Basic Policy for the Internal Control System
Pursuant to the Companies Act and the Ordinance for Enforcement of the Companies Act, the company shalldetermine a basic policy on construction of an internal control system, as follows.
1. System to ensure that duties performed by our company’s directors and employees, as well as directors andemployees of subsidiaries, comply with laws, regulations, and the articles of incorporation(1) We has established the “Pigeon DNA” and “Pigeon Way” as the corporate philosophy that each and every
employee holds dear. The Pigeon DNA, which consists of the “Corporate Philosophy” and “Credo”, is thecore of Pigeon and into the future. The Pigeon Way consists of “Purpose,” “Values” and “Action Principles,”and it embodies our “heart and soul” and sets the grounds for our actions to stream from this core. We shalldetermine compliance-related regulations for the corporate ethics framework made up of our ethicalguidelines and Code of Conduct based on the corporate philosophy. The directors and employees of thePigeon Group shall strictly comply not only with the law but also the standards and spirit of the communitiesthey serve. We shall position the Pigeon Way as our standard for action with a strong ethical outlook.
(2) In order to appropriately and smoothly promote compliance throughout our group, the Risk Management
Committee, chaired by the Director of the Global Head Office (GHO), shall nominate a ComplianceManagement Department and a staff member in charge of the department. The Compliance Management
Department shall play the role of establishing and maintaining compliance-related rules and otherframeworks, as well as leading and promoting compliance awareness centering on compliance education.
In the event of a compliance-related incident or other problem, the Compliance Management Department
shall respond to the problem in cooperation with the Risk Management Committee and, depending on thenature and content of the case, may consult with external lawyers as appropriate.
(3) In an effort to ensure early detection of any wrongdoings, we shall establish a Speak Up office as an internalreporting system and a Pigeon Partners Line as a reporting system for our business partners. When
problems are detected inside or outside of the company, sufficient consideration shall be given to protection
for the reporting/consulting individual before investigating facts. Based on the results of the investigation,
the Risk Management Committee shall determine a department to be in charge of resolving the problem,
and together with that department, shall determine whether response or corrective measures are necessary
as well as the details thereof, and shall lead the implementation of such measures. Applicable contents
shall be reported to upper-level organizations (the Management Committee or the Board of Directors).
(4) Rejection of relationships with antisocial forces shall be specified in the Code of Conduct. In addition toconducting education and training, we shall develop and thoroughly implement an internal system forpractical applications, such as appointing staff in charge of preventing false claims.
2. Systems related to saving and managing information pertaining to the performance of duties by directors
Information pertaining to the performance of duties by directors shall be recorded and saved in written
documents or electronic format in accordance with the Rules for Document Control and Management,
Confidential Information Management Bylaws and Rules for IT Control and Management. These documents
and other formats shall always be available for review by directors and audit & supervisory board members.
3. Rules and other systems related to our company and subsidiaries’ risk management for losses(1) Based on Risk Management Regulations which systematically define our group’s risk management
response and under supervision of the President and Chief Executive Officer, a GHO Risk Management

Committee shall be established with the GHO Director as the Chairperson, the General Managers ofbusiness segments (Japan business, China business, Singapore business, Lansinoh business) and theBusiness Strategy Division Manager as the committee members. This committee shall collect, analyze,
and evaluate comprehensive risk information for the corporate group as a whole, with priority risk categories
shown in (2) as the core, which are aggregated from each business segment. The committee shall also
consider and implement countermeasures either independently or with business segments asintermediaries. In addition, each business shall establish a Risk Management Committee with its General
Manager as Chairperson, and these committees shall be overseen by the GHO Risk ManagementCommittee. All of these risk management committees shall collect, analyze, and evaluate risk information
related to the applicable business segments, including risk information related to the segments’ subsidiaries,and shall consider and implement countermeasures.
(2) Our group shall establish "compliance," "finance," "information security," "SCM (supply chainmanagement)," "customer complaint" and “human rights” as priority risk categories, and the GHO Risk
Management Committee and a department in charge of risk management nominated by the GHO Risk
Management Committee shall take the lead in managing and responding to risks, especially across theGroup.
(3) Auditing the status of risk management in each department and each subsidiary shall be performed throughcooperation with the Internal Auditing Department, the Corporate Strategy Department, the Accounting &Finance Department, the Legal Department, and the Human Resources & General Affairs Department.
(4) Risk Management Committee shall be quickly convened based on the Rules for Risk Management or thebusiness continuity plan (BCP) if a large-scale disaster or other risk to our group occurs. The Committee
shall work to minimize losses and promote recovery.
4. System for ensuring efficient performance of duties by directors(1) By formulating a Medium-Term Management Plan and management plans for each individual fiscal year,we shall clarify goals to be achieved by our company and steadily implement priority management items.
(2) The Board of Directors shall make management decisions rationally and efficiently, and our company shallappoint outside directors for the purpose of receiving advice regarding management strategies, making
objective decisions, and improving corporate governance. Moreover, our company shall practicemanagement that elicits lively opinions from internal and outside directors and audit & supervisory board
members, including issues presented by outside directors, and shall strengthen management andsupervisory functions for execution of business. Furthermore, through a delegated managing officer system
and a managing officer system, we shall seek mutual partnership between decision-making / management
and supervisory functions and execution of business and shall clarify the operating responsibilities ofdirectors.
(3) A Management Committee meeting with attendance from all standing directors and senior managing
officers shall be held approximately twice a month in order to strengthen and enhance the function of theBoard of Directors. Through this committee, the Board of Directors shall seek to quickly resolve issues
through expeditious execution of business and decision-making for important policies.
5. System for ensuring proper operation in our company and corporate groups composed of subsidiaries(1) Our company shall determine Rules for the Division of Duties and Authority and clarify the approval process
for the working scope of each post and operation, and directors and employees shall execute their duties
in accordance with the applicable regulations. In addition, matters for which subsidiaries request approval

from our company and which subsidiaries report to our company shall be determined in the Rules for Group
Company Management, and subsidiaries shall carry out their business after acquiring approvals from ourcompany and carrying out reporting to our company as necessary in accordance with the applicableregulations.
(2) The division managers shall confirm the state of execution of business by directors of the subsidiaries they
manage and shall report the performance of the subsidiaries and the execution of their business to ourcompany’s Board of Directors each quarter.
(3) In addition to periodically auditing the execution of business by directors of subsidiaries, audit & supervisoryboard members shall also cooperate with audit & supervisory board members at subsidiaries in order todevelop internal controls and monitor the operation of such controls. Audit & supervisory board members
at our company and subsidiaries shall hold audit & supervisory board liaison committee meetings asnecessary.
(4) The Internal Auditing Department shall audit the level of appropriateness and efficiency for the executionof business throughout our group.
(5) In order to ensure reliability and appropriateness in financial reporting, our company and group companies
shall comply with the Financial Instruments and Exchange Act. We shall strive to ensure a healthy internalcontrols environment, to strengthen control activities on a company-wide level, to construct an internal
controls system which is capable of effective and valid evaluation, and to operate this system appropriately.
6. Items pertaining to employee aids appointed upon request from an audit & supervisory board member anditems pertaining to independence of said employees from directors and the effectiveness of instructions fromaudit & supervisory board members
Aids shall be appointed upon request from audit & supervisory board members. When an aid is appointed,
the opinion of audit & supervisory board members shall be respected when making personnel decisions
related to the aid. Moreover, the audit & supervisory board members’ instructions to the aid shall be given
independently from directors and the aid shall engage in work based on instructions from audit &supervisory board members.
7. Systems for company directors and employees and subsidiary directors, audit & supervisory board members,
and employees to report to audit & supervisory board members and other systems for reporting to audit &supervisory board members(1) Directors and employees shall promptly report to audit & supervisory board members any item other thanlaws and regulations which will have a major impact on our company and our group, the status of internal
controls, and the status of reporting using the Speak Up office.
(2) In addition to meetings of the Board of Directors, audit & supervisory board members shall attend
Management Committee meetings and shall be permitted to provide opinions when requested or whennecessary regarding items being discussed.
(3) The Corporate Strategy Department shall notify audit & supervisory board members of the overview ofproceedings and results for each meeting of the Board of Directors and Management Committees.
(4) Our company’s directors and employees, subsidiary directors, audit & supervisory board members, andemployees of subsidiaries, or persons who have received reports from such parties may make reports
directly to audit & supervisory board members via the Speak Up office on matters that have a significant
effect on our corporate group, matters that cause significant damage to our corporate group, and importantcompliance matters. Individuals will not suffer in any way for making these reports.

(5) Our company shall promptly handle demands made by audit & supervisory board members or the audit &supervisory board for reasonable expenses or refunds incurred related to the performance of duties byaudit & supervisory board members.
8. Other systems for ensuring effective auditing by audit & supervisory board members
The individuals with high awareness of corporate activities such as finance and law shall be recruited as
outside audit & supervisory board members. The majority of these individuals shall be CPAs and lawyers.
In addition to enhancing the auditing environment of the audit & supervisory board members, outside audit& supervisory board members shall also make efforts to execute appropriate and effective auditing services
through cooperation with the Internal Auditing Department.
Established: May 22, 2006
Revised: April 28, 2008
Revised: January 26, 2009
Revised: February 22, 2010
Revised: February 21, 2011
Revised: February 20, 2012
Revised: April 26, 2012
Revised: February 25, 2013
Revised: March 3, 2014
Revised: February 23, 2015
Revised: May 1, 2015
Revised: March 7, 2016
Revised: March 6, 2017
Revised: March 5, 2018
Revised: March 4, 2019
Revised: December 2, 2019
Revised: December 13, 2022
Revised: February 14, 2023
Revised: May 14, 2024