Corporate Governance Report
Last Update: June 26, 2023

DAIICHIKOSHO CO., LTD.
Tadahiro Hoshi, President
Contact: Corporate Planning Department
Securities Code: 7458
https://www.dkkaraoke.co.jp/
The corporate governance of DAIICHIKOSHO CO., LTD. (the “Company”) is described below.

I.

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

1. Basic Views
The Company and its subsidiaries (the “Group”) believe that sustained growth and medium- to long-term
enhancement of corporate value are priority management objectives. In order to achieve them, it is critical for
us to 1) build up a trustful relationship with all stakeholders including not only shareholders and customers,
but also business partners and employees. It is no less important for us to 2) achieve long-term stable growth,through providing services and products that offer satisfaction to customers, thereby contributing to theco-existence between customers and the Group, based on our corporate motto, “More music to society, more
service to society.” Under the aforementioned philosophy, the Group established and published the“DAIICHIKOSHO Group Code of Conduct” as our action guidelines. Moreover, with a view to further
driving the achievements of priority management objectives, the Group will strive to develop a more robust
corporate governance structure through various measures, fully respecting the purport of the Corporate
Governance Code established by the Tokyo Stock Exchange.
DAIICHIKOSHO Group Code of Conduct
https://www.dkkaraoke.co.jp/corporate/public/conduct.html[Reasons for Non-compliance with the Principles of the Corporate Governance Code][Supplementary principle 4.1.2] (Formulation and announcement of a mid-term management plan)
Given the increasing pace of change in business environment surrounding companies, commitment toachieving a mid-term plan may be rather a risk. Based on this belief, the Company formulates a management
plan only on a single year basis and makes it public.
The management plan on a single year basis and basic principles on capital policies are published in the
Company’s Flash Report on the Consolidated Results and annual securities report, etc.
[Supplementary principle 4.11.1] (Philosophy on the compositional balance, diversity and size of the Board of
Directors)
The compositional balance of the Group’s Board of Directors is basically maintained by appointing talents
well-versed in each business domain of the Group, and the Group seeks a balance as a foundation to allow the
Board of Directors to carry out comprehensive and reasonable decision-making.
In terms of diversity, independent Outside Directors (including a female director) are appointed, with a viewto enhancing corporate governance based on the management oversight from a viewpoint free of the businessculture of the karaoke industry and of the Company. Meanwhile, as to the size of the Board of Directors, it isbelieved to be adequate in view of the Group’s business domains from the perspective of building amanagement system that flexibly responds to changes in the business environment. Besides, the Board of-1-

Directors is not comprised in a way that takes into account a global aspect, as currently most of theCompany’s net sales come from its domestic business. Going forward, we will make efforts so that we canappoint Directors with diverse backgrounds in accordance with the expansion of our business domains.
[Disclosure Based on the Principles of the Corporate Governance Code] Updated[Principle 1.4] (Policies for strategic shareholdings and the standards for exercising voting rights)
1. Policies for strategic holdings
The Group’s business domains cover a wide array of businesses ranging from the planning and development,
consignment production, sales, rental, distribution and maintenance of commercial karaoke systems to theoperation of karaoke boxes as part of provision of services to end users and the music software business, abusiness domain adjacent to the karaoke content business. Thus, since collaborative relationships with various
companies are vital for carrying out these businesses, the Group maintains strategic holdings of shares that are
judged necessary from a medium- to long-term point of view, by taking into account factors including
business strategies and reinforcement of relationships with our business partners.
2. Details of the verification at the Board of Directors
The strategic shareholdings are subject to annual verification at the Board of Directors to check the rationalityof such holdings on a stock by stock basis, and shareholdings that are judged lacking in rationality arereviewed for possible reduction or unwinding in consideration of share price, market trends and othercircumstances as appropriate.
3. Basic principles for exercising voting rights
The Group makes decisions on the exercise of voting rights from perspectives including whether the proposal
is in line with appropriate corporate governance of the relevant company issuing strategic shares,
compatibility with the Group’s objectives of shareholding, and economic rationality.
[Principle 1.7] (Related party transactions)
In respect of related party transactions, the Group stipulates basic attitudes of its officers and employees underthe “DAIICHIKOSHO Group Code of Conduct” in an effort to fully inform all concerned of the risks
associated with such transactions including any conflicts of interest that may be involved. In addition, withrespect to specific transactions, the “Administrative Rules for Related Party Transactions within the Group”
separately stipulate the scope of relevant transactions, procedures for executing such transactions if
appropriate, reporting obligations imposed on concerned parties including officers in charge, and methods foradministering transaction records.
With respect to the scope of relevant transactions and the procedures for executing such transactions, theCompanies Act and other laws and regulations shall be complied with, and approval of relevant transactions
shall be decided by the Board of Directors. Meanwhile, as part of measures to eliminate any such transactions
going unchecked, officers and other concerned parties conducting transactions with the Group shall be
required to report all of them so that progress is checked regularly in every period.
Furthermore, clear explanations are provided in the “Group Code of Conduct Guidelines,” formulated as partof the education program for officers and employees, regarding the overview and handling of competitive andconflict-of-interest transactions. These explanations ensure understanding and attention on this issue by all
officers and employees.
[Supplementary principle 2.4.1] (Ensuring diversity in the promotion to core human resources)
1. Policies and voluntary and measurable goals for ensuring diversity in the promotion to core humanresources, along with the disclosure of their status
In order to attract excellent human resources and ensure diversity in the promotion to core human resources,
the Company adopts a recruitment policy to open work opportunities to all, irrespective of academic
background of applicants or whether they are new graduates or midcareer personnel. This policy has resulted
in the midcareer hires accounting for approximately 70% of all employees, and in the promotion to middle
managerial positions as well, midcareer hires account for approximately 80%. These results reflect ourthorough adoption of merit-based personnel system in light of the business type and occupational field of theCompany’s operations. In measurable goals to be set up, too, these current ratios in recruitment and promotion
shall be maintained. In terms of female recruits and women in middle managerial positions, they are both
small in number. The reason for this is that, of the regular employees described below, while the number of-2-those working at the Company’s locations such as restaurants and BIG ECHO cabins, as well as branches andsales offices is 1,069 (as of March 31, 2023), it is difficult to assign female employees to these locations
because of the operations and occupational field at these sites requiring late-night work, or due to theirlocational characteristic of being situated in entertainment districts. Going forward, the Company will actively
promote women in new business departments or sales and other headquarters divisions, where utilization of
female employees is expected, or in departments in charge of entertainment, development and administration,
thereby striving to enhance the layer of female employees. In terms of foreign employees, the Company
currently employs most of them as part-time workers or partly contract employees, and recruitment activities
of regular employees are not being conducted in a way that takes into account a global aspect, as currently
most of the Company’s net sales come from its domestic business.
The actual results of the number of hires are posted on the Company’s website.
https://www.dkkaraoke.co.jp/csr/social/employment.html
2. Policies for human resource development and internal environment development to ensure diversity in corehuman resources, along with the status of their implementation
The Company promotes human resource development and aims to realize a supportive workplaceenvironment based on its policy “What is indispensable for corporate growth is first and foremost its humanresources.” The status of the implementation and that of internal environment development are described
below.
<Human resource development>
Hierarchy-specific training: Training for newly hired employee, Training for newly appointed managers
Sales staff training: Basic sales training for new employees
Store staff training: Initial training, Career development training, Discussion meeting for new employees who
are recent graduates<Development of a supportive workplace environment>
Efforts are being made to reduce long working hours through such measures as sending of overtime alert
email and periodic confirmation of the utilization status of annual leave.
In addition, to facilitate employees and their families to refresh themselves, the Company informs them about
its welfare facilities on a periodic basis. It also established various systems such as an employees’ savings
scheme, an employee shareholding association and a collective insurance system.
[Principle 2.6] (Roles of corporate pension funds as asset owners)
The Company does not operate a corporate pension plan.
[Principle 3.1] (Full disclosure)
1. Corporate philosophy, business strategies and management plan
(1) Corporate philosophy
The Group believes that “the survival of a business depends on co-existence and co-prosperity with society.”
Thus, for achieving sustained growth, the Group finds it critical to fulfill our social responsibility by creating
corporate value needed by society through karaoke, as illustrated by our corporate motto, “More music tosociety, more service to society,” thereby providing pleasure and cheerfulness to the population while
contributing to their healthy and enriched lifestyles.
(2) Business strategies
With a view to fulfilling its corporate philosophy, the Group shall be committed to promoting the following
karaoke-focused businesses.
1. We will expand our customer base, which enjoys our karaoke services as well as the benefits of music, bydeveloping karaoke systems of the highest standards (in terms of sound, vision, content, etc.) and building up
a high-level service network across Japan.
2. We will increase the number of our repeat customers among karaoke box users by providing comfortable
time and space that offer peace of mind, safety and cleanliness.
3. We will entice a wide range of karaoke users across generations, not least among the elderly population,
by extensively marketing karaoke systems targeting those in need of good health or seeking recovery from illhealth, physically or mentally.
(3) Management plan-3-

The management plan (on a single year basis) is disclosed in the Company’s Flash Report on the Consolidated
Results as well as on its corporate website.
Please refer to “Financial Information” (financial results briefing materials).
https://www.dkkaraoke.co.jp/stockinfo/financialinfo/
2. Our views and basic principles on corporate governance
Please refer to “Basic Views” in this report.
3. Policies and procedures on determining the remuneration for Representative Director and Directors
Remuneration for Representative Director and Directors consists of a fixed portion called basic remunerationcommensurate with individual job responsibilities. A variable portion comprises executive bonuses thatprovide incentives commensurate with short-term performance payable within the collective limit ofaggregate executive remuneration, and share remuneration-type stock options, which provide incentives
commensurate with medium- to long-term performance.
Remuneration for Representative Director and Directors shall be determined based on the “Executive
Remuneration Rules” and the “Rules for Share Remuneration-type Stock Options,” and individual evaluations
shall be made according to the “Standards for Evaluating Directors’ Performance.” The final evaluation andallocation of the amount of remuneration shall be decided solely by the President as entrusted by the Board of
Directors.
Individual remuneration proposals prepared by the President, as entrusted by the Board of Directors, shall be
submitted to the Remuneration Advisory Committee comprising Outside Directors and officers in charge of
personnel affairs. The President makes the ultimate decision by respecting the results of deliberations or
recommendations by the Committee.
Remuneration for Outside Directors and Corporate Auditors consists solely of basic remuneration, in
consideration of their responsibilities for management oversight and auditing functions from an independent
standpoint.
4. Policies and procedures on the appointment/dismissal of Representative Director as well as on thenomination of candidates for Directors and Corporate Auditors
The Company has clarified the roles expected of Representative Director and Directors in the form of seven
key roles expected of Directors (innovative spirit, flexibility for change, power to see the essence, power toenvision, breaking free of the past, utilization of diversity, risk management) in the “Standards for Evaluating
Directors’ Performance.”
In the appointment of Representative Director, abilities to envisage strategies based on the Group’s corporate
philosophy and strong capabilities to execute business are required as vital preconditions, apart from theaforementioned roles expected of Directors.
In the nomination of candidates for Directors, appropriate persons are selected in overall consideration ofindividual character and insights necessary for executing management/supervisory functions, based on the
aforementioned seven key roles expected of Directors.
In the nomination of candidates for Corporate Auditors, appropriate persons are selected based on their insight
into corporate risks, abilities to honestly articulate opinions to the corporate manager, and capabilities tocontribute to the enhancement of the soundness and transparency of management.
In the appointment of Representative Director as well as the nomination of candidates for Directors andCorporate Auditors, the Personnel Affairs Advisory Committee chaired by an Outside Director shall conduct
prior deliberation and submit its opinion to the Board of Directors. The Board shall carefully review such
opinions and make decisions.
Dismissal of Representative Director shall be decided by the Board of Directors whenever deviation from thestandards that warranted the appointment is recognized. However, as a fail-safe system in the event of theBoard of Directors falling into a state of dysfunction for whatever reason, the Personnel Affairs Advisory
Committee chaired by an Outside Director shall provide the Board of Directors with advice orrecommendations for dismissal.
Individual appointment/dismissal and nomination at the time of nominating candidates for Directors andCorporate Auditors shall be stated in the Notice of Convocation of the General Meeting of Shareholders.
Please refer to the “Report on the General Meeting of Shareholders” (Notice of Convocation of the 47th
Ordinary General Meeting of Shareholders).
https://www.dkkaraoke.co.jp/stockinfo/meeting.html-4-

In addition, in the appointment of executives, they are appointed based on the skill items that were identified
in light of the business strategies of the Company, and in line with the Company’s “Policies and procedures on
the appointment/dismissal of Representative Director as well as on the nomination of candidates for Directors
and Corporate Auditors.” (The skills matrix of Directors is provided at the end of this Report.)[Supplementary principle 3.1.3] (Initiatives, etc. on sustainability)
Since its inception, the Group has continued to expand by delivering enjoyment and entertainment to society
mainly through the medium of karaoke. The Group is now earnestly addressing issues associated with modern
living, such as rising mental stress levels, in addition to growing health concerns as the population ages, aswell as environmental and other issues that our society is faced with, in a bid to propel our growth forward as
a company that contributes to society by exploring the potential of the joy of singing and places to sing.
<Basic principles on sustainability>
The Group aims to provide pleasure and cheerfulness to the population through karaoke, while contributing totheir healthy and enriched lifestyles.
<Priority objectives>
Amid Japan’s super-aging society, the Group has identified the “extension of healthy life expectancy” and the“enhancement of Quality of Life (QOL)” for the elderly as its priority objectives, in line with its basic
principles on sustainability. The Group is also diligently working to solve various social issues, including
environmental problems, through its business activities. By promoting these initiatives designed to solve
social issues, we have established a corporate governance structure optimized for the realization of asustainable society.
<Governance pertaining to sustainability>
With a view to promoting the initiatives for priority objectives across the Group based on the basic principles
on sustainability, the Company has established the Sustainability Committee, which is chaired by the
President of the Company.
In accordance with the basic principles on sustainability as established by the Board of Directors, theSustainability Committee assists the President and the Board of Directors by deliberating on and promoting
across the Group the following important matters related to sustainability. The Sustainability Committee
meets once every six months in principle.
 Formulation and revision of the basic principles
 Detection of priority objectives and formulation of implementation plans
 ESG initiatives and progress Other measures based on corporate governance
The Committee submits regular reports regarding its discussions twice a year to the Board of Directors toallow for the monitoring of the status of such initiatives.
<Risk management pertaining to sustainability>
The Group Risk Management and Compliance Committee is responsible for risk management covering theentire Group. In identifying risks related to sustainability and narrowing them down to the risks to beaddressed with priority, more detailed examinations are performed in the Sustainability Committee, and theinformation is shared.
Important matters related to sustainability are deliberated on by the Sustainability Committee, reflected in theannual business plan, then implemented and promoted. The status of measures is monitored also by the
Sustainability Committee, and details are reported to and supervised by the Board of Directors.
1. Initiatives for human capital
The Group promotes human resource development and aims to realize a supportive workplace environment
based on its policy “What is indispensable for corporate growth is first and foremost its human resources.” Wealso improve the internal environment so that various human resources can exercise their abilities.
2. Initiatives for intellectual properties
In order to contribute to all stakeholders based on our corporate motto, “More music to society, more service
to society,” the Group is engaged in the research and development of new products and services. Inventions-5-

arising in the course of embodying this motto are protected as intellectual properties properly and in a securemanner so as to increase corporate value.
3. Initiatives related to climate change
The Company discloses information on its initiatives in this regard in accordance with the Task Force on
Climate-related Financial Disclosures (TCFD) recommendations to analyze climate-related risks andopportunities, as we develop operational systems for governance, strategy, metrics and targets, and risk
management.
Details of our initiatives on sustainability are posted on the Company’s website:
https://www.dkkaraoke.co.jp/english/csr/(Our Sustainability Story)
https://www.dkkaraoke.co.jp/english/csr/story/(Basic Policy on Sustainability)
https://www.dkkaraoke.co.jp/english/csr/sustainability/(Environment <Initiatives to Address Climate Change>)https://www.dkkaraoke.co.jp/english/csr/environment/(Society < Improving Health >)https://www.dkkaraoke.co.jp/english/csr/social/(Society < Recruitment and Personnel>)https://www.dkkaraoke.co.jp/english/csr/social/employment.html(Governance)
https://www.dkkaraoke.co.jp/english/csr/governance/[Supplementary principle 4.1.1] (Scope of delegation to the management)
The Board of Directors shall make decisions on the matters required to be decided solely by the Board of
Directors under laws and regulations, as well as on important business execution as defined by the internal
rules. Business execution other than the aforementioned matters shall be delegated to each organizational unit
and managers thereof including Corporate Officers, according to the Executive Committee, as well as the“Organizational Rules” and the “Rules on Division of Duties.” The description and level of delegation of
authority associated with the delegation of business execution shall be defined by the “Standards for the
Approving Authority” stipulated by the Board of Directors.
[Principle 4.8] (Effective utilization of independent Outside Directors)
The Company currently appoints two independent Outside Directors to ensure enhancement of oversightfunctions towards Directors’ business execution and management transparency.
[Principle 4.9] (Criteria for assessing the independence of and qualification required for independent Outside
Directors)
The Company’s independence criteria for Outside Directors are stated in the “[Independent Officers-related]
Other matters relating to Independent Officers” in this report. Please refer to the section.
[Supplementary principle 4.11.2] (Concurrent service of Directors and Corporate Auditors)
None of the Company’s Directors or Corporate Auditors are concurrently serving as officers of other listedcompanies.
[Supplementary principle 4.11.3] (Self-evaluation of the effectiveness of the Board of Directors)
With a view to enhancing the function of the Board of Directors, the Company conducted an evaluation of theeffectiveness of the Board of Directors as follows. The results will be fed back to ensure future improvementof the Board of Directors.
1. Content of implementation (Evaluation period: from October 2022 to March 2023)(1) A questionnaire-based self-evaluation is carried out targeting all Inside Directors including the Chairmanof the Board of Directors.
(2) The effectiveness of the Board of Directors as a whole is evaluated with reference to the results of aself-evaluation by individual Directors.
(3) Efforts for improvement are to be made as necessary by drawing out issues with respect to thecomposition and administration of the Board of Directors, based on the evaluation of the Board.
-6-(4) Evaluation of the Board’s effectiveness as well as the issues drawn out and improvement are to reflect theopinions of Outside Directors.
2. Method for evaluation
The evaluation of the Board of Directors is classified into two categories, namely “resolution matterevaluation” and “institutional evaluation” as follows.
(1) “Resolution matter evaluation” refers to the evaluation of the effectiveness of the resolution/reporting
process at the Board of Directors meetings held during the applicable period.
(2) “Institutional evaluation” refers to the evaluation of the compositional/organizational effectiveness of theBoard of Directors.
3. Summary of results of analysis/evaluation relating to the effectiveness of the Board of Directors in the firsthalf of the fiscal year ended March 31, 2023
Through the “resolution matter evaluation,” as a result of the evaluation of resolution/reporting mattersrelating to items including the management plan, capital policies, business strategies, affiliates policies,
internal control, corporate institution, material personnel affairs, it was concluded that effectiveness of theresolution/reporting process was carefully managed and appropriate.
Through the “institutional evaluation,” as a result of the evaluation of the current status of items including theBoard of Directors, outside officers, corporate governance, various reportings, administration of meetings,
it was concluded that compositional/organizational effectiveness of the Board of Directors is in compliancewith laws and regulations, suitable for the actual condition of the Company, and adequate as well as
reasonable in consideration of all factors including oversight by outside officers.
Furthermore, we will proceed with evaluations going forward while making efforts for improvement andconducting examinations including with respect to its procedures and methods, with a view to enhancing thefunctions of the Board of Directors.
[Supplementary principle 4.14.2] (Policy on the training for Directors and Corporate Auditors)
Newly appointed Directors and Corporate Auditors shall participate in the executive training programorganized by an external attorney at the earliest opportunity following their appointment. They shall also
receive briefings on important matters concerning the Company including its business strategies and financial
condition from the President or executive corporate officers designated by the President.
To help Inside Directors gain a deeper understanding mainly in such areas as “Roles and Responsibilities of
the Board of Directors” and “Fiduciary Duty of Directors and Corporate Auditors, etc.” set out under the
Corporate Governance Code, the Company provides information and training on specific matters as theyarise, utilizing venues such as the Officers Council.
To help independent Outside Directors gain a deeper understanding mainly in such areas as “Responsibilitiesof the Board of Directors” in general and “Roles and Responsibilities of Outside Directors” set out under the
Corporate Governance Code, the Company provides necessary information on specific matters as appropriate.
Meanwhile, the Company also provides explanations about the Group’s businesses and operations while
creating as many opportunities as possible for visiting the fields of business.
In the meantime, information about relevant laws and regulations, etc. is shared among Corporate Auditors as
appropriate, while the Company is offering necessary support to their self-improvement efforts throughtraining opportunities such as external seminars.
[Principle 5.1] (Policy for establishment of system and related measures for the promotion of constructive
dialogue with shareholders)
1. Basic views
The Group believes that the development of trustful relationships with shareholders/investors is essential formaterializing sustained growth and enhancing corporate value over the medium to long term. To this end, theGroup recognizes that it is important to provide accurate and impartial report on the current status of theGroup’s operation to shareholders/investors, while gathering unreserved opinions therefrom.
2. IR system
For effective dialogue with shareholders/investors, the Group appoints a Corporate Officer in charge, and theBusiness Planning Department is in charge of IR activities. Opinions presented from shareholders/investors in
the course of dialogue will be periodically organized and analyzed by the Business Planning Department andreported to the President and Directors as appropriate.
3. IR activities
The Group conducts close information exchanges with institutional investors based on the “face-to-face”
principle. Meanwhile, the Company posts on its website various information as appropriate for both private
and institutional investors, including the Flash Report on the Consolidated Results, financial results briefing
materials and newsletters for shareholders.
-7-For the purpose of direct dialogue with shareholders, the Company also organizes a social gathering forshareholders after every Ordinary General Meeting of Shareholders, thereby providing an opportunity forthem to have their voice heard candidly.
4. Insider information and the quiet period
The Company shall deliver no insider information in its dialogue with shareholders/investors. It shall refrainfrom having any dialogue on the subject of financial results for a period that begins three weeks before theannouncement of financial results and ends on the day of the said announcement in each quarter (the “quiet
period”).

-8-2. Capital Structure
Foreign Shareholding Ratio

20% or more but less than 30%[Status of Major Shareholders] Updated
Number of Shares Owned(Shares)Name / Company Name
The Master Trust Bank of Japan, Ltd. (Trust
Account)
Tadahiro Hoshi
Harutoshi Hoshi
JP MORGAN CHASE BANK 380055
Hoshi Create Co., Ltd.
Custody Bank of Japan, Ltd. (Trust Account)
ASAHI BREWERIES, LTD.
NORTHERN TRUST CO. (AVFC) RE
FIDELITY FUNDS
THE BANK OF NEW YORK MELLON(INTERNATIONAL) LIMITED 131800
Mitsubishi UFJ Trust and Banking Corporation
Controlling Shareholder (except for Parent
Company)
Parent Company

Percentage (%)

7,630,900

13.98

6,246,000
6,119,000
2,872,780
2,449,800
1,858,200
1,820,000

11.44
11.21
5.26
4.49
3.40
3.33

1,520,114

2.78

1,492,200

2.73

1,148,000

2.10

—
None

Supplementary Explanation Updated(1) (1) The major shareholders as abovementioned are as of March 31, 2023.
(2) Of the above number of shares held by The Master Trust Bank of Japan, Ltd. (Trust Account), shares
related to the trust business were 7,554 thousand shares.
(3) Of the above number of shares held by The Custody Bank of Japan, Ltd. (Trust Account), shares related tothe trust business were 1,802 thousand shares.
(4) As of March 31, 2023, the Company holds 142 thousand shares of treasury stock, but is excluded from theabove list of the major shareholders.
(5) On April 1, 2023, the Company performed a 2-for-1 stock split of its common shares. However, thenumbers of shares owned presented in the above list are the numbers of shares owned before the said split.

3. Corporate Attributes

Fiscal Year-End

Tokyo Stock Exchange
Prime Market
MarchType of Business

Wholesale Trade

Listed Stock Exchange and Market Section

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

UpdatedNumber of Consolidated Subsidiaries as of the
End of the Previous Fiscal Year

1,000 persons or more

¥100.0 billion or more but less than ¥1 trillion

10 or more but less than 50 companies-9-4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling
Shareholder—
5. Other Special Circumstances That May Have Material Impact on Corporate GovernanceAs the Company has neither a parent company nor listed subsidiaries, there are no particular facts orcircumstances that may have material impact on its corporate governance at present.

II. Business Management Organization and Other Corporate Governance Systems
regarding Decision-making, Execution of Business, and Oversight in Management
1. Organizational Composition and Operation
Company with Corporate Auditors

Organization Form

[Directors]
Maximum Number of Directors Stipulated in
Articles of Incorporation
Term of Office Stipulated in Articles ofIncorporation

12

2 years

Chairperson of the Board

President

Number of Directors

6

Appointment of Outside Directors

Appointed

Number of Outside Directors

2

Number of Outside Directors designated as
Independent Officers

2

Outside Directors’ Relationship with the Company (1)NameAttribute

Relationship with the Company*
a

b

c

d

e

f

g

h

i

Katsuya Taruishi
Other
Miki Kashizaki
Other
○
*
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 pastjk○a. Executive of the Company or its subsidiaries
b. Non-executive director or executive of a parent company of the Company
c. Executive of a fellow subsidiary company of the Company
d. A party whose major client or supplier is the Company or an executive thereof
e. Major client or supplier of the Company or an executive thereof
f. Consultant, accountant or legal professional who receives a large amount of monetary consideration orother property from the Company besides remuneration as a director- 10 -

g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is alegal entity)
h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f)(the director himself/herself only)
i. Executive of a company, between which and the Company outside officers are mutually appointed (thedirector himself/herself only)
j. Executive of a company or organization that receives a donation from the Company (the director
himself/herself only)
k. Others

Outside Directors’ Relationship with the Company (2)Name
Katsuya
Taruishi

Miki
Kashizaki

Designationas
Independent
Officer○○

Supplementary
Relationship

Explanation

of

the

Apr. 1977 Joined Original Confidence
Inc. (currently oricon ME Inc.)
May 1981 Sapporo Branch Manager ofOriginal Confidence Inc.
Sept. 1982 Editor in Chief of Oricon
Weekly of Original Confidence
Inc.
Apr. 1990 General Manager of Marketing
Dept. of Original ConfidenceInc.
June 1997 Director and Editor in Chief ofOriginal Confidence ofOriginal Confidence Inc.
Oct. 1999 Director of Oricon Direct
Digital Inc. (currently Oricon
Inc.)
Oct. 2001 President of Oricon Co., Ltd.
(currently oricon ME Inc.)
Jan. 2007 President of Oricon Marketing
Promotion, Inc. (currently
Oricon Research Inc.)
June 2017 Vice President of Oricon Inc.
(current position)
Mar. 2021 Advisor of Oricon, Inc. (current
position)
Apr. 1994 Joined The Dai-ichi MutualLife Insurance Company(currently The Dai-ichi Life
Insurance Company, Limited)
Apr. 2015 General Manager of Diversity
and Inclusion Promotion
Office, HR Dept. of The
Dai-ichi Life Insurance
Company, Limited
Apr. 2017 General Manager of Public
Sector Relations Dept. of The
Dai-ichi Life Insurance
Company, Limited
July 2020 General Manager of Public- 11 -

Reasons of Appointment
Mr. Taruishi is nominated for new
appointment as an Outside
Director. He has a wealth ofmanagement experience inimportant posts at the OriconGroup, as well as specialized
knowledge related to music andentertainment. The Company
proposes his appointment as
Outside Director in the
expectation that he will utilize theinsights described above andprovide oversight of theCompany’s operations from an
independent and objective
standpoint. Additionally, if he iselected, the Company plans to
involve him in the nomination andremuneration process for
Directors, as a member of the
Personnel and Remuneration
Advisory Committee.

Ms. Kashizaki is nominated for
new appointment as an Outside
Director. She has a wealth ofexperience with the Dai-ichi LifeGroup, primarily in HR andcorporate sales, as well as
specialized knowledge related tocorporate management diversity
and inclusion. The Company
proposes her appointment as
Outside Director in the
expectation that she will utilize
the insights described above andprovide oversight of theCompany’s operations from an
independent and objective
standpoint. Additionally, if she iselected, the Company plans to
involve her in the nomination andremuneration process for
Directors, as a member of the
Personnel and Remuneration
Advisory Committee.

Sector Relations Dept.
(Supervisor) of The Dai-ichi
Life Insurance Company,
LimitedApr. 2021 Executive Officer, General
Manager of Public Sector
Relations Dept. of The Dai-ichi
Life Insurance Company,
Limited (current position)
Voluntary Establishment of Committee(s)Corresponding to Nomination Committee orRemuneration Committee

Established

Committee’s Name, Composition, and Attributes of Chairperson Updated
Committee Corresponding to
Remuneration Committee
Remuneration Advisory Committee

All Committee Members

Committee Corresponding toNomination Committee
Personnel Affairs Advisory
Committee
3

Full-time Members

00Inside Directors

11Outside Directors

22

Outside Experts

0

0

Other

0

0

Chairperson

Outside Director

Outside Director

Committee’s Name

3

Supplementary Explanation
The Company has established the Personnel Affairs Advisory Committee along with the Remuneration
Advisory Committee. Candidates for Directors and Corporate Auditors as well as their remuneration shall bedecided after these committees receive consultations and reports.
[Corporate Auditors]
Establishment of Board of Corporate Auditors
Maximum

NumberofCorporate

Stipulated in Articles of Incorporation
Number of Corporate Auditors

Auditors

Established5
4

Cooperation among Corporate Auditors, Accounting Auditors and Internal Audit Departments
Corporate Auditors receive reports from the Accounting Auditor on the results of accounting audits, etc. atleast once a quarter, apart from reports on the contents of the audit plan, exchanging opinions as appropriate.
Furthermore, a collaborative system is being strengthened between them by measures including opportunities
for Corporate Auditors to attend visiting audits or physical inspections by Accounting Auditors as necessary.
Corporate Auditors and the internal audit department hold monthly meetings for communications, including
reporting on the result of internal audits and the progress of internal control assessment along with exchangeof opinions, in an effort to share information and recognition over matters such as confirmation of audit- 12 -

priorities and necessity for additional investigations.
Appointment of Outside Corporate Auditors

Appointed

Number of Outside Corporate Auditors

2

Number of Outside Corporate Auditors that are2designated as Independent Officers

Outside Corporate Auditors’ Relationship with the Company (1)NameAttribute

Relationship with the Company*
a

b

c

d

e

f

g

h

i

j

k

l

m

Hiroshi Umetsu
From another company○
Masumi Arichika
From another company○*
Categories for “Relationship with the Company”* “○” when the corporate auditor presently falls or has recently fallen under the category;“△” when the corporate auditor fell under the category in the past
* “●” when a close relative of the corporate auditor presently falls or has recently fallen under the
category;“▲” when a close relative of the corporate auditor fell under the category in the pasta. Executive of the Company or its subsidiaryb. 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. Corporate auditor of a parent company of the Company
e. Executive of a fellow subsidiary company of the Company
f. A party whose major client or supplier is the Company or an executive thereof
g. Major client or supplier of the Company or an executive thereofh. Consultant, accountant or legal professional who receives a large amount of monetary consideration orother property from the Company besides remuneration as a corporate auditor
i. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is alegal entity)
j. Executive of a client or supplier company of the Company (which does not correspond to any of f, g, or h)(the corporate auditor himself/herself only)
k. Executive of a company, between which and the Company outside directors/corporate auditors aremutually appointed (the corporate auditor himself/herself only)
l. Executive of a company or organization that receives a donation from the Company (the corporate auditor
himself/herself only)
m. Others- 13 -

Outside Corporate Auditors’ Relationship with the Company (2)Name
Hiroshi Umetsu

MasumiArichika

Designation as
Independent
Officer○○

Supplementary Explanation of
the Relationship

Reasons of Appointment

1991: Joined Asahi Shinwa &Co. (currently KPMG
AZSA LLC)
1994: Registered as certified
public accountant
2006: Partner, KPMG AZSALLCThe Company elected Mr. Umetsu as
Corporate Auditor, since he has awealth of experience based on his
years of service as certified public
accountant, along with high-level
expert knowledge and insight infinance and accounting.

Mr. Umetsu has been designatedas independent officer of theCompany.
1987: Representative Director,
Kami no Fune Co., Ltd.
(current position)
Mr. Arichika has been
designated as independent
officer of the Company.

The Company elected Mr. Arichika
as Corporate Auditor, since he has
considerable expertise in legal affairs
related to music as well as knowledge
about the music industry in general,
based on his years of experience asmusic composer and as staff member
at a company managing music
copyrights.

[Independent Officers]
Number of Independent Officers

4

Other matters relating to Independent Officers
The Company sets forth the “Criteria for Assessing the Independence of Independent Officer of theCompany,” and designates individuals to whom none of the following criteria apply as Independent Officers.
(1) An executive of the Company or an affiliate of the Company, or a person who has been an executive of theCompany or an affiliate of the Company in the past ten years(2) A person who has the Group as its major business partner or its executive.
(3) A person who is the major business partner of the Group or its executive.
(4) A person who is a major shareholder of the Company (directly or indirectly holding 10% or more of thevoting rights) or its executive.
(5) A person in whom 10% or more of the voting rights is held directly or indirectly by the Company or its
executive.
(6) A person affiliated with an audit firm, which serves as the Accounting Auditor of the Group.
(7) An attorney, a certified public accountant, a tax accounting or a consultant, and the like, who receives
considerable monetary compensation or other properties from the Group other than executive remuneration.
(8) A director or other executive of legal entities or organization, including legal firms, audit firms, tax
accountant firms or consulting firms, and the like, which receives considerable monetary compensation orother properties from the Group.
(9) A person, who receives considerable amounts of donations or subsidies from the Group, or a director orother executive of legal entities or organizations including legal firms, audit firms, tax accountant firms or
consulting firms, and the like, which receives considerable amounts of donations or subsidies from the Group.
(10) An Executive Director, an Executive Officer, a Corporate Officer or an employee, including a Manager
of a company, at which an Executive Director or a Standing Corporate Auditor of the Group concurrently
serves as Outside Director or Outside Corporate Auditor(11) Any person to whom items (2) through (10) applied in the past three (3) years; and(12) In cases where a person to whom items (1) through (11) above applies is in an important position, the- 14 -

spouse or a relative within the second degree of kinship of such person.
[Incentives]
Incentive Policies for Directors

Stock Options

Supplementary Explanation
Stock option plan
The Company abolished the Executive Retirement Benefit Plan at the 40th Ordinary General Meeting of
Shareholders held on June 19, 2015. The Company instead introduced the Share Remuneration-type Stock
Option Plan, with a view to enhancing motivation for the long-term improvement of business performanceand corporate value more than ever by making executive remuneration more linked to the Company’s shareprice and performance and sharing the merits and risks of share price fluctuations with shareholders.
Recipients of Stock Options

Inside Directors, Others

Supplementary Explanation Updated
Share remuneration-type stock options shall be granted to Inside Directors (excluding Part-time Directors),
whereas performance-based stock options shall not be granted to Outside Directors or Corporate Auditors inconsideration of their roles and independent nature.
“Others” under Recipients of Stock Options refers to Officers with Special Titles and Senior Corporate
Officers (excluding those concurrently serving as Directors and Part-time Corporate Officers).
Status of granting these stock options in the fiscal year ended March 31, 2023
Share remuneration-type stock options (share acquisition rights) based on the resolution at the Board of
Directors meeting held on June 23, 2023
307 stock acquisition rights (equivalent to 30,700 shares) were granted to four Directors
146 stock acquisition rights (equivalent to 14,600 shares) were granted to three officers consisting of Officers
with Special Titles and Senior Corporate Officers (excluding those concurrently serving as Directors andPart-time Corporate Officers)- 15 -

[Director Remuneration]
Disclosure of Individual Directors’ Remuneration

Selected Directors

Supplementary Explanation
Total amount of remuneration paid to Directors and that paid to Corporate Auditors are disclosed separately,while remuneration for officers receiving ¥100 million or more per person shall be disclosed individually.
Policy on Determining Remuneration Amounts
and Calculation Methods

Established

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods
Based on a Board of Directors resolution, the Company shall entrust the decision on the amount of
remuneration for each Director to the President, who shall make a final decision after deliberations at the
Remuneration Advisory Committee, an advisory body to the President.
[Supporting System for Outside Directors and/or Corporate Auditors]
While there is no organizational unit dedicated to supporting Outside Directors (Outside Corporate Auditors),
there is a system in place for measures to be taken as necessary primarily by the Administration Departmentof the Company.
[Retired presidents/CEOs holding advisory positions (Corporate Counselor, Advisor, etc.)]

Information on retired presidents/CEOs holding advisory positions (Corporate Counselor, Advisor, etc.)

Employment terms
Name

Job title/
position

Responsibilities(Full/part time, with/without
remuneration, etc.)

Yasutaka
Wada

AdvisorActivities
associated withindustry bodies,etc.

Part-time/with compensation

Number of retired presidents/CEOs holding
advisory positions (Corporate Counselor,

1

Advisor, etc.)
Others—- 16 -

Date

whenformerrole

as president/
CEO ended
September 1,
2009

Term

1 year2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration
Decisions (Overview of Current Corporate Governance System) Updated
An outline of the Company’s decision-making, execution of business and oversight in management is asfollows.
[Board of Directors]
The Board of Directors of the Company is composed of six directors, including two Outside Directors, whomake decisions on important matters, including matters stipulated by laws and regulations or the Articles ofIncorporation and basic management policies, and supervise the management of business execution.
The members of the Board of Directors are as follows.
President: Tadahiro Hoshi (Chairman)
Directors: Harutoshi Hoshi, Kenji Otsuka, Takeshi Iijima, Katsuya Taruishi, Miki Kashizaki[Board of Corporate Auditors]
The Company adopts a Corporate Auditor system. The Board of Corporate Auditors is composed of four
Corporate Auditors, two of whom are Outside Corporate Auditors. In addition to attending important meetings,
including the Board of Directors meetings, Corporate Auditors conduct rigorous audits by inspecting important
documents requiring approval, and receiving reports and explanations directly from Directors, the Audit
Department, and persons in charge of business, as necessary.
The Members of the Board of Corporate Auditors are as follows.
Standing Corporate Auditors: Hiroshi Umetsu (Chairman), Fumiaki Koizumi
Corporate Auditors: Masumi Arichika, Hiroyoshi Shibano[Executive Committee]
The Executive Committee is composed of 13 Corporate Officers who meet once a month in principle and holdextraordinary meetings as required. The Executive Committee engages in decision-making, following
sufficient deliberations, regarding the execution of important business based on the basic management policies
determined by the Board of Directors. Executive Committee meetings shall be attended by a manager
responsible for the department concerned with each agenda, in order to provide detailed verification of subject
matters and further accelerate decision-making as appropriate.
While not decision-making bodies, we have also established the “Officers Council” and the “Management
Liaison Council” as auxiliary bodies for meetings of the Executive Committee. The Officers Council engages
in extensive and multilateral discussions on matters relating to management and important business execution,
and assists the Executive Committee. The Officers Council shall meet twice a month in principle. The
Management Liaison Council is positioned as a body that holds meetings where the managers responsible foreach department report on the policies, plans, and progress of other important projects decided by the Board of
Directors and the Executive Committee, and share information with officers and managers responsible for eachdepartment. A Management Liaison Council shall be held on a weekly basis in principle.
The members of the Executive Committee are as follows.
President and Chief Corporate Officer: Tadahiro Hoshi (Chairman)
Senior Managing Corporate Officer: Yuichi Murai, Yasuhito Watanabe
Managing Corporate Officer: Harutoshi Hoshi, Kenji Otsuka, Takeshi Iijima
Senior Corporate Officers: Noriyuki Takehana, Shuichiro Odajima
Corporate Officers: Hiroshi Kunitsu, Takeshi Sekizawa, Kenji Suda, Toshiharu Egashira, Ken Ohyama[Managing Officers Council]
The Company’s Managing Officers Council is composed of six Officers with Special Titles who meet on a
weekly basis in principle and hold extraordinary meetings as required.
As an advisory body to the President and Chief Corporate Officer, the Managing Officers Council assists the
President and Chief Corporate Officer by deliberating and approving important management matters based on
the basic management policies determined by the Board of Directors. Managing Officers Council meetings
shall be attended by a manager responsible for the department concerned with each agenda.
The members of the Managing Officers Council are as follows.
President and Chief Corporate Officer: Tadahiro Hoshi (Chairman)
Senior Managing Corporate Officer: Yuichi Murai, Yasuhito Watanabe
Managing Corporate Officer: Harutoshi Hoshi, Kenji Otsuka, Takeshi Iijima- 17 -

[Personnel Affairs Advisory Committee]
The Company has established a Personnel Affairs Advisory Committee chaired by an Outside Director, as anadvisory body to the Board of Directors. The Board of Directors ensures fairness and objectivity by consultingwith the Committee regarding such matters as the appointment/dismissal policies of Representative Directors,
proposals for each candidate, and succession plans for the President.
The members of the Personnel Affairs Advisory Committee are as follows.
Chairman: Katsuya Taruishi (Outside Director)
Committee members: Miki Kashizaki (Outside Director), Harutoshi Hoshi (Director in charge of personnel
affairs)[Remuneration Advisory Committee]
The Company has established a Remuneration Advisory Committee chaired by an Outside Director, as anadvisory body to the Board of Directors. The Board of Directors ensures fairness and objectivity by consultingwith the Committee regarding such matters as the remuneration system for Directors and Representative
Directors, the level of remuneration and the amount of remuneration.
The members of the Remuneration Advisory Committee are as follows.
Chairman: Katsuya Taruishi (Outside Director)
Committee members: Miki Kashizaki (Outside Director), Harutoshi Hoshi (Director in charge of personnel
affairs)[Independent Officers Liaison Council]
The Company has established an Independent Officers Liaison Committee for the purpose of coordinating
information sharing and the exchange of opinions among outside officers. In addition, when meetings of theabovementioned Personnel Affairs Advisory Committee and Remuneration Advisory Committee are held, theIndependent Officers Liaison Council shares information and exchanges opinions among outside officers.
The members of the Independent Officers Liaison Council are as follows.
Members of the Committee: Katsuya Taruishi (Outside Director), Miki Kashizaki (Outside Director), Hiroshi
Umetsu (Outside Corporate Auditor), Masumi Arichika (Outside Corporate Auditor)[Sustainability Committee]
With a view to promoting the initiatives for priority objectives across the Group based on the basic principles
on sustainability, the Company has established the Sustainability Committee.
In accordance with the basic principles on sustainability as established by the Board of Directors, theSustainability Committee assists the President and the Board of Directors by deliberating on Group-widepriority issues related to sustainability. The Sustainability Committee shall meet once every six months inprinciple.
The members of the Sustainability Committee are as follows.
Chairman: Tadahiro Hoshi (President)
Committee members: Harutoshi Hoshi (Director), Kenji Otsuka (Director), Takeshi Iijima (Director), Atsuya
Furuta (Outside Director), Chika Masuda (Outside Director), Yuichi Murai (General Manager of Development
Headquarters), Yasuhito Watanabe (General Manager of Entertainment Business Headquarters)[Summary of the liability limitation agreement]
Pursuant to Article 427, Paragraph 1 of the Companies Act, the Company concluded an agreement with
Outside Directors and Outside Corporate Auditors, which limits their liability for damages set out under
Article 423, Paragraph 1 of the same act. The limit of liability for damages under such an agreement is anamount stipulated under laws and regulations. The limit shall be applied only when the Outside Director or
Outside Corporate Auditor acts in good faith and there is no gross negligence on the side of them in executing
their duties that give rise to such liability for damages.

3. Reasons for Adoption of Current Corporate Governance System
The present corporate governance system is adopted, as it is believed to be appropriate in maintaining
efficient and sound management and materializing sustainable enhancement of corporate value, while
ensuring fairness and transparency of management.

- 18 -

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures for the Vitalization of the General Shareholder Meetings and Smooth Exercise of Voting
Rights Updated
Early Notification of General
Meeting of Shareholders

Scheduling General Meetingof Shareholders Avoiding thePeak Day
Allowing Electronic Exerciseof Voting Rights
Participation in Electronic
Voting Platform and Other
Efforts to Enhance the Voting
Environment for Institutional
Investors
Providing
NoticeofConvocation in English

Supplementary Explanations
In order to allow shareholders to secure a sufficient period of time to
examine proposals to be resolved at the General Meeting of Shareholders,the Company disclosed a summary of the proposals on the same day they
were passed at the Board of Directors. The Notice of Convocation was also
dispatched to shareholders early on.
The Notice of Convocation was posted on the Company’s website on thefollowing dates, before it was sent by postal mail:Japanese version: June 1
English version: June 1
The Company held the 48th Ordinary General Meeting of Shareholders on
June 23, 2023, avoiding the peak day, June 29, 2023.
The Company adopts an electronic method for exercising voting rights.
The Company participates in an Electronic Voting Platform run by ICJ, Inc.

The Company prepares a shortened English version of the Notice ofConvocation and posts it on the Company’s website, to assist non-Japaneseshareholders in exercising their voting rights.

2. IR Activities
Supplementary Explanations

Explanation byRepresentative

Preparation and Publication ofDisclosure Policy

Regular Investor Briefings forAnalysts and Institutional
Investors
Posting of IR Materials on
WebsiteEstablishment of Department
and/or Manager in Charge ofIR

The Company prepares its disclosure policy andpublishes it on the Company’s website. For details, pleaserefer to the website:
https://www.dkkaraoke.co.jp/corporate/public/disclosure.
html
While the Company does not hold financial results
briefing sessions in the form of plenary conferences, it
actively organizes one-on-one meetings.
Flash Reports on the Consolidated Results, financial
results briefing materials and newsletters for shareholders
are posted in the Shareholder & Investor Information
section of the Company’s website on a timely basis.
Business Planning Department- 19 -None

3. Measures to Ensure Due Respect for Stakeholders
Stipulation of Internal Rules
for Respecting the Position of
Stakeholders

Implementation ofEnvironmental Activities, CSR
Activities etc.

Development of Policies on
Information Provision to
Stakeholders

Other

Supplementary Explanations
The DAIICHIKOSHO Group Code of Conduct clearly prescribes a basic
stance, approach and handling for all its stakeholders. The Company and theGroup apply this Code not only to their management but also to each andevery employee, while continuing to encourage them all to act inaccordance therewith.
As part of its environmental conservation activities, the Company has
digitized its karaoke songbooks in an effort to reduce paper consumption.
All the Company’s “BIG ECHO” karaoke cabins have switched lighting to
LED as part of its efforts to reduce CO2 emissions, as well as discontinued
the use of plastic straws to battle the plastic waste issue.
As part of its CSR activities, the Company is committed to donation
activities to support recovery and reconstruction efforts in the event oflarge-scale disasters, along with support activities including providing carefor the affected population to improve their physical and mental welfare
through making full use of karaoke. The Company also engages in an elder
business that contributes to preventing senior citizens from falling into caredependency, which is one of our social issues, as well as to promoting theirhealth.
Details are posted on the Company’s website:[Sustainability]
https://www.dkkaraoke.co.jp/english/csr/
In the course of their corporate activities, the Company and the Group shallbe committed to active disclosure to stakeholders of all information that
may have short-, medium- or long-term impacts on business performance.
Disclosures are conducted in ways that ensure timeliness, fairness andaccuracy.
As part of efforts to promote the advancement of women in workplace, theCompany is committed to developing a workplace environment that allows
a balance between work and child-rearing by establishing various systems
such as leave of absence and temporary retirement or shortened working
hours before and after giving birth and child-rearing.

- 20 -

IV. Matters Related to the Internal Control System
1. Basic Views on Internal Control System and the Progress of System Developments
1. System to ensure that Directors and employees of the Company and its subsidiaries execute their duties incompliance with laws, regulations and respective Articles of Incorporation(1) The Group Code of Conduct prepared by the Company shall be thoroughly conveyed to all officers andemployees to ensure that officers and employees of the Company and its subsidiaries (the “Group”) execute
their duties in compliance with laws, regulations and respective Articles of Incorporation, while fulfilling theirsocial responsibilities (and business ethics).
(2) The Internal Control Promotion Department shall be assigned as “Department Controlling Risk
Management and Compliance.” The Department shall be responsible for preparing a basic compliancemanual, taking a guiding role in the planning and development of the Group structure and conducting
education and training for officers and employees. Furthermore, monitoring the status of legal compliancewill be conducted jointly with the Audit Department.
(3) The Internal Control Promotion Department shall be responsible for managing and operating thewhistle-blowing system across the Group, as well as for strictly protecting whistle-blowers.
(4) Status of legal compliance shall be assessed through regular audits by the Audit Department and reported
to the Board of Directors and the Board of Corporate Auditors.
2. System related to the retention and management of information concerning the execution of duty by
Directors(1) With respect to decision making by Directors and reports delivered thereto as well as other material
decision making and reports, rules such as the Document Control Rules for the Preparation, Retention and
Disposal of Documents and the Rules for Meeting Bodies shall be established and a system shall be in place
to allow concerned parties to inspect the information as necessary.
3. Rules and other systems related to the management of risk of loss at the Company and its subsidiaries(1) Pursuant to the Basic Rules for the Group Risk Management, the Internal Control Promotion Department
shall be responsible for providing guidance on risk management within the Group (involving instruction andeducation for development of relevant manuals for each department), comprehensive risk analysis, evaluation
and responses, the operation of the risk management system, and maintaining its functions within the Group.
(2) Pursuant to the Basic Rules for the Group Risk Management, the Group shall be engaged in the
management of risks associated with each department.
(3) In the event of the materialization of risks involving the likelihood of significant loss, general managers at
the Company’s headquarters and/or presidents of its subsidiaries shall report to the Board of Directors without
delay.
(4) In the event of the emergence of new risks, the President of the Company shall instruct the Group as
appropriate to address the risks. The Rules for the Group Crisis Management shall be activated along with theappointment of the Director in charge.
4. System to ensure that Directors of the Company and its subsidiaries execute their duties efficiently(1) The Board of Directors, Executive Committee and Managing Officers Council shall be attended by amanager responsible for the department concerned with each agenda, in order to ensure managementtransparency, detailed verification of subject matters and prompt decision-making as appropriate.
(2) A Management Liaison Council shall be held on a weekly basis in principle to achieve prompt andaccurate instructions on the Group’s management policies as well as communication of important matters.
Directors and Corporate Auditors shall attend the Council.
5. System to ensure appropriate business execution within corporate Group comprising the Company and its
subsidiaries(1) A Group Risk Management and Compliance Committee shall be established as a body for deliberation on
and promotion of the Group-wide risk management and compliance system.
(2) The Group Risk Management and Compliance Committee shall be responsible for giving instructions andpresenting information regarding the system for risk management and compliance covering the entire Group.
(3) The Internal Control Promotion Department shall be responsible for appropriately developing andoperating the system for evaluating and managing the risks throughout the entire Group. The Audit
Department shall be responsible for monitoring the system.
- 21 -

(4) Internal control necessary for ensuring appropriate financial reporting shall be developed and operated.
(5) Matters concerning the business execution by directors and employees of the Company’s subsidiaries shallbe reported to the Company on a regular and timely basis. Implementation of important management mattersby the Company’s subsidiaries shall be subject to the Company’s prior approval.
6. Matters concerning employees in cases where Corporate Auditors request employees’ assignments to serveas their assistants in carrying out their duties(1) While no staff shall be assigned as assistants to Corporate Auditors for the time being, they shall be
assisted by the Audit Department and Business Planning Department for business audits and by the
Administration Department for day-to-day business.
(2) In the event where assistants to Corporate Auditors are required in future, the Company shall select theright persons in consultation with the Board of Corporate Auditors.
7. Matters concerning the independence of the aforementioned employees from Directors(1) In the event where assistants to Corporate Auditors are required, the employees’ independence shall beensured by measures including the establishment of a chain of command in which they report directly to
Corporate Auditors.
8. System for reporting to Corporate Auditors including a system for Directors and employees of theCompany and its subsidiaries to report, and a system to ensure that persons who report should not receive any
disadvantageous treatment on account of their actions(1) The Group’s Directors and employees shall report to Corporate Auditors in the event of actual or likely
occurrences of situations involving significant loss to a Group company, or discovery of illegal or wrongfulacts committed by officers or employees, or otherwise any matters instructed by Corporate Auditors to report
thereto.
(2) Directors and General Managers of the Audit Department, Administration Department, Internal Control
Promotion Department, Business Planning Department, or other departments responsible for managing theCompany’s subsidiaries shall report on matters including the processes to decide on important matters, illegal
acts, rewards and punishments, status of risk management and whistle-blowing, at the request of Corporate
Auditors or subject to the matters’ materiality. The Audit Department shall have reporting sessions with
Corporate Auditors on a regular basis on the progress of internal audits.
(3) The Group prohibits disadvantageous treatment of officers or employees who report to a Corporate
Auditor or the Board of Corporate Auditors on account of such actions. The spirit of the prohibition shall bethoroughly communicated to all officers and employees throughout the Group.
9. Matters concerning the policy for the processing of expenses or obligations arising from the execution ofduties by Corporate Auditors of the Company, including the procedures for the advance payment or
reimbursement of the expenses(1) Under its annual business plan, the Company shall establish budgets for expenses arising from theexecution of duties by Corporate Auditors. The Company shall promptly process payment or reimbursement
on request for the advance payment of expenses, or upon the occurrence of unbudgeted audit-related expenses
or obligations arising on an urgent or temporary basis.
10. System to ensure that audits by Corporate Auditors are otherwise effectively conducted(1) Opinion-exchange sessions between the President and Corporate Auditors shall be held periodically forthe purpose of adequate communication.
(2) Corporate Auditors shall be allowed to attend the Officers Council and other important meetings.
(3) The Audit Department, Administration Department and Internal Control Promotion Department shall also
assist the Board of Corporate Auditors.
11. System to eliminate anti-social forces(1) Under the provisions of the Group Code of Conduct, the Group shall declare the breaking off of its
relationship with anti-social forces and promote the development of an internal system that will eliminate
anti-social forces. The Administration Department will be assigned as the office responsible for dealing with
anti-social forces, taking a dauntless stance as an organization against any unlawful demands, in coordination
with outside parties such as attorneys and the police.

- 22 -

2. Basic Views on Eliminating Anti-Social Forces and the Progress of System Development
1. Basic views on eliminating anti-social forces(1) In order to completely break off its relationship with anti-social forces, the Group makes it a basic
principle to develop and appropriately apply internal regulations and systems, including the Group Code of
Conduct.
2. Progress of development of the system for eliminating anti-social forces(1) The Company has assigned an office responsible for dealing with anti-social forces along with a person in
charge of defending the Company from unlawful demands. The Company also endeavors to collect and share
information through its participation in a liaison group organized by the police, and closely communicatingwith the external expert organizations. The Company also adopts measures, including preparation anddistribution of a basic manual for handling anti-social force issues, participation in an external training
program and conducting internal enlightenment activities, striving to develop a system for preventing loss anddamage associated with anti-social forces.

- 23 -

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

Not Adopted

Supplementary Explanation
As of this moment, the Company has yet to introduce defensive measures against hostile takeovers.
Going forward, the Company shall review the necessity and other aspects of such measures, based on the
judgment of whether they would contribute to the enhancement of corporate value, fully in consideration of
the impact on shareholders.
If the Company decides to introduce, as a defense against hostile takeovers, any measures that might impact
shareholders and investors, the measures’ details shall immediately be disclosed.

2. Other Matters Concerning Corporate Governance System
Summary of the timely disclosure system
1. The Company’s approach toward disclosure
We recognize that management’s essential responsibility is its commitment to active information disclosurein a timely and appropriate manner to help shareholders/investors make appropriate judgments on the
Company’s corporate value. Based on the following disclosure policy, the Company will strive to enhance
management transparency through adequate information disclosure, with a view to meeting the trust ofshareholders/investors.
2. Disclosure policy(1) Basic policy for information disclosure
The Company believes that it is its critical responsibility to all stakeholders, not least shareholders andinvestors, to provide prompt and accurate information disclosure based on transparency, fairness andcontinuity of management.
In order to fulfill such responsibilities, the Company shall strive to disclose information in compliance with
the Financial Instruments and Exchange Act and the Timely Disclosure Rules set out by the Tokyo Stock
Exchange. Other important information will also be published on the Company’s website on a timely basis.
(2) Method for information disclosure
The Company discloses the required information under the Timely Disclosure Rules on TD-NET as
provided by the Tokyo Stock Exchange, pursuant to such rules. Information disclosed on TD-NET shall all
be posted, in principle, on the Company’s website without delay. The Company shall also strive to disclose
at its discretion information not required to be disclosed under the Timely Disclosure Rules on the
Company’s website, following the spirit of timely disclosure, insofar as it helps the shareholders/investors
better understand the Company, thereby ensuring an accurate and fair delivery of information thereto.
(3) Quiet period
The Company shall arrange a “quiet period” that begins three weeks before the announcement of financial
results and ends on the day of the said announcement, for the purpose of preventing information leakages
concerning financial results and ensuring fairness. During the quiet period, the Company shall refrain frommaking any comments or answering any questions regarding the results, provided, however, that if it
becomes evident that a discrepancy from the performance forecast observed during the period falls into therange of fluctuation applicable under the Securities Listing Regulations, the discrepancy shall be disclosed
in the form of a press release, etc. as appropriate.
(4) Forward-looking statements
The information disclosed by the Company excepting the past facts is forward-looking statements reflecting
its judgment based on currently available information, and thus should involve risks and uncertainties
associated with factors including economic conditions, market trends, and changes in tax regimes andvarious institutions. Thus, please bear in mind that the actual results, etc. to be announced in the future may
deviate from those described in the forward-looking statements due to changes in such factors.
3. Internal system for timely disclosure
Please refer to the diagram that illustrates the system for timely disclosure.
- 24 -

[Corporate Governance System]
Management oversightGeneral Meeting of Shareholders
Coordination<Accounting auditor>
Ernst & Young
ShinNihon LLC<Board of Corporate
Auditors>
Corporate Auditors

Business/accounting audit

Audit of the Board of Directors andbusiness execution

Decision-making on management policies/
strategies and oversight of business execution

Officers
CouncilInternal control

Sustainability Committee

President andChief Corporate
Officer

Audit Department
Group Risk
Management
andCompliance
Committee(Chaired by an Outside Director)

Independent Officers Liaison
Council

Executive Committee

Internal control

Personnel Affairs Advisory Committee
Remuneration Advisory Committee

Coordination
Business
execution

Coordination

Business execution<Board of Directors>
Directors

Managing Officers
Council

Coordination

Internal Control Promotion
Department

Management
Liaison Council

Compliance Hotline

Risk information
Whistle-blowing

Each business department andconsolidated subsidiary

Election and dismissal (instructions/orders)
Audit/oversight (internal control)
Information sharing (coordination)
Submission of or reporting on important matters including risk information- 25 -

[Skills matrix of Directors of the Company]
Skill items identified in light of the business strategies of the Company

Current positions and responsibilities at the Company

NameManagement

Industry

Businessstrategies

Risk

〇

〇

〇

○

Harutoshi
Hoshi

〇

〇

〇

General Manager of Sales Management Kenji Otsuka
Headquarters

〇

〇

○

〇

〇

○

President

Tadahiro
Hoshi

Diversity

Director
General Manager of Administration
Headquarters and General Manager ofFinance Dept.

〇

Director

Director
General Manager of Stores Business
Headquarters and General Manager ofStores Development Dept.

Director
Outside/Part-time

Director
Outside/Part-timeTakeshi
IijimaKatsuya
Taruishi
Miki
Kashizaki- 26 -〇〇〇〇