This document has been translated from the Japanese original for reference purposes only. In the event of any
discrepancy between this translated document and the Japanese original, the original shall prevail. The Company
assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from thetranslation.

Corporate Governance Report

Last Update: June 28, 2024

SANKYO CO., LTD.

Akihiko Ishihara, Representative Director, President & CEO & COO
Contact: Corporate Planning Division TEL: +81-3-5778-7773
Securities Code: 6417
https://www.sankyo-fever.co.jp
The corporate governance status of SANKYO CO., LTD. (the “Company”) is as follows.

I.

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

1. Basic Views
The basic philosophy of the Company and its consolidated subsidiaries and affiliates (the “SANKYO Group”)
is to fulfill its mission, namely, to contribute to the sound development of pachinko and pachislot, which are
popular leisure activities in Japan, and to the quality of life in society at large as a leading company in thepachinko and pachislot industry. The SANKYO Group’s stakeholders include shareholders, pachinko parlors,
which are the Group’s customers, pachinko players, suppliers, local communities, and employees. One of themost important management tasks is to maintain good relations with each of these stakeholders, and theCompany recognizes this task as a basic component of corporate governance.
Based on the above, the Group has set the following fundamental policies for business operations:
1. Maximize stakeholder value and achieve the optimum distribution of that value
2. Ensure compliance with laws and regulations, social norms, and corporate ethics
3. Enhance efficiency and transparency of management
4. Inspire employees and develop their capabilities
5. Enhance society’s trust in the pachinko and pachislot industry[Reasons for Non-compliance with the Principles of the Corporate Governance Code] Updated[Supplementary Principle 3.1.3] Sustainability initiatives, etc.
The basic philosophy of the SANKYO Group is to fulfill its mission, namely, to contribute to the sounddevelopment of pachinko and pachislot, which are popular leisure activities in Japan, and to the quality of life
in society as a leading company in the pachinko and pachislot industry. Through consideration for andcooperation with all stakeholders, including customers, suppliers, shareholders, employees, and local
communities, the Group aims to realize both a sustainable society and continuous corporate growth so as toenhance corporate value. In order to further concretize this basic philosophy, the Company has decided toestablish a Sustainability Committee in April 2024, chaired by the Representative Director, President & CEO,and promote sustainability initiatives.
The Group disclosed its sustainability and human capital initiatives in the most recent securities report andthe corporate report. Moreover, the Company recognizes that intellectual property is sources of its
competitiveness. Having established the Intellectual Property Division, the Company is promoting its
intellectual property strategy. The Company has one of the largest number of patents in the pachinko andpachislot industry.
-1-

Led by the Sustainability Committee chaired by the Representative Director, President & CEO, discussion isunderway on the evaluation of various sustainability risks, including climate change, and theircountermeasures. In light of the deliberations, matters of particular materiality are reported to the Board of
Directors and the Management Committee. Regarding the response to climate-related information, discussionis underway with a view to disclosure of information utilizing the framework proposed by the Task Force on
Climate-related Financial Disclosures (TCFD), as well as endorsement of the TCFD recommendations.
Securities Report(https://www.sankyo-fever.co.jp/corporate/ir/library/report.html)
Corporate Report(https://www.sankyo-fever.co.jp/en/corporate/ir/library/annual.html)[Disclosure Based on the Principles of the Corporate Governance Code] Updated[Principle 1.4] Strategic Shareholdings
The Company does not engage in strategic shareholdings unless it considers it to be necessary. In addition,with respect to the standards for strategic shareholdings, such factors as the continuity of transactions andwhether they will serve the mid- to- long-term interests of the Company are assessed annually from acomprehensive viewpoint, and the results are informed to the Board of Directors.
With respect to the exercise of voting rights of strategic shareholdings, the Company will make decisions with
top priority on whether it will lead to increases of the Company’s corporate value.
[Principle 1.7] Related Party Transactions
When engaging in transactions with related parties or conflict of interest transactions with Directors, aresolution of the Board of Directors is required upon excluding the parties involved from the vote to prevent
harm to the interests of the Company and common interests of shareholders. In addition, the Company has its
officers submit written confirmations on the status of such transactions once a year. If an officer is to engage
in a significant transaction, the Company will request the officer to report to the Board of Directors.
[Supplementary Principle 2.4.1] Ensuring diversity in the appointment of core human resources, etc.
Comprehensively considering the experience and skills of employees, the Company promotes employees tomanagerial positions regardless of their gender or nationality, or whether they joined the Company
immediately after they graduated from schools or after they worked at another company. Nevertheless, theCompany has never appointed foreign nationals as managers due to the characteristics of the pachinko andpachislot business that the Company operates and operations sites, which is limited to the domestic market.
When it comes to the appointment of women and mid-career hires to managerial positions, the ratios ofwomen and of mid-career hires to all employees were 12% and 51%, respectively, as of March 31, 2024. The
ratios of female managers and of mid-career hires in managerial positions were 5% and 43%, respectively.
Owing to the nature of the pachinko and pachislot industry, men account for over 80% of the new graduate
applicants for the Company, and the number of female applicants is low. In these circumstances, with the aimof increasing the ratios of female employees and female managers, the Company has set targets as follows
and is promoting various measures linked to the degree of achievement of these targets.
(Metrics and targets)
Ratio of female hires to total hires: target of 15% or more
Average length of service of female workers: target of 17 years or more
Ratios of female managers is over 10%
The Company’s initiatives for promotion of human capital, diversity and inclusion are disclosed in the“Approach and initiatives for sustainability” section of the securities report.
[Principle 2.6] Roles of Corporate Pension Funds as Asset Owners
The Company has no corporate pension fund at present, and thus is not an asset owner. However, in order tosupport asset building by employees, the Company has a defined contribution pension plan for which theemployees themselves provide investment instructions. In order to facilitate stable asset building by
employees, the Company has selected an investment management institution with sophisticated expertise in
asset investment. The Company has established systems that contribute to stable asset building by employees,
such as the holding of seminars on defined contribution pensions as part of employee education in order to-2-

provide employees with basic knowledge about the plan upon the start of investment, points to bear in mind
concerning investment, and so on.
[Principle 3.1] Full Disclosure(i) [Management plans]
The Company disclosed its “Management Policies and Mid-Term Management Plan” etc. on our website.
https://www.sankyo-fever.co.jp/corporate/
The Company discloses the explanation of the management strategy and management plan on our website, in
Corporate Report, Securities Reports, Financial Statements, and Presentation on Business Results.
(ii) [Basic views and basic policy on corporate governance]
As stated in “I-1. Basic Views” of this Report.
(iii) [Policies in determining the remuneration of senior management and Directors]
The remuneration is determined by the Board of Directors upon the deliberation of the Nomination andRemuneration Committee, a majority of whose members consists of Independent Outside Directors.
The policy on determining amounts and calculation methods of remuneration, etc. for Directors are stated in
II -1. [Incentives] “Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods”
of this report. In addition, the details is disclosed in securities report.
(iv) [Board of Directors’ policies in the appointment/dismissal of senior management and the nomination ofcandidates for Directors]
The Company established a voluntary Nomination and Remuneration Committee that is independent of theBoard of Directors and the majority of whose members are Independent Outside Directors in January 2024
for the purpose of ensuring objectivity, transparency, and fairness in evaluation and decision-making
procedures concerning nomination and remuneration of Directors etc. so as to further enhance the corporate
governance system.
The Board of Directors of the Company determines the nomination of Directors and the appointment anddismissal of senior management based on the information presented by the Representative Director, President& CEO, taking into consideration the candidates’ qualifications, such as their experience and personal
achievements, motivation to improve their personal qualities, and their health, following discussion andsubmission of a report by the Nomination and Remuneration Committee.
(v) [Explanations with respect to the individual appointments and nominations when appointing senior
management and nominating candidates for Directors]
When nominating candidates for Directors, the Company discloses the reasons for each nomination in the
Reference Documents for the General Meeting of Shareholders.
* Reasons for nomination as a candidate for Directors (NOTICE OF THE 59th ORDINARY GENERALMEETING OF SHAREHOLDERS)
https://www.sankyo-fever.co.jp/corporate/ir/meeting.html[Supplementary Principle 4.1.1] Roles and Responsibilities of the Board of Directors (1)The Board of Directors Regulations specifies procedures for convocation of meetings of the Board of
Directors, the method of resolution, etc. and the Regulations on Official Authority specifies matters to bedeliberated and decided. The Board of Directors is operated in accordance with laws and regulations, theArticles of Incorporation, and the Board of Directors Regulations. The Company has an operating officer
system for the purposes of strengthening corporate governance and securing swiftness and accuracy ofdecision-making. To clarify the role of the Board of Directors as an organizational body to make management
decisions and supervise business execution, decisions on business execution have been delegated to Directors
or Operating Officers, except for matters that require the resolution by the Board of Directors.
[Principle 4.9] Independence Standards and Qualification for Independent Outside Directors
As stated in “II-1. Organizational Composition and Operation, Independent Directors” of this Report.
[Supplementary Principle 4.10.1] Use of Voluntary Committees-3-

The Company established the Nomination and Remuneration Committee, a committee that is independent of
the Board of Directors and the majority of whose members are Independent Outside Directors in January 2024
for the purpose of ensuring objectivity, transparency, and fairness in evaluation and decision-making
procedures concerning nomination and remuneration of Directors and senior management and further
enhancing the corporate governance system. The Committee discusses and reports on matters concerning
nomination and remuneration, etc. of Directors and senior management, and the Board of Directors adopts a
resolution, giving respect to the Committee’s report.
[Supplementary Principle 4.11.1] Views on the appropriate balance among knowledge, experience and skillsof the Board of Directors as a whole, and on diversity and the size
The Board of Directors of the Company consists of four Directors (excluding Directors who are Audit andSupervisory Committee Members) and five Directors who are Audit and Supervisory Committee Members(including three Outside Directors who are Audit and Supervisory Committee Members). As of June 30, 2024,
the ratio of independent Outside Directors was 33.3%, and the ratio of female Directors was 22.2%. To ensure
diversity of the Board of Directors, two of the three Outside Directors who are Audit and Supervisory
Committee Members have management experience at listed companies.
The Company disclosed a skills matrix, listing the knowledge, experience, skills, etc. expected of each
Director, in the Reference Documents for the General Meeting of Shareholders.
* Directors’ Skills Matrix (NOTICE OF THE 59th ORDINARY GENERAL MEETING OF
SHAREHOLDERS)
https://www.sankyo-fever.co.jp/corporate/ir/meeting.html[Supplementary Principle 4.11.2] Preconditions for Ensuring the Effectiveness of the Board of Directors
If an Outside Director of the Company concurrently serves as an officer of another listed company, theCompany shall request him/her to attend 80% or more of the Board of Directors meetings and to limit his/her
concurrent service to no more than five other listed companies in order that he/she will assign sufficient active
time necessary to appropriately fulfill the roles and responsibilities for the duties of Directors. In addition, thestatus of concurrent service is disclosed in the notice of convocation of the General Meeting of Shareholders
every year.
[Supplementary Principle 4.11.3] Preconditions for Ensuring the Effectiveness of the Board of Directors
The Company’s Board of Directors has lively discussions at its meetings involving all its members on topics
including its operation. In order to enhance the functions of the Board of Directors, the Company carries out
an evaluation of the Board of Directors once a year based on a questionnaire to gather the opinions from
Directors on “operation of the Board of Directors meetings” and “effectiveness of the Board of Directors.”
Upon aggregating and analyzing the results of the questionnaire, the Company assesses that the Board of
Directors has sufficiently high effectiveness.
In order to further strengthen the audit and supervisory function of the Board of Directors and further enhance
governance, the Company transitioned to a company with an Audit and Supervisory Committee, upon
obtaining approval at the Ordinary General Meeting of Shareholders held on June 27, 2024. Going forward,
the Company will strive to invigorate discussions at the meetings of the Board of Directors and enhance its
effectiveness under a structure of four Directors (excluding Audit and Supervisory Committee Members) andfive Directors who are Audit and Supervisory Committee Members (including three Outside Directors who
are Audit and Supervisory Committee Members).
[Supplementary Principle 4.14.2] Training for Directors
Upon their assumption of office, the Company briefs Directors on operation of the Board of Directors basedon various regulations and also briefs them on regulations concerning Directors and other regulations tofacilitate their understanding. The Company is implementing measures to ensure that Directors canappropriately fulfill their duties. For example, in addition to explanation on corporate governance, Directors
are also briefed on compliance. In addition, for Independent Outside Directors, the Company prepares
opportunities to inspect its major facilities, plants, etc. and holds briefings, as necessary.
[Principle 5.1] Policy for Constructive Dialogue with Shareholders
The Board of Directors has established a policy for constructive dialogue with shareholders. The Company
proactively conducts engagement activities such as dialogue with shareholders (interviews) in accordancewith the policy.
-4-

[Action to Implement Management that is Conscious of Cost of Capital and Stock Price] [Disclosure in
English is available]
The Company has formulated a three-year Mid-term Management Plan “SANKYO VISION 25-27 –A portentfor sustainable growth-” which started in FY2025 and ends in FY2027.
The outline of the Mid-term Management is composed of “Business Strategies”, “Financial Strategies”, and
ESG and sustainability as follows.
[Business strategies]
We aim to make our top sales share in the pachinko business a robust one, and also become one of thecompanies in the top group in the pachislot business.
[Financial strategies]
In order to achieve ROE that exceeds our capital cost, we will work on appropriate investment and measures
for return of profits to shareholders centered around measures to improve the return on sales.
[ESG and sustainability]
We will work to identify sustainability issues and solve such issues, while strengthening information
disclosure, in the aim of improving corporate value.
For details on the Mid-term Management Plan, please refer to the Company’s website
The Company’s website(https://www.sankyo-fever.co.jp/corporate/ir/policy.html)
The Mid-term Management Plan
(https://www.sankyo-fever.co.jp/corporate/modify/IR/)[Better Dialogue with Shareholders and Related Disclosure]This information is disclosed in the most recent Corporate Report.
Corporate Report(https://www.sankyo-fever.co.jp/en/corporate/ir/library/annual.html)

2. Capital Structure
Foreign Shareholding Ratio

More than 30%[Status of Major Shareholders] Updated
Name / Company Name
The Master Trust Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)
JP MORGAN CHASE BANK 380055
Hideyuki Busujima
Resona Bank, Limited.
Takeshi Busujima
JP JPMSE LUX RE BARCLAYS CAPITAL SEC LTD
EQ COAkiko Busujima
STATE STREET BANK AND TRUST COMPANY
505001
THE BANK OF NEW YORK MELLON 140044
Controlling Shareholder (excluding Parent
Company)
Parent Company

Number of Shares Owned
32,525,500
13,540,800
12,479,645
7,500,000
4,689,500
4,339,500

Percentage (%)
14.73
6.13
5.65
3.39
2.12
1.96

4,314,070

1.95

4,000,000

1.81

3,637,065

1.64

3,296,700

1.49----None

Supplementary Explanation Updated
Percentages of shares owned stated for the Status of Major Shareholders are the ratios of the numbers ofshares owned to the total number of shares outstanding (220,698,145 shares) excluding treasury stock(39,301,855 shares) as of March 31, 2024.
-5-3. Corporate Attributes
Listed Stock Market and Market Section

Tokyo Stock Exchange Prime Market

Fiscal Year-End

MarchType of Business

Machinery

Number of Employees (consolidated) as of the
End of the Most Recent Fiscal YearSales (consolidated) as of the End of the Most
Recent Fiscal Year
Number of Consolidated Subsidiaries as of the
End of the Most Recent Fiscal Year

From 500 to less than 1000
From ¥100 billion to less than ¥1 trillion
Less than 10

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling
Shareholder----5. Other Special Circumstances which may have Material Impact on Corporate Governance
-----

-6-

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 an Audit and Supervisory Committee[Directors]
Maximum Number of Directors Stipulated in
the Articles of Incorporation Updated
Term of Office Stipulated in the Articles ofIncorporation

14
1 yearChairperson of the Board

President

Number of Directors Updated

9

Appointment of Outside Directors

Appointed

Number of Outside Directors Updated

3

Number of Independent Directors Updated

3

Relationship with the Company (1) Updated
Name

Attribute

Taro Kitani

Attorney at law

Hiroyuki Yamasaki

Certified public
accountant

Takashi Miura

From another company***

Relationship with the Company*
a

b

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;“ᇞ” 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 pasta. Executive of the Company or its subsidiaries
b. Non-executive director or executive of a parent company of the Company
c. Executive of a fellow subsidiary of the Company
d. A party whose major client or supplier is the Company or an executive thereof
e. Major client or supplier of the Company or an executive thereof
f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or otherproperty from the Company besides remuneration as an officer
g. Major shareholder of the Company (or an executive thereof if it is a legal entity)
h. 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)
i. Executive of a company, between which the Company mutually appoints outside officers (the director
himself/herself only)
j. Executive of a company or organization that receives a donation from the Company (the director
himself/herself only)
k. Others-7-

Relationship with the Company (2) Updated

Name

Taro
KitaniHiroyuki
Yamasaki

Audit andSupervisory
Committee
Members○○

Designationas
Independent
Director

Supplementary
Explanation of
the Relationship

○

-----

○

The Director in question
was engaged in theexecutionofaudit
servicesfortheCompany during his
tenure at ChuoAoyama
Audit Corporation until
2006. He was not
involved in any audit
services, etc. for theCompany at Ernst &Young ShinNihon LLC
where he worked from2007 to 2017 after heretiredfrom
ChuoAoyama
Audit
-8-

Reasons of Appointment
Mr. Taro Kitani is well versed incorporate legal affairs as an attorney at
law and has sufficient insight into
corporate governance. He has beenstating objective and fair opinions at
meetings of the Board of Directors froma third-party perspective, considering
the achievement of both economic
performance and social performance.
He is overseeing the Company’s
management appropriately and iscontributing to strengthening of theCompany’s corporate governance.
Although Mr. Kitani has never been
directly
involved
incorporate
management, for the reasons statedabove, the Company believes that hewill be able to adequately perform
decision-making on important mattersof the Company’s management andoversight of business execution as an
OutsideDirector,
Audit
andSupervisory
Committee
Member.
Therefore, the Company appointed him
as an Outside Director, Audit andSupervisory Committee Member. He is
unlikely to cause conflict of interest
with shareholders based on the
Company’s independence criteria, andtherefore has been appointed as
Independent Directors.
Mr. Kitani has never been the
Company’s legal advisor.
Mr. Hiroyuki Yamasaki has a wealth ofprofessional knowledge on finance andaccounting cultivated through his career
as a certified public accountant. He also
has many years of experience in
conducting accounting audits ofcompanies at audit firms. He isproviding advice and suggestions on
overallmanagementfromanindependent, objective standpoint basedon his expertise, including experience asa manager of a listed company, and iscontributing to strengthening theeffectiveness of the decision-making
function and the oversight function of
the Company’s Board of Directors.

Corporation. Moreover,as a sufficient period oftime has passed since hisretirement from the said
auditing firm in 2017,and he has not been
involvedinanyoperations of the said
auditing firm since hisretirement,theCompany judges that his
independenceissufficiently secured.

Takashi
Miura

○

○

-----

For the reasons stated above, theCompany believes that he will be able toadequately perform decision-making onimportant matters of the Company’s
management and oversight of businessexecution as an Outside Director, Audit
and Supervisory Committee Member.
Therefore, the Company appointed him
as an Outside Director, Audit andSupervisory Committee Member. He is
unlikely to cause conflict of interest
with shareholders based on the
Company’s independence criteria, andtherefore has been appointed as
Independent Directors.
Mr. Takashi Miura has a wealth ofexperience and deep insight gained
through his long years of service as acorporate manager. He is expected toprovide advice and suggestions on
overallmanagementfromanindependent, objective standpoint basedon his experience and to contribute tostrengthening the effectiveness of thedecision-making function and theoversight function of the Board of
Directors.
For the reasons stated above, theCompany believes that he will be able toadequately perform decision-making onimportant matters of the Company’s
management and oversight of businessexecution as an Outside Director, Audit
and Supervisory Committee Member.
Therefore, the Company appointed him
as an Outside Director, Audit andSupervisory Committee Member.
He is unlikely to cause conflict ofinterest with shareholders based on the
Company’s independence criteria, andtherefore has been appointed as
Independent Directors.

[Audit and Supervisory Committee]
Committee’s Composition and Attributes of Chairperson Updated

Audit and Supervisory
Committee

No. of Total
Members

No. of Fulltime Members

No. of Inside
Directors

No. of Outside
Directors

Committee Chairperson

5

1

2

3

Inside director-9-Appointment of Directors and/or Employees
to Support the Audit and Supervisory
Committee Updated

Appointed

Matters Related to the Independence of Such Directors and/or Employees from Executive Directors Updated
The Company has established a Secretariat of Audit and Supervisory Committee to assist Audit andSupervisory Committee Members’ duties. If the Company assigns full-time staff at the Secretariat of Audit
and Supervisory Committee, such staff shall be under the command and control of Audit and Supervisory
Committee Members. Any concurrent service of the staff at another department or his/her performance
evaluations or personnel changes shall be decided with approval from Audit and Supervisory Committee
Members in advance.
Cooperation among Audit and Supervisory Committee, Accounting Auditor and Internal Audit Department
UpdatedThe Company has three Outside Directors who are Audit and Supervisory Committee Members, who haveno conflict of interest with the Company, audit and supervise the execution of duties by Directors at its Boardof Directors, and therefore has developed a system in which monitoring of management from an external
perspective functions sufficiently. Moreover, the Company’s Audit and Supervisory Committee, the
Accounting Auditor, and the Internal Audit Office strive to coordinate with each other by exchanging opinions
as necessary when drawing up audit plans and implementing interim and year-end audits. At meetings theyexchange various opinions from the viewpoint of audit reporting, as well as improving audit quality,
improving audit efficiency, and strengthening corporate governance.
[Voluntary Committees]
Establishment of Voluntary Committee(s)Corresponding to Nomination Committee orRemuneration Committee Updated

Established

Committee’s Name, Composition, and Attributes of Chairperson Updated

Committees
Corresponding
to Nomination
Committee
Committees
Corresponding
to Remuneration
Committee

Name ofCommittee

No. of
Total
Members

No. ofFull-timeMembers

No. ofInsideDirectors

No. ofOutsideDirectors

No. ofOutsideExperts

No. ofOthersCommittee
Chairperson

Nomination
andRemuneration
Committee

4

0

1

3

0

0

Insidedirector

Nomination
andRemuneration
Committee

4

0

1

3

0

0

Insidedirector

Supplementary Explanation Updated
The Company established the Nomination and Remuneration Committee, a committee that is independent of
the Board of Directors and the majority of whose members are Independent Outside Directors in January 2024
for the purpose of ensuring objectivity, transparency, and fairness in evaluation and decision-making
procedures concerning nomination and remuneration of Directors and senior management and further
enhancing the corporate governance system.
[Independent Directors]- 10 -

Number of Independent Directors Updated

3

Matters relating to Independent Directors□ The Company designates all Outside Directors who meet the requirements for Independent Directors as
Independent Directors.
□ The Company has established a minimal standards for attribute information (relationship with theCompany): for a relationship with a customer or supplier or a person formerly working therefor, less than
2% of net sales of the Company and the customer or supplier; for a relationship with a donee or a person
formerly working therefor, the total annual sum of the donation not exceeding ¥10 million or 30% of thetotal annual expenses of the donee, whichever is larger.
□ When appointing Outside Directors, the Company judges their independence in accordance withindependence criteria as shown in the Guidelines for Listing of the Tokyo Stock Exchange as well as thecategorical standards model to assist in determining independence announced by the Japan Association of
Corporate Directors, etc.
[Incentives]
Implementationofmeasureson

granting

incentive to Directors

Introduction of performance-linked compensation

Supplementary Explanation Updated
The Company resolved at the Board of Directors meeting held on May 11, 2023 to introduce a performancelinked stock compensation plan and the proposal to introduce this plan was approved at the 58th Ordinary
General Meeting of Shareholders held on June 29, 2023. Meanwhile, the Company transitioned from acompany with a Board of Statutory Auditors to a company with an Audit and Supervisory Committee basedon the resolution to amend the Articles of Incorporation at the 59th Ordinary General Meeting of Shareholders
held on June 27, 2024. Accordingly, the Company re-determined the amounts of compensation and details of
the plan, and obtained approval at the said Ordinary General Meeting of Shareholders.
With regard to the compensation limit of the stock-compensation-type stock options for the Company’s
Directors (in an amount not exceeding ¥200 million per year), which was approved at the 49th Ordinary
General Meeting of Shareholders held on June 27, 2014, the Company abolished such compensation limit by
the introduction of this plan, and shall not make any allotment of share acquisition rights. However, such shareacquisition rights already granted to the Company’s Directors shall survive unless they have been exercised.
For details on the performance-linked compensation, please refer to “Disclosure of Policy on Determining
Remuneration Amounts and Calculation Methods” in this Report. For details on status of share acquisitionrights already granted to the Company’s Directors, please refer to securities report.
Recipients of Stock Options
Supplementary Explanation[Director Remuneration]
Disclosure
Remunerationof

Individual

Directors’

Selected Directors- 11 -

Supplementary Explanation Updated
The amount of remuneration, etc. for Directors and Statutory Auditors of the Company for the fiscal year
ended March 31, 2024 was as follows.
Classification / Total remuneration, etc. / Fixed compensation / Performance-linked compensation /Performance-linked stock compensation / Number of Directors and Statutory Auditors covered
Directors (excluding Outside Directors) / ¥768 million / ¥253 million / ¥252 million / ¥262 million / 3
Statutory Auditors (excluding Outside Statutory Auditors) / ¥37 million / ¥37 million / - / - / 3
Outside Directors and Outside Statutory Auditors / ¥11 million / ¥11 million / - / - / 4(note) Amount of performance-linked stock compensation is amounts recorded as expenses in
the fiscal year ended March 31, 2024 for performance-linked stock compensation of three
directors (excluding Outside Directors).
The amount of consolidated remuneration, etc. for each Director is as follows. (limited to a person whose total
consolidated remuneration, etc. is ¥100 million or more)
Name / Classification / Total consolidated remuneration, etc. / Company classification, fixed compensation /Company classification, performance-linked compensation / Company classification, performance-linked
stock compensation
Hideyuki Busujima / Director / ¥547 million / Filing company, ¥180 million / Filing company, ¥180 million/ Filing company, ¥187 million
Akihiko Ishihara / Director / ¥119 million / Filing company, ¥38 million / Filing company, ¥39 million / Filingcompany, ¥41 million
Ichiro Tomiyama / Director / ¥109 million / Filing company, ¥34 million / Consolidated subsidiary Bisty Co.,
Ltd., ¥2 million / Consolidated subsidiary JB Co., Ltd., ¥6 million / Filing company, ¥33 million / Filingcompany, ¥34 million
Policy on Determining Remuneration Amounts
Establishedand Calculation Methods

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods□ Matters related to the policy on determining the details of remuneration for individual Directors
The Policy on Determining the Details of Remuneration, etc. for Individual Directors (hereinafter, the“Determination Policy”) described below was resolved by the Board of Directors of the Company (resolution
made on February 8, 2021, the revision made on June 27, 2024).
The Company’s system for remuneration, etc. of Directors (excluding Directors who are audit and supervisorycommittee members and Outside Directors) is designed to enhance linkage with shareholders’ interests inorder to function effectively as an incentive for Directors to achieve sustainable and stable enhancement of
the Company’s performance and corporate value. To determine remuneration of individual Directors, theCompany’s basic policy is to ensure that the level of remuneration reflects the responsibilities, performance,
the degree of contribution, and other factors. Directors’ remuneration consists of basic compensation, which
is fixed compensation, performance-linked compensation as bonuses, and performance-linked stockcompensation. As for remuneration of Outside Directors, only basic compensation is paid in view of theirduties. As for remuneration of Directors who are audit and supervisory committee members, it consists ofbasic compensation and bonuses as fixed compensation not linked to performance.
i. Basic compensation
The basic compensation is fixed compensation: monthly salaries in the same amounts are paid at the end ofeach month. Basic compensation for Directors (excluding Directors who are Audit and Supervisory
Committee Members and Outside Directors) is determined by the Board of Directors upon the deliberation of
the Nomination and Remuneration Committee, a majority of whose members consists of Independent Outside
Directors. Basic compensation for Directors who are Audit and Supervisory Committee Members isdetermined upon consultation by Directors who are Audit and Supervisory Committee Members.
- 12 -

ii. Performance-linked compensation and non-monetary compensation, etc.
Performance-linked compensation (bonus) shall be paid on the bonus payment date in July. Amounts ofperformance-linked compensation shall be determined by the Board of Directors within a range of 0% to150% of the standard amount, without exceeding the maximum amount of compensation determined byresolution of the General Meeting of Shareholders, based on the degree of achievement of consolidated
operating income for the previous fiscal year, while also considering the business environment and otherfactors in the current fiscal year. The amount of bonus for executive officers is also determined within therange of 0% to 150% of the standard amount. Bonuses for Operating Officers are also linked to businessperformance in the same manner as those for Directors. As for remuneration of Directors who are Audit andSupervisory Committee Members (excluding Outside Directors), it consists of basic compensation andbonuses as fixed compensation not linked to performance.
Non-monetary compensation, etc. is performance-linked stock compensation. The purpose is to clarify thelinkage between compensation of Directors of the Company and the Company’s performance and stock value,enhance their motivation toward contributing to improvement of the med- to long-term performance andincreasing corporate value, by sharing them with the shareholders not only the benefits of a rise in stock price
but also the risk of a fall in stock price. The ratio of the fixed portion to the performance-linked portion is 1:4.
Performance-linked stock compensation is granted at approximately the same time each year as points,
without exceeding the maximum amount determined by resolution of the General Meeting of Shareholders,
based on the degree of achievement of consolidated operating income for the previous fiscal year.
Performance-linked stock compensation is also granted to Operating Officers in a manner similar to that for
Directors.
Performance-linked compensation and non-monetary compensation, etc. shall be determined based on thecalculation method determined by the Board of Directors, provided the Board of Directors will determine
them by taking into account opinions and advice from the Nomination and Remuneration Committee or
opinions, etc. of the Audit and Supervisory Committee, if available.
The amounts of performance-linked compensation (bonus) and non-monetary compensation, etc.
(performance-linked stock compensation) vary depending on the achievement of consolidated operating
income for each fiscal year, which the Company considers important as profit from its core business, andchanges in stock value. Therefore, the proportions of remuneration change, however, basic compensation,
performance-linked compensation (bonus), and non-monetary compensation, etc. (performance-linked stockcompensation) are determined such that the ratio is approximately 5:3:2, when performance-linked
compensation is paid in standard amounts.
□ Matters related to resolution at the General Meeting of Shareholders on remuneration, etc. of Directors(excluding Directors who are Audit and Supervisory Committee Members) and Directors who are Audit
and Supervisory Committee Members
It was resolved at the 59th Ordinary General Meeting of Shareholders held on June 27, 2024, that the
maximum amount of compensation to be paid to Directors (excluding Directors who are Audit andSupervisory Committee Members) shall not exceed ¥1,200 million per year. (The number of Directors at theclosing of the said Ordinary General Meeting of Shareholders was four.) It was resolved at the 59th Ordinary
General Meeting of Shareholders held on June 27, 2024, that the maximum amount of performance-linked
stock compensation shall not exceed 500 million yen and 625,000 shares a year, separately from the maximum
amount of monetary compensation for Directors stated above (The number of eligible Directors for this planat the closing of the said Ordinary General Meeting of Shareholders was four).
It was resolved at the 59th Ordinary General Meeting of Shareholders held on June 27, 2024, that the
maximum amount of compensation to be paid to Directors who are Audit and Supervisory Committee
Members shall not exceed ¥200 million per year. (The number of Directors who are Audit and Supervisory
Committee Members at the closing of the said Ordinary General Meeting of Shareholders was five.)
Remuneration of Directors who are Audit and Supervisory Committee Members consists only of fixedcompensation from the viewpoint of independence and objectivity and the amounts of remuneration ofindividual Directors who are Audit and Supervisory Committee Members are determined upon consultation
by Directors who are Audit and Supervisory Committee Members.
[Supporting System for Outside Directors] Updated
For Outside Directors, a person in charge distributes the relevant materials for agenda, etc. at the Board of
Directors meeting in advance and gives explanations while appropriately providing information as necessary.
- 13 -

In addition, a “Secretariat of the Audit and Supervisory Committee” has been established in order to assist theperformance of duties by the Audit and Supervisory Committee, including the Outside Directors who are
Audit and Supervisory Committee Members.

2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration
Decisions, etc. (Overview of Current Corporate Governance System) Updated□ Overview of current system
The Company adopts “a company with an Audit and Supervisory Committee” and has four Directors(excluding Directors who are Audit and Supervisory Committee Members) and five Directors who are Audit
and Supervisory Committee Members (including three Outside Director, Audit and Supervisory Committee
Member) as of June 28, 2024. In addition, in April 2008 the Company introduced an operating officer system
for the purposes of strengthening corporate governance and securing swiftness and accuracy of decisionmaking. The Company specifies the Board of Directors as an organ that makes management decisions andoversees the execution of business operations, and positions operating officers as responsible persons
entrusted by the Board of Directors with the authority to execute business operations in the fields under theircharge.
The Nomination and Remuneration Committee, a committee that is independent of the Board of Directors
and the majority of whose members are Independent Outside Directors, discusses and reports on mattersconcerning nomination and remuneration, etc. of Directors and senior management, and the Board of
Directors adopts a resolution, giving respect to the Committee’s report.
(Composition of Directors and operating officers)
Four Directors (excluding Directors who are Audit and Supervisory Committee Members): composed of four
members, including one Directors concurrently serving as operating officers. Three Directors are male andone Director is female.
Five Directors who are Audit and Supervisory Committee Members: composed of five members, including
three an Outside Director, Audit and Supervisory Committee Member, who meet the requirements for
Independent Director. Four Directors who are Audit and Supervisory Committee Members are male and one
Director who is Audit and Supervisory Committee Member is female.
Operating officers (not concurrently serving as Directors) (fourteen members): composed of fourteen male
operating officers.
In addition to the Board of Directors, the Company has established a “Management Committee” consistingof Directors and Operating Officers to be held regularly each month. The Management Committee makes
preliminary deliberations on matters to be resolved at the Board of Directors meeting and makes swift andaccurate decisions on matters relating to business strategies and supervision of overall compliance and risk
management, and instructs each division of the Company and each group company to execute matters decided.
In addition, to promote flexible business operations, the Company has established “Information Security
Committee” and “Sustainability Committee”, and several committees for specific objectives, such as a “Sales
Strategy Committee” and “Product Committee.”With respect to internal audits, the Company has established an Internal Audit Office composed of threemembers under the direct rule of the President as an internal audit department. The Audit and Supervisory
Committee consists of five members, including three Outside Directors who are Audit and Supervisory
Committee Members. When implementing audits, the Company confirms and deliberates whether businessactivities in each division or base are in compliance with laws and regulations and various rules, etc. andoperate appropriately and efficiently, based on an audit plan formulated at the beginning of the fiscal year.
In addition, the Company forms the “J-SOX Project” across the Company for internal control, and the Internal
Audit Office points out or makes proposals conducive to improvement to the Project from a viewpoint of aninternal statutory auditor. Besides, the Audit and Supervisory Committee investigates the Project byconducting hearings, etc., as necessary, to oversee and verify the status of maintenance and operation. The
Audit and Supervisory Committee also exchanges opinions with the Accounting Auditor on the Project asnecessary to mutually grasp and cooperate on matters to be shared.
□ Status of accounting audit- 14 -

The Company has concluded an audit agreement with Ernst & Young ShinNihon LLC to serve as anaccounting auditor pursuant to the Companies Act and to conduct accounting audit pursuant to the Financial
Instruments and Exchange Act.
Members of audit corporation engaged in the audit of the Company for the fiscal year ended March 31, 2024
Name of the certified public accountants engaged in the audit
Designated partner engagement partner: Motoaki Ikeuchi
Designated partner engagement partner: Tatsuya Suzuki
Number of audit assistants
Certified public accountants: 8
Other: 18
Note: Other includes persons who have passed the CPA examination, persons engaged in system audits, etc.
Details of audit remuneration
Remuneration for audit certification services: ¥65 million
Remuneration for non-audit services: -3. Reasons for Adoption of Current Corporate Governance System Updated
The Company transitioned from ”a company with Board of Statutory Auditors” to “a company with the Audit
and Supervisory Committee” as of June 27, 2024, and aims to strengthen the supervisory functions of theBoard of Directors and accelerate decision-making and business execution through delegation of authority
with the aim of achieving continuous enhancement of corporate value.
Prior to the transition of the corporate governance system, the Company established the Nomination andRemuneration Committee, a committee that is independent of the Board of Directors and the majority ofwhose members are Independent Outside Directors in January 2024. The Committee discusses and reports on
matters concerning nomination and remuneration, etc. of senior management and Directors, and the Board of
Directors adopts a resolution, giving respect to the Committee’s report.
In April 2008 the Company has introduced an executive officer system to strengthen corporate governanceand ensure swift and accurate decision-making. The Company has clearly defined the Board of Directors as
an organization that makes management decisions and supervises the execution of business. Executive
officers are delegated authority by the Board of Directors and are positioned as responsible for the executionof business in their assigned fields.
The Company believes that the current system is appropriate in view of the Group’s business activities andscale, and that it is functioning effectively to earn the trust and meet the expectations of shareholders andother stakeholders.

- 15 -

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Meeting of Shareholders and Smooth Exercise of Voting Rights
UpdatedEarly Notification of General
Meeting of Shareholders
Allowing Electronic Exerciseof Voting Rights
Participation in Electronic
Voting Platform and othermeasures to facilitate exercise
of voting rights by institutional
investors
Providing Convocation Notice(Summary) in English
Other

Supplementary Explanations
For the Ordinary General Meeting of Shareholders held on June 27, 2024, theCompany commenced electronic provision of information on June 3, 2024
and sent the notice of convocation on June 7, 2024.
In use, starting from the Ordinary General Meeting of Shareholders held in
June 2010.
In use, starting from the Ordinary General Meeting of Shareholders held in
June 2010.

Disclosed on the Company’s website, etc., starting from the Ordinary General
Meeting of Shareholders held in June 2009.
Introduced the use of visual media, starting from the Ordinary General
Meeting of Shareholders held in June 2006, to promote shareholders’
understanding of the Company.

2. IR Activities Updated
Explanation by

Supplementary Explanations

Regular Investor Briefings for
Individual Investors

Regular Investor Briefings forAnalysts and Institutional
Investors

Regular Investor Briefings forOverseas Investors

Posting of IR Materials on
WebsiteHeld briefings regularly for individual investors at
the branch offices, etc. of securities companies. Did
not hold briefings from the fiscal year ended March
31, 2021 to the fiscal year ended March 31, 2023 inview of the COVID-19 pandemic.
Held briefings for individual investors online in thefiscal year ended March 31, 2024. Intends tocontinuously provide the same activities toindividual investors on an ongoing basis.
Held briefings on business results following theclosing of the fiscal year and following the closingof the first six-month period. Held briefings asnecessary, in addition to the above.
Beginning with the briefing on business results forthe second quarter of the fiscal year ending March
31, 2022, a transcription of the contents of thebriefing will be posted on the Company’s website
and distributed through information vendors.
Regularly participated in conferences in Japan
sponsored by securities companies to which many
overseas investors were invited.Visited investors inNorth America in March 2017.
Posted various press releases (Japanese/English),financialstatements(“kessantanshin”)(Japanese/English), securities reports, quarterly
report,results
briefings
materials(Japanese/English), financial historical data
(Japanese/English),
corporatereports(Japanese/English), etc.

- 16 -

Representative

Yes

Yes

Yes

Establishment of Department
and/or Manager in Charge of
IR
Other

3.

Established the IR Office in the Corporate Planning
Division as a department dedicated to IR.
Otherwise conducted meetings to observe facilities
and product briefings, etc. in a timely manner.

Measures to Ensure Due Respect for Stakeholders Updated
Stipulation of Internal Rules
for Respecting the Position of
Stakeholders
ImplementationofEnvironmental Activities, CSR
Activities etc.
Development of Policies on
Information
Provisionto
Stakeholders

Supplementary Explanations
As with the Basic Views on Corporate Governance, we express our stance ofprimary emphasis on stakeholders in our basic philosophy.
With regard to “pachinko and pachislot machines,” our key products, we
make efforts on product development based on recycling in order to restrainindustrial waste and reuse parts and resources. Specific initiatives aredisclosed in the Company’s website and the Corporate Report.
In addition to statutory information disclosure, we define information on facts
expected to significantly affect the SANKYO Group’s management and theCompany’s stock price, etc. as “Material Information,” formulate a policy towork with proactive information disclosure, and implement it.

- 17 -

IV. Matters Related to the Internal Control System
1. Basic Views on Internal Control System and the Progress of System Development Updated□ Basic Views
The SANKYO Group has established a basic policy on constructing and operating an internal control system
by resolution at the Board of Directors, in order to realize its basic stance toward corporate governance,
namely, “to maintain good relations with each of these stakeholders, including shareholders, pachinko parlors,
which are the Group’s customers, pachinko players, suppliers, local communities, and employees.” The basic
policy is established with close attention paid to the viewpoints of shareholders among Group stakeholders
by emphasizing the construction and maintenance of “reliable financial reporting,” “effectiveness andefficiency of business,” and the “compliance system.”
The Group operates in an environment which is conducive to nurturing the perception of legal compliance,
because the development, manufacturing, and sale of game machines, the key businesses of the Group since
its foundation, require permissions and approvals as preconditions pursuant to laws and regulations such as
the “Act on Control and Improvement of Amusement and Entertainment Business.”□ Progress of system development
1. System to ensure that the execution of duties by Directors and employees complies with laws andregulations and the Articles of Incorporation
The SANKYO Group shall supervise corporate ethics and overall compliance and formulate policies andmeasures at a “Management Committee” consisting of Directors (excluding Directors who are Audit andSupervisory Committee Members) and operating officers of the Company. In addition, the Company seeks to
improve transparency and ensure objectivity of management by appointing multiple Independent Directors.
The Internal Audit Office of the Company (hereinafter, the “Internal Audit Office”) audits the Group’s statusof compliance with laws and regulations and internal rules by conducting regular internal audits. The Internal
Audit Office shall report the results of audits to the President of the Company and promptly formulate
measures for compliance or assist improvement if any problems are detected. In addition, the Group
distributes slogans on the execution of operations to all of its officers and employees, in order to spreadawareness of the importance of compliance and the specific code of daily conduct, while providing guidanceand supplementary training mainly at outside educational institutions, etc., as necessary.
The SANKYO Group adopts a resolute stand against anti-social forces and bodies, works in close cooperation
with the police and other relevant organizations, and always strives to take sensible actions so as to not takepart in anti-social acts, with common sense and a sense of justice in mind.
2. System to store and manage information on the execution of duties by Directors and employees
The Company shall manage information on the execution of duties and store and manage related documents,
etc. in accordance with laws and regulations and internal rules. The Company shall continue to monitor andguide the status of storage and management of information mainly through internal audits, etc. by the Internal
Audit Office. In addition, the Company shall promptly disclose the stored information as necessary incooperation with a person responsible for handling information for timely disclosure.
3. Rules and other systems pertaining to management over risks of loss
The “Management Committee” shall supervise overall risks in relation to the business operations of theCompany and set forth a policy on specific responses upon the occurrence of significant crises and a policyon the risk management system. In addition, the Internal Audit Office and “Sustainability Committee”, etc.
shall abstract potential risks of the SANKYO Group, deliberate on measures to mitigate risks, and revise
internal rules, etc. as necessary, so as to enable the response system to take root in the Group. With respect torisk management in ordinary business operations, each division of the Group shall take control in accordancewith internal rules and the status of compliance shall be monitored and supervised through internal audits by
the Internal Audit Office.
4. System to ensure the efficient execution of duties by Directors
In addition to ordinary meetings of its Board of Directors, the Company shall hold extraordinary meetings of
its Board of Directors for swift decision-making as necessary, in order to make important management
decisions and oversee the execution of operations by Directors (excluding Directors who are Audit andSupervisory Committee Members).
- 18 -

The Company has introduced an operating officer system to strengthen management decision-making
functions and oversight functions by the Board of Directors. In addition, the “Management Committee” shallbe periodically held each month to make detailed preliminary deliberations on matters to be resolved at theBoard of Directors meeting, and shall make swift and accurate decisions on matters relating to management
strategies, etc. Furthermore, for the flexible promotion of Group business, the Company has establishedseveral committees for specific objectives, such as the “Product Committee” to discuss the development of
new products and the “Sales Strategy Committee” to decide sales policy, and thereby clarifies the
responsibilities and roles regarding the execution of duties by Directors under the division of duties.
5. System for ensuring appropriate business operations within the Group
Each company of the SANKYO Group shall periodically report management conditions, etc. to the
Accounting Division of the Company each month. Fairness and efficiency, as well as the status of compliance,
etc., of each group company shall be monitored through internal audits by the Internal Audit Office. In
addition, with regard to the dissemination of compliance, the Company shall establish a system under which
the Company not only gives daily guidance by distributing and posting slogans on the execution of operations,but also offers opportunities to participate in the Company’s training as necessary. With regard to the
management of each group company, the Company shall receive reports on important matters at the“Management Committee” and discuss them in advance, while respecting its autonomy.
6. System for ensuring reliability of financial reporting
The Company and each major company of the SANKYO Group shall formulate the “Basic Policy for Internal
Control” in order to ensure the appropriateness of documents related to financial accounting as set forth in the
Financial Instruments and Exchange Act and other information, and establish and operate a system underwhich internal control over financial reporting is implemented on a company-wide level and operational
process level in accordance with the Policy.
7. Matters related to the employees if Audit and Supervisory Committee request for employees assisting with
their duties
The Company may establish a Secretariat of Audit and Supervisory Committee to assist Audit andSupervisory Committee Members’ duties, assign employees as full-time staff or staff serving concurrently atother departments as necessary, and decide upon personnel affairs thereof after consulting in advance by andbetween the Directors (excluding Directors who are Audit and Supervisory Committee Members) and Audit
and Supervisory Committee Members.
8. Matters to ensure the independence of employees assisting with the Audit and Supervisory Committee’duties from the Directors (excluding Directors who are Audit and Supervisory Committee Members), and theeffectiveness of instructions to the employees
If the Company assigns full-time staff at the Secretariat of Audit and Supervisory Committee, such staff shallbe under the command and control of Audit and Supervisory Committee Members. Any concurrent serviceof the staff at another department or his/her performance evaluations or personnel changes shall be decidedwith approval from Audit and Supervisory Committee Members in advance.
9. System for reporting by Directors (excluding Directors who are Audit and Supervisory Committee
Members) and employees to the Audit and Supervisory Committee and other reporting to the Audit andSupervisory Committee, and systems to ensure that persons who report to the Audit and Supervisory
Committee are not treated disadvantageously because of their reporting
The Company shall maintain a system under which the Audit and Supervisory Committee shall request the
Directors (excluding Directors who are Audit and Supervisory Committee Members) and employees, etc. of
the SANKYO Group to report or explain facts as necessary to fully monitor the status of execution of duties
and compliance by Directors.
In addition, to grasp the process of important decision-making and the status of execution of operations, Audit
and Supervisory Committee Members may attend the Board of Directors meetings and other important
meetings of the Company and receive reports about important information of the Group, as well as inspectmajor approval documents and others concerning the execution of operations, and request Directors(excluding Directors who are Audit and Supervisory Committee Members), etc. to report or explain the facts.
If Directors (excluding Directors who are Audit and Supervisory Committee Members) and employees, etc.
of the SANKYO Group discover a fact likely to significantly damage the Group, they shall report the fact to- 19 -

a department in charge, etc. or the Audit and Supervisory Committee Members of the Company, pursuant tolaws and regulations, etc.
Directors (excluding Directors who are Audit and Supervisory Committee Members) and employees, etc. of
the Group who have reported to Audit and Supervisory Committee Members shall not be treateddisadvantageously in any way whatsoever as a consequence of such reporting, and the Company shall seek
the thorough elimination of such disadvantageous treatment.
10. Matters related to procedures for the advance payment or redemption of expenses arising from theexecution of duties by Audit and Supervisory Committee Members and other policies for handling of expenses
or liabilities arising from the execution of their duties
Expenses arising from the execution of duties by Audit and Supervisory Committee Members shall be borneby the Company upon request by the Audit and Supervisory Committee Member unless the Company provesthat the expenses or liabilities relating to such request are not required for the execution of duties by the Audit
and Supervisory Committee Member. In addition, if an Audit and Supervisory Committee Member requests
the Company to make an advance payment of such expenses, the Company will comply with the request.
11. Other systems for ensuring effective audits by Audit and Supervisory Committee
The Internal Audit Office shall regularly report to the Audit and Supervisory Committee on theimplementation status of internal audits, and exchange opinions.
In addition, Audit and Supervisory Committee Members may request attorneys at law or other professionals
to give advice, etc. on audit operations as necessary.

2. Basic Views on Eliminating Anti-Social Forces and the Progress of System Development
The Company adopts a resolute stand against anti-social forces and bodies, works in close cooperation withthe police and other relevant organizations, and always strives to take sensible actions so as to not take partin anti-social acts, with common sense and a sense of justice in mind.

- 20 -

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

Not Adopted

Supplementary Explanation-----

2. Other Matters Concerning Corporate Governance System Updated□ Efforts to conduct timely disclosure
To conduct fair and equitable information disclosure in a timely and appropriate manner, the Company
complies with laws and regulations and rules and has established a disclosure system in accordance with the“Regulations on the Management of Internal Information,” its internal rules. The IR Office, Corporate
Planning Division takes charge of information disclosure under a person responsible for handling information;
provided, however, that the IR Office discloses account settlement-related information in cooperation with
the Accounting Division.
□ Judgment for timely disclosure
We define information on facts expected to significantly affect the SANKYO Group’s management and theCompany’s stock price, etc. as “Material Information.” “Material Information” is reported by the person
responsible for handling information to the Representative Directors and Board of Directors, which
deliberates whether or not to disclose the information.
□ Internal system relating to timely disclosure
For details on the Company’s internal system relating to timely disclosure, please see the attachment.

- 21 -

The Company’s Corporate Governance System

General Meeting of Shareholders
Appointment/Dismissal

Appointment/Dismissal
Cooperation

Appointment/Dismissal

Audit, etc.
Audit and Supervisory
Committee

Board of Directors

Consult

SuggestAccounting
Auditor Ernst

Directors who are Audit and Supervisory
Committee Members
Cooperation

Directors

ReportInternal Audit Office

Audit

ReportAppointment/
Dismissal

Cooperation
Audit

Nomination andRemuneration
Committee

Audit

Appointment/
Dismissal

ReportReportReportRepresentative Director, President & CEO & COO
Sales Strategy Committee
Product Committee, etc.

Sustainability
Committee
Management Committee

Operating Officers
ReportExecution ofoperations

Execution ofoperations

Execution ofoperations

Divisions / Subsidiaries and affiliates- 22 -

Information
Security
Committee

<<Attachment>> Schematic of the Internal System concerning Timely Disclosure
Material Information other than Account Settlement-related Information

Representative Directors
and Board of Directors
Approvals and decisions on thedisclosure of Material Information

Reports on Material Information

Person responsible for handling information,
General Manager of Administration Division

Thorough administration ofinternal information

Discussion with thedepartment in charge

Announcement

Report/Reference

Thorough administration ofinternal information

Subsidiaries and affiliates

Report/Reference

The Company
General Manager of a Division
or Office

The Company’s officer in charge
ReportReportOfficers and employees ofsubsidiaries and affiliates

Employees of the Company

Account Settlement-related Information
Instructions on disclosure after approvalby the Board of Directors
Board of Directors

Management Committee
ReportPerson responsible for supervision,
General Manager of Accounting Division

Cooperation

Person Responsible For Handling
Information, General Manager of
Administration Division

CompileEach department and each group company- 23 -

TDnet

Announcement