Corporate Governance Report

Solasto Corporation

Last Update: June 26, 2024

Solasto Corporation

Toru Noda
President and Representative Director, CEOContact: Investor Relations OfficeTel: 03-6890-8904
Securities Code: 6197
https://www.solasto.co.jp/ir/en/

The corporate governance of Solasto Corporation (the “Company”) is described below.

I.

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

1. Basic Views
Solasto views corporate governance as a framework for ensuring corporate management that is rapid and effective, stable andfair, and highly transparent. Through the creation and implementation of this framework, we are able to uphold our Corporate
Philosophy thus enabling us to continuously improve our corporate value.
Based on this view, we established the Solasto Corporate Governance Policy, a framework and guidelines for corporate
governance, at the Board of Directors meeting held on June 30, 2016 (Revised on April 1, 2024). We will use this framework
to promote initiatives and strive to continuously improve our corporate governance.
Solasto Corporate Governance Policy
https://www.solasto.co.jp/ir/en/corporate/governance.html
Corporate Philosophy

People. Technology.
Supporting comfortable living and energetic communities
The Solasto Group supports the happiness and well-being of our customers
by combining the advanced expertise and superior teamwork of our employeeswith the innovative and flexible use of technology to provide medical, elderly care, child care,and education services suited to the local communities we serve.
We are committed to putting energetic smiles on the faces of each of our employees
and establishing a society that provides peace of mind.
[Disclosure Based on the Principles of the Corporate Governance Code][Principle 1.4 Cross-Shareholdings]
We do not retain listed stocks for the purpose of strategic shareholding.
[Principle 1.7 Related Party Transactions]
When conducting transactions with executives or major shareholders (transactions between related parties), we consult
Outside Directors as well as attorneys and other third parties as necessary, after which the Board of Directors deliberates anddecides on the necessity of the transaction and the adequacy of the details and conditions of the transaction.
[Principle 2.4.1 Ensuring Diversity in the Promotion to Core Human Resources]<Approach to securing diversity>
We position the promotion of diversity management as a core part of our human resources strategy, and outlined a Diversity
Policy in 2020. We promote diversity through the following six core policies
Promoting women’s workplace advancement
Supporting work-life balance
Promoting employment for persons with disabilities
Opportunities for the elderly
Accepting foreign workers
Promoting understanding of sexual minorities
Details are outlined in our Diversity Policy and the six pillars of diversity (please refer to “3.3 Measures to Ensure Due Respect
for Stakeholders”).

(1) Promotion of female workers to managerial positions
Although our ratio of female managers is higher than the industry average, we believe it is necessary to further promote theactive participation of women, who account for 90% of our employees. We have set a goal to raise the ratio of female managers
from 46% (as of April 1, 2024) to 60% by the end of March 2027. We are strengthening Talent Reviews (based on theassessment of each employee, action plans are formulated to foster opportunities for experience and educational initiatives
through their duties and roles) and are promoting various initiatives, such as holding roundtable discussions with women in
managerial positions, in order to foster a culture which female workers can take on the challenge toward managerial positions.
We also believe that promoting diversity by such means as increasing the ratio of women in managerial positions will lead to a
reduction in gender wage differences.
(2) Utilization of mid-career hiring
Mid-career hiring represents over 90% of our annual hiring. Similarly, mid-career hires represent over 90% of our management
personnel. The Solasto Group relies on personnel with a diverse range of knowledge and experience in other industries, each
applying their respective strengths regardless of age, gender, or nationality, to aggressively engage in our business activities,
responsibilities, and goals.
We will continue to promote diversity as a driving force that supports our sustainable growth, and we will continue to secureand utilize a diverse range of human resources.
(3) Promotion of male workers taking parental leave
The ratio of male workers taking parental leave has already met the current Japanese Government target of 50% of maleworkers taking parental leave by FY2025, with a result of 50% in FY2023. We will continue to maintain the high level, promotemeasures to encourage male workers to take parental leave and further improve the rate.
We will continue to maintain a high level and promote measures to encourage male workers to take parental leave and further
improve the rate.
<Status of diversity progress, Solasto’s unique and measurable goals for securing diversity>
We disclose information concerning our diversity initiatives on our website.
(https://www.solasto.co.jp/ir/en/sustainability/hizaimu.html)<Status of human resource development policy and workplace environment development policy for securing diversity>
As a driving force that supports the sustainable growth of the Group, we are building a mechanism to support diverse working
styles in order to promote the recruitment and active contribution of diverse human resources. Career center has been
established to support career development of each employee, also in particular for women in the workplace, we are promoting
female workers to managerial positions through training for the candidates for managerial positions, and the implementation ofcommunity events for employees to hear directly from those in managerial positions. In addition, to achieve a work-life balance,
we have taken measures such as utilization of part-time employees and establishment of a shorter working hours system thatcovers a wider range than set by the law. We also introduced a system in which employees can take their paid leave by one
hour as the smallest unit.
We respect the diversity and individuality of each individual and fulfillment and well-being of their family and life, and are striving
to create a work environment in which all employees, regardless of race, age, gender, self-recognition, sex orientation, disability,
or other factors can participate in their work while reflecting their individual characteristics and attractiveness. In particular,
we have introduced a same-sex-partner system for gender minorities and a special leave system for fertility treatments andgender-compatible surgeries.
Moreover, we have been implementing comprehensive measures related to people with the aim of maintaining and improving
motivation, such as implementations of communication measures, fair evaluations through evaluation meetings, as well as
improvement of workplaces and compensations. As one of the indicators to measure the results of these efforts, we conduct
an employee satisfaction survey every year and report the results to Board of Directors.
[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]
We do not offer the fund-type or contract-type of defined benefit pension or welfare pension fund assumed under the Corporate
Governance Codes.
[Principle 3.1 Full Disclosure](1)

Our Group drafts and publishes our Corporate Philosophy. Our Corporate Philosophy is outlined in “1.1 Basic Views” ofthis report. We publish our corporate strategy and management plan on our website.
(https://www.solasto.co.jp/ir/en/index.html)(2)

We indicate our basic approach and basic policies on corporate governance in “1.1 Basic Views” of this report.

(3)

We indicate policies and procedures related to decisions on compensation for management personnel and Directors in“2.1 [Director Remuneration] Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods” ofthis report.
We indicate general policies and procedures concerning the selection of management personnel and the nomination of
Director and Corporate Auditor candidates in “2.2 Matters on Functions of Business Execution, Auditing, Oversight,
Nomination and Remuneration Decisions (Overview of Current Corporate Governance System” of this report.

(4)

(5)

We indicate “reasons for nomination” for all Directors and Corporate Auditor candidates in each of the nomination
proposals indicated in the Convocation Notice of the 55th Ordinary General Meeting of Shareholders (reference materials).

[Supplemental Principle 3.1.3 Approach to Sustainability and Initiatives]<Initiatives for sustainability>
Solasto Group aims to realize its corporate philosophy, “People. Technology. Supporting comfortable living and energetic
communities,” and continue to contribute to society by providing solutions to social issues and valuable services throughout its
business activities. To continuously grow together with society based on this philosophy, we have identified important issues
that we must prioritize and formulated them into five sustainability themes.
Initiatives to address social issues through business activities
Contributing to an Aging Society and Local Communities
Innovation and Contribution to Optimize Social Security Expenditures
Management Foundation
Human Capital (Human Resource Development, Compensation Improvement, Diversity)
Compliance and GovernanceConsideration for Environment and Resources<Data disclosure aligned with the TCFD recommendations>
We believe that climate change has the potential to affect our business activities, including abnormal weather events damaging
elderly care and child care facilities or decreased labor productivity and service quality due to heat stress.
To clarify our commitment to assessing climate-change-related risks, opportunities, and their impacts, the Group has expressed
its support for the TCFD recommendations. As our long-term environmental targets, we have set the goals of reducing
greenhouse gas emissions intensity by 70% by FY2030 (compared to FY2021), and achieving net-zero emissions by FY2050.
For the details related to data disclosure aligned with TCFD recommendations and initiatives for the environment, please refer
to our website.
(https://www.solasto.co.jp/ir/en/sustainability/environment.html)<Respecting of human rights>
The Group has upheld respect for human rights in the Solasto Group Code of Conduct, and has ensured that the entire Group
is aware of the need to respect fundamental human rights and to refrain from infringing on human rights in its business activities.
<Investment in human capital>
We are making continuous efforts and implementing comprehensive measures related to people with the aim of maintaining
and improving motivation, such as implementations of communication measures, fair evaluations through evaluation meetings,
as well as improvement of workplaces and compensations. For the details related to the initiatives and targets, please refer toour website.
(https://www.solasto.co.jp/ir/en/sustainability/hizaimu.html)[Supplemental Principle 4.1.1 Scope of Delegation to Management]
In our Board of Directors Regulations, we clearly outline the matters to be decided or voted on by the Board of Directors. In the
Board of Directors Regulations, matters to be decided or voted on by the Board of Directors are defined as matters stipulated
by law and our Articles of Incorporation as well as the approval of or changes to general corporate policy, annual and monthly
budgets, personnel plans, medium- and long-term management plans, matters concerning our organization and humanresources, and other important matters concerning business execution. To promote rapid decisions on matters concerningbusiness execution, other matters are consigned to personnel below the company president in accordance with our organization
regulations and work authority regulations.
[Supplemental Principle 4.8 Effective Use of Independent Directors]
The Company has appointed four outside directors, including three independent outside directors, with a variety of experienceand skills, with the aim of strengthening the supervisory function (monitoring) of the Board of Directors and incorporating advice
into management that contributes to improving the Company's corporate value. The proportion of independent outside directors
on the Board of Directors is 50%.
[Supplemental Principle 4.9 Independent Standards and Qualification for Independent Outside Directors]
Matters concerning the criteria used to judge the independence of Outside Directors are as outlined in “2.1 [Independent
Directors/Corporate Auditors] Matters Relating to Independent Directors/Corporate Auditors” of this report.
[Supplemental Principle 4.10.1 Establishment of Advisory Committee Mainly Comprised of Independent Outside Directors]
The Company has established a Nomination, Evaluation and Compensation Committee (President and CEO and four outside
directors including three independent outside directors), with more than half of the members being independent outside
directors and the committee being chaired by an outside director.
The Nomination, Evaluation and Compensation Committee examines the personnel, compensation and succession planningof directors, including senior management, prior to the resolution of the Board of Directors and submits the results of suchexamination to the Board of Directors, thereby ensuring that independent outside directors are involved in the personnel,

compensation and succession planning of directors, including senior management.
[Supplemental Principle 4.11.1 Composition of Board of Directors]
Our approach concerning the balance, diversity, and scope of the Board of Directors is outlined in “2.2 Matters on Functions ofBusiness Execution, Auditing, Oversight, Nomination and Compensation Decisions (Overview of Current Corporate
Governance System)” of this report. Also, our Independent Outside Directors include persons with management experience atother companies. A skills matrix outlining knowledge, experience, and skills of the Directors is provided in “5.2 Other Matters
Concerning the Corporate Governance System [Skills Matrix]” of this report.
[Supplemental Principle 4.11.2 Status of Directors/Corporate Auditors with Concurrent Posts]
No Directors other than Outside Directors or Outside Corporate Auditors serve concurrent positions at other listed companies.
Information concerning important concurrent posts held by Outside Directors or Outside Corporate Auditors is indicated in “2.1
[Directors] Outside Directors’ Relationship with the Company (2)” and “2.1 [Corporate Auditors] Outside Corporate Auditors’
Relationship with the Company (2)” of this report.
[Supplemental Principle 4.11.3 Analyzing and Evaluating the Effectiveness of the Board of Directors as a Whole]
We conduct an evaluation of the effectiveness of our Board of Directors every year. Methods and a summary of the evaluationof the effectiveness conducted is disclosed on our website.
(Investor Relations > Company Information > Corporate Governance > (4)Board of Directors > Board Effectiveness Evaluation
https://www.solasto.co.jp/ir/en/corporate/governance.html)[Supplemental Principle 4.14.2 Training Policy for Directors and Corporate Auditors]
We provide Directors, Corporate Auditors, and Corporate Officers with relevant recommendations for participation in externalseminars and membership with external organizations to promote self-enlightenment by adopting new thinking and interactingwith frontline information. The Company covers related expenses in accordance with our internal regulations.
[Principle 5.1 Policy for Constructive Dialogue with Shareholders]On our website, we indicate our policies evaluated and approved by the Board of Directors on developing structures andimplementing initiatives to promote constructive dialogue with shareholders.
(Basic Policy on Investor Relations: https://www.solasto.co.jp/ir/en/basic_policy.html)[Actions to Achieve Management with Emphasis on Cost of Capital and Stock Price]<Evaluation of the current situation>
Our analysis and assessment is that the Company has achieved a return on capital that exceeds its cost of capital.

Shareholders' equity cost
WACC
ROE
ROIC
PBR
PER

FY2021
7.8%
6.1%
18.1%
8.8%
5.1x
23.8x

FY2022
8.5%
6.1%
5.2%
9.1%
2.8x
15.0x

FY2023
7.6%
5.1%
10.7%
7.9%
2.4x
8.9x

<Policy and targets>
The market evaluation of the Company's stock price has been higher in the past compared to this analysis and evaluation was
made. We are currently reviewing our medium-term management plan and our long-term vision, which sets out the direction
we should take in order to respond to changes in the external environment, and we will continue to aim for increased profitability,
improved corporate value and sustainable growth through dialogue with the capital markets.
[Dialogues with shareholders]
The status of communication with shareholders (including shareholders and analysts) in FY2023 is as follows.
We conduct dialogues with shareholders and report to the Board of Directors and Corporate Officers their inquiries andcomments as their feedback. Shareholder opinions and concerns obtained in the engagemens and feedback are incorporated
into our management in a variety of ways.
Main speakers who conducted engagements with shareholders: President and CEO, CFO (Corporate Officer in charge ofInvestor Relations), General Manager of Investor Relations
Frequency of engagemens: Financial results briefing conducted quarterly. Direct engagements were conducted for the totalof 138 times/companies through one-on-one meetings and small meetings.
Outline of shareholders conducted engagements with: Fund Managers and analysts, ESG representatives, etc. from active
management funds of domestic and overseas institutional investors
Major topics of engagements and matters of interest of shareholders: Management strategy, environment and strategy forexisting and new businesses, environment and status of M&A, and PMI status after M&A.

2. Capital Structure
Foreign Shareholding Ratio

From 20% to less than 30%[Status of Major Shareholders]Name / Company Name

Number of Shares Owned

Percentage (%)

Daito Trust Construction Co., Ltd.

31,805,100

34.49

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

8,805,600

9.55

Custody Bank of Japan, Ltd. (Trust Account)

5,482,300

5.95

TOHO HOLDINGS CO., LTD.

4,709,500

5.11

JP MORGAN CHASE BANK 385174

3,412,500

3.70

INFOCOM CORPORATION

2,545,200

2.76

GOVERNMENT OF NORWAY

2,150,094

2.33

Solasto Employee Shareholding Association

2,110,012

2.29

STATE STREET BANK AND TRUST COMPANY 505038

1,516,900

1.65

Custody account (for Junichi Arai) Custodian SMBC Trust Bank Ltd.

1,200,600

1.30

Controlling Shareholder (except for Parent Company)―

Parent Company

N/A

Supplementary Explanation
The Company, which holds 2,531,133 shares of treasury stock, is excluded from the above list of major shareholders. Holdings ratio excludes treasury
stock..

3. Corporate Attributes
Listed Stock Market and Market Section

Tokyo Stock Exchange Prime Market

Fiscal Year-End

MarchType of Business

Services

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

More than 1000

Sales (consolidated) as of the End of the Previous Fiscal Year

From ¥100 billion to less than ¥1 trillion

Number of Consolidated Subsidiaries as of the End of thePrevious Fiscal Year

From 10 to less than 50

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
One Outside Corporate Auditor (Mr.Tsukasa Okamoto) has been appointed from Daito Trust Construction Co., Ltd., whichowns 34.49% of outstanding shares of the Company. However, the Company is not restricted by Daito Trust Construction Co.,
Ltd. in terms of its business activities and management decisions. The Company recognizes that its independence is secured.

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

1. Organizational Composition and Operation
Organization Form

Company with Board of Corporate Auditors[Directors]
Maximum Number of Directors Stipulated in Articles of Incorporation

10

Term of Office Stipulated in Articles of Incorporation

1 yearChairperson of the Board

President

Number of Directors

6

Appointment of Outside Directors

Appointed

Number of Outside Directors

4

Number of Independent Outside Directors

3Outside Directors’ Relationship with the Company (1)NameAttribute

Yukio Kubota (Mr.)
Kenji Chishiki (Mr.)
Miki Mitsunari (Ms.)
Miho Tanaka (Ms.)

aFrom another company
From another company
From another company
From another companyb

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

k

* Categories for “Relationship with the Company”* “○” when the Director presently falls or has recently fallen under the category; “△” when the Director fell under the category in the past
* “●” when a close relative of the Director presently falls or has recently fallen under the category; “▲” when a close relative of the Director
fell under the category in the past

a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.

Executive of the Company or its subsidiaries
Non-executive Director or executive of a parent company of the Company
Executive of a fellow subsidiary company of the Company
A party whose major client or supplier is the Company or an executive thereof
Major client or supplier of the listed company or an executive thereof
Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company
besides compensation as a Director
Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)
Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) (the Director himself/herself only)
Executive of a company, between which and the Company Outside Directors are mutually appointed (the Director himself/herself only)
Executive of a company or organization that receives a donation from the Company (the Director himself/herself only)
Others

Outside Directors’ Relationship with the Company (2)Name

Designation as
Independent
Director

Yukio Kubota

Supplementary Explanation of theRelationship

Reasons of Appointment(Significant concurrent positions
outside the Company)
Outside Director of KOEIDREAMWORKS Co., Ltd

Mr. Kubota has a wealth of experience andextensive knowledge as the Director
including Representative Director among
plural companies. Therefore, the Company
has appointed him as an Outside Director
with expectation that he will use thisexperience to supervise and support
management
towardimprovingourcorporate value.

(Significant concurrent positions
outside the Company)
Kenji Chishiki○

Outside Director of Ishii FoodCO., Ltd.
Director and Vice President of
ONWARD HOLDINGS CO., LTD

Mr. Chishiki has served as a Representative
Director in a number of companies, as wellas has a wealth of experience serving as an
Outside Director. The Company has
appointed him as an Outside Director
because he has a wide range of knowledge
and experience in personnel development,organizational
management
includingcorporate culture, and the establishment andstrengthening of management foundations,with the expectation he will provide usefuladvices to the Company. In accordance with
the independence criteria set forth by Tokyo
Stock Exchange, Inc. and the independence
requirements for independent outside
executives set forth by the Company, theCompany has determined that there is norisk of conflict of interest with generalshareholders in the execution of duties byoutside officers and designated him as an
Independent Officer.

Miki Mitsunari

Miho Tanaka(Significant concurrent positions
outside the Company)
President of FINEV inc.
Director of Japan Accreditation
Board
Outside Director of YAMADAHOLDINGS CO., LTD.
Outside Director of YUASATRADING CO.,LTD.

○○(Significant concurrent positions
outside the Company)
Partner of Shiba & Tanaka Law
OfficeSupervisory Director of Marimo
Regional Revitalization REIT, Inc.
Supervisory Director of JINUSHI
Private REIT Investment
Corporation
Outside Director of Tokyo Century
Corporation

Voluntary Establishment of Committee(s) Corresponding to Nomination
Committee or Compensation Committee

Ms. Mitsunari has served as therepresentative director of a consulting
company related to the environment, climatechange, ESG, and the SDGs, and has
experience serving as an outside director for
multiple companies. She also possesses
vast knowledge and broad perspective
concerning environmental problems related
to real estate, disaster prevention measuresand risk management. The Company has
appointed her as a Outside Director with the
expectation that she will provide beneficial
advice as we aim to provide high-quality
services based on a fusion of humans andtechnology, including facility monitoring
services using cameras and sensors. In
accordance with the independence criteria
set forth by Tokyo Stock Exchange, Inc. andtheindependence
requirementsforindependent outside executives set forth by
the Company, the Company has determinedthat there is no risk of conflict of interest withgeneral shareholders in the execution ofduties by outside officers and designated her
as an Independent Officer.
As an attorney with extensive knowledge
and experience in corporate legal affairs andM&A-related fields, the Company has
judged that she can audit the execution ofduties by Directors from an objective and fairstandpoint, and has appointed her as an
outside director.
In accordance with the independence criteria
set forth by Tokyo Stock Exchange, Inc. andtheindependence
requirementsforindependent outside executives set forth by
the Company, the Company has determinedthat there is no risk of conflict of interest withgeneral shareholders in the execution ofduties by outside officers and designated her
as an Independent Officer.
Established

Committee’s Name, Composition, and Attributes of Chairperson
Committee Corresponding toNomination Committee
the Nomination, Evaluation, andCompensation Committee

Committee Corresponding to
Remuneration Committee
the Nomination, Evaluation, andCompensation Committee

All Committee Members

55

Full-time Members

00Committee’s Name

Inside Directors

11Outside Directors

44Outside Experts

0

0

Other

0

0

Chairperson

Outside Director

Outside Director

Supplementary Explanation
The Company has established the Nomination, Evaluation, and Compensation Committee and the Corporate GovernanceCommittee under the Board of Directors to support the role of the Board of Directors.
Majority of the Nomination, Evaluation, and Compensation Committee members are Outside Directors and the Committee ischaired by an Outside Director (Committee consists of 1 Representative Director and four Outside Directors). The Committee
proposes candidates for the president and corporate officers to the Board of Directors. In addition to setting and evaluating
annual targets for corporate officers, the Committee evaluates and determines whether corporate officers' remuneration iscompetitive and appropriate.
[Corporate Auditor]
Establishment of Board of Corporate Auditors

Established

Maximum Number of Corporate Auditors Stipulated in Articles of Incorporation

5

Number of Corporate Auditors

4

Cooperation among Corporate Auditors, Accounting Auditors, and Internal Audit Departments
Through strengthening mutual cooperation among Corporate Auditors, Accounting Auditors and the Audit Department as aninternal audit department and exchanging opinions at the regular meetings, the Company strengthens the quality of audits
covering all management activities.
The Corporate Auditors Office is in charge of communication and coordination with relevant departments within the Company
in order to accurately provide corporate information to Outside Corporate Auditors.
For the audit by Corporate Auditors, appropriate audits are ensured by attending important meetings, visiting departments,
offices and subsidiaries, exchanging opinions with Directors, and receiving reports on audit plans and results from Accounting
Auditors. The results of these audits are reported to all divisions through the Board of Directors.
The Company has concluded an audit agreement with KPMG AZSA LLC as an accounting auditor and receives an accounting
audit.
Under the direction of the President, the Audit Department conducts audits of the effectiveness of internal controls and thestatus of actual execution of operations for each division at the head office, all business locations, and subsidiaries. The resultsof these audits are reported to the President and Board of Directors as well as departments which function as upperorganizations of each division as needed. In addition, Internal Audit Department holds meetings and exchange views with the
Corporate Auditors as necessary.
Appointment of Outside Corporate Auditors

Appointed

Number of Outside Corporate Auditors

3

Number of Independent Outside Corporate Auditors2

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

Hironori Yokote (Mr.)
Kanae Fukushima (Ms.)
Tsukasa Okamoto (Mr.)

CPA
LawyerFrom another companyab

Relationship with the Company*c d e f g h i
j k L

m

〇

* Categories for “Relationship with the Company”* “○” when the Corporate Auditor presently falls or has recently fallen under the category; “△” when the Corporate Auditor fell under the
category in the past
* “●” when a close relative of the Corporate Auditor presently falls or has recently fallen under the category; “▲” when a close relative of the
Corporate Auditor fell under the category in the past

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

Executive of the Company or its subsidiaryNon-executive Director or accounting advisor of the Company or its subsidiaries
Non-executive Director or executive of a parent company of the Company
Audit & Supervisory Board Member of a parent company of the Company
Executive of a fellow subsidiary company of the Company
A party whose major client or supplier is the Company or an executive thereof
Major client or supplier of the Company or an executive thereof
Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company
besides compensation as an Corporate Auditor
i. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)
j. Executive of a client or supplier company of the Company (which does not correspond to any of f, g, or h) (the Corporate Auditor
himself/herself only)
k. Executive of a company, between which and the Company Corporate Auditor are mutually appointed (the Corporate Auditor himself/herself
only)
l. Executive of a company or organization that receives a donation from the Company (the Corporate Auditor himself/herself only)
m. Others

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

Hironori Yokote

Kanae Fukushima

Designation as
Independent
Corporate
Auditors’
Board Member

Supplementary Explanationof the Relationship

Reasons of Appointment○(Significant concurrent
positions outside theCompany)
Director of Hironori Yokote
CPA Office
Representative Partner of
Miogi Audit Corporation.
Outside Corporate Auditor of
Suzuki Shokai K.K.

He has a wealth of knowledge and experience inaccounting and taxation as a certified public
accountant and tax accountant.
He has many years of experience of being
seconded to the Listing department of the Tokyo
Stock Exchange, Inc. and is well versed in thepractice of listed companies. The Company has
appointed him in the expectation that he will
provide useful advice for further strengthening
corporate governance in our company.
In accordance with the independence criteria set
forth by Tokyo Stock Exchange, Inc. and the
independence requirements for independent
outside executives set forth by the Company, theCompany has determined that there is no risk of
conflict of interest with general shareholders in
the execution of duties by outside officers anddesignated him as an Independent Officer.

○(Significant concurrent
positions outside theCompany)
Outside Corporate Auditor of
iXs Co., Ltd
Partner at Utsunomiya Shimizu& Haruki Law OfficeOutside Director (Audit &Supervisory Committee
Member) of World Co., Ltd

She has well knowledge and experience as a
judge, handling civil, criminal and administrative
cases in the Family Court, District Court and High
Court, which enables her to audit the directors'
performance of their duties from an objective andfair standpoint, and she is therefore appointed as
an outside corporate auditor.
In accordance with the independence criteria set
forth by Tokyo Stock Exchange, Inc. and the
independence requirements for independent
outside executives set forth by the Company, theCompany has determined that there is no risk of
conflict of interest with general shareholders in
the execution of duties by outside officers anddesignated her as an Independent Officer.

Tsukasa Okamoto(Significant concurrent
positions outside theCompany)
Director, Senior Executive
Officer and General Manager
of Management Department,
CFO of Daito Trust
Construction Co., Ltd.

As a certified public accountant, Mr. Okamoto not
only has a wealth of expertise and experience incorporate accounting, but also a broad
knowledge about corporate management througha range of experiences such as serving as adirector at a large construction company. The
Company believes that by utilizing his expertiseas a certified public accountant, he will be able toaudit the execution of the duties of Directors froma fair and objective perspective, and has
therefore appointed as an outside corporate
auditor.

[ Independent Directors/Corporate Auditors]
Number of Independent Directors/Corporate Auditors

5

Matters Relating to Independent Directors/Corporate Auditors<Independence Requirements for Outside Executives– Revised on June 1, 2021>

In accordance with the independence criteria established by the Tokyo Stock Exchange, we judge outside executives applicable
to any of the following as not qualifying as an independent outside director.
1. A person who is currently a director (excluding outside directors), corporate auditor (excluding outside corporate auditor),
corporate officer, or employee of the Solasto Group (*1).
2. A person who, during any business year occurring within the past 10 years, is or was a major shareholder (*2) of the SolastoGroup, or the director, corporate auditor, corporate officer, or employee of a company for which the Solasto Group is a major
shareholder.
3. A person who is or was an executive (*4) of a major Solasto Group business partner (*3).
4. A person who is or was a trustee or other director, corporate auditor, corporate officer, or employee of a corporation or
foundation receiving significant donations (*5) from the Solasto Group.
5. Persons dispatched to or from the Solasto Group as a director, corporate auditor, or corporate officer.
6. A person who is or was associated with the Solasto Group’s accounting auditor within the past 5 years.
7. A person who is or was an attorney, Certified Public Accountant, or consultant receiving significant monetary amounts (*6) orother assets from the Solasto Group.
8. A person who is the spouse, blood relative within two degrees, a cohabiting relative, or otherwise engaged in shared livingwith the following persons:(1) A Solasto Group business executive(2) A person who was a Solasto Group business executive during any fiscal year occurring in the past 10 years.
(3) Persons deemed not independent based on the above 2 through 7
9.Other persons who, upon a substantive decision by the company, would have potential conflicts of interest with SolastoGroup general shareholders if serving as an outside executive.
(Notes)1: “Solasto Group” refers to Solasto Corporation and its subsidiaries.
2: “Major shareholder” refers to a company, etc. directly or indirectly possessing voting rights equivalent to 20% or more of total
voting rights.
3: “Major business partner” refers to a company, etc. whose payments made or received for transactions with the Solasto Groupaccount for 2% or more of the Solasto Group’s or said business partner’s consolidated net sales during any fiscal year during
the past three fiscal years.
4: “Executive” refers to a person in the position of executive director, executive officer, or a senior management position ofgeneral manager or higher.
5: “Significant donation” refers to donations averaging 10 million yen annually or exceeding 2% of the recipient’s consolidated
net sales or gross revenue, whichever is higher, over the past three fiscal years.
6: “Significant monetary amount” refers to amounts averaging 10 million yen annually for an individual, or exceeding 2% of anorganization’s consolidated net sales for an organization over the past three fiscal years.
[Incentives]
Incentive Policies for Directors

Performance-linked Compensation / Stock Options

Supplementary Explanation
A portion of bonuses for internal directors are determined based on a quantitative evaluation (performance-linked remuneration)linked to the Company's performance.
The Company has also introduced a restricted stock compensation plan for internal directors.

*The Company has introduced restricted stock compensation for internal directors since FY2021, in place of the previous
stock option compensation, in order to provide an incentive to continuously improve the corporate value of the Company
and promote further sharing of value with shareholders. The Company has abolished the stock option system for Directors
and Corporate Auditors except for those already granted.
Establishment of shareholding guidelines
The Company has established guidelines for directors' shareholding with the aim of increasing corporate value by
encouraging the Company's directors and corporate officers to hold the Company's own shares, thereby further boosting
their motivation and morale to improve the Company's performance and increase the share price.
The shareholding targets for each executive position set out in the guidelines are as follows
President:
Ownership of shares equivalent to 2.0 times the annual basic remuneration within five years of assuming
this position.
Executive officers other than the above:
within five years of assuming their position, to own shares in the company
equivalent to 0.5 to 1 times their base remuneration (annual amount).

*

Recipients of Stock Options
Supplementary Explanation―[Director Remuneration]
Disclosure of Individual Directors’ Remuneration

No Individual Disclosure

Supplementary Explanation
The total amount of compensation for all Directors and Corporate Auditors is disclosed in the Annual Securities Report andBusiness Report in accordance with relevant laws and regulations, and is made available for public inspection by posting on the
Company's website. The total amount of compensation paid to Directors in FY2023 was 165 million yen, of which compensation
paid to Outside Directors was 31 million yen.The following are the details.
[Compensation of Directors]
Total amount of compensation:
Basic compensation:
Bonus:
Non-monetary compensation:
Number of Eligible Directors:***

165 million yen(including 31 million yen for Outside Directors)
122 million yen(including 31 million yen for Outside Directors)
23 million yen
19 million yen
9 people (including 4 outside directors)

The number of paid personnel excludes one uncompensated Outside Director.
At the 47th Ordinary General Meeting of Shareholders held on June 26, 2015, the maximum amount of remuneration for
directors was resolved to be within 320 million yen per year (excluding employee salaries). The number of directors at theconclusion of the General Shareholders' Meeting was seven.
At the 53rd Ordinary General Meeting of Shareholders held on June 28, 2021, the compensation for Directors (excluding
Outside Directors) for the grant of restricted stock was determined to be monetary remuneration receivables and the total
amount of remuneration was resolved to be no more than 100 million per year (but not including compensation for
employees and Directors who are also employees). The number of the Directors at the close of the said Shareholders
Meeting was eight (including four Outside Directors).
Policy on Determining Remuneration Amounts and Calculation Methods

Established

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods<Policy concerning decisions on executive compensation>
We believe it appropriate that individual compensation for Directors be determined by the Nomination, Evaluation, andCompensation Committee, which is comprised of a majority of Outside Directors. As such, the Board of Directors consigns
decision-making authority concerning individual compensation for Directors to the Nomination, Evaluation, and Compensation
Committee, which deliberates on adequacy based on outlined decision-making policy.
Details of our decision-making policy on individual compensation for Directors are as follows.
a. Basic policy
The remuneration for the Directors is based on a remuneration system that functions sufficiently as an incentive to continuously
improve corporate value, and the basic policy is to determine the remuneration of individual directors in consideration of the levelof the Company's peers, performance, and the balance with the employees.

Remuneration for Directors (excluding Outside Directors) consists of basic remuneration, bonuses, and restricted stock
remuneration. Basic remuneration consists of director remuneration and business execution remuneration, and is paid monthly.
Bonuses are paid for director and execution at certain times in accordance with their roles. The business execution portion of
the bonuses consists of fixed and variable remuneration. Variable remuneration is determined by the both qualitative evaluation
and a quantitative evaluation linked to the company's performance (performance-linked remuneration). Remuneration for Outside
Directors is limited to basic remuneration in light of their roles. Basic remuneration consists of director remuneration andcommittee allowances, and is paid monthly.
b. Policy on performance-linked remuneration, etc.
Performance-linked remuneration uses net sales and operating profit as performance indicators as they are directly linked to theCompany's goal of achieving its 2030 Numerical Goals. The performance goal is to achieve the annual plan for each indicator,
and the payment rate of performance-linked remuneration is determined based on the achievement rate. Directors in charge of
specific business divisions are designated for indices of their respective divisions in charge, while other Directors, including thePresident, are designated for indices of consolidation.
c. Policy on non-monetary compensation
Restricted stock remuneration provides an incentive to continuously improve corporate value and promotes further value sharing
with shareholders. The amount is determined based on performance and their roles. In addition, certain transfer restriction period
is to be stipulated by the Board of Directors shall be imposed on the shares to be granted.
d. Policy on determination of details of individual compensation for Directors
In order to supplement the functions of Board of Directors, compensation for each Director is determined by the Nomination,
Evaluation, and Compensation Committee after deliberation by the Committee. Final decisions on individual compensation canalso be made discretionary to the President & Director. If delegated, President & Director must make the final decisions on
individual compensation based on the results of deliberations by the Nomination, Evaluation, and Compensation Committee.
Nomination, Evaluation, and Compensation Committee was established under the Board of Directors and is chaired by an
Outside Director, Yukio Kubota, and the other members are Director, Kenji Chishiki, Miki Mitsunari and Miho Tanaka.
The committee is operated with the majority of the Committee being composed of Outside Directors, incorporating the superior
aspects of the structure of a company with a Nominating Committee.
e. Policy on the proportion of remuneration, etc.
The ratio of each Director's remuneration is determined by the Nomination, Evaluation, and Compensation Committee, with astructure in which the percentage of the bonus becomes higher for the higher position and the Director in charge of a specificbusiness division.
Reference: The proportion of remuneration for Directors (excluding Outside Directors)
The composition ratio of remuneration for Directors (excluding Outside Directors) for FY2023 is as shown below. Stockremuneration is determined by multiplying a certain percentage on the basic remuneration and bonus. Bonuses arecalculated based on the base amount thus differs from the composition ratio of actual payments.
President and Vice President
Directors (excluding Outside Directors)

Basic remuneration
56%
61%

Bonus
22%
23%

Stock remuneration
22%
16%[Supporting System for Outside Directors and/or Outside Corporate Auditors]
Corporate Planning Division provides support to Outside Directors, and Corporate Auditors Office and Corporate Planning
Division provide support to Outside Corporate Auditors.
In principle, materials for the Board of Directors are distributed in advance by the secretariat of the Board of Directors to ensurethat Outside Directors and Outside Corporate Auditors have time to consider them. They also provide advance explanations asnecessary.
Materials for important meetings are distributed to Outside Directors from the secretariat of the Board of Directors and otherbodies. Full-time Corporate Auditor shares information on Corporate Auditors' audits, accounting audits and internal audits to
Outside Corporate Auditors.
2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview
of Current Corporate Governance System)
We select a company with Board of Corporate Auditors as its institutional design under the Companies Act. To supplement thefunctions of Board of Directors, we established the Nomination, Evaluation, and Compensation Committee and the Corporate
Governance Committee under the of Board of Directors, and have established and implemented a system that incorporates thesuperior aspects of a company with a Nominating Committee, by appointing Outside Officer as the chairperson, as well as
consisting more than half of the members Outside Officers.
<Board of Directors>
The Board of Directors aims to realize proactive governance through prompt and decisive decision-making and appropriate risktaking in order to enhance corporate value over the long term after having established fairness and integrity. In addition toensuring the effectiveness and transparency of management through the exercise of oversight functions over overallmanagement through decisions on important business execution, the supervision and approval of candidates for Directors andCorporate Auditors and the appointment of executive officers, and supervision and approval of annual budgets, medium-term
management plans, and other important strategies, it also monitors the efforts of executive officers, including the president, toincrease corporate value. In addition, our Board of Directors have a 1-year term of office in order to clarify management
responsibilities and enable the Company to respond swiftly to changes in the business environment.
In principle, regular meetings of the Board of Directors are held monthly, and extraordinary meetings are held as necessary. In
FY2023, the Board of Directors held 14 meetings, to elect candidates for Directors and Corporate Auditors as well as corporate
officers, approve the annual budgets, M&As and other matters.
<Board of Corporate Auditors>
The Company has established a system to ensure the effectiveness of audits by each member of Board of Corporate Auditors
by deciding on the chairperson among the members of Board of Corporate Auditors. Auditors audit the execution of duties byDirectors and the fulfillment of the supervisory obligations of the Board of Directors by attending important meetings, including
meetings of the Board of Directors. In addition, the Board of Corporate Auditors meets monthly in conjunction with the Board of
Directors Meeting to formulate auditing policies and plans, as well as to receive reports from each Corporate Auditors on
important auditing matters and discuss or make resolutions.
In FY2023, the Board of Corporate Auditors held 23 meetings and major matters for Board of Corporate Auditors included thestatus of the development and operation of the Group's internal control system, management and control of subsidiaries tocorrespond the expansion of the Group by M&A, as well as human resources management in response to organizational
restructuring.
<Nomination, Evaluation, and Compensation Committee>
The Nomination, Evaluation, and Compensation Committee assists the Board of Directors in its role in the nomination, evaluationand compensation of management, such as proposing the President and Executive Officer candidates to the Board of Directors.
In FY2023, the Nomination, Evaluation, and Compensation Committee held 9 meetings, and discussed the nomination of
directors and corporate officers, the composition of committees and the development of the next generation of management
three meetings to review of overall its corporate governance and to discuss the evaluation of the effectiveness of the Board of
Directors personnel.
<Corporate Governance Committee>
The Corporate Governance Committee assists the Board of Directors in its roles by deliberating on ongoing enhancements tocorporate governance and initiatives to increase management transparency and fairness, and proposes them to Board of
Directors.
In FY2023, the Corporate Governance Committee held 3 meetings, and discussed the general review of its corporate
governance and the assessment of the effectiveness of the Board of Directors.
<Other Committees>
In addition to the above, the Company has established a Management Committee, the purpose of which is to promote rapid andefficient decision-making by the Board of Directors by serving as an entity that deliberates and decides on important mattersrelated to business execution. The Management Committee is comprised by all Corporate Officers including President. In
principle, the committee meets once a month. Also, Risk and Compliance Committee has been established to oversee companywide risk and compliance matters.
<General Policies and Procedures for Appointing Management Team and Nominating Directors and Corporate Auditors>
The Company selects candidates with the knowledge and experience required to execute the authority and responsibilities
deemed required of Corporate Officers and Directors. Candidates are nominated for the position of Corporate Officer and Director
by our Nomination, Evaluation, and Compensation Committee and submitted to the Board of Directors for approval. Corporate
Officer candidates must be appointed by the Board of Directors. Director candidates are appointed at the General Meeting of
Shareholders after the approval of the Board of Directors. Corporate Auditor candidates are subject to consent by the Board of
Corporate Auditors and approval by the Board of Directors before candidates can be appointed by the General Meeting of
Shareholders.
3. Reasons for Adoption of Current Corporate Governance System
We believe that the Board of Directors (six members, including four Outside Directors) receiving opinions from external
perspectives ensures transparency and objectivity in corporate management, and that receiving accurate advice based on
wealth of experience and broad insight enables us to make appropriate decisions.
Furthermore, we believe that an effective auditing system realized through mutual collaboration among Board of Corporate
Auditors, accounting auditors, and the audit department, which is the internal audit department, ensures legality andappropriate audits in a reasonable manner.
For the reasons stated above, we have adopted the current corporate governance system.

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting Rights
Supplementary Explanations
Early Notification of General
Shareholder Meeting

The notice of the Ordinary General Meeting of Shareholders held in June 2024 wasdisclosed electronically 26 days prior to the date of the meeting. The integrated accessnotice and reference documents for the meeting were sent out 20 days prior to thedate of the meeting.

Scheduling AGMs Avoiding thePeak DayThe Ordinary General Meeting of Shareholders held in June 2024 was set to avoid
the day of most concentration.

Allowing Electronic Exercise of
Voting Rights

The Company has introduced electronic voting system from FY2021.

Participation in Electronic Voting
Platform

The Company participates in the electronic voting platform operated by ICJ, Inc.
In addition, in order to secure sufficient time for institutional investors to consider
proposals, the Company electronically disclosed the notice of the Ordinary General
Meeting of Shareholders (in Japanese and English) 26 days prior to the date of theOrdinary General Meeting of Shareholders.

Providing Convocation Notice inEnglishThe Notice of the Ordinary General Meeting of Shareholders the Reference
Documents for the General Meeting of Shareholders, and the Business Report(summary) are posted in English on the Company's website.

2. IR Activities
Supplementary Explanations

Preparation and Publication ofDisclosure Policy

Explanations byRepresentatives

The Company discloses its basic policy on investor
relations in Japanese and English on the Company's
website. The policy on the system, development, andinitiatives to promote constructive dialogue withshareholders was reviewed and approved by the Boardof Directors.
JP:(https://www.solasto.co.jp/ir/jp/corporate/basic_poli
cy.html）
EN:(https://www.solasto.co.jp/ir/en/basic_policy.html)

Regular Investor Briefings forAnalysts and Institutional
Investors

The Company holds quarterly financial results briefing
meetings.
We also hold small meetings and one-on-one with sellside analysts and institutional investors.

Posting of IR Materials on
WebsiteThe Company's website actively discloses all important
information that may contribute to investment decisions
in Japanese and English.

Establishment of Department
and/or Manager in Charge of IR

Investor Relations Office, Corporate Communications
and Investor Relations Department, Management
DivisionYes

3. Measures to Ensure Due Respect for Stakeholders
Supplementary Explanations

Stipulation of Internal Rules for
Respecting the Position of
Stakeholders

We have established the "Solasto Group Code of Conduct" as a basic guidelines
for ethical and liability conduct in the realization of our Corporate Philosophy andthe implementation of the policies and action guidelines set forth by the Group. It
stipulates not only respect for basic human rights and diversity, and compliancewith laws and regulations, but also the establishment and maintenance of soundand favorable relationships with various stakeholders.
(https://www.solasto.co.jp/ir/20230401_codeofconduct_en.pdf)

Implementation of Environmental
Activities, CSR Activities etc.

The Company provides medical outsourcing, elderly care, and child care services,
as well as education and training to those engaged in these services, and is closely
related to the welfare and employment of local communities.
As mentioned in the Corporate Philosophy, the Company's CSR is to contribute to
the continuous development of local communities through these businesses. The
Company has set the Solasto Group Code of Conduct that stipulates that wecomply with social rules and norms and are fair and honest in conduct of ourbusiness, and strives to ensure that we follow the code of conduct.
In 2021, the Solasto Group identified key issues to be addressed on a priority basis
through its business activities, and established them as five sustainability themes.
Details of these initiatives are posted on our website.
(https://www.solasto.co.jp/ir/en/sustainability/theme.html

Development of Policies on
Information Provision to
Stakeholders

The Company's business is deeply related to the welfare and employment of local
communities, and the Company has many stakeholders, including local
communities. The Company recognizes that it is an important responsibility forthese diverse stakeholders to deepen their understanding not only of management
information but also of various initiatives of the Company, such as productivity
improvement, safety and security, and human resource development. The
Company uses media and other media to disseminate information widely.
The Company's Corporate Philosophy calls for “We are committed to puttingenergetic smiles on the faces of each of our employees and establishing a societythat provides peace of mind.” The Company places a high priority on the work styleand career development of human resources, especially female employees, who
account for approximately 90% of the total.
Based on the belief that enhancing employee satisfaction leads to improving
customer satisfaction and business performance, the Company has worked to
improve various systems that consider work-life balance and to create anenvironment in which employees can work longer with peace of mind while raisingchildren and caring for their family.
In April 2021, in order to grow together with society, the Company identified
particularly important issues to be addressed with priority, and formulated fivesustainability themes: "Contributing to an Aging Society and Local Communities,""Innovation and Contribution to Optimizing Social Security Expenditures," "Human
Capital (Human Resources Development, Compensation Improvement, andDiversity)," "Compliance and Governance," and "Consideration for the Environment
and Resources."
The Company actively promotes information disclosure through its website andvarious materials and dialogues with stakeholders with regard to initiatives onsustainability themes and ESG (environment, society and governance).

Other

Solasto's Diversity Policy
Solasto has established its diversity policy and is promoting 6 types of diversity.
6 diversity themes are described in “1.Basic Views, [Disclosure Based on the
Principles of the Corporate Governance Code],[Principle 2.4.1 Ensuring
Diversity in the Promotion to Core Human Resources]
Initiatives for diversity
https://www.solasto.co.jp/ir/en/sustainability/hizaimu.html[External Evaluations]- Certified of "Eruboshi (third)" based on the Law Concerning the Promotion of
Women's Participation and Advancement in the Workplace in 2021.
- Complied with the certification standards based on the Law for Promotion of
Measures to Support the Development of the Next Generation and acquisitionof the Kurumin certification mark by the Ministry of Health, Laboure and Welfare
in 2008, 2011 and 2015
- Recognized as a "Best Workplace" at the D&I Awards, which recognize
diversity and inclusion (D&I) initiatives (2021).
[Current Status of Promotion of Female Employees]
Female managers: 46.0% (as of April 1, 2024)* Sectional managers and above

IV. Matters Related to the Internal Control System
1. Basic Views on Internal Control System and the Progress of System Development
The Company believes that it is important to establish an effective internal control system in order to enhance the soundness
and transparency of its management. The Board of Directors has resolved to establish the necessary systems to ensure thesuitability of its operations as the basis for this system.
1) Structure for ensuring work execution by Directors and employees is compliant with law and our Articles of Incorporation(1) To fulfill society’s expectations for the Company and to clarify our basic stance on corporate ethics and legal compliance,
we have outlined the Solasto Group Code of Conduct as basic guidelines for all Group employees. We work to promote
the awareness of the code among all executives and employees.
(2) In accordance with our Compliance Regulations, we established a Risk & Compliance Committee to create and promote agroup wide compliance structure.
(3) In accordance with our Whistleblowing Regulations, we operate a whistleblowing system to promote the early discovery
and correction of any legal, regulatory, or rule violations.
(4) We reject all relations with anti-social forces that serve to threaten the order and safety of society. Our entire organization
works closely with relevant administrative agencies and attorneys to ensure we respond appropriately.
2) Structure for storing and managing information related to business execution by Directors(1) Information concerning business execution by Directors is stored and managed appropriately in accordance with ourinternal regulations and other document management regulations.
3) Regulations and other structures concerning loss risk management(1) In accordance with our Basic Regulations on Risk Management, our Board of Directors works to mitigate and prevent Grouprisks in order to ensure the survival of the Company and our ability to engage in healthy business operations.
(2) In accordance with our Basic Regulations on Risk Management, we have established a Risk & Compliance Committee tobuild and promote a Group risk management structure.
(3) The risk management supervisor of each department implements risk management for their respective department. The
risk management supervisor makes regular risk management reports to the department in charge of risk management andcoordinates on risk management.
4) Structure for ensuring efficient business implementation by Directors(1) As the foundation of our structure for ensuring efficient business implementation by Directors, we hold Regular Board of
Directors’ meetings once per month and impromptu Board of Directors’ meetings to conduct rapid and accurate decisionmaking on critical matters.
(2) Details on authority, responsibilities, and procedures related to executions of business decisions made by the Board of
Directors are outlined in organization regulations, business allocation regulations, and work authority regulations.
(3) In order to clarify the management responsibilities of Directors and enable rapid responses to change in our operating
environment, the term of each Director shall be one year.
5) Structure for ensuring proper business practices by the company, parent company, and subsidiaries that comprise our Group(1) We outlined the Solasto Group Code of Conduct and work to build a Group compliance structure to ensure proper businesspractices by Group companies.
(2) Departments responsible for the administration of subsidiaries and other affiliates conduct necessary management inaccordance with Affiliate Management Regulations including promotion of workflow optimization at subsidiaries.
(3) In accordance with Affiliate Management Regulations, subsidiaries provide regular reports on performance and otherimportant matters.
(4) In accordance with our Basic Regulations on Risk Management, we appropriately build and operate a risk assessment andmanagement structure for our entire Group.
6) Matters concerning employees when a Corporate Auditor requests an employee assistant, matters concerning independence
from Directors, and matters concerning ensuring the efficacy of instructions by corporate auditors to said employee(s)(1) The company shall establish a Corporate Auditor department and assign dedicated staff to assist in the work of Corporate
Auditors.
(2) Dedicated staff shall not be subject to instructions or orders from Directors.
(3) Personnel reassignments, personnel evaluations, and any disciplinary action of dedicated staff shall be subject to priorapproval by the Board of Corporate Auditors.
(4) Dedicated staff works to maintain close collaboration with Corporate Auditors by regularly engaging in discussions andexchanging opinions concerning audit results, etc.
7) Structure for Directors and employees to report to Corporate Auditors, structures for other reporting to Corporate Auditors,
and other structures for ensuring effective audits by Corporate Auditors(1) A Director or employee, or a Director, Corporate Auditor, or employee of a subsidiary, or persons who have received reports
from said persons shall report to the Board of Corporate Auditors concerning any incident that has occurred or is at risk ofoccurring that could cause significant losses to the Company, when it is discovered that an employee or executive hascommitted a legal violation or fraud, or in the event of other matter deemed requiring reporting by the Board of Corporate
Auditors. Notwithstanding the above, a Corporate Auditor may, as necessary, demand a report from a Director or employee,
or a Director, Corporate Auditor, or employee of a subsidiary.

(2)
(3)

(4)
(5)

The Company prohibits any unfair treatment of persons making the aforementioned reports to the Board of Corporate
Auditors in response to having made such a report. The prohibition of such treatment shall be reinforced among Directors
and employees, as well as subsidiary Directors, Corporate Auditors, and employees.
Corporate Auditors shall attend Board of Directors’ meetings, management meetings, and any other important conferences
and committee meetings necessary to ascertain processes related to important decision-making and business execution.
As necessary, Corporate Auditors may request explanations from Directors and employees. Furthermore, Corporate
Auditors shall regularly hold meetings with the Representative Director to exchange opinions, promote communication, andensure the maintenance of an appropriate reporting structure.
In accordance with our Whistleblowing Regulations, the Company shall ensure an appropriate structure for reporting legal
infractions and other compliance issues to the Corporate Auditors.
When a Corporate Auditor requests the prepayment or reimbursement of expenses related to their execution of duties, said
expenses and liabilities shall be handled immediately excluding when it is deemed that said expenses were not necessary
to the execution of duties by said Corporate Auditors.

2. Basic Views on Eliminating Anti-Social Forces
No member of our Group, special interest affiliates, shareholders, or business partners, etc. shall have any relations with antisocial forces.
(1) Basic approach to the elimination of anti-social forces
Acting in accordance with the Solasto Group Code of Conduct, our Group rejects any and all relations with anti-social forces andprohibits any acts that work to assist the activities of anti-social forces.
We have created an Anti-Social Forces Response Manual to outline specific response policies and standards. Furthermore, toverify that no Group executive or employee constitutes any anti-social force, they are required to submit a pledge upon hiring
and are required to take necessary training.
(2) Status of structure for eliminating anti-social forces
We designate the Human Resources & General Affairs Division as the division of operations related to anti-social forces. We
also assign compliance management supervisors to each business division to gather information from our worksites and engage
in uniform measures throughout our Group. Our cooperation with external organizations includes membership in the Tokyo
Center for Removal of Criminal Organizations. We have registered the General Manager of our General Affairs Division as the
Unjust Claims Prevention Supervisor and participate in regular training. The Unjust Claims Prevention Supervisor works to gather
information related to anti-social forces and build a structure for cooperating with police.

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

Not Adopted

Supplementary Explanation―

2. Other Matters Concerning the Corporate Governance System<Initiatives to Establish a Timely Disclosure System>
The Group considers timely and appropriate disclosure to be an important element of corporate governance and a significant
responsibility to shareholders. The Company's policy is to promptly disclose financial results and other information that may havea significant impact on business results.
The basic policy for timely disclosure is to follow the internal procedures.

(Reference)【Schematic Diagram】

【Skills Matrix】■：Chairman □：Member●possesses

Committees to serve
Name

Toru Noda

Nomination,
Evaluation, andCompensation
Committee

Corporate
GovernanceCommittee□□

Masateru KawanishiExpertise and Experience
Marketing/Innovation

DX/ICT

Financial andAccounting/
M&A

●

●

●

●

●

●

●
●

Corporate
Organizational
Management Management●□

Yukio Kubota

■

□

●

●

●

Kenji Chishiki

□

□

●

●

●

Miki Mitsunari□□

Miho Tanaka

□

■

●

Masami Nishino□●

Hironori Yokote□

Kanae Fukushima□

Tsukasa Okamoto

●

Human
Resources/
Risk
Human
Management/
Resource
Sustainability
Development

●

●

●
●

●
●

●
●

●

●

●
●

(Notes) 1. The above list does not represent all the expertise and experience possessed by directors and auditors●●

【Reason for selecting each skill items】
Corporate Management:

As the business environment surrounding us continues to change, we need the experience and achievements of corporate management inorder to make appropriate management decisions and realize sustainable increases in corporate value.

Organizational Management:

In order for approximately 30,000 employees to demonstrate their high level of expertise and teamwork and continue to provide services ona stable manner, we need a high level of organizational management ability and experience.

Marketing/Innovation:

In order to lead the solution of social issues through our business, such as contributing to the declining birthrate and aging population andthe optimization of social security expenditures, it is necessary to have a deep understanding of business and the knowledge to createcustomers and markets with new ideas that are different from the conventional ones.

DX/ICT:

In order to continue to support local communities where people live with peace of mind by integrating "people" and "technology," it isnecessary to have a deep understanding of technology and knowledge to realize advanced and flexible utilization.

Financial Accounting/M&A:

In order to build a solid financial base and realize growth investments (new businesses, M&A) aimed at sustained improvement of corporate
value, it requires solid knowledge and experience in the financial and accounting fields.

Human Resources/Human
Resource Development:

Our greatest asset is "people," and in order to promote diversity in which approximately 30,000 employees can thrive in their respective
personalities and working styles while maximizing their capabilities, we need a knowledge to formulate a human resource strategy andaccomplish it.

RiskManagement/Sustainability:

We are responsible for businesses with a high public profile, thus consider "grow together with society" to be particularly important, and needknowledge to risk management and sustainability in light of laws and compliance.