Note: This document is an excerpt translation of the original Japanese document and is only for reference purposes.
In the any discrepancy between this translated document and the original Japanese document, the later shall prevail.

Corporate Governance Report
CORPORATE GOVERNANCESANYO SHOKAI LTD.

Last Update:June 28, 2024

SANYO SHOKAI LTD.
Shinji Oe
Representative Director
President & Chief Operating Officer

Contact:

Securities code:

Yoshihiro Taniuchi
General Manager, Investor Relations& Public Relations Strategy
Corporate Management Headquarters
03-3357-4111
8011
https://www.sanyo-shokai.co.jp/

The corporate governance of SANYO SHOKAI LTD. (the “Company”) is described below.

I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other
Basic Information
1. Basic Views
Based on our Corporate Policy and Management Philosophy, our mission is to continuously increase corporate value through ourbusiness activities and to fulfill our social responsibilities. We have made corporate governance an important cornerstone inachieving these missions, and we are striving to build a corporate governance system, ensure sound management, and improvetransparency.

Reasons for Non-compliance with the Principles of the Corporate Governance CodeThe principles are stated in accordance with the Code after the June 2021 revision.
The Company implements all the principles of the Corporate Governance Code.

Disclosure Based on the Principles of the Corporate Governance Code[Principle 1.4: Strategic Shareholdings](1) Policy related to strategic shareholdings
The Company may hold shares of other companies as strategic shareholdings principally for the purpose of creating business
opportunities and maintaining collaborative business relationships. In regard to each strategic shareholding, the Board of
Directors annually verifies the economic rationality in light of the Company’s cost of capital and the risks of continuing to holdthe shares upon confirming its holding purpose, recent dividend status, stock price, etc. As a result of the verification, for thoseshares which have diminished significance behind their holding, we will proceed with selling them in stages, taking into
consideration the situation of the company concerned.
(2) Verification of the appropriateness of shareholdings
At the Board of Directors meeting held on February 29, 2024, we examined whether individual holdings were appropriate in lightof the above criteria, and a resolution was passed to continue holding the one stock currently held.
(3) Criteria for the exercise of voting rights
The Company makes decisions on the exercise of voting rights for shares held for strategic purposes based on whether or not the
proposed content will contribute to improving shareholder value pertaining to the issuing company, the impact on the Company’s
corporate value, and other factors.
[Principle 1.7: Transactions Between Related Parties]
The Company requires the prior approval of the Board of Directors in the event that any of the Company’s Director conducts a
conflict-of-interest transaction or a competitive transaction as stipulated in the Companies Act, and in addition, if any suchtransaction has been conducted, shall report such transaction to the Board of Directors without delay.
We distribute survey forms individually to the Directors once a year to confirm whether or not there are any transactions with the
Directors of the Company, affiliated companies, or subsidiaries, or with the close relatives of said Directors.
Transactions between major shareholders or other related parties are appropriately disclosed in accordance with the Companies
Act, the Financial Instruments and Exchange Act, and other applicable laws, in addition to the provisions of the Tokyo Stock
Exchange.

1

[Principle 2.4: Ensuring Diversity in the Promotion to Core Human Resources][Supplementary Principle 2.4.1](1) Ensuring diversity
Recognizing that human resources are the most important capital for improving corporate value over the medium to long term,
the Company continues to proactively recruit and promote a diverse range of human resources, including women, foreigners, andmid-career hires with various work experience. In addition to promoting the active participation of women, which we have beenworking on so far, we will continue to introduce a flextime system, telework, and other initiatives to realize flexible and diverse
work styles, and to develop a work environment that allows each individual to make the most of their own characteristics andabilities. Furthermore, in order to promote these efforts, we will continue to proceed with providing management development.
To ensure diversity in the promotion to core human resources, we will promote employees according to their abilities, aptitudes,
and achievements, regardless of gender or nationality or whether they are new graduates or mid-career hires.
(2) Voluntary and measurable targets for ensuring diversity and the status of these efforts(i) Promotion of women to managerial positions
We will implement a variety of initiatives from the three perspectives of career development, management training, andemployment continuity support for female employees.
We aim to achieve a ratio of women in managerial positions of 20% by fiscal 2026 by developing our own career vision without
being constrained by existing concepts, providing training focused on developing skills to achieve this vision, and training
candidates for managerial positions.
As of February 29, 2024, the ratio of female managers is 9.4%.
(Managerial positions refer to general managers or division managers that fall under the positions of supervision or management
under the Labor Standards Act.)For other information on the status of active participation of women, please refer to “Establishment of a personnel infrastructure
to provide job satisfaction” under “Sustainability” on our website.
・Sustainability (Establishment of a personnel infrastructure to provide job satisfaction)(https://www.sanyo-shokai.co.jp/en/sustainability/social/work-environment/)(ii) Promotion of foreigners to managerial positions
We do not set any restrictions on promotion of employees according to nationality, but in view of the characteristics of ourbusiness, we have not set any target for the promotion of foreigners to managerial positions as of now. In the future, in accordancewith our business development, etc., we will consider establishing and strengthening our system for promotion to managerial
positions.
(iii) Voluntary and measurable targets and the status thereof pertaining to promotion of mid-career hires to managerial positions
As of February 29, 2024, the ratios of mid-career hires in managerial positions in the Company are 29.0% for general managers
and 18.7% for division managers, representing 21.7% overall.
For promoting mid-career hires to managerial positions, with a provisional target of 20%, we will continue to actively promote awide range of people including professionals to managerial positions.
(3) Policies for human resource development and internal environment development to ensure diversity, as well as the status
thereof(i) Human resource development policy to ensure diversity
We define the human resources necessary for sustainable growth as “Apparel business professionals,” “Back office professionals,”and “IT/DX human resources.” We also work to recruit and develop human resources, who will respond sensitively to changes inthe society and be responsible for the growth and development of our business, and to pass on this know-how.
(ii) Developing an environment to further the active participation of diverse human resources
By providing diverse career paths and work styles, we will create a rewarding work environment where employees can achieve
personal growth and job satisfaction, and thereby feel motivated to contribute to their teams.
(iii) Promotion of diversity and inclusion
By encouraging each employee to respect and accept each other’s individualities and differences and to put these to good use, wecreate new values and ideas that lead to the sound and sustainable growth of the company. We will also strive to create such a
corporate culture.
(iv) Status of efforts to ensure diversity
Support for employee career development:
Implementation status of the career path system (promotion of mainly people who have experience working in stores) Career-track permanent employees: 1 person (2023), 1 person (2022), 2 persons (2021), 3 persons (2020), 11 persons (2019),
10 persons (2018)
 Specialist permanent employees: 23 persons (2023), 4 persons (2022), 4 persons (2021), 4 persons (2020), 5 persons (2019), 2
persons (2018)
Fair and equitable recruitment with an emphasis on diversity:
Recruitment status of mid-career hires (excluding sales staff)・New hires in 2023: 7 new graduates and 24 mid-career hires; new hires in 2022: 44 mid-career hires; new hires in 2021: 31
mid-career hires; new hires in 2020: 17 new graduates and 20 mid-career hires; new hires in 2019: 17 new graduates and 45
mid-career hires

2[Principle 2.6: Roles of Corporate Pension Funds as Asset Owners]
The Pension Fund Asset Management Committee, which consists of members of the Accounting Department, Finance
Department, and Human Resources Department including the General Manager of Accounting & Finance Headquarters and theGeneral Manager of Personnel & Administration Headquarters, considers and decides the Company’s pension fund management
policy. The pension fund management policy aims to secure the required overall profit over the long term while considering risks
in order to ensure that pension benefits to beneficiaries will be provided in the future.
When considering the policy, the Pension Fund Asset Management Committee hears opinions from multiple external fundmanagement institutions, and formulates the strategic asset allocation from a medium- to long-term perspective.
[Principle 3.1: Enhancement of Information Disclosures](1) Company objectives (e.g., business principles), business strategies, and business plan
Please see the following on our website: Corporate Policy and Management Philosophy(https://www.sanyo-shokai.co.jp/en/company/philosophy/) Medium-Term Business Plan (Fiscal 2023–2025)(https://ssl4.eir-parts.net/doc/8011/ir_material_for_fiscal_ym7/150149/00.pdf)
 Fiscal 2024 Financial Results Explanatory Materials(https://ssl4.eir-parts.net/doc/8011/tdnet/2420435/00.pdf)(2) Basic policy on corporate governance based on each of the principles of the Code
Please see the following on our website: Basic Approach to Corporate Governance(https://www.sanyo-shokai.co.jp/en/sustainability/governance/corporate-governance/) Corporate Governance Policy(https://www.sanyo-shokai.co.jp/assets/pdf/cg_policy_EN_20240327.pdf)
 Annual Securities Report(https://ssl4.eir-parts.net/doc/8011/ir_material_for_fiscal_ym5/158278/00.pdf)(3) Board policies and procedures in determining the compensation of the senior management and Directors
Details are stated below in “Policy on Determining Remuneration Amounts and the Calculation Methods Thereof”.
(4) Board policies and procedures in the appointment/dismissal of senior management and the nomination of candidates for
Directors and Audit & Supervisory Board Members
The Company has established the Nomination & Compensation Committee, chaired by an independent Outside Director, as avoluntary advisory committee to the Board of Directors in the deliberation and decision-making at the board meetings concerning
the nomination of Directors, Audit & Supervisory Board Members, and Senior Executive or Executive Managing Officers(hereinafter collectively referred to as “Corporate Officers, etc.”), as well as the compensations and compensation system for
Directors and Managing Officers. By establishing the Nomination & Compensation Committee, we utilize the knowledge andadvice of Outside Officers, while ensuring objectiveness and transparency in the procedures related to the nomination of
Corporate Officers, etc., as well as compensations and the compensation system for Directors and Managing Officers, in order tofurther enhance the function of corporate governance.
The nomination of candidates for Directors or Audit & Supervisory Board Members is, as a general rule, based on the following
conditions: The candidates must have engaged in duties as a Managing Officer, General Manager, or the equivalent thereof for atleast one year, be well-versed in the Company’s business operations with extensive work experience, have excellent management
acumen as well as ability to guide, lead, take action, and plan, and in addition, possess the character and knowledge appropriate to
the position of a Director or a Audit & Supervisory Board Member.
The nomination of candidates for Outside Directors or Outside Audit & Supervisory Board Members is based on the following
conditions: In addition to having excellent management acumen as well as ability to guide, lead, take action, and plan, andpossessing the character and knowledge appropriate to the position of a Director or a Audit & Supervisory Board Member, thecandidates must be persons with abundant experience in management or with expertise in various fields including law andaccounting, who can be expected to fulfill the functions and roles of performing objective and appropriate supervision or auditing,
and whose independence can be ensured without any risk of conflict of interest with general shareholders.
The standards for the independence of Outside Directors and Outside Audit & Supervisory Board Members are as stipulated in
the “Standards for the Independence of Outside Officers.”(5) Explanations with respect to the individual appointments/dismissals of senior management and nominations of candidates for
Directors and Audit & Supervisory Board Members conducted by the Board of Directors based on (4) above
The Company’s reasons for the individual appointments of candidates for Directors and Audit & Supervisory Board Members aredescribed in the “Notice of the Annual General Meeting of Shareholders.”[Supplementary Principle 3.1.3](1) Company’s initiatives on sustainability
As set forth in the Corporate Governance Policy, we recognize that sustainability issues are important management issues that not
only reduce risks but also bring about earning opportunities. In order to respond to these issues, we have established the Basic
Policy on Sustainability, and the Sustainability Committee is taking the lead in promoting sustainability activities in cooperation
with external partners as necessary, as well as actively working to build an internal system and raising awareness among
employees.

3Please see the following page on our website for specific activity reports:
 Sustainability (https://www.sanyo-shokai.co.jp/en/sustainability/)(2) Investments in human capital and intellectual properties(i) Regarding investments in human capital
We believe that developing the skills of our employees is the most important requisite for becoming an excellent company thatcan contribute to the realization of a sustainable society with the ability to create high values and solid profitability. We position
the growth of our human resources as the source of our corporate value creation. The Company has set forth “skills to create highquality, high grade, and high value-added products,” “excellent brand portfolios with the ability to accomplish brand businesstargets,” “employees with creative skills and high ethical values,” and “executives with excellent management skills underefficient management systems” as the Values necessary to achieve our Mission and Vision. To provide these values, we work todevelop the skills of our employees through training, etc., in accordance with our human resource development policy. In
addition, by providing diverse career paths and work styles, we strive to create a rewarding environment in which employees canachieve personal growth and job satisfaction, and thereby engage in their own work.
(ii) Regarding investments in intellectual properties
The Company’s Vision is “to become an excellent company that can contribute to the realization of a sustainable society with theability to create high values and solid profitability,” and we recognize that intellectual properties accumulated through value
creation are our most important assets, and that they are the most important targeted investment in conducting our brand business.
We will continue to actively invest in intellectual properties, including the acquisition of trademark rights.
As specific examples of our investment results so far, we acquired the trademark rights of EVEX by KRIZIA in 16 Asian
countries including Japan in December 2011, and in March 2021, we acquired the trademark rights pertaining to Paul Stuart inJapan.
(3) Impact of climate change-related risks and earning opportunities on company’s own business activities and profits
We express our support for the TCFD and disclose 11 items over four areas based on the TCFD framework. For details, please
visit the following page on our website:(https://www.sanyo-shokai.co.jp/en/sustainability/environment/tcfd/)[Principle 4.1: Roles and Responsibilities of the Board of Directors (1)][Supplementary Principle 4.1.1]
The Board of Directors makes decisions on matters to be resolved and important management matters stipulated in theRegulations of the Board of Directors. As for the scope of delegation to management, the authorities related to decision-making,deliberation, and approval for decision-making bodies and decision-makers, such as the Board of Directors, Management
Council, Representative Directors, Managing Directors, and General Managers, are clearly defined in the Regulations on the
Duties of Directors, the Regulations of Managing Officers, and the Regulations on the Division of Duties.
[Principle 4.9: Independence Standards and Qualification for Independent Outside Directors]
The independence standards that we use when appointing Outside Directors and Outside Audit & Supervisory Board Members
are based on the Standards for the Independence of Outside Officers established by domestic financial exchanges such as theTokyo Stock Exchange. As for the nomination of candidates for Outside Directors and Outside Audit & Supervisory Board
Members, we require that the candidates must be persons with abundant experience in management or with expertise in various
fields including law and accounting, who have the character and knowledge appropriate to the position of an Outside Director oran Outside Audit & Supervisory Board Member, and whose independence can be ensured. The standards for the independence ofOutside Directors and Outside Audit & Supervisory Board Members are as follows.
<Standards for the Independence of Outside Officers>
The Company deems that a candidate for Outside Officers (Outside Directors or Outside Audit & Supervisory Board Members)
does not have the independence of an outside officer if he/she falls under any of the following.
1. Major client
A person for whom the Company is a major client *1) or the business executor of such person, or otherwise a person who is amajor client of the Company *2) or the business executor of such person
2. External expert
Consultant, accounting expert, or legal expert who receives a large amount *3) of cash or other assets in addition to officer
compensation from the Company (in cases where the recipient of the assets is a corporation, association, or other organization, aperson who belongs to the relevant organization)
3. Audit firm of the Company
A person who belongs to an audit firm that conducts audits pertaining to the Company based on the Companies Act or the
Financial Instruments and Exchange Act
4. Recipient of contributions
A person who receives a large amount *4) of contributions from the Company (in cases where the recipient is a corporation,
association, or other organization, a person who executes the business of the relevant organization)
5. Major shareholder
A person who substantially holds 10% or more of voting rights in the Company or the business executor of such person
6. Past relationships
A person who had recently fallen under any of the category from 1 to 5 above
7. Close relatives
Close relatives of a person who falls under any of the category from 1 to 6 above (excluding non-important person)

4

(Notes)*1) “A person for whom the Company is a major client” refers to those who have received from the Company payments
accounting for more than 2% of its annual sales in the most recent fiscal year.
*2) “A major client of the Company” refers to those who have paid the Company more than 2% of the Company’s annual sales in
the most recent fiscal year, or a person whose loan balance pertaining to the Company accounts for more than 2% of the total
assets of the Company.
*3) The term “large amount” as mentioned here refers to the amount of assets a party received in the most recent fiscal year; if theparty is an individual, it means an amount exceeding 10 million yen per year, and if the party is a corporation, association, orother organization, it means an amount exceeding 2% of the consolidated sales or total income of the relevant organization.
*4) The term “large amount” as mentioned here means an amount of contributions received in the most recent fiscal year thatexceeds 10 million yen per year or 2% of the total income, whichever is greater.
[Principle 4.10: Use of Voluntarily Established Mechanism][Supplementary Principle 4.10.1]
The Company has established the Nomination & Compensation Committee, chaired by an independent Outside Director, as avoluntary advisory committee to the Board of Directors in the deliberation and decision-making at the board meetings concerning
the nomination of Directors, Audit & Supervisory Board Members, and Senior Executive or Executive Managing Officers(hereinafter collectively referred to as “Corporate Officers, etc.”), as well as the compensations and compensation system for
Directors and Managing Officers. By establishing the Nomination & Compensation Committee, we utilize the knowledge andadvice of Outside Officers, while ensuring objectiveness and transparency in the procedures related to the nomination of
Corporate Officers, etc., as well as the compensations and compensation system for Directors and Managing Officers in order tofurther enhance the function of corporate governance.
The nomination of candidates for Directors or Audit & Supervisory Board Members is, as a general rule, based on the following
conditions: The candidates must have engaged in duties as a Managing Officer, General Manager, or the equivalent thereof for atleast one year, be well-versed in the Company’s business operations with extensive work experience, have excellent management
acumen as well as ability to guide, lead, take action, and plan, and in addition, possess the character and knowledge appropriate to
the position of a Director or a Audit & Supervisory Board Member.
The nomination of candidates for Outside Directors or Outside Audit & Supervisory Board Members is based on the following
conditions: In addition to having excellent management acumen as well as ability to guide, lead, take action, and plan, andpossessing the character and knowledge appropriate to the position of a Director or a Audit & Supervisory Board Member, thecandidates must be persons with abundant experience in management or with expertise in various fields including law andaccounting, who can be expected to fulfill the functions and roles of performing objective and appropriate supervision or auditing,
and whose independence can be ensured without any risk of conflict of interest with general shareholders.
The standards for the independence of Outside Directors and Outside Audit & Supervisory Board Members are as set forth in the<Standards for the Independence of Outside Officers> described under the aforementioned [Principle 4.9: IndependenceStandards and Qualification for Independent Outside Directors]. The Company’s reasons for the individual appointments ofcandidates for Directors and Audit & Supervisory Board Members are described in the “Notice of the Annual General Meeting of
Shareholders.”[Principle 4.11: Preconditions for Ensuring the Effectiveness of the Board of Directors][Supplementary Principle 4.11.1]
The Company’s Board of Directors is composed of seven Directors. In addition to the two Inside Directors responsible for
executing and administering our business, we have appointed five Outside Directors to strengthen the independence, objectivity,
and accountability of the functions of the Board of Directors, as well as to enhance its supervisory function. In order to ensure thesoundness, transparency, and efficiency of management, we have strengthened the management supervising function andestablished an effective corporate governance system through the appointment of five independent Outside Directors and two
independent Outside Audit & Supervisory Board Members, based on the structure of a company with a Board of Audit &Supervisory Board Members. We are also working to speed up and streamline decision-making and business execution throughthe introduction of a Managing Officer system.
Our Directors have abundant experience and specialized knowledge in various fields including corporate management, generalretail, branding, product planning/production/technology, marketing/CRM, EC/OMO, international experience/overseas business,financial markets/M&A, legal/compliance, and finance/tax/accounting. In addition, all of our Outside Directors have experiencein corporate management and similarly have abundant experience and expertise in various fields, including general retail,branding, product planning/production/technology, marketing/CRM, EC/OMO, international experience/overseas business,financial markets/M&A, and finance/tax/accounting.
Therefore, the composition of the Company’s Board of Directors is not only well-balanced in terms of the knowledge, experience,and skills possessed by each Director, but also diverse.
[Supplementary Principle 4.11.2]
In the event that a Director or a Audit & Supervisory Board Member of the Company concurrently serves as an officer of a listedcompany, the approval of the Board of Directors on such positions will only be granted to a reasonable extent whereby the timeand effort necessary to properly fulfill their roles and responsibilities as an officer of our Company can be secured. The status ofimportant concurrent positions held by Outside Directors and Outside Audit & Supervisory Board Members at other companies isdisclosed annually through the general shareholders meeting notice, annual securities report, corporate governance report, etc.

5[Supplementary Principle 4.11.3]
The Company conducts self-evaluation and analysis of the effectiveness of the Board of Directors with the aim of improving thefunctions of the Board of Directors and thereby enhancing corporate value.
Self-evaluation and analysis were conducted by the following method with the advice of an external organization. In February
2024, we conducted a survey of all Directors and Audit & Supervisory Board Members who are members of the Board of
Directors. For the response method, we have ensured anonymity by having them send the responses directly to an externalorganization. Based on the external organization’s report of the aggregated results, we analyzed, discussed, and evaluated theresults at the ordinary Board of Directors’ meeting in March 2024. An overview of the results is as follows.
From the survey responses, we received positive evaluations on several points such as: (1) Board of Directors’ meetings havebeen held at an appropriate frequency and sufficient time has been allocated for deliberations, (2) discussions and exchanges of
opinions taking place are not formal, but open and constructive, and (3) the situation in which dialogues with shareholders are
conducted by the executive team in a timely and appropriate manner has been clearly shared. Accordingly, we confirmed that theeffectiveness of the Board of Directors as a whole is assured.
In the previous effectiveness evaluation, issues were pointed out regarding the need for adequate discussion and clear consensus
building on value creation from the customer’s perspective using data and digital technology, as well as on the vision to achievethis. Since then, we made efforts toward improving on those issues and confirmed that improvements have certainly been made.
On the other hand, the Board of Directors shared the following two issues: (1) there should be appropriate discussions on theapproach to ensuring diversity in core human resources, including the appointment of women, foreigners, and mid-career hires tomanagement positions, as well as the goals toward such diversity, and on policies for human resource development and internal
environmental improvement; (2) there should be training opportunities for officers (e.g., for acquiring the necessary knowledge of
their roles and responsibilities).
In the future, based on this effectiveness evaluation, the Company’s Board of Directors will thoroughly consider theabove-mentioned issues and respond promptly to them, and will thereby continue efforts to enhance the functions of the Board of
Directors.
[Principle 4.14: Trainings for Directors and Audit & Supervisory Board Members][Supplementary Principle 4.14.2]
In order for Directors and Audit & Supervisory Board Members to fully fulfill their management supervising and auditing
functions, we provide appropriate and timely information necessary for the performance of their duties through the Board of
Directors Secretariat. As for Outside Officers, in order to enhance their deliberation at the board meetings, we distribute andexplain the meeting materials and provide related information to them beforehand, while continuously providing them
opportunities to understand the Company’s business operations through, among other things, orientation at the time of
appointment and dialogues with our senior management.
We continuously provide Inside Directors and Managing Officers with trainings on compliance, corporate governance, andinternal control conducted by external instructors. In addition, newly appointed Inside Directors and Managing Officers are
required to attend external seminars.
[Principle 5.1: Policy for Constructive Dialogue with Shareholders]
We recognize the importance of gathering opinions through active dialogue with shareholders and reflecting them in ourmanagement in order to achieve sustainable growth and enhance corporate value over the medium to long term. To this end,
through efforts led by the officer in charge of IR and the department in charge of IR, we are actively engaging in dialogue withshareholders and investors. For shareholders and investors, we convene financial results explanatory meetings once every six
months, and hold one-on-one meetings as appropriate.
In addition, we advance our provision of information to overseas shareholders and investors by preparing English versions ofFinancial Results Explanatory Materials, Medium-Term Business Plan, and other documents, and disclosing them on the English“IR NEWS” section of our Company’s website (https://www.sanyo-shokai.co.jp/en/ir/).
<Action to Implement Management that is Conscious of Cost of Capital and Stock Price> <English version available>
Action to Implement management that is Conscious of Cost of Capital and Stock Price is disclosed on our website.
(https://ssl4.eir-parts.net/doc/8011/tdnet/2347687/00.pdf)<Status of Dialogue with Shareholders> <English version available>
Status of dialogue with shareholders is disclosed on our website. (https://www.sanyo-shokai.co.jp/en/ir/shareholder/)62. Capital Structure
Foreign Shareholding Ratio

20% or more but less than 30%

Status of Major Shareholders
Individual or Company Name
Yagi Tsusho Limited
Custody Bank of Japan, Ltd. (Mitsui & Co., Ltd. Retirement Benefit Trust
Account re-entrusted by Sumitomo Mitsui Trust Bank, Limited)
The Master Trust Bank of Japan, Ltd. (Trust Account)
Tomohiro Yoshida
MSIP Client Securities
Mitsui & Co., Ltd.
Meiji Yasuda Life Insurance Company
MSCO Customer Securities
The Nomura Trust and Banking Co., Ltd. (Trust Account)
J. P. MORGAN Securities plc for and on behalf of its clients JPMSP re client
assets—sett acct
Name of Controlling Shareholder, IF applicable (excluding Parent Company)
Name of Parent Company, if applicable

Number of Shares Held
(Shares)
1,515,100

Percentage (%)
12.98

757,800

6.49

708,100
378,500
349,000
345,426
270,453
248,869
205,700

6.07
3.24
2.99
2.96
2.32
2.13
1.76

188,317

1.61

–
None

Supplementary Explanation
This is the status as of February 29, 2024. In addition to the above, there are 952,952 treasury shares that should be included in
the description of major shareholders. The ownership interest (%) is calculated after deducting these treasury shares from the total
number of shares issued.

3. Corporate Attributes
Listed Stock Exchange and Market Segment
Fiscal Year-End
Business Sector
Number of Employees (Consolidated) as of the End of the Previous Fiscal
Year
Net Sales (Consolidated) as of the End of the Previous Fiscal Year
Number of Consolidated Subsidiaries as of the End of the Previous Fiscal YearTokyo Prime Market
February
Textiles & Apparels
1,000 or more
¥10 billion or more and less than ¥100 billion
Fewer than 10

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 Governance–

II. Business Management Organization and Other Corporate Governance Systems regarding
Decision-making, Execution of Business, and Oversight in Management
1. Organizational Composition and Operation
Corporate Governance System
Company with Audit & Supervisory Board Members**Referred to in the Corporate Governance Code reference translation as "Company with Kansayaku Board"

Directors
Number of Directors Stipulated in Articles of Incorporation
Directors’ Term of Office Stipulated in Articles of Incorporation
Chairperson of the Board
Number of Directors
Election of Outside Directors
Number of Outside Directors
Number of Independent Directors

7

9
1 yearOutside Director
7Elected55Outside Directors’ Relationship with the Company (1)Name

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

AttributesabjkMotoyoshi Shiina
From another company
Chihiro Nihashi
From another company
Ikuo Yasuda
From another company
Osamu Nakamoto
From another company△ △△Kayo Murakami
From another company* Categories for “Relationship with the Company”.
(Use “○” when the director presently falls or has recently fallen under the category; “△” when the director fell under the
category in the past; “●” when a close relative of the director presently falls or has recently fallen under the category; and “▲”when a close relative of the director fell under the category in the past.)
a. Person who executes business of the Company or a subsidiary
b. Person who executes business or a non-executive director of a parent company
c. Person who executes business of a fellow subsidiaryd. Person/entity for which the Company is a major client or a person who executes business for such person/entity
e. Major client of the Company or a person who executes business for such clientf. Consultant, accounting expert, or legal expert who receives large amounts of cash or other assets in addition to director/Audit& Supervisory Board Member compensation from the Company
g. Major shareholder of the Company (in cases where the shareholder is a corporation, a person who executes business of thecorporation)h. Person who executes business for a client of the Company (excluding persons categorized as any of d, e, or f above) (applies toself 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)NameMotoyoshi
ShiinaChihiroNihashi

Designation as
Independent
Director○○

Supplementary Explanation of
the Applicable RelationshipHe came from a trading
company that is also a majorclient and a major shareholder of
the Company, but he left thatcompany in 2008. We do notthink there is a risk that his
appointment will affect the
judgment of shareholders andinvestors in light of the scale andnature of the relevant business
transactions.

He came from a department
store company that is a majorclient of the Company, but we donot think there is a risk that his
appointment will affect the
judgment of shareholders andinvestors in light of the scale andnature of the relevant business
transactions.

8

Reasons for Appointment
In addition to knowledge of the apparel and retailindustry, branding, and international business, he also
has abundant experience in management as a whole andcorporate governance as the representative director &president of a listed company. Based on such experience,
he serves as Chairman of the Board of Directors of theCompany since 2020, and accordingly, we judge that hewill contribute to the improvement of transparency andobjectivity of the Company’s management and is asuitable person in the position to supervise our businessexecution. After his appointment, we expect that he will
properly perform his duties as an Outside Director of theCompany, including making decisions on importantmanagement matters and supervising our businessexecution.
Having been involved in the management of department
stores for many years, he is well versed in the appareland retail industry. His wealth of managerial experiencein department stores and his extensive knowledge ofbranding and marketing are beneficial to the realizationof our Medium-Term Business Plan. After his
appointment, we expect that he will properly perform his
duties, including making decisions on importantmanagement matters and supervising our businessexecution.

Ikuo Yasuda

○

―

Osamu
Nakamoto○

Kayo
Murakami○

He came from a trading
company, which is the largest
shareholder of our Company.
Although we have major
business relationships with said
company, he left said company
in June 2015 and its affiliatedsubsidiary in May 2018.
Therefore, we do not think there
is a risk that his appointment willaffect the judgement ofshareholders and investors.
―

He has extensive business experience in Japanese andoverseas financial institutions. Based on his knowledgeof finance, he specializes in various fields especially
M&A, business succession, and business restructuring.
His expertise in financial markets and M&A is beneficial
to the realization of our Medium-Term Business Plan forbusiness growth. After his appointment, we expect that
he will properly perform his duties, including making
decisions on important management matters andsupervising our business execution.
He has held important positions related to brand businessat a trading company that mainly imports apparel. He is
also serving as representative director and vice chairmanof said company’s overseas affiliate in UK. He is wellversed in the apparel and retail industry, and hisabundant experience and broad knowledge of productplanning, branding, overseas business, and many otherfields are beneficial to the realization of our
Medium-Term Business Plan. After his appointment, we
expect that he will properly perform his duties, including
making decisions on important management matters andsupervising our business execution.
She specializes in digital marketing and digitaltransformation, and is well versed in those areas. Her
insights on marketing and EC are beneficial to therealization of our Medium-Term Business Plan. After her
appointment, we expect that she will properly perform
her duties, including making decisions on importantmanagement matters and supervising our businessexecution.

Voluntary Establishment of Committee(s) equivalent to Nomination Committee or Remuneration Committee

Established

Status of Voluntarily Established Committee(s), Member Composition, and Attribute of the Committee Chair (Chairperson)

Voluntarily
Established
Committee
Equivalent toNomination
Committee
Voluntarily
Established
Committee
Equivalent toRemuneration
Committee

Committee’s
Name

All
Members

Full-timeMembers

InsideDirectors

OutsideDirectors

OutsideExperts

Nomination &Compensation
Committee

3

0

1

2

0

0

Outside Director

Nomination &Compensation
Committee

3

0

1

2

0

0

Outside Director

Committee Chair(Chairperson)

Other

Supplementary Explanation
The Company has established the Nomination & Compensation Committee, chaired by an independent Outside Director, as anadvisory committee to the Board of Directors in the deliberation on the nomination of Directors, Audit & Supervisory Board
Members, and Senior Executive or Executive Managing Officers (hereinafter referred to as “Corporate Officers, etc.”), as well ason the compensations or compensation system for Directors and Managing Officers; by doing so, we utilize the knowledge andadvice of Outside Officers, while ensuring objectiveness and transparency in the procedures for decision-making concerning thenomination of Corporate Officers, etc., as well as procedures related to the compensations and compensation system for Directors
and Managing Officers. By establishing the Nomination & Compensation Committee, we aim to improve the supervisory
function of the Board of Directors and further enhance the function of corporate governance.

9

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

Established5
3

Cooperation among Audit & Supervisory Board Members, Accounting Auditor and Internal Audit Departments
Cooperative relationships between Audit & Supervisory Board Members and Independent Accounting Auditor
The Company recognizes that the Independent Accounting Auditor is responsible to shareholders and investors. Other thanreceiving explanations of the audit plan and audit report from the Independent Accounting Auditor, the Audit & Supervisory
Board Members visit business sites and observe audit review meetings. In addition, the Audit & Supervisory Board Members andIndependent Accounting Auditor hold regular quarterly meetings to exchange various information related to general audits,internal control, business risks, etc., and endeavor to maintain audit schedules and audit systems for an appropriate auditing.
Cooperative relationships between Audit & Supervisory Board Members and Internal Audit Departments
The Audit & Supervisory Board Members of the Company shall cooperate with the Internal Audit Departments to collectinformation necessary for conducting audits, and also, led by the full-time Audit & Supervisory Board Member, they shall request
information from the executive departments.
The Company’s Internal Audit Office regularly reports the implementation status of audits to the President, and at the same time,endeavors to strengthen cooperative relationships by providing reports to Directors and Audit & Supervisory Board Members. In
cooperation with the Internal Audit Office, information is provided to Outside Audit & Supervisory Board Members in a timely
manner using the same materials as those reported to the President at the Internal Audit Office periodic meeting held every threemonths.
Appointment of Outside Audit & Supervisory Board Members
Number of Outside Audit & Supervisory Board Members
Number of Outside Audit & Supervisory Board Members Designated as Independent Officer

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

a

c

d

e

Relationship with the Company*
f
g
h
i
j
k

l
m
Somuku Iimura
LawyerAtsushi Fukuda
CPA△* 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 subsidiaryb. A non-executive director or an accounting advisor of the Company or its subsidiaries
c. Person who executes business or a non-executive director of a parent company
d. An Audit & Supervisory Board Member of a parent company of the Company
e. Person who executes business of a fellow subsidiaryf. Person/entity for which the Company is a major client or a person who executes business for such person/entity
g. Major client of the Company or a person who executes business for such clienth. Consultant, accounting expert, or legal expert who receives large amounts of cash or other assets in addition to director/Audit& Supervisory Board Member compensation from the Company
i. Major shareholder of the Company (in cases where the shareholder is a corporation, a person who executes business of thecorporation)j. Person who executes business for a client of the Company (excluding persons categorized as any of f, g, or h above) (applies
to self only)
k. Person who executes business for another company holding cross-directorships/cross-auditorships with the Company (applies
to self only)
l. Person who executes business for an entity receiving contributions from the Company (applies to self only)
m. Other10bOutside Audit & Supervisory Board Members’ Relationship with the Company (2)Somuku Iimura

Designation as
Independent
Audit &
Supervisory
Board Member○

Atsushi Fukuda

○

Name

Supplementary Explanation of the
Applicable Relationship―He belonged to an audit corporationthat serves as an accounting auditorof our Company, but he has already
retired from said corporation. Since
he has had no business contact with
our Company during his tenure at
said corporation, and in light of thenature of the relevant transactions
and its relationship with ourCompany, we do not think there is arisk that his appointment will affectthe judgement of shareholders andinvestors.

Reasons for Appointment

We believe that he will be able to appropriately
perform his duties as an Outside Audit &Supervisory Board Member based on his
professional standpoint and abundant experience asa lawyer, as well as his impeccable character andinsight. In addition, we have designated him as anindependent auditor because he satisfies the“Standards for the Independence of Outside
Officers” established by our Company and there isno risk of him having any conflict of interest withgeneral shareholders.
We believe that he will be able to appropriately
perform his duties as an Outside Audit &Supervisory Board Member based on his
professional standpoint and abundant experience asa certified public accountant (CPA), as well as his
impeccable character and insight. In addition, we
have designated him as an independent auditor
because he satisfies the “Standards for the
Independence of Outside Officers” established by
our Company and there is no risk of him having any
conflict of interest with general shareholders.

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

7

Other Matters Concerning Independent Directors and Independent Audit & Supervisory Board Members―

Incentives
Implementation Status of Measures related to Incentives Granted to Directors

Performance-based compensation system

Supplementary Explanation for Applicable Items
The total amount of a Director’s compensation is composed of a fixed monthly compensation paid as basic compensationaccording to his/her responsibilities and position, a bonus paid as compensation based on performance, etc., and a Restricted
Stock award. The composition is set as follows: a fixed monthly compensation of 70%, a bonus that varies between 0% and22.5% (15% when 100% is achieved), and a Restricted Stock award of 15%. Furthermore, from the perspective of independence,compensation for Outside Directors consists only of fixed monthly compensation, without the payment of performance-based
compensation or Restricted Stock awards. Performance-based compensation for Directors (excluding Outside Directors) will be
paid as bonuses after being calculated according to the degree of achievement of consolidated operating income and net income
attributable to shareholders of the parent company, which are indicators of corporate profitability, on the assumption that theCompany’s operating income is in surplus. Upon deliberation at the voluntary Nomination & Compensation Committee, which ischaired by an Outside Director, the amount of compensation for Directors is then determined by the Board of Directors after
taking into consideration factors such as comparisons with compensation levels at other companies, managerial responsibilities,
and positions. In addition, Restricted Stock awards, which are non-monetary compensation, are paid in the form of restricted
shares allocated by a method in which monetary compensation receivables paid to each Director are invested in kind based on
their positions, etc.
Persons Eligible for Stock Options

Supplementary Explanation for Applicable Items―

11

Director Remuneration
Status of Disclosure of Individual Directors’ Remuneration

No disclosure of individual directors’ compensation

Supplementary Explanation for Applicable Items
The Company discloses the total amount of compensations, etc. for Directors in Annual Securities Report and Business Report(document attached to the Notice of Annual General Meeting of Shareholders).
 Number of persons to whom remuneration was paid and total amount of remuneration in FY2023: 11 persons and ¥161 million
 Directors (excluding Outside Directors): ¥96 million
 Audit & Supervisory Board Members (excluding Outside Audit & Supervisory Board Members): ¥17 million
 Outside Officers: ¥48 million
 The above includes one Director who retired at the conclusion of the 80th Annual General Meeting of Shareholders held on
May 30, 2023.
Policy on Determining Remuneration Amounts and the Calculation Methods Thereof

Established

Disclosure of Policy on Determining Remuneration Amounts and the Calculation Methods Thereof
At the 64th Annual General Meeting of Shareholders held on March 29, 2007, a resolution was passed to set the total amount ofannual compensation for Directors of the Company as an amount no higher than 450 million yen (However, the employee salaries
for Directors who concurrently serve as employees are not included.) and the total amount of annual compensation for Audit &Supervisory Board Members of the Company as an amount no higher than 80 million yen. In addition, as part of our efforts instrengthening corporate governance, we review our officer compensation system, provide incentives for our Directors (excluding
Outside Directors) to pursue ongoing improvements in our corporate value, and also, for the purpose of promoting further value
sharing with shareholders, a resolution was passed at the 76th Annual General Meeting of Shareholders held on March 28, 2019
to introduce a restricted stock award plan (hereinafter referred to as “the Plan”) within the scope of the above compensation limit.
Based on the Plan, the total amount of monetary compensation receivables to be paid is capped at 100 million yen per year, withno more than 50,000 shares per year.
The total amount of a Director’s compensation is composed of a fixed monthly compensation paid as basic compensationaccording to his/her responsibilities and position, a bonus paid as compensation based on performance, etc., and a Restricted
Stock award. The composition is set as follows: a fixed monthly compensation of 70%, a bonus that varies between 0% and22.5% (15% when 100% is achieved), and a Restricted Stock award of 15%. Furthermore, from the perspective of independence,compensation for Outside Directors consists only of fixed monthly compensation, without the payment of performance-based
compensation or Restricted Stock awards. Performance-based compensation for Directors (excluding Outside Directors) will be
paid as bonuses after being calculated according to the degree of achievement of consolidated operating income and net income
attributable to shareholders of the parent company, which are indicators of corporate profitability, on the assumption that theCompany’s operating income is in surplus. Upon deliberation at the voluntary Nomination & Compensation Committee, which ischaired by an Outside Director, the amount of compensation for Directors is then determined by the Board of Directors after
taking into consideration factors such as comparisons with compensation levels at other companies, managerial responsibilities,
and positions. In addition, Restricted Stock awards, which are non-monetary compensation, are paid in the form of restricted
shares allocated by a method in which monetary compensation receivables paid to each Director are invested in kind based on
their positions, etc.
The total amount of compensation, etc. for Audit & Supervisory Board Members is determined through discussions at the Audit &Supervisory Board Members’ meetings, taking into consideration the respective responsibilities of full-time Audit & Supervisory
Board Members and Outside Audit & Supervisory Board Members. From the standpoint of ensuring independence, Audit &Supervisory Board Members receive only a fixed monthly compensation.

Support System for Outside Directors and/or Outside Audit & Supervisory Board Members
For Outside Directors, we assign the Administration Department, which is the Board of Directors Secretariat, and the Corporate
Planning Department to assist them with their duties and to support them in other work related to administration, communication,etc., while for Outside Audit & Supervisory Board Members, the assisting employees of the Audit & Supervisory Board Members
are assigned to these supporting roles.

Statuses of Persons who have Retired as Representative Director and President, etc.
Information on Persons Holding Advisory Position (Sodanyaku, Komon, etc.) who are former Representative Director andPresident, etc.
Name
Masamichi
NakaseJob title/
position
AdvisorResponsibilities
Give advice upon request from theCompany, utilizing the experience andknowledge from having been involvedin the management of the Company

12

Terms and Conditions ofDate when former
Employment (Full/part time, role as president/
with/without remuneration, etc.)
CEO ended
Part-time with remuneration
March 28, 2013

Term
1 yearNumber of Persons Holding Advisory Position (Sodanyaku, Komon, etc.) who are former
Representative Director and President, etc.

1

Other Related Matters
Regarding the appointment of Advisors, a resolution is passed at the Board of Directors upon deliberation by the Nomination &Compensation Committee.

2. Matters Concerning Functions of Business Execution, Auditing and Supervision, Nomination, andRemuneration Decisions (Overview of Current Corporate Governance System)
We are a company with Audit & Supervisory Board Members.
(1) Mechanism for monitoring business execution and management
As of May 29, 2024, the Company’s Board of Directors consists of seven Directors. Of these seven Directors, five Outside
Directors have been appointed to further strengthen management systems and enhance the supervisory function. In addition, three
Audit & Supervisory Board Members, including two Outside Audit & Supervisory Board Members, are present. The Board of
Directors is positioned as a body that makes decisions on basic management policies, matters stipulated by laws, and otherimportant matters related to management, while supervising the status of business execution to ensure thorough compliance.
 Chair: Motoyoshi Shiina, Director
 Members: Shinji Oe, Representative Director & President; Ikuro Kato, Director; Chihiro Nihashi, Director; Ikuo Yasuda,
Director; Osamu Nakamoto, Director; Kayo Murakami, Director. Note that Motoyoshi Shiina, Chihiro Nihashi, Ikuo Yasuda,
Osamu Nakamoto and Kayo Murakami are Outside Directors.
We have established a Management Council consisting of Directors (excluding Outside Directors) and persons appointed by the
Board of Directors for multifaceted consideration and decision-making regarding important matters that have a significant impact
on the Company. In addition, through the introduction of a Managing Officer system, we carry out management that enables
prompt decision-making and business execution by separating the management’s strategic decision-making function and businessexecution supervising function from the business execution function.
As a general rule, the above-mentioned Board of Directors, Management Council, and Managing Officer’s Council hold meetings
every month, respectively.
(2) Director’s term of office
From the 75th fiscal year, the term of office for Directors has been shortened from two years to one year in order to respondpromptly to changes in the business environment and to clarify the managerial responsibilities of Directors during a fiscal year.
(3) Overview of various committees
For the purpose of strengthening corporate governance, we have established the Nomination & Compensation Committee,
consisting of three members—one independent Outside Director as the chair, one Director, and one other independent Outside
Director. It serves as a voluntary advisory committee to the Board of Directors in the deliberation on the nomination of therespective candidates for Directors, Audit & Supervisory Board Members, and Managing Officers, as well as on thecompensations and compensation system for Directors and Managing Officers; by doing so, we utilize the knowledge and adviceof Outside Officers, while ensuring objectiveness and transparency in the procedures for decision-making concerning the
aforementioned nominations. The nomination of candidates for Directors or Audit & Supervisory Board Members is, as a generalrule, based on the following conditions: The candidates must have engaged in duties as a Managing Officer, General Manager, orthe equivalent thereof for at least one year, be well-versed in the Company’s business operations with extensive work experience,
have excellent management acumen as well as ability to guide, lead, take action, and plan, and in addition, possess the characterand knowledge appropriate to the position of a Director or a Audit & Supervisory Board Member. The nomination of candidates
for Outside Directors or Outside Audit & Supervisory Board Members is based on the following conditions: In addition to having
excellent management acumen as well as ability to guide, lead, take action, and plan, and possessing the character and knowledge
appropriate to the position of a Director or a Audit & Supervisory Board Member, the candidates must be persons with abundant
experience in management or with expertise in various fields including law and accounting, who can be expected to fulfill thefunctions and roles of performing objective and appropriate supervision or auditing, and whose independence can be ensured
without any risk of conflict of interest with general shareholders.
 Chair: Motoyoshi Shiina, Director
 Members: Shinji Oe, Representative Director & President; Ikuo Yasuda, Director(4) Outside Directors and Outside Audit & Supervisory Board Members
As stipulated in the Corporate Governance Policy, our basic policy on independence when appointing Outside Directors andOutside Audit & Supervisory Board Members requires that there is no risk of conflict of interest with general shareholders, andwe expect them to fulfill the functions and roles of performing objective and appropriate supervision or auditing based on their
specialized knowledge.
Outside Directors and Outside Audit & Supervisory Board Members are appointed from those who have a wide range ofknowledge and insights with abundant experience and achievements in various fields, as well as those whose independence canbe ensured, in order to further strengthen management systems and enhance the management supervising function.
Outside Directors receive reports on internal audits, compliance, progress of internal controls, as well as the results of Audit &Supervisory Board Members’ audits and independent accounting audits at the Board of Directors’ meetings. Furthermore, otherthan attending the Board of Directors’ meetings and receiving reports on the results of audits and reviews from the Independent13

Accountant mainly at the Audit & Supervisory Board Members’ meetings upon the announcement of each quarter’s financial
results, Outside Audit & Supervisory Board Members also regularly receives explanations concerning the implementation statusof audits from the Internal Audit Departments. Through such exchange of information, we are working to strengthen cooperative
relationships among the relevant parties.
In an effort to strengthen cooperative relationship with the internal control division, the Internal Audit Office reports to the Boardof Directors on the progress of internal controls during the fiscal year, and the Board of Directors conducts a question-and-answer
session in addition to giving advices on internal controls, as appropriate.
(5) Status of audit by Audit & Supervisory Board Members
The Board of Audit & Supervisory Board Members consists of three Audit & Supervisory Board Members, of whom two are
Outside Audit & Supervisory Board Members. In addition, one of the Outside Audit & Supervisory Board Members is a certified
public accountant who has considerable knowledge of finance and accounting. In principle, the Board of Audit & Supervisory
Board Members holds a meeting every month to determine audit policies, division of duties, etc., and to monitor importantmatters.
 Chair: Rokuichi Ito, Full-time Audit & Supervisory Board Member
 Members: Somuku Imura, Audit & Supervisory Board Member; Atsushi Fukuda, Audit & Supervisory Board Member
Note that Somuku Imura and Atsushi Fukuda are Outside Audit & Supervisory Board Members.
We maintain a system in which Audit & Supervisory Board Members attend Board of Directors’ meetings and other important
meetings, receive reports from Directors, etc. concerning business conditions, review important approval documents, and conduct
audits of business execution. We are working to strengthen cooperative relationships by conducting regular exchange of
information among the Audit & Supervisory Board Members, Independent Accountant, and Internal Audit Office.
The Company has executed agreements that limit the liability for damages under Article 423, Paragraph 1 of the Companies Act
with each Outside Director and Audit & Supervisory Board Member, pursuant to the provisions of Article 427, Paragraph 1 ofsaid Act. The maximum amount of liability for damages under the relevant agreement shall be the amount stipulated by law. Suchlimitation of liability is recognized only when the relevant Outside Director or Audit & Supervisory Board Member has acted ingood faith and without gross negligence in performing the duties that caused the liability.
(6) Overview of the agreement limiting liability
The Company has executed agreements that limit the liability for damages under Article 423, Paragraph 1 of the Companies Act
with each Outside Director and Audit & Supervisory Board Member, pursuant to the provisions of Article 427, Paragraph 1 ofsaid Act. The maximum amount of liability for damages under the relevant agreement shall be the amount stipulated by law. Suchlimitation of liability is recognized only when the relevant Outside Director or Audit & Supervisory Board Member has acted ingood faith and without gross negligence in performing the duties that caused the liability.
(7) Matters concerning liability insurance contract for Corporate Officers, etc.
The Company concludes a liability insurance contract with an insurance company for Corporate Officers, etc., with the Directors,
Audit & Supervisory Board Members, Managing Officers, and managerial employees of the Company and its subsidiaries being
named as the insured.
A summary of the contract is as follows.
 Compensation covers legal costs and damages incurred by the insured due to company litigation, third-party litigation,
shareholder litigation, and other lawsuits.
 As a measure to ensure that the insured’s proper performance of duties is not impaired, damages incurred due to criminal acts
conducted by the insured are not covered by compensation.
 Insurance premiums for the relevant contract are fully paid by the Company.

3. Reasons for Adoption of Current Corporate Governance System
In order to ensure the soundness, transparency, and efficiency of management, we have strengthened the management supervising
function and established an effective corporate governance system through the appointment of five independent Outside Directors
and two independent Outside Audit & Supervisory Board Members, based on the structure of a company with a Board of Audit &Supervisory Board Members. We are also working to speed up and streamline decision-making and business execution throughthe introduction of a Managing Officer system.
Our Directors have abundant experience and specialized knowledge in various fields including corporate management, generalretail, branding, product planning/production/technology, marketing/CRM, EC/OMO, international experience/overseas business,financial markets/M&A, legal/compliance, and finance/tax/accounting. In addition, all of our Outside Directors have experiencein corporate management, and similarly have abundant experience and expertise in various fields, including general retail,branding, product planning/production/technology, marketing/CRM, EC/OMO, international experience/overseas business,financial markets/M&A, and finance/tax/accounting.
Therefore, the composition of the Company’s Board of Directors is not only well-balanced in terms of the knowledge, experience,and skills possessed by each Director, but also diverse.

14III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Shareholder Meetings and Facilitate Exercise of Voting Rights

Early Posting of Notice of the General
Shareholders Meeting
Electronic Exercise of Voting Rights
Participation in a Platform for the Electronic
Exercise of Voting Rights and Other Initiatives
to Enhance Environment for Institutional
Investors to Exercise Voting Rights
Provision of Notice (or Summary of Notice) of
the General Shareholders Meeting in English
Other

Supplementary Explanation
From the passing of board resolution regarding the convocation of the General
Shareholders Meeting to the sending of the convocation notice, the relevant
information will be announced electronically via the “Company
Announcements Service” of the Tokyo Stock Exchange and on the Company’s
website.
It is also possible to exercise voting rights via the Internet.
We participate in the Electronic Voting Platform for institutional investors
operated by ICJ, Inc.

English translations of proposals for the General Shareholders Meeting are
prepared and posted on the Company’s website.
Visualization of the operation of general meetings and explanation of thebusiness plan with SR in mind

2. Status of IR-related Activities

Supplementary Explanation

Formulation and Publication ofDisclosure Policies

Regular Investor Briefings held
for Analysts and Institutional
Investors
Online Disclosure of IR
Information

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

We recognize that it is an extremely important responsibility toappropriately communicate to stakeholders such as shareholders andinvestors information that will impact their investment decisions.
Therefore, we disclose information in a timely and appropriate mannerbased on the principles of transparency, promptness, and continuity.
We strictly comply with information disclosure obligations based on laws
and regulations regarding both financial information, such as financial
status and operating results, and non-financial information relating tomanagement strategies, management issues, risks associated withbusiness activities, and corporate governance. In addition to disclosure
based on laws and regulations, we actively disclose information byappropriate methods regarding matters that are deemed necessary.
Disclosure Policy(https://www.sanyo-shokai.co.jp/en/ir/management/disclosure/)
We hold a “Financial Results Explanatory Meeting” after theannouncement of financial results (cumulative second quarter financial
results and full fiscal year financial results).
We post annual securities reports, quarterly securities reports, financial
reports (including quarterly financial reports), financial results
explanatory materials, financial highlights, medium-term business plan,and materials other than financial information that need timely
disclosure.
The Investor Relations & Public Relations Department of the Corporate
Management Headquarters plays a central role in handling IR-related
matters, in cooperation with the Corporate Planning Department andAccounting & Finance Headquarters.

15

Explanation bya representative
director or arepresentative
executive
officerHeld

3. Status of Measures to Ensure Due Respect for Stakeholders
Establishment of Internal Rules Stipulating
Respect for the Position of Stakeholders

Implementation of Environmental Preservation
Activities and CSR Activities, etc.

Supplementary Explanation
Our Basic Policy on Sustainability states the following:
We make our utmost effort to resolve issues faced by the fashion industry inorder to gain the satisfaction and trust of all stakeholders, including
shareholders, investors, customers, business partners, employees, and local
communities. Under this policy, we promote sustainability management
through identifying materiality and by implementing individual policies
regarding the environment, human rights, human capital, etc. in accordancewith the materiality.
We recognize that sustainability issues are important management issues that
not only reduce risks but also bring about earning opportunities. In order to
respond to these issues, we have established the Basic Policy on Sustainability
and the Sustainability Committee is taking the lead in promoting sustainability
activities in cooperation with external partners as necessary, as well as actively
working to build an internal system and raising awareness among employees.
For details, please visit the following page on our website:
Sustainability (https://www.sanyo-shokai.co.jp/en/sustainability/)

IV. Matters Concerning the Internal Control System
1. Basic Views on Internal Control System and Status of Development
In order to ensure proper and appropriate business execution based on our Corporate Policy and Management Philosophy and the
Basic Policy on Sustainability, as well as employment rules and various regulations or rules, the Company, led by the Internal
Control Committee, endeavors to implement business reforms and improvements and to promote the development and effective
operation of the internal control system after re-analyzing and re-evaluating in detail the risks pertaining to current business
operations, business flow, and IT systems closely related to the business. Furthermore, with the aim of strengthening compliancemanagement, the Company established the Sanyo Alarm System (a compliance reporting system) some time ago, and we aretaking appropriate measures in response to laws and bylaws as well as developing the necessary internal systems.
In addition, we have appointed the Compliance Committee Chair as the person responsible for playing a central role in risk
management, and established the Compliance Committee under said Chair. Other than having full-time Audit & Supervisory
Board Members on said Committee, we have developed a system to share information with Outside Officers, external lawyers,
etc. respectively so that appropriate advice can be obtained.
Furthermore, for the purpose of strengthening and enhancing the internal control system, we have established the Internal Control
Committee under the direct control of the Management Council, and are working to promote the development and effective
operation of the system. In case there is a risk of loss, the Crisis Management Committee will respond according to the type ofcrisis, in accordance with the Crisis Management Regulations. In addition, the Internal Audit Office under the direct control of the
President develops the internal control system, while regularly conducting internal audits on the status of compliance with laws,
the Articles of Incorporation, internal regulations, etc. and on the appropriateness of procedures pertaining to the execution ofduties, as well as monitoring the operational status.
Based on these, we believe that it is possible for the management to ensure the “reliability of financial reporting,” which is anindispensable condition for the Company as a publicly listed company, and we will continue to fulfill our responsibilities to ourshareholders and other stakeholders, as well as to the society. As for the status of development of the risk management system, we
have concluded advisory contracts with multiple legal advisors and tax accountants to deal with legal and tax issues.

2. Basic Views on Measures for Eliminating Anti-Social Forces and Status of Development
The Company’s Corporate Code of Conduct and compliance regulations stipulate that we shall have absolutely no interaction
with antisocial forces that pose a threat to the order and safety of civil society. We promote awareness of this policy throughout
the Company by posting them on our online bulletin board, accessible to all employees, and by holding seminars inviting outside
experts as necessary.

16

V.

Other

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

Not adopted

Supplementary Explanation for Applicable Items―

2. Other Matters Concerning the Corporate Governance System
Overview of timely disclosure system
We have formulated the “Corporate Governance Policy — Chapter 4: Ensuring Appropriate Information Disclosure andTransparency,” which summarizes our basic policy on information disclosure, and published it on our website.
(https://www.sanyo-shokai.co.jp/assets/pdf/cg_policy_EN_20240327.pdf)
Person in charge of handling information: Senior Executive Managing Officer, General Manager of Corporate Management HQand Marketing & Digital Strategy HQ(1) The system for managing information and the collection and ascertainment of information
The Company consists of four headquarters—Personnel & Administration Headquarters, Accounting & Finance Headquarters,
Corporate Management Headquarters, and Operation Headquarters, each of which collects, ascertains, and manages information
under its jurisdiction.
(2) Regarding timely disclosure system
Important facts decided or that have occurred in each department are centrally collected without delay by the person in charge ofhandling information, and the Investor Relation & Public Relations Strategy Department of the Corporate Management
Headquarters determines the necessity of timely disclosure of said information. If timely disclosure is required, specificdisclosure content will be prepared in cooperation with related departments. Subsequently, after a decision has been made at theBoard of Directors, the Investor Relation & Public Relations Strategy Department will act as the contact person and disclose theinformation in a timely manner under the direction of the person in charge of handling information.

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Skill Matrix of the Directors and Audit & Supervisory Board Members<Skills Required for the Board of Directors>
The criteria for the appointment of a Director and an Audit & Supervisory Board Member of the Company stipulate that they mustpossess the appropriate character and knowledge for a Director and an Audit & Supervisory Board Member, sufficient experience andexpertise to contribute to the continuous enhancement of corporate value, insight and ability to supervise management, and the ability toanalyze and make judgments in an objective manner.
In addition, the current medium-term management plan (fiscal year ended February 28, 2023 to fiscal year ending February 28, 2025)
will promote four growth strategies: brand strategy, channel strategy, marketing strategy, and e-commerce strategy, in order to shift fromdefense to offense, while continuing the structural reform measures implemented in the Revitalization Plan.
In order to accomplish this plan and at the same time maintain a high level of transparency in management, we believe that thecomposition of the Board of Directors should have the following skills<Definition of the selected skill>
Corporate Management Experience

Management experience or knowledge and experience in corporate governance

Knowledge of the Industry and Retail in
GeneralKnowledge of the apparel industry and business experience in retail such as department
stores, company-operated stores, and outlets required to drive our channel strategy

Branding

Knowledge in the area of branding, including expressing brand philosophy and brandvalue enhancement necessary to promote our brand strategy, as well as businessexperience required to expand our licensing business

Product Planning/Production and Technology Knowledge in product planning and production to create high-quality, high-grade,high-value-added products (which is one of our strengths), as well as in the technology
and quality control fields that support this planning and production
Marketing/CRM

Extensive knowledge in marketing and CRM (Customer Relationship Management)
expertise required to drive our marketing strategy

EC/OMO

Extensive knowledge of the EC sector, cross-border EC, and inbound support necessary
to establish a mutually complementary system between EC and brick-and-mortar stores(OMO: online and offline integration) in order to promote our EC strategy

International Experience/Overseas Business

International experience and knowledge of overseas business (including the licensing
business) necessary to consider future overseas business development

Financial Markets/M&A

Expertise in financial markets necessary to manage a prime market listed company andknowledge of M&A as a tool of a future growth strategy

Legal/ComplianceExpertise in the legal field or experience in a leadership role in the field

Finance/Tax/Accounting

Expertise in the financial, tax, or accounting field or experience in a leadership role in
the field

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The knowledge, experience and skills that the Directors and Audit & Supervisory Board Members possess are as follows.
Audit & Supervisory Board
Members

Directors
Shinji
Oe

Kato
Ikuro

Motoyoshi
ShiinaChihiroNihashi

Ikuo
YasudaOsamu
Kayo
RokuichiNakamoto Murakami
Ito

OutsideOutsideOutsideOutsideOutsideIndependent Independent Independent Independent Independent

Outside/Independent

✔

✔

✔

✔

Knowledge of theIndustry and Retail in
General

✔

✔

✔

✔

✔

Branding

✔

✔

✔

✔

✔

Product Planning/
Production andTechnology✔

✔

Marketing/CRM

✔

✔

✔

✔

International Experience/
Overseas Business✔

Financial Markets/M&A✔

Legal/Compliance✔

Finance/Tax/Accounting✔

OutsideOutsideIndependent Independent

✔
✔

✔
✔

✔

✔

EC/OMO

Atsushi
FukudaChairman of Audit &Supervisory Board

Member of the Nomination &Compensation Committee

Member of the Nomination &Compensation Committee

Corporate Management
Experience

Chairman of the Board of
Directors
Chairman of the Nomination& Compensation Committee

Committees, etc.

SomukuIimura

✔
✔

✔

✔

✔
✔
✔

✔

✔

✔

✔

✔

✔

* This skills matrix does not represent all of the knowledge, experience, and skills of the Directors and Audit & Supervisory Board
Members.

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