Corporate Governance Report

Hanwa Co, Ltd.
Report date: June 27,2024

Hanwa Co., Ltd.
Yoichi NAKAGAWA, Director, President
Contact: Corporate Planning Dept.
+81-3-3544-2000

Securities code:8078
https://www.hanwa.co.jp/
The corporate governance of Hanwa CO., LTD.(the Company) is described below.

I.

Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other
Basic Information

1.

Basic Views
We aim to fulfill our social responsibilities as a good corporate citizen so that we can gain and retain the respect fromstakeholders and be recognized as a valuable enterprise. We work to establish a high degree of transparency in management
systems to ensure full legal and regulatory compliance and respect for social norms.
In addition, to coexist with the Earth and society and to develop sustainably, we have established the Sustainability Promotion
Committee and promoted management initiatives with a focus on sustainability.

Reasons for Non-compliance with the Principles of the Corporate Governance CodeSupplementary Principles 2.4.1
We have set a numerical target for the ratio of new female graduates hired (30% or more for career-track positions) andfor mid-career hiring (30% by FY2025). In addition, as part of our efforts to create an internal environment to secure adiverse workforce, we are developing infrastructure for telecommuting and have established an "in-house university" tocreate a comfortable work environment and a system where employees can grow autonomously. As a result, the number andratio of women, foreign nationals, and mid-career hires are increasing year by year.
Furthermore, we have set a target of 3.7% for the ratio of female employees in managerial positions by FY2025 and areworking to form a population for promotion to core personnel. Our action plan based on the Act on the Promotion of
Women's Active Engagement in Professional Life is available on our website.
In the development of our human resources, we have adopted the keyword "Professional & Global." We are working todevelop human resources with an expanded sense of humanity who can communicate with an understanding of theuniqueness and diversity of each of the world's regions. Specifically, we are promoting the development of human resources
with management knowledge, business knowledge, language skills, and international perspectives by combining theacquisition of knowledge and language skills through systems that dispatch employees to MBA programs in Japan,
language education institutions in and outside Japan, and overseas subsidiaries as trainees, with practical application in theworkplace by assigning them to related positions after completion of the training program.
Supplementary Principles 3.1.3
In the ”Medium-Term Business Plan 2025”, we have set "Sustainability Management" as one of our basic policies andare working on "business/investment strategies rooted in ESG and SDGs" as well as "strengthening the organizational
structure to support sustainable growth.” We also have a human resources strategy and are working to create an environment
in which a diverse workforce can work while growing sustainably, as well as promoting the introduction of systems that
support each employee's ability to demonstrate his or her strengths and take on challenges.
The Company discloses information on sustainability as appropriate through the "Sustainability” page(https://www.hanwa.co.jp/en/csr/) on its website.
With regard to the impact of climate change-related risk and profit opportunities on the Company’s business activities
and earnings, the Company is preparing an internal system to disclose information in accordance with the TCFD frameworkand gradually disclosing information as it is complied.

1

Supplementary Principles 4.1.3
With regard to the personnel affairs of directors, the Company has established a Nomination Advisory Committee as anadvisory organ of the Board of Directors. The Committee, which includes outside directors and an outside corporate auditor,
examines and submits personnel proposals to the Board of Directors. Concerning successors of the CEO and other top
executives, candidates will be narrowed down based on close examinations of the individual performance, characters,
knowledge, and other factors of each director and executive officer.
The Company does not have a specific procedural plan, such as succession plan, clearly defined. However, since
FY2003, the Company has had a qualitative review system for executive officers, including executive directors, and haspresented the desirable management requirements as evaluation criteria. The results of evaluations of all executive officers
have been accumulated. Through the accumulation of evaluations and feedback conducted every fiscal year, candidates who
possess the appropriate qualities for the CEO will be selected. Considering the number of senior executives and otherfactors, the Company believes that it is at a level where the rationale for and the appropriateness of the selection of
successor candidates can be shared within the Board of Directors.

Disclosure Based on the Principles of the Corporate Governance Code
The Company’s policies and initiatives in response to all 83 items of general principles, principles andsupplementary principles of the Corporate Governance Code are disclosed on our website as the Principles for
Responding to the Corporate Governance Code (https://www.hanwa.co.jp/en/company/governance.html).Amongthese, disclosure items based on each principle of the Corporate Governance Code are as follows.
Principle 1.4(1) Holding Policy
From the perspective of business partnerships, creating business opportunities, maintaining and strengthening business
relationships, etc., the Company holds shares of business partners, etc., when it is considered to contribute to enhancing
corporate value over the medium to long term.
(2) Verification and Reduction Policy
Each year, the Board of Directors and the Management Committee regularly and comprehensively examine theappropriateness of the holding of individual shares, taking into account factors such as investment returns from transactions
and dividends, capital efficiency, and the purpose of holding. The Company promotes the sale of shares that are deemed to
be inconsistent with the purpose of the holding.
(3) Criteria for Exercising Voting Rights
The Company has established the following screening criteria for exercising voting rights. For the stock issues that meetthe criteria, the Company will scrutinize the details of the proposals and determine whether to vote for or against them.
1) a company whose value of shares are judged to be significantly impaired according to its stock price level and financial
conditions
2) a company whose operating income, ordinary income, or net income was recorded as negative in its business results forthe previous fiscal year3) a company that caused a scandal with significant social impact, including violations of laws and regulations or anti-social
acts4) a company that submits a proposal that is likely to hinder the purpose of shareholding and significantly impair the valueof shares, including any proposal on changes of control or substantial revisions of corporate organization(4) Reduction Status for the Year Ended March 2024
The Company sold all shares of 29 issues and a portion of shares of 7 issues. As of the end of March 2024, the ratio ofcross-shareholdings to consolidated net assets was 19.6%.
Principle 1.7
If the Company intends to engage in a transaction with a director of the Company or a company where a director of theCompany holds office as a representative (related party transaction), the Company will conduct the related party transaction
only after the Board of Directors deliberates on the transaction and gives approval.
With regard to transactions with major shareholders, financial transactions with Sumitomo Mitsui Banking Corporation
and The Dai-ichi Life Insurance Company, Limited are conducted with approval from the Board of Directors. With regard
to commercial transactions, the Company conducts them based on the Standards for Decision-making Authority establishedwith approval from the Board of Directors according to the sizes of the transactions, and applies the same procedures to theCompany’s transactions with major shareholders such as Nippon Steel Corporation.

2

Supplementary Principles 2.4.1
We have set a numerical target for the ratio of new female graduates hired (30% or more for career-track positions) andfor mid-career hiring (30% by FY2025). In addition, as part of our efforts to create an internal environment to secure adiverse workforce, we are developing infrastructure for telecommuting and have established an "in-house university" tocreate a comfortable work environment and a system where employees can grow autonomously. As a result, the number andratio of women, foreign nationals, and mid-career hires are increasing year by year.
Furthermore, we have set a target of 3.7% for the ratio of female employees in managerial positions by FY2025 and areworking to form a population for promotion to core personnel. Our action plan based on the Act on the Promotion of
Women's Active Engagement in Professional Life is available on our website.
In the development of our human resources, we have adopted the keyword "Professional & Global." We are working todevelop human resources with an expanded sense of humanity who can communicate with an understanding of theuniqueness and diversity of each of the world's regions. Specifically, we are promoting the development of human resources
with management knowledge, business knowledge, language skills, and international perspectives by combining theacquisition of knowledge and language skills through systems that dispatch employees to MBA programs in Japan,
language education institutions in and outside Japan, and overseas subsidiaries as trainees, with practical application in theworkplace by assigning them to related positions after completion of the training program.
Principle 2.6
The Company manages pension reserves through Pension Fund of Hanwa Co., Ltd. (hereinafter referred to as the PensionFund). Although it is difficult to say that the Company sufficiently assigns personnel who are highly qualified andexperienced in investment in pension funds due to our size and expertise, the Company has established a Pension
Committee within the Company to ensure stable and efficient management of Pension Fund and its investments. The
Pension Committee is composed mainly of officers and section managers in charge of the Personnel Department, Finance
Department, and Accounting Department. The committee selects investment institutions to be entrusted, allocatespremiums, and evaluates investment performance. The results are submitted to the Board of Directors, Representatives of
the Pension Fund, and the Chairman of the Board of Directors. Based on the report of the Pension Committee, the Pension
Fund presents its investment policy to the investment management contractors, entrusts them to the fund, monitors theinvestment status of the fund to the contractors on a regular basis, and shares the investment results with the Pension
Committee.
The selection of individual issues and the exercise of voting rights are left to the trustees, and the Company does notdirect them directly. Therefore, the Company believes that there will be no conflict of interest between the pension
beneficiaries and the Company.
Principle 3.1i) Company objectives (e.g., business principles), business strategies and business plans;
The Company’s Corporate Philosophy proclaims that by “Coping with changing times and markets quickly, Hanwa
makes a great contribution to society by satisfying various needs of customers as a ‘distribution specialist.’” Under thisCorporate Philosophy, the Company, as a user-oriented trading company which provides high value-added productdistribution and proposal-based services which meet customer demands, pursuits trading company logistics with distinction.
The Company also has a policy of increasing its corporate value as well as fulfilling social responsibility with an emphasison compliance through these activities. With regard to business strategies and business plans, the Company establishes amedium-term business plan every three years in principle and broadly discloses it.
ii) Basic views and guidelines on corporate governance based on each of the principles of the Code;We aim to fulfill our social responsibilities as a good corporate citizen so that we can gain and retain the respect fromstakeholders and be recognized as a valuable enterprise. We work to establish a high degree of transparency in management
systems to ensure full legal and regulatory compliance and respect for social norms.
In addition, to coexist with the Earth and society and to develop sustainably, we have established the Sustainability
Promotion Committee and promoted management initiatives with a focus on sustainability.
iii) Board policies and procedures in determining the remuneration of the senior management and directors;
The Company has established a remuneration system consisting of monetary remuneration and compensation in the formof company stock (restricted stock compensation) for Directors. The annual monetary remuneration decided at the General
Shareholders Meeting held in June 2006 is within the total amount of 860 million yen. The restricted stock compensation iswithin the total annual amount of 150 million yen (the maximum number of shares to be paid is 50,000 per year) decided at
the 76th General Shareholders Meeting held in June 2023. The Board of Directors determines the specific amount of
remuneration for each Director. The Company has established a decision-making policy pertaining to the content of this3

remuneration, a summary of which is as follows.
The basic policy of the Company’s remuneration system for Directors is to ensure that it functions sufficiently as anincentive for the sustainable enhancement of corporate value and that it is at an appropriate level based on the
responsibilities of each position. Specifically, the remuneration system consists of basic remuneration, which is a monthly
fixed amount determined based on the standard amount of remuneration for each position and taking into consideration thecomprehensive evaluation of Directors made by the Officers Evaluation Committee chaired by the President, with anemphasis on their attitude toward medium- and long-term issues aimed at sustainable growth and the results of their efforts;
performance-linked remuneration, which reflects the performance indicators for each fiscal year that the management teamas a whole bears; and restricted stock compensation designed to provide incentives to increase corporate value over the
medium to long term. Outside Directors, who are responsible for supervisory functions, are paid only basic remuneration inconsideration of their duties.
In determining the ratio of remuneration by type, the Remuneration Advisory Committee considers the level of
remuneration based on the benchmarks of companies in the same scale of business and related industries and businesscategories as the Company.
With regard to procedures for determining the individual compensation of the management members and directors, theRemuneration Advisory Committee, the majority of whose members are outside directors and outside corporate auditors,
plays a leading role in determining them, in accordance with the following procedures.
The Officers Evaluation Committee, chaired by the President and composed of members including outside directors andoutside corporate auditors who serve as advisors, meets at least twice a year to conduct a comprehensive evaluation of basic
remuneration based on an assessment of the commitment of directors and executive officers (excluding the President) and aqualitative evaluation of directors and executive officers. Based on the results of the comprehensive evaluation by the
Officers Evaluation Committee, the Remuneration Advisory Committee, the majority of whose members are outside
directors and outside corporate auditors, prepares a proposal for basic remuneration and the Board of Directors makes adecision on the amount.
Performance-linked remuneration is determined by the Board of Directors after the Remuneration Advisory Committee
examines the proposed calculation method for each fiscal year, with the aim of ensuring that the remuneration accuratelyreflects the achievements and responsibilities of each management member and director.
Restricted stock compensation is positioned as compensation for each management member’s responsibilities toshareholders in increasing corporate value in accordance with his or her position. With this in mind, the Board of Directors
determines the specific number of shares to be paid (the amount of monetary compensation claims to be used to pay for theacquisition of shares) based on the Remuneration Advisory Committee’s consideration of the level deemed appropriate foreach position.
The amount of remuneration for each executive member of the management team other than directors (executive officers)
is determined in accordance with the same system and procedures as those for executive members who also serve as
directors.
iv) Board policies and procedures in the appointment/dismissal of the senior management and the nomination of directors
and kansayaku candidates;
To select internal directors, the Nomination Advisory Committee, which is chaired by an outside director and the majorityof its members consist of outside directors and outside corporate auditors, reviews the directors of the following fiscal year
based on their evaluation from directors and executive officers and the results of their performance evaluations of
employees. A draft is then submitted to the Board of Directors where a proposal of the list of candidates is then forwarded to
the Annual Shareholders Meeting. In addition, the Nomination Advisory Committee deliberates on the positions of directors
and draws up a draft to be approved by the Board of Directors.
With regard to internal corporate auditors, the Board of Directors selects persons deemed capable of executing the duties
of corporate auditors as candidates from among internal directors and executive officers, etc. in consideration of their fieldsof specialty, their careers, and other factors. A proposal list of candidates is then forwarded to the Annual Shareholders
Meeting with prior consent from the Board of Corporate Auditors.
To select outside directors and outside corporate auditors, appropriate candidates are examined from all perspectives inconsideration of the balance of their abilities and any excesses or deficiencies in the fields of specialty of the outside
directors and outside corporate auditors based on the fields of specialty of those retiring and of those remaining, and a
proposal of the list of candidates is then prepared.
More specific criteria for the nomination of candidates for directors and corporate auditors and the appointment anddismissal of senior management are currently under consideration, including the necessity of such criteria. Discussions will
be held at the Nomination Advisory Committee in the future.

4v) Explanations with respect to the individual appointments/dismissals and nominations based on iv).
Reasons for proposals for electing the senior management, directors and corporate auditors are stated in the Notice ofShareholders Meeting, together with brief career summaries. In the event that a senior executive is dismissed, the company
will explain the background and the reason for the dismissal of the previous executive when disclosing the replacement.
Supplementary Principles 3.1.3
In the ”Medium-Term Business Plan 2025”, we have set "Sustainability Management" as one of our basic policies andare working on "business/investment strategies rooted in ESG and SDGs" as well as "strengthening the organizational
structure to support sustainable growth.” We also have a human resources strategy and are working to create an environment
in which a diverse workforce can work while growing sustainably, as well as promoting the introduction of systems that
support each employee's ability to demonstrate his or her strengths and take on challenges.
The Company discloses information on sustainability as appropriate through the "Sustainability” page(https://www.hanwa.co.jp/en/csr/) on its website.
With regard to the impact of climate change-related risk and profit opportunities on the Company’s business activities
and earnings, the Company is preparing an internal system to disclose information in accordance with the TCFD frameworkand gradually disclosing information as it is complied.
Supplementary Principles 4.1.1
The Company stipulates the decision-making authority of an organ according to the importance of decisions andmonetary scale and other factors in the Regulation on the Board of Directors and the Standard for Submission to the Boardof Directors, as well as the Regulations on the Management Committee and the Standard for Submission to theManagement Committee, while prescribing the scope of operational delegation according to the positions of the executive
officers, etc. in the Standard for Approval.
Principle 4.9
With regard to standards for judgment when electing independent outside directors, we make use of articles referring to
independence of outside officers stated in the Enforcement Rules for Securities Listing Regulations and the Guidelines for
Listing Examination, etc., both established by the Tokyo Stock Exchange, on which the Company is listed. However, at a
meeting of the Board of Directors held on September 26, 2017, the Company passed a resolution regarding “IndependenceStandards for Outside Officers” as follows.
“Independence Standards for Outside Officers”
When an outside officer (outside director and outside corporate auditor) of the Company does not fall under any of thefollowing cases, he or she is judged independent from the Company.
1. A major shareholder of the Company (meaning a shareholder who holds either directly or indirectly 10% or moreof the total voting rights of the Company at the end of the most recent fiscal year), or an executing person thereof.
2. A person belonging to or an executing person of a company of which the Company is a major shareholder(holding10% or more of the total voting rights of the company at the end of the most recent fiscal year.)
3. A major business partner of the Company (whose annual transaction with the Companyexceeds2% of theconsolidated net sales of the Company during the most recent fiscal year), or an executing person thereof.
4．A major lender to the Company (whose outstanding loans to the Company at the end of most recent fiscal year
exceeds2% of the consolidated total net assets of the Company), or an executing person thereof.
5．A representative or an employee who belongs to the audit corporation that is the accounting auditor of theCompany.
6. A consultant, legal professional, certified public accountant, tax accountant, or other person providing a specialist
service who received 10 million yen or more of monetary consideration or other properties per year from theCompany other than officer remuneration in the most recent fiscal year (referring to a person belonging to theorganization if the one who received the relevant property is an organization such as corporation and association.)
7．A person who received the annual total of 10 million yen or more of donations or aid funds from the Company inthe most recent fiscal year (referring to an executing person who belongs to the organization if the one who
received the relevant donations or aid funds is an organization such as corporation and association.)
8．A person who falls under any of 1 to 7 above in the past three years
9．A person whose close relative falls under any of 1 to 8 above.
(Note1.) An executing person refers to an executive director, executive officer, corporate officer, or staff executing
business of an entity(Note2.) A close relative means a relative within the second degree of kinship
Even if a person falls under any of the above criteria, such person maybe elected as a candidate for independent outside
officer if the person satisfies the requirements of an outside director or an outside corporate auditor under the Companies

5Act, has specialization and experience necessary in view of the Company’s current situations and his/her knowledge andviewpoint are judged to be beneficial to the Company’s management, on the condition that the Company provides
explanations to shareholders of the reasons of its judgement and the fact that the person satisfies the requirements of an
independent outside officer.
Supplementary Principles 4.10.1
With regard to the evaluation, appointment, and remuneration of directors and executive officers, the Company has
established three committees: the Officers Evaluation Committee, the Nomination Advisory Committee, and theRemuneration Advisory Committee, to ensure the independence and objectivity of the supervisory function of the Board of
Directors. Specifically, an outside director serves as the chairperson of the Nomination Advisory Committee while thePresident serves as the chairperson of the Officers Evaluation Committee and the Remuneration Advisory Committee. In
addition, the Officers Evaluation Committee, with the participation of independent outside directors and independent
outside corporate auditors (collectively referred to as the "Independent Outside Officers." In addition, the Company has
replaced the words "independent outside directors shall be the principal members" with "independent outside officers shallbe the principal members" and "the majority of the members shall be independent outside directors" with "the majority ofthe members shall be independent outside officers" in these supplementary principles.), determines the individual evaluationof each director and executive officer based on evaluations of achievement levels for medium- to long-term management
issues and qualitative evaluations, etc. Based on the results of these evaluations, the Nomination Advisory Committee andthe Remuneration Advisory Committee, the majority of whose members are independent outside officers, consider
appointment and remuneration proposals.
The Nomination Advisory Committee and the Remuneration Advisory Committee are mainly composed of independent
outside officers to ensure independence from the management. The role of the Nomination Advisory Committee is to
discuss the composition of the management team and directors (including candidates), and the role of the Remuneration
Advisory Committee is to discuss the overall remuneration system for the management team and directors. Each committee
has the authority to discuss matters stipulated in their respective committee regulations and to report to the Board of
Directors the decisions made by the committee.
Supplementary Principles 4.11.1
Regarding the appointment of directors and corporate auditors, please refer to Principle 3-1 iv). The Company believes
that the main skills required of each director and corporate auditor to ensure the effectiveness of the Board of Directors are"corporate management," "sales/business strategy," "overseas experience," "finance/accounting," "legal/risk management,""human resources/labor affairs," and "IT/digital.” The expertise possessed by each director and corporate auditor is asshown in the skill matrix, and we appoint persons with each skill in a well-balanced manner.
The Board of Directors of the Company consists of eleven members, including four independent outside directors, threeof whom have management experience at other companies.
The expertise held by each officer is listed in the skills matrix attached at the end of V-2. "Other Matters Concerning the
Corporate Governance System" of this report.
Supplementary Principles 4.11.2
Currently, internal officers only hold concurrent positions as officers of the Company’s group companies. The Company
believes it is desirable for its directors and corporate auditors to focus their efforts on the Company. However, concurrent
service as officers of other listed companies may broaden their knowledge and, in turn, have a positive impact on their
managerial decisions at the Company. Therefore, the Company does not rule out concurrent positions unless they become
excessive.
Ryuji Hori, Outside Director, concurrently serves as Representative Director and President of TMI Ventures Co., Ltd.,
Outside Director of Riskmonster.com and Outside Corporate Auditor of Lotte Co., Ltd. Kamezo Nakai, Outside Director,
concurrently serves as Outside Director of TAIHEI Engineering Co., Ltd. Reiko Furukawa, Outside Director, concurrently
serves as External Member of the Board of NHK Spring Co., Ltd. Chika Sato, Outside Director, concurrently serves as
Outside Director of Asahi Group Holdings, Ltd. Hideyuki Takahashi, Outside Corporate Auditor, concurrently serves as
Outside Director of Aozora Bank, Ltd. and Sunshine City Corporation. There are no special transaction relations between
the above companies and the Company.
Supplementary Principles 4.11.3
The effectiveness of the Board of Directors is not only confirmed on a daily basis by the corporate auditors through theirattendance at Board of Directors meetings, hearings with business departments, and exchange of information with theInternal Audit Department, but the Company has also established a Board of Directors Evaluation Committee chaired by
one of the outside directors. This committee introduces a mechanism to report evaluation results and make6

recommendations to the Board of Directors based on the results of a questionnaire survey of all directors and corporate
auditors. The outline of the most recent evaluation of the effectiveness of the Board of Directors is disclosed on “Corporate
Governance” page (https://www.hanwa.co.jp/en/company/governance.html) of the Company’s website and other media.
Supplementary Principles 4.14.2
Training for internal directors includes guidance when they assume their positions, internal study sessions onamendments to laws and regulations, etc., and encouragement to attend external training, etc., as necessary. The Company
provides outside directors with opportunities to attend monthly joint meetings of sales departments to enable them tounderstand the status of the Company’s business operations. The Company also distributes Management Committeematerials to outside directors and outside corporate auditors to provide information on management decisions other than theagenda items submitted to the Board of Directors. In addition, the Company actively encourages outside directors to visit
domestic and overseas group companies and investees, thereby providing the outside directors with opportunities tounderstand the Group’s current situation.
With regard to the provision of further training opportunities and financial support for associated expenses, the Company
examines the necessity therefor, cost-effectiveness, etc., and judges the adoption or rejection each time training is requested.
Principle 5.1
The Company has a structure in which the Corporate Planning Department is in charge of IR activities and promotes theactivities in cooperation with the Finance Department, Accounting Department, other administrative departments, and sales
departments. The Company proactively conducts dialogue with investors and may approach investors to provide meetings,
in addition to meetings requested by investors. The Company thinks of IR activities as opportunities to provide investors
with materials that help them to deepen their understanding about the Company’s actual business conditions and revenue
structure and judge the Company’s growth potential and future prospects. Going forward, the Company will aggressively
strive for stronger ties with investors accordingly.
[Actions to implement management that is conscious of cost of capital and stock prices] [English disclosure available]
Regarding “Actions to implement management that is conscious of cost of capital and stock prices,” please refer to page
16 of the “Outline of Financial Results for the Fiscal Year ended March 31, 2024” released in May 2024.
[Dialogue with shareholders] [English disclosure available]
Regarding “Dialogue with shareholders,” please refer to page 17 of the “Outline of Financial Results for the Fiscal Year
ended March 31, 2024” released in May 2024.
The above explanatory materials are available on our website in the "IR Library". The URL is as follows:
https://www.hanwa.co.jp/en/ir/library/explain.html

2. Capital Structure
Foreign Shareholding Ratio

20% or more but less than 30%

Status of Major Shareholders
Name or Company Name

Number of Shares Owned

Percentage (%)

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

5,637,600

13.86

Hanwa Clients' Stock Investment Association

2,291,000

5.63

Custody Bank of Japan, Ltd. (Trust account)

2,103,900

5.17

JP Morgan Chase Bank 385632

1,738,076

4.28

Sumitomo Mitsui Banking Corporation

1,526,080

3.75

Hanwa Employees' Stock Investment Association

1,095,259

2.69

DFA Intl Small Cap Value Portfolio

625,600

1.54

State Street Bank And Trust Company 505223

616,892

1.52

The Bank of New York Mellon 140044

616,645

1.52

Nippon Steel Corporation

600,200

1.48

7

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

Name of Parent Company, if applicable

None

Supplementary Explanation―

3.

Corporate Attributes
Listed Stock Exchange and Market Segment

Tokyo Stock Exchange Prime Market

Fiscal Year-End

MarchBusiness Sector

Wholesale Trade

Number of Employees (Consolidated) as of the Endof the Previous Fiscal Year

1,000 or more

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

1 trillion yen or more

50 or more but to fewer than 100 companies

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

5. Other Special Circumstances which May have Material Impact on Corporate GovernanceNot applicable.

II.

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

1.

Organizational Composition and Operation
Corporate Governance System

Company with Audit and Supervisory Board*Referred to in the Corporate Governance Code reference translation as "Company with Kansayaku Board"

Directors
Number of Directors Stipulated in Articles ofIncorporation25

Directors' Term of Office Stipulated in Articles ofIncorporation

1 yearChairperson of the Board

President

Number of Directors

118Election of Outside Directors

ElectedNumber of Outside Directors

4

Number of Independent Directors

4Outside Directors’ Relationship with the Company (1)Relationship with the Company*
Name

AttributesaRyuji Hori

From another company

Kamezo Nakai

From another company

Reiko Furukawa

From another company

Chika Sato

From another company

b

c

d

e

f

g

h

i

j

k

△

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

Designation as
Independent
Director

Supplementary Explanation of
the Applicable Relationship

Ryuji Hori○―

Kamezo Nakai○―

Reasons for Appointment
He has expertise and extensive knowledge inlegal affairs, cultivated through his many years ofexperience mainly in risk management at a general
trading company, along with his experience as auniversity professor. The Company expects that hecan provide advice on the Company’s management
decisions and supervision towards the Company’sbusiness execution from a general and multilateralperspective.
There is no special interest relationship between
Mr. Hori and the Company, so we determine that
there is no potential for conflicts of interest withregular shareholders.
He has extensive knowledge and abundant
experience cultivated through his many years ofcorporate management in the securities industry
and real estate industry. The Company expects that
he can provide advice on the Company’s
management decisions and supervision towards the9Reiko Furukawa○―

Chika Sato○

She was a business executive at
NEC Corporation until March
2024.

Voluntary Establishment of Committee(s) equivalent toNomination Committee or Remuneration Committee

Company’s business execution from a practical andmultilateral perspective especially in finance andinvestment.
There is no special interest relationship between
Mr. Nakai and the Company, so we determine that
there is no potential for conflicts of interest withregular shareholders.
She has profound insight supported by her many
years of varied experience in business,management, audits, etc., at a large company for IT
service providing. The Company expects that she
can provide advice on our management decisions
and supervision towards the Company’s businessexecution from a practical and objective
perspective, especially in the areas of information
systems and internal control.
There is no special interest relationship between
Ms. Furukawa and the Company, so we determinethat there is no potential for conflicts of interest
with regular shareholders.
She has served as a manager of human resources
divisions at Japanese companies and foreign capitalcompanies for many years, and has profoundinsight and various experience regarding humanresources measures. The Company expects that she
can provide advice on our management decisions
and supervision towards the Company’s businessexecution from a practical and objective
perspective, especially in the areas of global HR
strategy and promoting diversity.
The Company has a transactional relationshipwith NEC Corporation, but the amount is less than
0.1% of the Company’s annual consolidated sales.
Given the scale and nature of the relationship, she
has no special interest relationship with theCompany, so we determined that there is nopotential for conflicts of interest with regularshareholders.

Established

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

All
Members

Full-timeMembers

InsideDirectors

OutsideDirectors

OutsideExperts

Other

Chairperson

Nomination
Advisory
Committee

9

0

3

4

0

2

Outside Director

Remuneration
Advisory
Committee

11

0

3

4

0

4

Inside Director

10Supplementary Explanation
Regarding the appointment of officers, the Nomination Advisory Committee, which is chaired by an outside director and whose
majority members consist of outside directors and outside corporate auditors, reviews the composition of officers for thefollowing fiscal year based on the evaluation of officers and the results of performance evaluations of employees. A draft is thensubmitted to the Board of Directors where a proposal of the list of candidates is then forwarded to the Ordinary General
Shareholders Meeting.
Regarding executive remuneration, the Remuneration Advisory Committee, which is chaired by the president and whose
majority members consist of outside directors and outside corporate auditors, prepares a draft of the basic remuneration for the
next fiscal year, after reviews based on the results of officer evaluation, and following a review of the proposed calculation rules
for performance-linked remuneration each year and consideration of the content of non-monetary remuneration and the amountand number of non-monetary remuneration, the Board of Directors makes the final decision.

Audit and Supervisory Board Member**Referred to in Corporate Governance Code reference translation as "kansayaku"
Establishment of Audit and Supervisory Board

Established

Number of Audit and Supervisory Board Members
Stipulated in Articles of Incorporation

5

Number of Audit and Supervisory Board Members

5

Cooperation among Audit and Supervisory Board Members, Accounting Auditors and Internal Audit Departments
The corporate auditors and the accounting auditor conduct regular audit reports, and exchange information as necessary, work
to grasp one another’s status of audit, and coordinate to enhance monitoring functions.
As the Company’s internal auditing division, the Internal Audit Department gives reports as appropriate based on requests fromthe Board of Auditors and stays in constant coordination with the corporate auditors. In addition, the department conducts audit
reports together with the accounting auditor, and exchanges information as necessary, grasps one another’s status of audit, andcoordinates to enhance monitoring functions.

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

Appointed
33Outside Audit and Supervisory Board Members’ Relationship with the Company (1)Relationship with the Company*
Name

AttributesaHideyuki Takahashi

From another company

Naoya Sakurai

From another company

Hisanori Kokuga

From another company

b

c

d

e

f

g

h

i

j

k

l

m

△

△

*Categories for “Relationship with the Company”.
(Use “○” when the director presently falls or has recently fallen under the category; “△” when the director fell under the category
in the past; “●” when a close relative of the director presently falls or has recently fallen under the category; and “▲” when aclose relative of the director fell under the category in the past.)

11

a.
b.
c.
d.
e.
f.
g.
h.

Person who executes business of the Company or a subsidiary
A non-executive director or an accounting advisor of the Company or its subsidiaries
Person who executes business or a non-executive director of a parent company
An Audit and Supervisory Board Member of a parent company of the Company
Person who executes business of a fellow subsidiary
Person/entity for which the Company is a major client or a person who executes business for such person/entity
Major client of the Company or a person who executes business for such client
Consultant, accounting expert, or legal expert who receives large amounts of cash or other assets in addition to director/Audit
and Supervisory Board Member compensation from the Company
i. Major shareholder of the Company (in cases where the shareholder is a corporation, a person who executes business of thecorporation)j. Person who executes business for a client of the Company (excluding persons categorized as any of f, g, or h above) (applies
to self only)
k. Person who executes business for another company holding cross-directorships/cross-auditorships with the Company (applies
to self only)
l. Person who executes business for an entity receiving contributions from the Company (applies to self only)
m. OtherOutside Audit and Supervisory Board Members’ Relationship with the Company (2)Name

Designation as
Independent
Director

Hideyuki Takahashi○

He was a business executiveat Mizuho Bank, Ltd. andMizuho Financial Group, Inc.
until June 2014.

Naoya Sakurai○―

Hisanori Kokuga○

He was a business executive
at Sumitomo Mitsui Banking
Corporation and
Sumitomo
Mitsui Financial Group, Inc.
until April 2018.

Supplementary Explanationof the Applicable Relationship

Reasons for Appointment
He has expertise in finance cultivated throughhis many years of business experience at a financial
institution along with his considerable experiencein management and audit. The Company believes
that he can appropriately audit and supervise theCompany’s Board of Directors by leveraging his
knowledge and experience.
Mizuho Bank, Ltd. is a major business partner of
the Company, but over 10 years have passed since
he retired from the position of a business executiveat the company. Considering this, we determinedthat there is no potential for conflicts of interest
with regular shareholders.
He has extensive insight into corporate legal
affairs, cultivated through his many years ofbusiness experience in the legal affairs division of a
globally operating company, and the Company
believes that he will utilize this knowledge in auditsof the Company.
There is no special interest relationship between
Mr. Sakurai and the Company, so we determine that
there is no potential for conflicts of interest withregular shareholders.
He has expertise and extensive knowledge
cultivated through his many years of businessexperience at a financial institution, along with his
considerable international experience.
The
Company believes that he can audit the Company’s
management from a global perspective.
Sumitomo Mitsui Banking Corporation is amajor business partner of the Company, but over
six years have passed since he retired from theposition of a business executive at the company.
Considering this, we determined that there is nopotential for conflicts of interest with regularshareholders.

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

712

Other Matters Concerning Independent Directors and Independent Audit and Supervisory Board Members
All outside officers who qualify to be independent officers are designated as such by the Company.

Incentives
Implementation Status of Measures related toIncentives Granted to Directors

Introduction of Performance-linked Remuneration System

Supplementary Explanation for Applicable Items
Regarding executive remuneration and bonuses, we introduce a fixed salary, performance-linked salary and restricted stockcompensation. The methods for determining remuneration amounts and other matters are provided below in “Director
Remuneration,” “Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods.”

Persons Eligible for Stock Options―

Supplementary Explanation for Applicable Items―

Director Remuneration
Status of Disclosure of Individual Directors’
Remuneration

Individual remuneration is not disclosed.

Supplementary Explanation for Applicable Items
The limits of executive remuneration amounts are determined by resolution of the General Shareholders Meeting. In fiscal
2023, the content of director remuneration was as follows.
Total amount of director remuneration, including bonuses, was 625 million yen. Total amount of remuneration for outside
directors included in the total amount of director remuneration was 55 million yen.

Policy on Determining Remuneration Amounts andthe Calculation Methods Thereof

Established

Disclosure of Policy on Determining Remuneration Amounts and the Calculation Methods Thereof
The Company has set the policy for determining the individual remuneration of directors (hereafter referred to as the“determination policy”). A summary of the policy is as follows.
The basic policy of the Company’s remuneration system for Directors is to ensure that it functions sufficiently as an incentive
for the sustainable enhancement of corporate value and that it is at an appropriate level based on the responsibilities of eachposition. Specifically, the remuneration system consists of two types of monetary remuneration: basic remuneration, which is amonthly fixed amount of money determined based on the standard amount of remuneration for each position and taking into
consideration the comprehensive evaluation of Directors made by the Officers Evaluation Committee chaired by the President,with an emphasis on their attitude toward medium- and long-term issues aimed at sustainable growth and the results of theirefforts; and performance-linked remuneration, which is a money remuneration reflecting the performance indicators for eachfiscal year that the management team as a whole bears, and restricted stock remuneration designed to provide incentives toincrease corporate value over the medium to long term.
In determining the ratio of remuneration for executive directors by type, the Remuneration Advisory Committee reviews the13

ratio of basic remuneration, performance-linked remuneration, and non-monetary remuneration, in consideration of the level of
remuneration based on the benchmarks of companies in the same scale of business, related industries, and business categories as
the Company. The Board of Directors determines the individual remuneration of directors taking into consideration the report of
the Remuneration Advisory Committee.

Support System for Outside Directors and/or Outside Audit and Supervisory Board Members
The Company appoints a person responsible for contact and adjustment for outside directors from the Secretarial Office, andfor outside corporate auditors from the Corporate Planning Department, respectively, and takes necessary measures.

Statuses of Persons who have Retired as Representative Director and President, etc.
Information on Persons Holding Advisory Positions (Sodanyaku, Komon, etc.) after Retiring as Representative Director andPresident, etc.

Name

Job title/
position

Shuji Kita

Special counselor

Hironari
Furukawa

AdvisorResponsibilities

Outside activities in thebusiness world
Outside activities in thebusiness worldTerms and Conditions of
Employment(Full/part time,
with/without remuneration,etc.)

Date when former
role as president/
CEO ended

Part-time, Remunerated

3/31/2011

3 years

Full-time, Remunerated

3/31/2022

1 year(renewable)

Term

Number of Persons Holding Advisory Positions (Sodanyaku, Komon, etc.)
2
After Retiring as Representative Director and President, etc.

Other Related Matters
By resolution of the Board of Directors, the Company may appoint a person who retired as a Representative Director as an
Advisor, and appoint a person who retired as a Director, Executive Officer, or Full-time Corporate Auditor as a Counselor. The
term of office is one year (can be extended) for Advisor and three years for Counselor. Duties are not specifically established; but
such individuals may engage in outside activities at the request of the Company, but they do not participate at all indecision-making by the Company or its business execution.

2.

Matters Concerning Functions of Business Execution, Auditing and Supervision, Nomination, andRemuneration Decisions (Overview of Current Corporate Governance System)
The Company adopts the governance system of a company with audit and supervisory board. The Board of Auditors consists offive corporate auditors (three of whom are outside corporate auditors) that are appointed at the General Shareholders Meeting.
They oversee and verify the Board of Directors, which makes decisions on management and supervises business, and the businessexecution of company organizations at and below the level of the Management Committee, which are operational organizations.
The results are approved by the Board of Auditors and reported to the General Shareholders Meeting.
Since April 2012, the Company has introduced an executive officer system to establish a system that enables moredetail-oriented business operations and to promote quicker and more efficient decision-making.
The Board of Directors has 11 directors (four of whom are outside directors) appointed by the General Shareholders Meeting. It
meets once a month, in principle, to make decisions on matters stipulated by laws and regulations and in the Articles ofIncorporation, draft plans for important management for the Group, and supervise business execution.
The Management Committee mainly consists of officers at the level of managing executive officer or above and full-time
corporate auditors. It meets twice a month, in principle, to submit important issues related to the management decisions of the14Group to the Board of Directors as agenda items, and to promptly execute business in accordance with the management policy
determined by the Board of Directors, as the highest body for business execution.
Regarding personnel matters and treatment for officers, the Company has introduced a three-committee system that consists of
the Officers Evaluation Committee, Nomination Advisory Committee, and Remuneration Advisory Committee, and the following
procedures have been adopted.
Regarding evaluations of officers, the Company has introduced mechanisms whereby decisions are made by the Officers
Evaluation Committee, which is chaired by the president and composed of members that also include outside directors andoutside corporate auditors. The committee meets at least twice a year to evaluate the commitments set by each officer at the
beginning of the fiscal year and to perform overall evaluations of each officer based on the results of qualitative reviews, andprovides the evaluation results to the Nomination Advisory Committee and the Remuneration Advisory Committee.
Regarding the appointment of officers, the Nomination Advisory Committee, which is chaired by an outside director and whose
majority members consist of outside directors and outside corporate auditors, reviews the composition of officers for thefollowing fiscal year based on the evaluation of officers and the results of performance evaluations of employees. A draft is thensubmitted to the Board of Directors where a proposal of the list of candidates is then forwarded to the Ordinary General
Shareholders Meeting.
Regarding executive remuneration, the Remuneration Advisory Committee, which is chaired by the president and whose
majority members consist of outside directors and outside corporate auditors, prepares a draft of the basic remuneration for the
next fiscal year, after reviews based on the results of officer evaluation, and the Board of Directors makes the final decision. In
terms of executive bonuses, we use a system of performance-linked salary which specifically reflects the achievements andresponsibilities of each executive. After the Remuneration Advisory Committee reviews a draft of calculation rules for the
performance-linked salary for each fiscal year, the Board of Directors makes the final decision. In addition, restricted stock
remuneration is positioned as remuneration for the responsibility that each management team has to shareholders for enhancing
corporate value. The Remuneration Advisory Committee reviews the appropriate level for each position, and the specific numberof shares to be paid (the amount of monetary compensation claims to be applied to pay the acquisition price of the shares) isdetermined by the Board of Directors.
Regarding the evaluation of the effectiveness of the Board of Directors, we have introduced a system in which the Board of
Directors Evaluation Committee, chaired by one of the outside directors and composed of outside directors and all corporate
auditors, plays a central role. The committee reports the results of its evaluation and makes proposals for improvement to theBoard of Directors.
The Investment Examination Committee meets around twice a month, in principle. It conducts multifaceted analyses, including
consistency with corporate management policy, project profitability, and risks regarding important investment and lending
projects proposed by business divisions and Group companies, as well as transactions with the potential for special risk. It thensubmits its views as a committee to the Management Committee.
The Disclosure Committee meets as necessary to consider the importance of information related to facts that have been decided
and facts that have arisen within the Group and determine the necessity of disclosure and consider the adequacy of the disclosed
information. It has also formulated principles and basic policies related to legal disclosure and timely disclosure and developed
related internal systems.
The Compliance Committee meets as necessary to build, maintain and manage the Group’s compliance system overall,
investigates individual cases as needed, considers response measures and formulates subsequent preventive measures.
The Security Trade Control Committee meets as necessary to promote legal compliance related to the Group’s security trade,plan and draft a screening system and procedures, etc. related to export control, and manage and give instructions for such
screening procedures.
The Internal Control Committee is held as necessary. Upon assignment from the Management Committee, it provides advice
and support for the verification of evaluations of the effectiveness of the Group’s internal controls conducted by the Internal Audit
Department. It also gives its opinions in internal control reports, considers issues related to the Group’s internal controls, andreports the results to the Management Committee.
Regarding internal audits, the Internal Audit Department monitors the Company’s domestic and overseas sites, as well asGroup companies in Japan and overseas, focusing on accounting, compliance, and internal controls. It reports to the Management
Committee as necessary and reports regularly to the Board of Directors.

15

Regarding audits by corporate auditors, focus is placed on preventive audits to prevent scandals before they occur.
Dialogue-based audits are conducted on the status of legal compliance, internal controls, risk management, and other matters.
Corporate auditors attend meetings of the Board of Directors, Management Committee and other important meetings to oversee
and audit the business execution of the management team. In addition, the Board of Auditors has the participation of outside
auditors with extensive knowledge of corporate activities, and conducts accurate business audits while maintaining independence
from top management. The Board of Auditors exchanges opinions as appropriate with the president and officers in charge of theCompany’s business divisions and presents corporate auditor opinions to the Board of Directors.
Regarding accounting audits, the Company has an auditing contract with KPMG AZSA LLC to conduct audits based on the
Companies Act and on the Financial Instruments and Exchange Act.

3. Reasons for Adoption of Current Corporate Governance System
The Company develops business in a wide range of fields and is characterized by its high level of expertise as a “distribution
specialist” in these respective fields. With this type of business, we believe that the governance system of a company with audit
and supervisory board is more suitable. Under the system, with a firm recognition of the management responsibilities delegatedby shareholders, internal directors, who thoroughly understand the operations of the Company, take the lead in deliberating andmaking decisions on important management matters through daily managerial decisions and the Board of Directors. They receive
oversight and verification from corporate auditors including outside auditors.
However, to enhance the transparency of management decisions and remain accountable to shareholders and otherstakeholders, we are making efforts to improve oversight functions for management based on an objective standpoint. These
efforts include appointing outside directors and establishing advisory committees related to the appointment, remuneration, andevaluation of officers, which are participated by outside directors and outside auditors as committee members.
In addition, regarding the auditing function of corporate auditors as well, we consider that it is functioning effectively as
corporate auditors attend Management Committee meetings and other important meetings, and they are provided with advancebriefings on important proposals.
With the adoption of mechanisms for pre-screening managerial matters at the Investment Examination Committee, Compliance
Committee and other committees, as well as the enhancement of these systems, we believe that a sufficiently effective governancesystem has been established.

III.

Implementation of Measures for Shareholders and Other Stakeholders

1. Measures to Vitalize the General Shareholder Meetings and Facilitate Exercise of Voting Rights
Supplementary Explanation

Early Posting of Notice
Shareholders Meeting

of

the

GeneralScheduling of the General Shareholders Meeting
During Non-Peak Days
Electronic Exercise of Voting Rights
Participation in a Platform for the Electronic
Exercise of Voting Rights and Other Initiatives toEnhance Environment for Institutional Investors to
Exercise Voting Rights
Provision of Notice (or Summary of Notice) of theGeneral Shareholders Meeting in English
Other

After the Board of Directors meeting for the settlement of accounts, we aim
to start the electronic provision of information as soon as possible,
regardless of the legal start date for electronic provision. We also send out
written convocation notices to shareholders with information on how toaccess the electronically provided information about three weeks prior to
the date of the Ordinary General Shareholders Meeting.
The 77th Ordinary General Shareholders Meeting was held on June 26,
2024.
We use the Internet voting rights exercise website managed by Sumitomo
Mitsui Trust Bank.
We use the platform for exercising voting right managed by ICJ, Inc.
(Investor Communications Japan).

Posted on the Company’s website.
The convocation notices for the General Shareholders Meeting is posted on
the Company’s website about four weeks prior to the date of the meeting.

16

2.

Status of IR-related Activities
Supplementary Explanation

Formulation and Publication of Disclosure
Policies
Regular Investor Briefings held for Analysts
and Institutional Investors

3.

Posted on the Company’s website.
Financial results briefing is held once half a year for
securities analysts and institutional investors, etc.

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

Summary of financial statements, annual reports,business reports, securities reports, briefing materials,
notices of resolution of the General Shareholders
Meeting, and other documents are posted on our website
at https://www.hanwa.co.jp/en/ir/.
Corporate Planning Department
TEL:+81-3-3544-2377

Other

―

Online Disclosure of IR Information

Explanation by arepresentative
director or arepresentative
executive officer

Held

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

Our Corporate Policy stipulates: “Improvement of ‘Hanwa’s Value’—Weutilize management resources offered from various stakeholders effectively,
and raise our corporate value steadily.”

Implementation of Environmental Preservation
Activities and CSR Activities, etc.

The Company obtained ISO 14001 certification for environmental
management according to international standards in April 2000. With regard tobusiness activities, in addition to its business development for the recycling ofresources such as steel scrap, ferrous raw material, and wastepaper, theCompany has realized effective measures for “reducing (curtailing waste),reusing (reusing waste) and recycling (recycling waste)” in its activities,
including the biomass fuel/RPF business, the aluminum products regranulation
recycling business, and its trade business approved by the relevant countries’
regulatory environmental authorities under the Basel Convention provisions
governing procedures for the international transfer of metallic industrial waste,
and plans to contribute to the formation of a recycling-oriented society.
In addition, we have established the Sustainability Promotion Committee topromote measures related to sustainability that are necessary for sustained
development. Further, as part of our social contribution activities, the Hanwa
Scholarship Foundation was established in April 1957 to conduct scholarshipprograms for students. Please see our Integrated Report for more details.
We have established the Disclosure Regulations for the purpose of stipulating
policies for fair, timely and appropriate disclosure of the Company’s financial,social, and environmental information, promoting the understanding of theCompany among all stakeholders, and contributing to its appropriate
evaluation.

Formulation of Policies, etc. on Provision ofInformation to Stakeholders

Other

―

17

IV. Matters Concerning the Internal Control System
1. Basic Views on Internal Control System and Status of Development
1. Basic views of Internal Control System
The Company is committed to using an effective corporate governance system to achieve sustained growth and other progress
while reducing exposure to risks associated with achieving business goals. To accomplish this, we need to work on theestablishment and operation of a system of internal controls for performing business activities properly and efficiently.
Our goal of internal control systems is to achieve (1) operational effectiveness and efficiency; (2) reliability in financial
reporting; (3) strict compliance with laws and regulations in operating activities; and (4) appropriate preservation of assets.
2. Status of development of internal control systems
The Board of Directors meeting held on May 10, 2006, resolved a basic policy related to the construction of a system forensuring the execution of duties by directors consistent with laws and regulations and the Articles of Incorporation and othersystems for ensuring the appropriateness of business operations (hereinafter, internal control systems). The Company’s basic
policy as of the time of the submission of this report is as described on our website athttps://www.hanwa.co.jp/ms/data/pdf/ir/20240527_4635.pdf (Japanese Only).

2. Basic Views on Measures for Eliminating Anti-Social Forces and Status of Development
1. Basic views to eliminating anti-social forces
We take a resolute stance against anti-social forces and groups that threaten the order and safety of civil society and staunchly
break off all relations with them.
Further, for unreasonable demands and other forms of organized violence made by anti-social forces and groups, our basic
principles are to not be intimidated, not give money and not use. We do not provide any benefit that goes by any name.
2. The status of development of systems for eliminating anti-social forces
Based on our basic approach for eliminating anti-social forces, the Hanwa Corporate Ethics Code of Conduct states, “We will
be resolute in the face of anti-social forces and provide no benefit, etc. to them.” The basic approach is also stated in the Basic
Policy on the Establishment and Operation of Internal Control Systems.
Regarding internal systems against anti-social forces, the General Affairs Dept. is the managing department and works tocollect information on anti-social forces. It has built a relationship of trust with jurisdictional police stations, the Legal Affairs
Bureau, and the Consumer Centers as a point of contact, and abides by their instructions. Moreover, we are affiliated with theTokyo Metropolitan Police Department’s Special Violence Prevention Task Force (Tokubouren) and Osaka Prefecture Corporate
Defense Alliance Council, working to coordinate and share information with other companies and related groups and making
efforts to eradicate anti-social forces. Regarding matters for which a legal response is necessary, we handle the situation
appropriately in collaboration with the Legal Dept. and external attorneys.
To raise the awareness of employees, we set forth our basic approach to anti-social forces in the compliance manual posted
internally by the Compliance Committee. We have also formulated a manual for handling special violence and work to instructemployees on how to handle specific demands made by anti-social forces.

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

Not Adopted

Supplementary Explanation for Applicable Items
The Company maintained the so-called takeover defense measures since its introduction in February 2007. However, weabolished the measures as of the close of the Ordinary General Shareholders Meeting on June 22, 2018.

2. Other Matters Concerning the Corporate Governance System
Going forward, we will continue our consideration to build and enhance effective and fair corporate governance systems.

18

【Corporate Governance Structures】【Timely Disclosure System】

19

【Skill Matrix】

END

20