting Platform or Other
Means to Increase the Exerciseof Voting Rights by
Institutional Investors

The Company has participated in a platform for the exercise of voting
rights since the 42nd Annual General Meeting of Shareholders.

Convocation Notice in English
Provided

Other Matters

Since the 49th Annual General Meeting of Shareholders, the Company has
posted the convocation notice (partial excerpt) in English on the Company
website on the date on which providing information in electronic format islaunched, and makes it available for viewing on the Internet via the TDnet
Company Announcements Service operated by Tokyo Stock Exchange,Inc.
After it has been approved by the Board of Directors, the convocation
notice was posted on the Company website before it was sent out on May
23, 2024 and was also made available for viewing on the Internet via the
TDnet Company Announcements Service operated by Tokyo Stock
Exchange, Inc. To enable shareholders to view the General Meeting of
Shareholders since the 53 Meeting, it will be livestreamed via the Internet.

2. IR Activities
Supplementary Explanations
Formulation and Public
Disclosure of the Disclosure
PolicyRegular Investor Briefings forAnalysts and Institutional
Investors

Posting of IR Materials on
WebsiteEstablishment of Department
and/or Manager in Charge ofIR

Explanation from
Representative

The Company formulated a Disclosure Policy inMarch 2010. It is posted on the Company website.
The Company holds financial results briefings foranalysts and institutional investors after summary
financial results are announced for the second quarterand the full year.
The Company posts summary financial statements, an
overview of financial results, financial resultspresentation materials, the securities report, theIntegrated Report, news releases, other IR informationon the Company website.
Division in charge of IR: Corporate Communications
Office, Corporate Planning DivisionYes3. Measures to Ensure Respect for Stakeholders’ Positions
Supplementary Explanations
Stipulation of Internal Rules
for Respecting the Position of
Stakeholders

Implementation ofEnvironmental Conservation
Activities, CSR Activities, etc.

Development of Policies on
Provision of Information to
Stakeholders

Other

The Company's basic stance toward each stakeholder is set forth in the"Basic Policy on the Systems to Support Sustainable Value Creation,""Corporate Governance Guidelines," and other regulations.
As a member of society, the Company carries out CSR activities that fulfill
our responsibilities, not only from an economic perspective, but also in awide variety of areas from the environmental and social perspectives.
On the environmental front, we have built an environmental management
system together with 15 of our main domestic subsidiaries. We also pursue
environmental activities through our business, from energy savings andresource conservation in our own group companies, to the ESCO service,energy and environment field leasing and finance that contributes toenergy savings for customers, PC Eco & Value leases that contribute toreuse of PCs, and re-marketing (used asset buy-back service) that
contributes to resource conservation, among other activities.
Particularly in regards to the climate change issue, we also entered thesolar power generation business through a subsidiary in 2012. Recently,
we are supplying renewable energy through renewable energy power
plants business domestically and internationally. In 2018, the company
joined the "RE100", which aims to convert electricity consumed by eachcompany group into 100% renewable energy by 2030. In 2021, thecompany declared that it will accelerate the date for achieving this goalfrom 2050 to 2030, while also becoming carbon neutral at the same time.
As an initiative to support the introduction of renewable energy andenergy-saving equipment to customers, we started the "Fuyo Renewable
Energy 100 Declaration Support. Program" in 2019 and the "Fuyo Zero
Carbon City Support Program" in 2020. We released the “ Fuyo Circular
Economy Lease ” in 2023, and launched to provide our services which
contribute to the realizing a recycling oriented society. On the social side,
we are engaged in activities that contribute to medical welfare and a superaging society by improving the efficiency of corporate management bystrengthening BPO efforts, solving labor shortages, contributing to work
style reforms, and investing in start-up companies aiming to develop
advanced medical equipment and leasing buildings such as paid nursing
homes for the elderly.
Regarding the current status of activities, we will publish them in
Integrated Report and there is more detail in the Sustainability section of
the Company website:(https://www.fgl.co.jp/eng/sustainability/)
The Fuyo Lease Group's Basic Compliance Policy stipulates that theCompany will enhance management transparency by disclosing
information in a fair, timely, and appropriate manner.
The Company regard the advancement of women as an importantmanagement issue and we are comprehensively hiring new women andpromoting them to management roles with the aim of further expanding
the scope of their capabilities. In addition to hiring and promoting, we also
strive to help every person-regardless of gender-balance life events withwork and showcase their strengths. Specifically, we encourage the use ofannual and male parental leave, present chances for exposure to a range ofprofessions and role models, and allow a choice of work styles. The
company also holds a variety of events for employees to experience
diverse careers and role models. The Company co-hosts roundtable talks
with senior employees, lectures by external female executives, andexchange meetings with executives and employees to provide

opportunities for exposure to varied occupations and role models.
Additionally, since FY2023, we have been supporting each employee's
individual career and skill development through career consulting-career
consultation by two qualified internal and external individuals available toall employees on a voluntary basis-and ongoing, periodic interviews withfemale employees.
In recognition of our efforts, we received "Platinum Kurumin
Certification" in fiscal 2017 and "Eruboshi" Certification with 2 stars (thesecond of three levels) in fiscal 2021 from the Minister of Health, Laborand Welfare.
The achievements against the numerical targets of our General Business
Action Plan(plan period from April 1, 2022 to March 31, 2027) based on
The Act on the Promotion of Women's Participation and Advancement in
the Workplace formulated in April 2022 are as follows:・Percentage of female employees hired (Employees joining in April
2024): 59.5% （Target: 40%）・Percentage of women in managerial positions: 32.2% （Target: 35%）
・Rate of taken annual paid leave: 93.3%（Target: 90%）
・Rate of taken male paternity leave: 108.3% (Target:100%）
To further advance awareness of diversity and inclusion in the workplace,
the group also conducts group training for managers, executive-level staff,
and human resources people in addition to offering e-learning courses on
the themes of LGBTQ and people with disabilities. As a result, we enteredthe "PRIDE Index 2023," an evaluation index for efforts to address sexual
minorities in the workplace established by the voluntary organization"work with Pride," and received the "Silver" award.
Please refer to the Annual Securities Report for the fiscal year ended
March 31, 2024 for the difference in wages between men and women in
our Group.
(https://ssl4.eir-parts.net/doc/8424/yuho_pdf/S100TQ74/00.pdf)

IV. Matters Related to the Internal Control System
1. Basic Views on the Internal Control System and Progress on System Development
Below is a summary of the Company’s decisions concerning a system to ensure that the execution of duties bydirectors complies with laws and regulations and the Company’s Articles of Incorporation, and other systems
to ensure proper conduct of Company business.
1)

System to Ensure that the Execution of Duties by Directors, Executive Officers, and Employees
Complies with Laws and Regulations and the Company’s Articles of Incorporation
The Company regards compliance as one of the most important management issues and has established
the Fuyo Lease Group Compliance Basic Policy as a basis for action that all executives and employees of
the Fuyo Lease Group must observe in order to comply with laws, regulations, and rules and to carry out
sincere and fair corporate activities that are not inconsistent with social norms. The Basic Policy on
Systems to Support Sustainable Value Creation, Corporate Governance Guidelines, Fuyo Lease Group
Basic Compliance Policy, Fuyo Lease Group Human Rights Policy and Fuyo Lease GroupEnvironmental Policy and Basic Policy for Establishing the Internal Control System are collectively
positioned as the Fuyo Lease Group Code of Corporate Conduct.
The Company has produced rules, procedures, and manuals based on the Fuyo Lease Group Code ofCorporate Conduct, and has established a compliance system through employee education and training.
We have also established of a robust internal whistleblowing system, and other measures. We maintain astructure to ensure that directors, executive officers, and employees comply with laws and regulations
and the Company’s Articles of Incorporation in executing their duties. This is accomplished throughoversight by the Board of Directors and Audit & Supervisory Board, audits by audit & supervisory board
members, the accounting auditor, and the Company’s Group Internal Audit Division.
2)

System for Retention and Management of Information Concerning the Execution of Duties by Directors
The Company produces Board of Directors meeting minutes, Executive Committee meeting minutes, andwritten ringi proposals based on the Articles of Incorporation, the Executive Committee Regulations, andthe Ringi Proposal Regulations. A system for retention and management of information concerning theexecution of duties by directors has been established and this system is maintained by retaining
documentation for the specified period of time.

3)

Loss Risk Management Regulations and Other Systems
In the Risk Management Regulations, the Company has segmented risks that should be managed into
credit risk, market risk, liquidity risk, administrative risk, system risk, legal risk, human risk, reputationalrisk, and other types of risk. We manage these risks according to the specific nature and importance ofeach risk, by the systems and methods specified in our basic policy on management of each risk.
We have also formulated other regulations such as Emergency Preparedness Regulations to prepare forthe occurrence of emergencies and disasters and Confidential Information Management Regulations
concerning the management of information, and have established regulations concerning the managementof loss risk and other systems. We act to strengthen the risk management system on an ongoing basis to
respond to various risks that arise along with changes in the management environment in an appropriate
and timely manner.

4)

System to Ensure the Efficient Execution of Duties by Directors
The Company has established a system to ensure the efficient execution of duties by directors byclarification of the division of duties through the executive officer system, through the delegation ofduties and authority based on the regulations on responsibilities and authorities, and by planning andmanagement and budget control based on the Medium-term Management Plan. We will improve the
PDCA cycle through budget controls and other means, and maintain an efficient system and work to
improve efficiency in the future as well.

5)

System to Ensure Appropriate Business Conduct by the Corporate Group, Consisting of the Company
and its Subsidiaries
The Corporate Group, which consists of the Company and its subsidiaries (hereafter, “Corporate
Group”), share the Fuyo Lease Group Code of Corporate Conduct in common, and the entire Group is
managed in light of the specific characteristics of the business of each company.
The Company seconds directors to all subsidiaries and implements management and controls such as
requiring approval or reporting on the conduct of business and management status of subsidiaries basedon the Management Regulations for Affiliates. By doing so, we maintain a structure that ensures theproper conduct of business in the Corporate Group.

Our basic policy is that each subsidiary establishes its own internal controls, and the Group Internal Audit
Division of the Company performs regular audits of the operations of the main subsidiaries. We also
strive for improvement by providing the necessary support and guidance on compliance, risk
management, and improving efficiency, depending on the nature of each subsidiary’s business.
6)

System to Ensure Reliability of Financial Reporting in the Corporate GroupThe Corporate Group implements appropriate internal controls at the Group-wide level and at theoperating process level to ensure the reliability of financial reporting or, in other words, to ensure thereliability of the financial statements and information that could have a material impact on the financial
statements. If any deficiency is discovered in the internal controls, improvements are implemented asneeded, and we maintain the system in a manner that ensures the reliability of financial reporting.

7)

System for the Support Personnel When an Audit & Supervisory Board Member Requests Personnel toAssist with Duties
The Company assigns personnel to assist an audit & supervisory board member (hereafter, “audit &supervisory board member assistant employee”) according to the rules on concurrent duties in the Boardof Directors Operations office.

8)

Ensuring Independence of Personnel in the Preceding Paragraph from Directors and Effectiveness of
Audit & Supervisory Board Member Instructions
To ensure the independence of audit & supervisory board member assistant employee from directors andthe effectiveness of work instruction issued by audit & supervisory board members, the Company has
directed that audit & supervisory board member assistant employee report directly to and perform work
for an audit & supervisory board member. Audit & supervisory board member assistant employee shallnot accept orders or instructions from a director. Furthermore, any personnel transfer, personnel
evaluation, or discipline for audit & supervisory board member assistant employee is decided andimplemented after first consulting the Audit & Supervisory Board.

9)

System for Reporting to Company Audit & Supervisory Board Members(1) System for Company directors, executive officers, and employees to report to the Audit &Supervisory Board or audit & supervisory board members, and other systems for reporting to audit& supervisory board members
Company directors, executive officers, and employees report to the Audit & Supervisory Board oraudit & supervisory board members 1) when they discover facts that could have a serious adverse
effect on the Company, 2) when a director, executive officer, or employee has committed a violationof laws and regulations or the Articles of Incorporation, or is thought to pose the risk of committing
such violations, or 3) other matters specified in laws and regulations or requested by the Audit &Supervisory Board or audit & supervisory board members.
(2) System for the directors, audit & supervisory board members, executive officers, and employees ofsubsidiaries to report to the Company’s audit & supervisory board members
The directors, audit & supervisory board members, executive officers, and employees of subsidiaries
will promptly report to a Company audit & supervisor board member when the audit & supervisor
board member has requested a report as necessary for performing his or her duties.
Company audit & supervisory board members will regularly convene Group audit & supervisorycommittee meetings, consisting of the audit & supervisory board members and others from theCompany and its subsidiaries to receive reports on audit results and share information.

Moreover, we have added Company audit & supervisory board members as contacts for reporting in
the Group internal whistleblowing system, and have established an information route to ensure thatreports are appropriately reported to audit & supervisory board members even when a whistleblower
reports to another contact.
10) System to Ensure that Whistleblowers in the Preceding Paragraph are not Retaliated Against for a
Whistleblowing Report
The Company will not retaliate against a director, audit & supervisory board member, executive officer,
or employee of the Company or one of its subsidiaries because they have reported as mentioned in thepreceding paragraph. Moreover, the Regulations on Internal Whistleblowing clearly specify protection of
the whistleblower or reporter who reports to an audit & supervisory board member.
11) Policy on Handling of Expenses or Obligations Audit & Supervisory Board Members Incur in the
Execution of Duties
When an audit & supervisory board member so requests, the Company will promptly pay expenses andother obligations for the performance of duties in advance, or make other arrangements.
12) Other Systems to Ensure the Effectiveness of Audits Performed by Audit & Supervisory Board Members
The Company maintains a system to ensure that audits by audit & supervisory board members are
performed effectively by providing an environment that enables audit & supervisory board members toascertain the status of the execution of business in the Company at all times through attendance at Boardof Directors and Executive Committee meetings and other meetings, participating in regular discussions
with management, circulation of important ringi proposals, reports on the results of administrative audits
by the Group Internal Audit Division, and other means. The Company implements improvements to thissystem as needed.
13) System for Prohibition of Relationships with Antisocial Forces
In the Fuyo Lease Group Basic Compliance Policy, the Company states that it prohibits all relationships
with antisocial forces that could threaten the order or safety of civil society. The Company also responds
in a systematic manner to prohibit relationships with antisocial forces by formulating complianceregulations and a response manual, providing education and training to employees, partnering with law
enforcement, and taking other steps.
The Company will continue to maintain a system for prohibiting relationships with antisocial forces andwill work to mount a comprehensive response in the future.

2. Basic Views on Elimination of Antisocial Forces and State of Preparedness
The Company’s basic views on elimination of antisocial forces and the state of preparedness are detailed
below.
1)

Basic Views on Elimination of Antisocial Forces
The Company prohibits all relationships with antisocial forces that could threaten the order or safety ofcivil society, and does not provide any products or services to antisocial forces. We perform appropriate
screening in advance, prevent the execution of transactions at the outset, and take immediate action tocancel transactions in the event that a counterparty is revealed to be an antisocial force after the fact.

2)

State of Preparedness for Eliminating Antisocial Forces(1) The Company has formulated compliance rules and standards (on relationships with antisocial
forces), and has also produced an Antisocial Force Response Manual, which contains guidelines forresponding to prohibit relationships with antisocial forces. We work to make sure that all officers
and employees are aware of these by providing education and training.
(2) The Company has appointed a division to be in charge of prohibiting relationships with antisocial
forces and an administrator to prevent improper requests. We have established an internal
communication structure, and a system for partnering with law enforcement, Anti-Organized Crime
Campaign Center of Tokyo, law firms, and other external institutions, and we mount a systematic
response.

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

Not Adopted

Supplementary Explanation―――

2. Other Matters Concerning Corporate Governance System
Internal system for timely disclosure of Company information
The Company endeavors to disclose information in a timely and appropriate and fair manner, in accordancewith the Financial Instruments and Exchange Act and with Tokyo Stock Exchange rules for timely disclosure.
We disclose information on important decisions, emergent events, information concerning financial
statements, or other information could affect investment decisions, or when there has been a material change
in important Company information that has already been disclosed.
To achieve this, the Company has specified procedures for handling important information concerning timely
disclosure, etc. to comprehend the information that must be disclosed in a timely manner. We work to makesure that everyone in the Company is aware of the internal procedures and we manage Company information
appropriately, in accordance with the Insider Trading Management Regulations, Immediate Reporting
Regulations, and Confidential Information Management Regulations.
For information on important decisions, emergent events, information concerning financial statements, orother information could affect investment decisions in the Company, the division collecting the informationand the division in charge of information disclosure determine whether the information needs to be disclosed
and consider timely disclosure and the method of disclosure, based on the Financial Instruments and Exchange
Act and various other relevant laws and regulations, as well as the timely disclosure rules of Tokyo Stock
Exchange, Inc. The decision to disclose is made by the Board of Directors or by the Chief Information
Management Officer, and is then promptly disclosed. We also receive timely advice and guidance from the
Audit & Supervisory Board, and seek advice from the accounting auditor when necessary.
The Company registers information that must be disclosed in a timely manner on TDnet (Timely Disclosure
Network) operated by Tokyo Stock Exchange, Inc., and then responds to inquiries from the exchange orprovides an explanation in advance. The exchange then processes the disclosure and once it has been disclosed
at the specified time, the information registered for disclosure is transmitted to numerous mass media
organizations. It is also simultaneously posted on the Company Announcements Disclosure Service andprovided for general viewing. The information disclosed is also posted on the Company website after
disclosure.

[Reference Material]
1.

Diagram of Corporate Governance System

2．Skills Matrix for the Board of Directors

3.

Timely Disclosure System Flowchart

Heads of each Company division, department, and branch& Chief Compliance Officers for Company subsidiaries
Decisions, financial information

Emergent events

Division collecting the information(Corporate Planning Division)

Consults as needed in advance

Audit & Supervisory
Board

Decision made by the Board of
Directors

Chief Information Management Officer

Instructions

Reports and discussions

Accounting auditor

Representative
Director

Division in charge of
information disclosure

Information Disclosed