Corporate Governance
Last updated: December 29, 2021

YOKOREI Co., Ltd.
President and Representative Director: Hiroyuki Matsubara
Contact: Yutaka Yoshida,
Corporate Officer & Public Relations
and IR Dept. General Manager
Securities code: 2874
The following outlines YOKOREI's commitment to corporate governance.

I.

Corporate Governance Philosophy, Capital Structure, Corporate Attributes, and Other Basic
Information

1. Basic philosophy
The YOKOREI Group seeks to fulfil the trust of diverse stakeholders, to realize sustainablegrowth, and to increase corporate value over the medium to long term. In addition to this, with theaim of achieving fair and highly transparent management, the Group endeavors to speed up
decision-making and strengthen checking functions to enhance corporate governance.
Our fundamental views on corporate governance are summarized on our website under the heading:
Basic Policy on Corporate Governance.

[Reason not to Enforce Each Principle of the Corporate Governance Code]Principle 2 Appropriate cooperation with stakeholders other than shareholders
Recognizing the importance of cooperating with all stakeholders, including shareholders, togenerate sustainable growth for the Company and raise medium- to-long term corporate value, wewill establish a management structure that makes it possible to respond to all changes in theeconomic and business environment by making the most of the business foundation we havecreated and abundant experience we have acquired. We have introduced various initiatives to fostera corporate culture and climate that respects the rights and positions of all stakeholders and soundbusiness ethics. In addition to formulating the YOKOREI's Environmental Policy and YOKOREI
Sustainability Vision 2030 concerning sustainability-related issues and building and promoting asystem for operations and planning integrated with management, we appropriately disclose related
initiatives. Recognizing that climate change–related risks and profit opportunities have aparticularly important impact on our business, we have expressed our agreement with the spirit of
the international disclose framework proposed by the Task Force on Climate-Related Financial
Disclosures (TCFD) and have just launched an examination of ways to reinforce disclosure throughthe TCFD or equivalent frameworks.
-1-

Principle 2.4.1 Ensuring diversity in mid-career hires
In regard to hiring, we value diversity and promote the recruiting of diverse human resources
regardless of gender, nationality, work experience, or other attributes. In YOKOREI Sustainability
Vision 2030, we set the goal of at least doubling the number of female managers compared to fiscal
2020 (3 female managers) by fiscal 2030 to support the active participation of women, but as ofnow, there are no measurable targets related to hiring non-Japanese or mid-career people. As of
September 30, 2021, of the 140 managers at YOKOREI, 3 were women, 0 were non-Japanese, and48 were mid-career hires (1 of which was a women).

Supplementary Principle 2.5.1

Establishing a whistleblower hotline independent from the

management team
Our internal whistleblowing system already in existence is effective at detecting risks at an earlydate and is functioning sufficiently well at promoting compliance; however, we would like tofurther strengthen this framework and are considering establishing an external whistleblower
hotline independent from management.

Supplementary Principle 3.1.3 Sustainability-related initiatives, etc.
We formulated YOKOREI Sustainability Vision 2030 with an eye toward 10 years from 2020 toraise our medium- to long-term corporate value and have set harmony with the global environment,
creating a rewarding workplace, providing better quality and service, developing together withlocal communities, and strengthening the business foundation and ensuring soundness as ourmateriality. In terms of creating a rewarding workplace, we will position human capital as the mostimportant element of our business foundation and implement related measures. As forstrengthening the business foundation and ensuring soundness, we actively work to improve ourbrand value, including intellectual property, as we reinforce corporate governance.
Recognizing that the impact of climate change–related risks and profit opportunities on ourbusiness is an important management issue, we have expressed our agreement with the spirit of theinternational disclose framework proposed by the Task Force on Climate-Related Financial
Disclosures (TCFD) and have just launched an examination of ways to conduct disclosure based on
the TCFD or equivalent frameworks.

Supplementary Principle 4.1.3

Oversight of a succession plan for the CEO and other top

executives
We recognize that it is a top priority to foster a management team able to steadfastly achieve ourbusiness strategies based on our business principles and with a focus on future developments. As
such, we plan to carry out discussions on our Nominating and Remuneration Advisory Committee-2-

(with more than one half of its members being independent outside directors) and we will deepen
debate regarding policies for fostering management and formulating a succession plan.

Supplementary Principle 4.2.2

Formulating basic policy on sustainability-related initiatives

We formulated YOKOREI Sustainability Vision 2030 with an eye toward 10 years from 2020 toraise medium- to long-term corporate value, have set harmony with the global environment,
creating a rewarding workplace, providing better quality and service, developing together withlocal communities, and strengthening the business foundation and ensuring soundness as ourmateriality, and strive to solve related issues. The Board of Directors effectively supervises the
allocation of business resources, including investments in human capital and intellectual property,
and will launch various initiatives, including an examination of the business portfolio.

Principle 4.11 Preconditions for ensuring the effectiveness of the Board of Directors and theBoard of Auditors
Our Board of Directors is composed of directors, 8 directors and 4 outside directors (Articles ofIncorporation limit the number of directors to no more than 15), and they are selected in such a waythat ensures a good overall balance in terms of knowledge, experience, and expertise related to the
Corporate Management Sector, Cold Logistics Business Sector, and Food Sales Business Sector,
and Customs Clearance Business Sector. We have also established a framework with officers incharge of overseas Group companies and have deemed our current composition to be diverse interms of gender, work experience, and age and robust in terms of size. YOKOREI does not use
internationality (nationality) as part of its criteria for appointment.

At present, no Board of Auditors members are certified public accountants or licensed tax
accountants; however, we deem all members to possess knowledge of finance, accounting, and law
from their prior professional experience and other career activities, and one appointed member
possesses sufficient knowledge of finance and accounting from experience with corporate financescreening at a financial institution. We conduct an anonymous survey of all directors in order toassess the overall effectiveness of the Board of Directors and, as a commitment to improving Board
functions, we strive to identify issues and make on-going improvements. We have confirmed that
our current Board of Directors is operating appropriately overall.

Supplementary Principle 5.2

Basic policy regarding business portfolio

One example of the organizational reform initiatives given in phase I of our medium-term
management plan is thoroughly managing our business portfolio, and we are currently examining
several issues related to the business portfolio, including basic policy, goals, and changes.
-3-[Disclosure Based on the Principles of the Corporate Governance Code]Principle 1.4

Cross-Shareholdings

We regularly carry out a detailed examination of whether the benefits and risks balance out the costof capital of our cross-shareholdings and the Board of Directors assesses the medium- to long-term
economic rationale and future outlook of cross-shareholdings. Based on this analysis, we graduallysell any holdings whose strategic significance has diminished. With respect to the exercise of
voting rights of shares held as cross-shareholdings, the Company formulates specific standards anddiscloses them, and makes decisions whether to approve or disapprove a proposal based on acomprehensive judgement of the relationship with the relevant company and whether such a
proposal will lead to sustainable growth for the Group and increase of its corporate value over the
medium to long term. This includes opposition to a proposal in cases where shareholder value will
be significantly undermined by such issues as serious concerns resulting from social scandal, legal
violations, organizational restructuring, and so forth.

Principle 1.7 Transactions with Related Parties
The Company will always obtain the approval of the Board of Directors when engaging incompeting transactions and conflict-of-interest transactions with the Company’s officers or withcorporate entities that are substantially controlled by the Company’s officers. The Company
discloses the key facts appropriately in accordance with the provision of laws and regulations when
it has engaged in such a transaction.
When engaging in transactions with its major shareholders, the Company obtains the approval of
the Board of Directors in accordance with laws and regulations to ensure that such transactions do
not harm the common interests of the Company and its shareholders, except when it is clear that theterms of transactions are the same as transactions in general.

Supplementary Principle 2.4.1

Ensuring diversity in mid-career hires

In regard to hiring, we value diversity and promote the recruiting of diverse human resources
regardless of gender, nationality, work experience, or other attributes. In YOKOREI Sustainability
Vision 2030, we set the goal of at least doubling the number of female managers compared to fiscal
2020 (3 female managers) by fiscal 2030 to support the active participation of women, but as ofnow, there are no measurable targets related to hiring non-Japanese or mid-career people. As of
September 30, 2021, of the 140 managers at YOKOREI, 3 were women, 0 were non-Japanese, and48 were mid-career hires (1 of which was a women).

Principle 2.6

Role of Corporate Pension Fund as Asset Owner

Given that the management of the corporate pension fund impacts on stable asset formation for-4-

employees as well as the Company’s financial position, the Company endeavors to assign and train
human resources with the necessary experience and qualities so that the organization with the
responsibility for managing the corporate pension fund can carry out the appropriate activities suchas monitoring investment institutions. Moreover, the Company has introduced a defined
contribution corporate pension plan as part of the welfare program and makes efforts to provide
information on asset management in addition to providing explanations when employees join the
Company. We are examining establishing a Corporate Pension Fund Management Working Groupto manage the plan.

Principle 3.1

Full disclosure(1) We disclose information detailing our corporate philosophy, corporate strategies (MediumTerm Management Plan), and the like on our website and in our securities reports, earnings
statements, and so on. Furthermore, we have formulated a Basic Policy on Corporate
Governance and have published it on our website.
(2) We aim to respond to the trust placed in us by a wide range of stakeholders and to realize
sustainable growth and raise medium- to long-term corporate value. We also aim to practicehighly transparent and fair management and we are always working to improve corporate
governance through swifter decision making and stronger oversight functions.
(3) Directors’ remuneration is approved by the Board of Directors, limited to the scope passed byresolution at the General Shareholders Meeting, and based on the results of discussions anddeliberations by the Nominating and Remuneration Advisory Committee (which has
independent outside directors comprising a majority of its members). Director compensation iscomprised of base compensation that is a fixed amount, performance-based compensation thatreflects business results for one fiscal year, and stock compensation that reflects medium- tolong-term business results. The rough ratios of each form of compensation, if performancetargets are met, are 60% base compensation, 20% performance-based compensation, and 20%
stock compensation. Outside director and corporate auditor compensation is only comprised ofbase compensation of a fixed amount.
(4) The appointment of top management and the nomination of director and auditor candidates isspearheaded by representative directors, who compile a list of candidates taking into accountknowledge and professional experience, as well as legally mandated qualifications. Finalapproval is made by the Board of Directors based on the results of discussions and deliberations
by the Nominating and Remuneration Advisory Committee (which has independent outside
directors comprising a majority of its members). If a member of top management is part of a-5-social scandal or has professionally violated a law or regulation, or the Company's Articles ofIncorporation, or has considerably damaged corporate value through professionally negligent
conduct, a framework is in place to ensure appropriate management, including dismissal upon
comprehensive review by the Board of Directors.
(5) Explanation regarding the appointment and dismissal of candidates for director and auditor areprovided in the “Reason for Appointing/Dismissing Directors and Auditors,” an attachment tothis report.
■ Mr. Toshio Yoshikawa (Chairman and Representative Director)
Since being appointed president and representative director in December 2003, Mr. Yoshikawa has
demonstrated leadership with clear foresight at the center of management, while striving to raise
corporate value for the Group as a whole and leading the management team in pushing the Group
forward. Mr. Yoshikawa is being nominated for director due to his abundant experience andknowledge being indispensable for improving the Group's sustainable corporate value.
■ Hiroyuki Matsubara (President and Representative Director)
With a track record as the Chief of the Corporate Management Sector and Chief of the Cold
Logistics Business Sector, Mr. Matsubara has greatly contributed to improving the Company's
corporate value through innovative vision and steadfast execution. Mr. Matsubara's experience andknowledge, in addition to his appropriate business management and operational supervision, aredeemed to have contributed to improving the Group's sustainable corporate value, and as such he isbeing nominated for director.
■ Yuji Inoue (Executive Vice President and Director)
As a managing director, Mr. Inoue has assisted the chairman and president since December 2015and has contributed to improving corporate value by, among other actions, leading the Company's
business expansion. Mr. Inoue is deemed, through his experience and knowledge, to be a valuable
resource capable of appropriately advising business management and supervising business
operations, and as such he is being nominated for director.
■ Koji Ochi (Managing Director)
Mr. Ochi has been appointed to management posts of Group companies and to key posts in various
sectors, while in the process contributing to the Company's development in a wide range of areas.
He possesses extensive knowledge of the company because of this diverse experience. Due to being
deemed capable of professionally pursuing business tasks, Mr. Ochi is being nominated for
director.
■ Naotaka Yoshikawa (Director)
After amassing professional experience in the Cold Logistics Business Sector, Mr. Yoshikawa was
appointed to various positions, including General Manager of the General Affairs and Human-6-

Resources Department and then the General Manager of the Overseas Business Department, andhas contributed to Company’s development in various ways, including promoting greater businessefficiency in the Food Sales Business Sector. Due to being deemed a valuable resource capable ofleveraging his diverse experience and professionally pursuing business tasks, Mr. Yoshikawa isbeing nominated for director.
■ Mikio Hanazawa (Director)
After amassing professional experience in accounting, Mr. Hanazawa has been appointed to key
posts, including Chief of the Corporate Management Sector and Chief of the Cold Logistics
Business Sector, while in the process contributing to the Company's development in a wide rangeof areas. Due to being deemed a valuable resource capable of leveraging his diverse experience andprofessionally pursuing business tasks, Mr. Hanazawa is being nominated for director.
■ Kenji Furuse (Director)
Mr. Furuse has developed detailed knowledge of overall operations through his many years ofprofessional experience in the Food Sales Business Sector. He has been appointed to key posts inthe same sector and has served as General Manager of the Internal Audit Department, and currently
contributes to the Company's development as the Chief of the Corporate Management Sector. Dueto being deemed a valuable resource capable of leveraging his experience and specialized expertise,
and also professionally pursuing business tasks, Mr. Furuse is being nominated for director.
■ Hiroshi Okada (Director)
Mr. Okada has developed detailed knowledge of overall operations through his many years ofprofessional experience in the Cold Logistics Business Sector. After serving in key posts in thesame sector, he was responsible for the Norway Business, and contributed to the Company's
development in the process. Due to being deemed a valuable resource capable of leveraging his
experience and specialized expertise, and also professionally pursuing business tasks, Mr. Okada isbeing nominated for director.
■ Mototsugu Sakai (Outside Director/Independent Officer)
Details given in section: II. 1. Matters related to institutional structure & organizational operations(2) Director relationships D. Relationships to the Company (2).
■ Yosuke Horiai (Outside Director/Independent Officer)
Details given in section: II. 1. Matters related to institutional structure & organizational operations(2) Director relationships D. Relationships to the Company (2).
■ Mitsuhiro Honda (Outside Director/Independent Officer)
Details given in section: II. 1. Matters related to institutional structure & organizational operations(2) Director relationships D. Relationships to the Company (2).
■ Yoriko Sakamoto (Outside Director/Independent Officer)
Details given in section: II. 1. Matters related to institutional structure & organizational operations-7-

(2) Director relationships D. Relationships to the Company (2).
■ Keizou Inoue (Outside Auditor/Independent Officer)
Details given in section: II. 1. Matters related to institutional structure & organizational operations(2) Director relationships D. Relationships to the Company (2).
■ Shuzo Hayashi (Outside Auditor)
Details given in section: II. 1. Matters related to institutional structure & organizational operations(2) Director relationships D. Relationships to the Company (2).
■ Eizo Tanahashi (Outside Auditor/Independent Officer)
Details given in section: II. 1. Matters related to institutional structure & organizational operations(2) Director relationships D. Relationships to the Company (2).
■ Hisao Munakata (Outside Auditor/Independent Officer)
Details given in section: II. 1. Matters related to institutional structure & organizational operations(2) Director relationships D. Relationships to the Company (2).

Supplementary Principle 3.1.3 Sustainability-related initiatives, etc.
We formulated YOKOREI Sustainability Vision 2030 with an eye toward 10 years from 2020 toraise medium- to long-term corporate value and have set harmony with the global environment,
creating a rewarding workplace, providing better quality and service, developing together withlocal communities, and strengthening the business foundation and ensuring soundness as ourmateriality. In terms of creating a rewarding workplace, we will position human capital as animportant element of our business foundation and implement related measures. As forstrengthening the business foundation and ensuring soundness, we actively work to improve ourbrand value, including intellectual property, as we reinforce corporate governance. Recognizingthat the impact of climate change–related risks and profit opportunities on business is an importantmanagement issue, we have expressed our agreement with the spirit of the international disclose
framework proposed by the Task Force on Climate-Related Financial Disclosures (TCFD) and havejust launched an examination of ways to conduct disclosure based on the TCFD or equivalentframeworks.

Supplementary Principle 4.1.1

Roles and Responsibilities of the Board of Directors (1)The Board of Directors shall make decisions on material matters stipulated in its Bylaws, inaddition to matters stipulated in laws and regulations and the Company's Articles of Incorporation.
Authority for decisions on other matters shall be delegated according to organizational rules
prescribed by the Board of Directors and the Rules for the Division of Duties & Administrative
Authority.

-8-Principle 4.9

Independence Standards and Qualifications for Independent Outside Directors

Based on the Tokyo Stock Exchange's criteria for independence, we have stipulated Standards for
Outside Director and Outside Auditor Independence, and we select candidates who meet thesestandards.

Supplementary Principle 4.10.1 Appropriate participation and advice by independent outside
directors through an independent Nominating and Remuneration Committee
We make decisions regarding the nomination and renumeration of managers and directors
following deliberations by the Nominating and Remuneration Advisory Committee, more than halfof whose members are independent outside directors, in order to follow proper procedures that are
fair and highly transparent.

Supplementary Principle 4.11.1

Philosophy regarding the diversity of the directors, etc.

Our Board of Directors appoints directors, 8 of whom are directors and 4 of whom are outside
directors, in such a way that ensures a good overall balance in terms of knowledge, experience, andexpertise related to the Corporate Management Sector, Cold Logistics Business Sector, Food Sales
Business Sector, and Customs Clearance Business Sector. We have also established a frameworkwith officers in charge of overseas Group companies and have deemed our current composition to
be diverse in terms of work experience and age and robust in terms of size, which is shown in theskill matrix. YOKOREI Group does not use gender as part of its criteria for appointment. Whenappointing directors, our representative directors select candidates who maintain a balance between
excellent character, knowledge, experience, and expertise in such a way that will contribute toimproving the Company's sustainable growth and corporate value. Appointments are finalized by
the Board of Directors after deliberation by a voluntary advisory committee on nominating andremuneration (with a majority of their members being independent outside directors). With regard
to dismissal, if a director has violated a law or regulation, or the Company's Articles ofIncorporation, or if a director has considerably damaged corporate value through, for example,
professionally negligent conduct, similar procedures as those for appointment are followed anddismissals are finalized by the Board of Directors after deliberation by an advisory committee on
nominating and remuneration.

Supplementary Principle 4.11.2

Concurrent service of directors and auditors

When directors or auditors of the Company serve concurrently as officers or auditors of companies
other than our Company, we limit the scope of said concurrent service so that they canappropriately fulfill their duty of diligence and duty of loyalty. Additionally, we disclose material
facts of concurrent service every year in our notification of the Annual General Meeting of-9-

Shareholders and our securities reports.

Supplementary Principle 4.11.3

Evaluation of the effectiveness of the Board of Directors

We conduct an anonymous survey of all directors in order to assess the overall effectiveness of theBoard of Directors and, as a commitment to improving Board functions, we strive to identify issues
and make on-going improvements. While we have confirmed the effectiveness of our current Boardof Directors and are confident that it is operating appropriately overall, we will strive to distribute
important reference material as quickly as possible and ensure more active discussions from broad
points of view.

Supplementary Principle 4.14.2

Policy on Training for Directors and Auditors

The Company provides newly appointed Directors with opportunities to acquire the necessary
information and knowledge on laws and regulations, management strategy, and finance required forappointment as well as providing ongoing training needed in order to fulfil their roles andresponsibilities. The Company gives newly appointed Auditors and Outside Directors an overview
of the Group’s business and carries out site visits, providing opportunities to deepen theirunderstanding of the Group’s business.

Principle 5.1

Policy for constructive dialogue with shareholders

Through constructive dialogue with shareholders, the Company endeavors to contribute tosustainable growth and an increase in corporate value over the medium to long term. The Company
has established the Public Relations and IR Department as a dedicated IR unit, and management
executives and the Directors engage in dialogue with shareholders to the extent it is reasonable. The
Company holds financial results briefings regularly (twice a year) and actively engages in investor
meetings, facility tours, and interviews. In addition, by strengthening the collaboration of related
departments through the officer with responsibility for the IR unit, the Company works to identify
the actual composition of shareholders and to establish and operate rules on the prevention of
insider trading.

2. Capital structure
Foreign shareholding ratio

10% or more but less than 20%[Major Shareholders]Name

Number of shares held

Ratio (%)

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

5,275,800

8.93

Matsuoka Co., Ltd.

2,551,600

4.32- 10 -

The Dai-ichi Life Insurance Company, Limited

2,205,720

3.73

The Bank of Yokohama, Ltd.

2,176,955

3.68

The Norinchukin Bank

1,473,419

2.49

Hacchoko Co., Ltd

1,411,870

2.39

YOKOREI Employee Shareholding Association

1,192,140

2.01

SAKATA SEED CORPORATION

1,022,000

1.73

DFA INTL SMALL CAP VALUE PORTFOLIO

1,014,700

1.71

892,000

1.51

YOKOHAMA SHINKO CO., LTD.

Majority shareholders (excluding parent company)-----

Parent company

None

Supplementary explanation------ 11 -

3. Corporate attributes
Stock exchange listing and section

Tokyo Stock Exchange, First Section

Fiscal year end

September

Industry sector

Wholesale Trade

Number of employees at end of previous fiscal

Over 1,000

year (consolidated)
Net sales in the previous fiscal year

Between ¥100 billion and ¥1 trillion(consolidated)
Number of consolidated subsidiaries at end ofLess than 10

previous fiscal year

4. Guidelines on measures to protect minority shareholders during dealings with majority shareholders-----

5. Other special circumstances that may have a material impact on corporate governance------ 12 -

II. Administrative Organizational Structure Covering Decision-Making, Execution, andSupervision in Management Activities, and Other Corporate Governance Systems
1. Matters related to institutional structure and organizational operations
Organizational form

Company with company auditor(s)[Matters Related to Directors]
Number of directors under the Articles of Incorporation

15

Term of service of directors under the Articles of Incorporation

2 years

Chairperson of the Board of Directors

Company president

Number of directors

12

Appointment of outside directors

Appointed

Number of outside directors

4

Number of outside directors designated as independent officers

4

Relationships to the Company (1)Relationship to the Company*
Name

AffiliationaMototsugu Sakai

From another company

Yosuke Horiai

Certified public accountant

Mitsuhiro Honda

Academic

Yoriko Sakamoto

Attorney

b

c

d

e

f

g

h

i

j

k

△

*Categories of "relationships to the Company"*A ○ icon indicates a category applicable to said person currently or recently. A △ icon indicates a
category applicable to said person in the past.
*A ● icon indicates a category applicable to a close family member currently or recently. A ▲ icon
indicates a category applicable to a close family member in the past.

a

Executive of a listed company or its subsidiaryb

Executive or non-executive director of the parent company of a listed companyc

Executive of a sister company of a listed companydA party whose major client or supplier is a listed company or an executive thereofeMajor client or supplier of a listed company or an executive thereoffConsultant, accounting expert, or legal expert receiving a large monetary sum or other property,
other than corporate officer remuneration, from a listed companyg

Major shareholder of a listed company (or an executive thereof, if the major shareholder is a
- 13 -

corporation)hExecutive (said person only) of a client or supplier (not covered by items d, e, and f) of a listedcompanyi

Executive (said person only) of an entity with a mutual appointment of an outside directorjExecutive (said person only) of an entity to whom a listed company makes donationsk

Other relationship

Relationships to the Company (2)Name

Independent
officer

Supplementary
explanation
related toapplicable
items

Reason for selection

Mr. Sakai is from ZEN-NOH (the National
Federation of Agricultural Cooperative
Associations). He possesses a wealth of experienceand wide-ranging expertise from his career in key
positions at ZEN-NOH and he provides the Board of
Directors with valuable opinions and advice on all
Mototsugu〇----

aspects of business management. We deem that he

Sakai
will continue to provide valuable input for theoverall management of the Company and,accordingly, have appointed him outside director.
Furthermore, Mr. Sakai meets the Company'sprescribed standards of independence for outside
directors.
As a certified public accountant, Mr. Horiai
possesses abundant experience and considerable
knowledge of corporate finance. We deem that,from this wealth of experience and expertise, he will
YosukeHoriai〇----provide the Board of Directors with valuable
opinions and advice on all aspects of business
management and, accordingly, have appointed him
outside director. Furthermore, Mr. Horiai meets theCompany's prescribed standards of independence foroutside directors.
- 14 -

Mr. Honda has held various important taxationrelated positions at the National Tax Agency and iscurrently active in various capacities, including as aprofessor at the University of Tsukuba Graduate
School. Because of his abundant experience, we
Mitsuhiro〇----

deem that Mr. Honda will provide the Board of

Honda
Directors with valuable opinions and advice on all
aspects of business management and, accordingly,
have appointed him outside director. Furthermore,
Mr. Honda meets the Company's prescribedstandards of independence for outside directors.
Because of her abundant experience as an educatorand extensive knowledge and experience as an
attorney, we deem that Ms. Sakamoto will provide
the Board of Directors with valuable opinions andYoriko〇----advice on all aspects of business management from

Sakamotovarious perspectives. and, accordingly, haveappointed her outside director. Furthermore, Ms.
Sakamoto meets the Company's prescribedstandards of independence for outside directors.

Voluntary establishment of committees equivalent toEstablished

Nominating Committee or Remuneration Committee

Establishment of voluntary committees and their member composition and chairperson attributes
Voluntary committee
equivalent to Nominating
Committee
Nominating and Remuneration
Advisory Committee

Voluntary committee
equivalent to Remuneration
Committee
Nominating and Remuneration
Advisory Committee

Total members

66

Full-time members

22Internal directors

22

Outside directors

44Outside experts

00

Other members

00Committee name- 15 -

Chairperson

Outside directors

Outside directors

Supplementary explanation

We have established a Nominating and Remuneration Advisory Committee, which has independent
outside directors comprising a majority of its members, as an advisory body to the Board of
Directors for the purpose of strengthening the Board’s supervisory functions and accountability,
while also enhancing its discussions. This committee deliberates on matters related to thenomination and dismissal of directors, as well as matters of remuneration, and reports those results
to the Board of Directors, thereby ensuring equitable, transparent, and objective proceedings by the
Board with regard to nominations, remuneration, and the like.

[Matters Related to Auditors]
Establishment of a Board of Auditors

Established

Number of auditors under the Articles of Incorporation

4

Number of auditors

4

Coordination between Auditors, Accounting Auditors, and the Internal Auditing Department

The auditors regularly meet with certified public accountants carrying out accounting audit tasks
and exchange information and opinions on audit plans and audit results, while coordinating inperson for some of the audits by certified public accountants. In addition, they receive review
reports from accounting audit firms at the time of quarterly earnings reports and they check any
material issues that exist.
Also, our Internal Audit Department, which is a dedicated office independent from businessexecution tasks, takes charge of internal audits. Auditors work with the Internal Audit Department
on an on-going basis to exchange information on audit plans, audit results, and the like. Whilemaintaining a close relationship, they strive to facilitate the implementation of highly efficient andeffective audits.

Appointment of outside auditors

Appointed

Number of outside auditors

4

Number of outside auditors designated as3

independent officers- 16 -

Relationships to the Company (1)Relationship to the Company*
Name

Affiliationa

Keizou Inoue

From another company

Shuzo Hayashi

From another company

Eizo Tanahashi

Attorney

Hisao Munakata

Other

b

c

d

e

f

g

h

i

j

k

l

m

△
△

*Categories of “relationships to the Company”*A ○ icon indicates a category applicable to said person currently or recently. A △ icon indicates a
category applicable to said person in the past.
*A ● icon indicates a category applicable to a close family member currently or recently. A ▲ icon
indicates a category applicable to a close family member in the past.

a

Executive of a listed company or its subsidiarybNon-executive director or accounting advisor of a listed company or its subsidiaryc

Executive or non-executive director of the parent company of a listed companydCorporate auditor of the parent company of a listed company

eExecutive of a sister company of a listed companyf

A party whose major client or supplier is a listed company or an executive thereofgMajor client or supplier of a listed company or an executive thereofhConsultant, accounting expert, or legal expert receiving a large monetary sum or other property,
other than corporate officer remuneration, from a listed companyi

Major shareholder of a listed company (or an executive thereof, if the major shareholder is a
corporation)j

Executive (said person only) of a client or supplier (not covered by items f, g, and h) of a listedcompanyk

Executive (said person only) of an entity with a mutual appointment of an outside directorlExecutive (said person only) of an entity to whom a listed company makes donationsmOther relationship- 17 -

Relationships to the Company (2)Name

Independent
officer

Supplementary
explanation
related toapplicable
items

Reason for selection

We are appointing Mr. Inoue outside

Keizou Inoue〇

Mr. Inoue iscorporate auditor because we deem himfrom ZEN-

capable of appropriately auditing theNOH (thebusiness execution of directors due to his

National

wealth of experience and knowledge from his

Federation ofcareer in key positions at ZEN-NOH and his

Agricultural

later involvement in corporate management

Cooperative

and audits. Furthermore, Mr. Inoue meets the

Associations).

Company’s prescribed standards of
independence for outside directors.
We are appointing Mr. Hayashi outside
corporate auditor because we deem him

Mr. Hayashi iscapable of appropriately auditing thefrom Thebusiness execution of directors due to his

Norinchukin

wealth of experience and knowledge from his

Bank.

considerable professional work involved with

Shuzo Hayashi

business, finance, and accounting at The
Norinchukin Bank.
We are appointing Mr. Tanahashi outside
corporate auditor because we deem him
capable of appropriately auditing thebusiness execution of directors due to his
Eizo Tanahashi〇

wealth of experience and knowledge from his----

considerable professional experience and his
work involved with corporate law as an
attorney. Furthermore, Mr. Tanahashi meets
the Company’s prescribed standards of
independence for outside directors.
Hisao Munakata〇

We are appointing Mr. Munakata outside----

corporate auditor because we deem him- 18 -

capable of adequately auditing the businessexecution of directors due to his wealth ofexperience and knowledge of crisis
management and his career in key positions
at the Defense Agency (now the Ministry of
Defense), including Vice Chief of Staff andInspector General of the North Eastern Armyin the Ground Self-Defense Force.
Furthermore, Mr. Munakata meets theCompany’s prescribed standards of
independence for outside directors.

[Matters Related to Independent Officers]
Number of independent officers

7

Other details concerning independent officers

Mototsugu Sakai, Yosuke Horiai, Mitsuhiro Honda, and Yoriko Sakamoto were appointed at the74th General Shareholders Meeting. All four individuals are independent officers in their capacities
as outside directors. Mototsugu Sakai possesses abundant experience and broad knowledge, having
held keys positions at ZEN-NOH (the National Federation of Agricultural Cooperative
Associations), and we deem that he can provide valuable opinions on all aspects of business
management. Yosuke Horiai possesses abundant experience as a certified public accountant and his
considerable knowledge related to corporate finance, and because of his extensive experience andknowledge, we deem that he can provide the Board of Directors with valuable opinions and advice
on all aspects of business management. Mitsuhiro Honda has held various important taxationrelated positions at the National Tax Agency and is currently active in various capacities, including
as a professor at the University of Tsukuba Graduate School. Because of his abundant experience,
we deem that he can provide the Board of Directors with valuable opinions and advice on all
aspects of business management. Because of her abundant experience as an educator and extensive
knowledge and experience as an attorney, we deem that Yoriko Sakamoto can provide the Board of
Directors with valuable opinions and advice on all aspects of business management from various
perspectives.

- 19 -

Independent officers Keizou Inoue, Eizo Tanahashi, and Hisao Munakata were appointed outside
directors at the 73rd General Shareholders Meeting. From his experience with corporate
management and auditing, we deem Keizou Inoue capable of providing advice to our management
team and fulfilling supervisory functions with regard to business execution. We deem Eizo
Tanahashi capable of utilizing his specialized knowledge and experience as an attorney to support
our auditing systems. Hisao Munakata has had a career in key positions at the Defense Agency(now the Ministry of Defense), including Vice Chief of Staff and Inspector General of the North
Eastern Army in the Ground Self-Defense Force. We deem him capable of utilizing his wealth ofexperience and knowledge of crisis management to support our auditing systems.

[Incentive-related Matters]
Implementation of measures to provide incentives to directors

Introduced stock
option plan and other

Supplementary explanation of this item

We approved the introduction of a stock compensation scheme at the December 19, 2014 General
Shareholders Meeting in order to more clearly elucidate the link between director compensation
and Company share price, while also increasing directors’ incentive to achieve stronger operating
results and to boost their level of awareness toward share price increases.

Stock option recipientsInternal Director

Supplementary explanation of this item
A restricted stock compensation plan for internal directors was introduced in line with a proposal
adopted at the 72nd General Shareholders Meeting held on December 20, 2019.

[Matters Related to Director Compensation]
Disclosure of individual director compensation

We do not disclose individual compensation.

Supplementary explanation of this item

Director compensation detailed in the 74th term (the fiscal year ended September 30, 2021)
securities report is as follows.
Recipients:
8 (excluding outside directors), Amount: 188 million yen (base compensation: 107 million yen,
- 20 -

bonus: 27 million yen, stock compensation: 54 million yen)
3 outside directors, Amount: 17 million yen (base compensation: 17 million yen)

Policy for determining compensation amounts and calculation methods

Yes

Disclosure of policy for determining compensation amounts and calculation methods

Directors’ remuneration is determined by the Board of Directors, limited to the scope passed byresolution at the General Shareholders Meeting, and based on the results of discussions anddeliberations by the Nominating and Remuneration Advisory Committee (which has independent
outside directors comprising a majority of its members). Director compensation is comprised ofbase compensation that is a fixed amount, performance-based compensation that reflects businessresults for one fiscal year, and restricted stock compensation that reflects medium- to long-termbusiness results. The rough ratios of each form of compensation, if performance targets are met, are
60% base compensation, 20% performance-based compensation, and 20% restricted stockcompensation. Outside director and corporate auditor compensation are only comprised of basecompensation of a fixed amount.

[Support System for Outside Directors (Outside Auditors)]
With regard to the Board of Directors agenda and relevant materials, the General Affairs
Department provides advance copies and communicates necessary information to outside directors(outside auditors). Additionally, the Company assigns employees to assist with the duties ofauditors.

[Former Representative Directors/Presidents]
Former representative directors/presidents in advisory/consulting positions

Name

Job
title/position

Responsibilities

Employment terms (full-time,
part-time, with/withoutcompensation, etc.)

Date retired
from said
position

Term

-

-

-

-

-

-

Total no. of former representative directors/presidents inadvisory/consulting positions

Other Matters---- 21 -02. Matters on Functions Related to Business Execution, Auditing and Supervision, Nominations, andRemuneration Decisions (Overview of Current Corporate Governance System)
1. Board of Directors
The Company’s Board of Directors consists of 12 members (four of whom, Mototsugu Sakai,
Yosuke Horiai, Mitsuhiro Honda, and Yoriko Sakamoto, are independent outside directors) and, in
addition to making decisions on important management issues and executing business tasks, theBoard strives for mutual supervision among directors and thorough compliance. In principle, theBoard meets once a month. Additionally, corporate officers are called to attend and contribute theiropinions to Board meetings as necessary, while the Board endeavors to achieve dynamic
management able to engage in swift and accurate decision making.
2. Executive Management Committee
The Executive Management Committee is comprised of the Chairman and Representative Director,
the President and Representative Director, the Executive Vice President and Director, Managing
Director, and the Chief of each Sector. The committee reviews matters referred to the Board andreports on transitional matters for important business execution, as well as the management ofsubsidiaries. In principle, the committee meets twice a month.
3. Auditors and the Board of Auditors
The Company has adopted a corporate auditor system that consists of four outside auditors (two ofwhom are part-time auditors). As noted in the section Reasons for Appointing These Outside
Auditors, all of the Company’s outside auditors possess broad experience and knowledge offinance, accounting, law, and crisis management, and their independence from the management
team is ensured, while three auditors (Keizou Inoue, Eizo Tanahashi, and Hisao Munakata) are
independent officers. Auditors visit business sites to conduct on-site audits following the audit
policy and audit plan, while also auditing directors’ execution of duties by attending Board of
Directors meetings. Auditors, the Internal Audit Department, and accounting auditors exchange
information on the results of audits and other matters and maintain a close relationship as they
strive to facilitate the implementation of highly efficient and effective audits.
4. Status of accounting audits
The Company has signed an auditing agreement with Deloitte Touche Tohmatsu LLC to receive
audits from an independent and unbiased point of view. The certified public accountants who haveaudited the Company are Konosuke Misawa, a designated limited liability partner and managing
partner auditing us for the third consecutive year, Takaya Otake, a designated limited liability
partner and managing partner auditing us for the sixth consecutive year, as well as seven certified
public accountants assisting with the audit, in addition to ten other personnel.
- 22 -

5. Nominating and Remuneration Advisory Committee
We have established a Nominating and Remuneration Advisory Committee, which has independent
outside directors comprising a majority of its members, as an advisory body to the Board of
Directors for the purpose of strengthening the Board’s supervisory functions and accountability,
while also enhancing its discussions. This committee deliberates on matters related to thenomination and dismissal of directors, as well as matters of remuneration, and reports those results
to the Board of Directors, thereby ensuring equitable, transparent, and objective proceedings by the
Board with regard to nominations, remuneration, and the like.

3. Reason for adopting present system of corporate governance
The Company has adopted a corporate auditor system. Of the four auditors, all four are outside
auditors (three of whom are independent officers) who possess the requisite knowledge andpractical experience for performing the professional tasks of a corporate auditor. Furthermore, by
making 4 of the 12 directors outside directors, we strive to incorporate diverse perspectives in ourmanagement as we work to strengthen reciprocal management supervisory functions among
directors. With this structure, we judge that we are able to ensure proper corporate management andtherefore have selected this current system.

- 23 -

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Efforts to boost participation in General Shareholders Meetings and to facilitate the exercise of
voting rights
Supplementary explanation
Early notification of General

Early notification is sent before General Shareholders Meetings

Shareholders Meetings(notification of the 74th General Shareholders Meeting was sent
22 days before the day of convocation)

Scheduling meetings to avoid

We take the schedules of other companies’ General Shareholders

peak meeting days

Meetings into account and endeavor to avoid scheduling our
event during the peak meeting days in Japan.

Electronic exercise of voting

We have adopted a system for exercising voting rights over therightsinternet.

Participating in a platform for

We participate in a platform for electronically exercising voting

electronically exercisingrights.

voting rights and otherinitiatives to improve theenvironment for exercising
voting rights among
institutional investors
Providing an English version

We provide an English version of the General Shareholdersof the General Shareholders

Meeting notification.

Meeting Notifications(Summary)
Other

We post General Shareholders Meeting notifications, business
reports (in video format), video of shareholders meetings, and theresults of shareholder votes on our website.

2. Investor relations activities
Supplementary explanation

Explanations by
the representative
himself/herself

Creation andannouncement
We post our Disclosure Policy on the Company website.
of Disclosure
PolicyRegularFinancial results briefings are held twice a year: after theinvestor

announcement of the second quarter financial results andAvailable- 24 -

briefings forafter the annual financial results. Additionally, whenanalysts andformulating Medium-Term Management Plans, we explain

institutional

the content of those plans at the time of financial results

investors

briefings.
Company IR website URL(Japanese) https://www.yokorei.co.jp/ir/(English) https://www.yokorei.co.jp/en/ir/
・ Management policies (message from top management,
Long-Term Vision and Medium-Term Management Plan,risk management initiatives, etc.)
・ Get to know YOKOREI (easy-to-understand explanationsof our business activities)

Posting of IR

・ Information (policies for dividends and shareholder
returns, FAQs, etc.) for individual investors

materials on
website・ Information (integrated reports, etc.) for institutional
investors
・ Financial highlights, IR library (earnings statements,
securities reports, financial briefing materials, etc.)
・ Stock and bond information (dividends, shareholder
incentives, General Shareholders Meetings, ratings
information, etc.)
・ Others: we disclose a variety of other information,
including our IR calendar.

Establishment

・ Department in charge: an IR manager is positioned in the
Public Relations and IR Dept.

of an IR
department

・ Director in charge: Executive Vice President and Director(manager)

3. Initiatives for respecting the position of stakeholders
Supplementary explanation
Guidelines (internal

A code of conduct for the YOKOREI Group is stipulated in our

regulations, etc.) for

Basic Policy for Compliance and in our Compliance Manual.

respecting the position of
stakeholders
Implementation of[Initiatives for the SDGs & Sustainability]

environmental protection

・ Coexisting with local communities (reducing GHG by adopting- 25 -

activities, CSR activities,

solar power generation systems and CFC-free naturaletc.

refrigerants, acquiring Green Management Certification,
Aquaculture Stewardship Council (ASC) certification, and Chainof Custody (CoC) certification.
・ Creating workplaces with a sense of fulfillment (using IT to savelabor and work hours; diversity promotion)
・ Providing higher quality and better services
・ Developing alongside local communities (establishing a programfor donating 1% of net income and sending it to social welfare
groups and others)
・ Ensuring a strong and healthy business foundation

Formulation of policies on

Our basic policy is to disclose material information on our

the provision of information

Company to shareholders, investors, and other stakeholders in ato stakeholders

timely, unbiased, and fair manner.

- 26 -

IV. Matters Related to our Internal Control System

1. Basic philosophy on and establishment of an internal control system
1. Systems for ensuring compliance with laws and regulations and the Company’s Articles ofIncorporation in the execution of duties by Directors and employees(1) The Company has established the Basic Policy on Compliance and the Compliance Manual(Code of Conduct) indicating the general principles that form the standards of conduct,
decisions, and evaluation for officers and employees, and has ensured that all officers and all
employees are well aware of it.
(2) In accordance with the Compliance Management Regulations, the Corporate Management
Headquarters conducts integrated compliance-related management to develop, promote, andmanage compliance systems.
(3) The Company has established the YOKOREI Group Whistleblowing and Consultation
Helpdesk in the General Affairs Department as the internal reporting system for legal
violations and other compliance-related facts, which it works to prevent. Based on the
Whistleblowing Process Rules, the Company also protects providers of information, which
includes not engaging in unfavorable treatment.
(4) The Company has established the Internal Audit Department under the direct supervision of
the President and Representative Director, and it conducts systematic internal audits, which
include the state of compliance, based on an annual plan.
(5) Matters related to the execution of important corporate business are determined by the regularmeetings of the Board of Directors held once a month and by extraordinary meetings of theBoard of Directors. The Board of Directors also oversees the execution of duties by the
Directors.
(6) The Auditors report their opinions to the Board of Directors as necessary and also advise on
improvements to the execution of duties by the Directors as necessary.
(7) The Company has no relationship of any kind with anti-social forces and the entire
organization will continue its firm stance against interference and other actions by anti-social
forces.
2. System regarding the retention and management of information relating to the execution ofduties by Directors(1) The President and Representative Director has appointed the Chief of the Corporate
Management Sector as the person responsible for the company-wide supervision of retention
and management of information relating to the execution of duties by Directors.
(2) The Company has established the Management Rules for Documents Relating to the
Execution of Duties by Directors for the retention and management of information relating to- 27 -

the execution of duties by Directors. Information is recorded on documents or electromagnetic
media, retained and managed based on the rules.
(3) The Directors and Auditors may view these documents at any time.
3. Rules and other systems related to managing the risk of loss
(1) The Company has ensured that all officers and all employees are well aware of the Basic
Policy on Risk Management, which stipulates the basic objectives and action guidelines forrisk management activities.
(2) The Board of Directors has established the Risk Management Rules to set out the relevant
departments and the emergency response for each type of risk for the priority management
risks.
(3) The Corporate Management Headquarters develops and operates the company-wide risk
management system, and will continue the comprehensive and integrated management ofGroup-wide risk.
(4) Auditors and the Internal Audit Department audit the effectiveness and appropriateness of risk
management in each department.
4. Systems for ensuring the appropriateness of financial reporting(1) In order to ensure the appropriateness of the Group’s financial reporting, the Company
develops and operates internal controls and evaluates their effectiveness in accordance with
the Internal Control Rules and the Basic Policy on the Development, Operation, andEvaluation of Internal Controls.
(2) Led by the development and operation team of the Internal Control Committee, the Company
will endeavor to develop and operate the systems required to ensure the appropriateness of theGroup’s financial reporting.
5. Systems for ensuring the efficient execution of duties by Directors(1) Authority and responsibility are clearly specified based on the rules regarding the division ofduties and authority so that the Directors execute duties efficiently.
(2) A review of performance and execution of operations is carried out at the meetings of theBoard of Directors that are held every month with the aim of efficient implementation ofoperations by assessing the achievement of management targets and issues.
(3) In order to strengthen the supervisory function and accountability of the Board of Directors aswell as enhance its deliberations, the Company has established the Nomination andRemuneration Advisory Committee, which has independent Outside Directors as a majority ofthe members, as an advisory body to the Board of Directors. The committee reports the detailsof deliberations on matters related to the appointment, dismissal and remuneration of Directors- 28 -

to the Board of Directors to ensure fairness, transparency, and objectivity in the procedures
related to the nomination and remuneration of Directors.
(4) Important decisions on management targets and matters with a serious impact are submitted to
the Board of Directors after full discussion and consideration at Management meetings inorder to expedite and streamline decision-making.
6. Systems for ensuring the proper operation of the corporate group composed of the Company
and its subsidiaries(1) System for reporting matters related to the execution of duties of Directors of subsidiaries to
the Company
a. In order to accurately understand the details of management at subsidiaries, the Company
sets out the matters to be discussed and reported to the Company in advance and manages
them appropriately based on the Affiliated Company Management Rules and the Detailed
Rules for the Operation of Subsidiaries based on them established by the Company.
b. The regular meetings of the Company’s Board of Directors and Management meetings
regularly receive reports on execution of operations, financial position, and other important
information from the Representative Directors and other officers of subsidiaries.
(2) Rules and other systems for managing the risk of loss at subsidiaries
a. Based on the Company’s Risk Management Rules, each subsidiary appoints a person withresponsibility for risk management and makes efforts to prevent and detect risk.
b. The Company stipulates that each subsidiary will report promptly to the Company’s Risk
Management Committee if a risk of loss is identified and has established a risk management
system for the comprehensive and integrated management of Group-wide risk.
(3) Systems for ensuring the efficient execution of duties by Directors of subsidiaries
a. The Company formulates fiscal year plans and medium-term management plans for theGroup in order to implement appropriate and efficient operations, taking into consideration
the business characteristics, size, and other features of subsidiaries.
b. The Chief of the Company’s Corporate Management Sector, who is the person withresponsibility for the management of subsidiaries, receives timely reports on important
decisions related to business activities and matters with a serious impact from theRepresentative Directors and other officers of subsidiaries, considers the content, and, whennecessary, gives advice and reports to the Board of Directors.
(4) Systems for ensuring compliance with laws and regulations and the Articles of Incorporationin the execution of duties by Directors and employees of subsidiaries.
a. Based on the Detailed Rules for the Operation of Subsidiaries, each subsidiary ensures that
all officers and all employees are well aware of the Company’s Basic Policy on Compliance- 29 -

and the Compliance Manual (Code of Conduct).
b. Based on the Company’s Compliance Management Rules, each subsidiary appoints a person
who is responsible for compliance to promote compliance and provide education andguidance.
c. The Company’s Internal Audit Department regularly conducts audits of subsidiaries, which
include the state of compliance.
7. Matters relating to employees when the Auditors request the assignment of employees to assist
in their duties, matters relating to the independence of the employees from the Directors, andmatters relating to ensuring the effectiveness of instructions given by Auditors to the employees(1) When the Board of Auditors has requested employees to assist with the duties of Auditors, theemployees are appointed in consultation with the Board of Auditors.
(2) Personnel evaluations and transfers of the employees are conducted in consultation with theBoard of Auditors in order to ensure their independence from the Board of Directors.
Additionally, to ensure the effectiveness of the instructions of the Auditors, the duties orderedby the Auditors are not subject to commands and orders of the Directors and persons from theorganizations with which the employees are affiliated.
8. Systems related to reports to the Company’s Auditors(1) The Company’s Directors and employees and the Directors, Auditors, and employees ofsubsidiaries report on company business position and the status of development and operationof the internal control system at the request of the Company’s Auditors.
(2) The General Manager of the Company’s Internal Audit Department reports to the Company’s
Auditors on the results of audits conducted by the Internal Audit Department. The General
Manager of the General Affairs Department reports to the Company’s Auditors on the statusof reports and consultations with the YOKOREI Group Whistleblowing and Consultation
Help Desk.
(3) The Company’s Directors and employees and the Directors, Auditors, and employees ofsubsidiaries report promptly to the Company’s Auditors after learning of facts that could causesignificant corporate damage, serious compliance violations, and misconduct.
(4) The Company and its subsidiaries prohibit unfavorable treatment of any person who has madea report to the Company’s Auditors for reason of having made such a report, and ensure that
the Company’s Directors and employees and the Directors, Auditors, and employees ofsubsidiaries are well aware of this prohibition.

- 30 -

9. Matters relating to policies on processing of audit expenses, etc.
(1) When the Auditors request the Company to pay the expenses for the execution of their duties
in advance, the Company processes the expenses or obligations promptly unless deemed
unnecessary.
(2) The Company sets a budget each fiscal year for expenses that arise related to the execution ofduties by Auditors.
10. Other systems for ensuring the effectiveness of audits by the Auditors(1) The Auditors hold regular meetings with members of the Management meetings composed of
the Representative Director and others to exchange opinions and communicate.
(2) The Auditors hold regular meetings with the accounting auditor to exchange information.
(3) The Auditors collaborate with the Internal Audit Department and endeavor to engage inappropriate communications and implement effective audit operations.

2. Basic philosophy and systems for excluding anti-social forces
Basic philosophy and systems for excluding anti-social forces(1) In our Basic Policy for Compliance, we stipulate our resolute stance against interference, etc.
from anti-social forces and we implement an organized response in cooperation withattorneys, police departments, and other external agencies.
(2) The Company is a member of a Corporate Defense Countermeasures Federation and also
strives to gather information on and assess the status of anti-social forces through contact with
police departments that have jurisdiction as well as the shareholder register administrator andother parties.

- 31 -

V. Others
1. Adoption of anti-takeover measures
Adoption of anti-takeover measures

Not adopted

Supplementary explanation of this item----2. Other matters related to the corporate governance framework-----

Reference: Corporate governance diagram

General Meeting of Shareholders
Nomination/dismissal

Nomination/
dismissal

Nomination/
dismissal

Audit

Consults

Audit
Reports

Nominating &Remuneration
Advisory Committee
Chairman and representative director,
president and representative director

Internal Audit Department

Executive Management
Committee

Directors in charge, corporate officers(execution of business)
Instructions

Reports

Instructions

Business Sector
Guidance- 32 -

Reports

Corporate Management
Sector

Accounting Auditors (external
auditors)

Board of Auditors (4 auditors, alloutside auditors)

Board of Directors(12 directors (4 of whom are outside directors); decides on
business execution, supervises the execution of duties bydirectors)