Corporate Governance
Last Updated: June 27, 2024
Kotobuki Spirits Co., Ltd.
President & CEO: Seigo Kawagoe
Contact: Shinji Matsumoto
Managing Director
Executive General Manager
Group Corporate Management Division
Securities Code: 2222
https://www.kotobukispirits.co.jp/
The corporate governance of Kotobuki Spirits Co., Ltd. (the “Company”) is described below.

I.

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

1. Basic Views
The Company strives to reinforce and enhance its corporate governance practices while aiming tocontinuously maximize shareholder value over the long-term. To such ends, we heighten the soundness andefficiency of our management while also focusing on the interests of each and every stakeholder who lends
support to our business initiatives, underpinned by management philosophy impelling us “to create happiness,
provide happiness,” as a basic policy of our business.
Management Philosophy“To create happiness, provide happiness.”
Corporate Motto“Thankfulness & Gratitude” “Originality & Ingenuity” “Earnestness & Sincerity”
Business Creed• We take our pleasure in pleasing our customers.
• We talk dreams each other, and strive daily to be the number one.
• We have consciousness of being professionals and true courage, and inspire people.
• We set high goals, earnestly strive, and accomplish them without fail.
• We will realize both materialistic and spiritual affluences by creating higher values.
[Reasons for Non-compliance with the Principles of Japan’s Corporate Governance Code] Update[Supplementary Principle 4.1.3] Specific plans regarding successorship of the CEO and other top executives
Although the Company does not prepare specific plans regarding successorship with respect to the CEO andother top executives at this point in time, its management does recognize the notion that bringing up the next
generation of top management is one of the highest management priorities that must be addressed in order for
the Company to achieve sustainable growth and increase corporate value over the medium to long term. As
such, we implement training programs for our midcareer executives and others, and are furthermore taking
steps to hasten development of management skills by engaging in initiatives that address business challenges,
with the aim of cultivating the next generation of senior managers who will spearhead the organization’ssustainable growth and development. Going forward, the Board of Directors will appropriately supervise
efforts that include those of developing our next generation of senior managers with its sights set on increasing
our corporate value over the medium to long term based on the deliberations and recommendations of theNominating and Remuneration Advisory Committee, a majority of whose members are Independent Outside
Directors.

-1-

[Disclosure Based on the Principles of Japan’s Corporate Governance Code] Update[Principle 1.4] Cross-shareholdings
The Company maintains cross-shareholdings based on the view that doing so helps it to maintain and develop
favorable business relationships while also enabling it to maintain stable financing relationships. We
accordingly hold stock deemed to help increase our corporate value, and the Board of Directors regularly
assesses holdings with respect to the medium- to long-term economic rationale of such holdings, the status oftransactions, and other such factors. Based on such policy, we act to reduce holdings if we find there to be anabsence of rationale for maintaining such holdings. We appropriately exercise our voting rights upon
comprehensively placing consideration on factors that include how the outcome might affect soundmanagement of the issuing company and enhancement of its corporate value over the medium to long term.
[Principle 1.7] Related party transactions
When conducting related party transactions, we appropriately engage procedures with respect to the Board of
Directors and disclose such matters in our securities reports and other such documents. We subject all Officersof the Company (including officers of the Kotobuki Spirits Group (the “Group”)) to surveys regarding related
party transactions, and monitor such activity. When it comes to transactions within the Group, we strive toensure compliance with our “Regulations on Affiliate Management” which forbid any such transaction thatwould be detrimental to the interests of either party.
[Supplementary Principle 2.4.1] Ensuring diversity in the promotion to core human resources(i) Policies on ensuring diversity
The Group recognizes that promoting diversity in workstyles and employment, such as by securing
human resources who have diverse perspectives and encouraging their active participation, is one of thehighest management priorities that must be addressed in order for the Group to achieve sustainablegrowth and increase corporate value over the medium to long term.
The Group is working on the following measures to ensure diversity.
 Promoting female employees to managerial positions to encourage their active participation
 Hiring professional human resources and foreign nationals through midcareer hires
 Advancing workstyle reforms and health and productivity management
 Enhancing human resource development
 Changing the management’s mindset on diversity(ii) Voluntary and measurable goals for ensuring diversity
 Promoting female employees to managerial positions
While the ratio of female employees in managerial positions was 8.3% as of March 31, 2024, theGroup believes it is extremely beneficial to leverage distinctive perspectives of women in management
given the Group’s business. The Group will continue to actively promote competent female
employees, including midcareer hires, to managerial positions, with the aim of increasing the ratio of
female managers to 30%.
 Promoting midcareer hires to managerial positions
The Group has actively hired professional human resources in departments such as productdevelopment, production technology, online marketing, IT, and overseas business in line with the
expansion of its business, resulting in the ratio of midcareer hires in managerial positions ofapproximately 58% as of March 31, 2024. Going forward, the Group will further focus on the
promotion of new graduate hires to managerial positions through enhancement of human resource
development, while also recruiting managers through midcareer hires as needed for businessdevelopment to maintain a good balance.
 Promoting foreign nationals to managerial positions
Commensurate with the expansion and development of the overseas business and the domestic
business targeting inbound tourists, the Group will hire foreign nationals and promote them tomanagerial positions as appropriate upon considering the strategic needs and other factors.
(iii) Status of securing diversity
For the status of the promotion of female employees, midcareer hires, and foreign nationals to managerial
positions, refer to the ESG data disclosed on the sustainability page of the Company’s website.
https://www.kotobukispirits.co.jp/sustainability/(iv) Policies on the development of human resources and internal environment for ensuring diversity and thestatus thereof-2-Refer to the (i) above and “[Supplementary Principle 3.1.3] (Investments in human capital)” of thisreport. In addition, as part of its initiatives to promote diversity, the Group will develop a positive
workplace environment by encouraging male employees to take childcare leave. The Group is also
promoting the development of an environment in which senior human resources over 60 years old canparticipate more actively through revisions to the continued employment system for employees past theretirement age.
[Principle 2.6] Roles of corporate pension funds as asset owners
Whereas Company and some of its consolidated subsidiaries previously enrolled in an employee’s pension
fund for companies in Tottori Prefecture’s food industry, that fund was dissolved per approval of Japan’s
Minister of Health, Labour and Welfare granted on March 25, 2016. The Company has no corporate pension
funds under management at this time.
[Principle 3.1] Full disclosure(i) Company objectives (management philosophy, etc.), business strategy, and business plans
The Company’s business policies and other such information is disclosed in its financial statements,
presented in its financial results briefings, and posted to its corporate website.
(ii) Basic views and basic policy on corporate governance
The Company strives to reinforce and enhance its corporate governance practices while aiming tocontinuously maximize shareholder value over the long-term. To such ends, we heighten the soundness
and efficiency of our management while also focusing on the interests of each and every stakeholder who
lends support to our business initiatives, underpinned by management philosophy impelling us “to create
happiness, provide happiness,” as a basic policy of our business. The Company’s basic views and basic
policy on corporate governance are stated under “1. Basic Views” of this report and posted to its corporatewebsite.
(iii) Board of Director policies and procedures in determining remuneration of senior management andDirectors
For basic policy on Director remuneration and methods for determining such remuneration, refer to thesection, “Disclosure of Policy for Determining Remuneration Amounts or Calculation Methods Thereof”
under “Director Remuneration” of this report.
(iv) Board of Director policies and procedures in appointing and dismissing senior management andnominating Director candidates
When deciding on senior management and Director candidates, the Company engages a policy of
nominating qualified individuals capable of fulfilling such duties and responsibilities upon making
judgment on comprehensive factors that include a candidate’s character, experience, knowledge, aptitudeand health. Director candidate nominations are proposed at general meetings of shareholders, upon
having been deliberated on at meetings of the Board of Directors attended by the Independent Outside
Directors. Going forward, to further enhance objectiveness and transparency of the procedures to appointand decide on senior management and Director candidates, we will seek advice from the Nominating
and Remuneration Advisory Committee, a majority of whose members are Independent Outside
Directors.
(v) Individual appointments and dismissal of the senior management and nominations of Director candidates
by the Board of Directors
The Company’s Notifications of General Meeting of Shareholders disclose details upon appointment ofsenior management and nomination of Director candidates by the Board of Directors. Such details
include career profiles of Director candidates in relation to their individual appointments andnominations, and reasons for appointment and career profiles of all Director candidates. In the event that
the Company deems there to be objective grounds for dismissing a senior manager or Director amid a
scenario where the Company finds, for instance, that the senior manager or Director has significantly
damaged the Company’s corporate value upon having violated laws, regulations, the Articles ofIncorporation, etc., the Board of Directors will resolve to remove the senior manager or Director upon
having appropriately engaged in exhaustive deliberations in a meeting of the Board of Directors attended
by the Independent Outside Directors. Going forward, to further enhance objectiveness and transparencyof the procedures of appointment and dismissal of senior management and nomination of Directors, wewill establish and seek advice from the Nominating and Remuneration Advisory Committee, a majorityof whose members are Independent Outside Directors.

-3-

[Supplementary Principle 3.1.3] Initiatives on sustainability, etc.
(i) Initiatives on sustainability
As the Group advances various business activities that stem from its management philosophy, “To create
happiness, provide happiness,” as the foundation of its corporate management, the Group recognizes thatissues around sustainability, including social and environmental issues, are critical for the enhancementof its corporate value over the medium to long term. Under this recognition, the Group established the“Kotobuki Spirits Group Ethics Guidelines,” which includes “closely collaborate and cooperate withlocal communities, and contribute to the development of local communities” and “be aware that
preserving the global environment in a better state is a condition necessary for our existence and activities
as we receive various benefits, such as resources from the earth that are necessary for business activities,
and carry out actions in a voluntary and proactive manner,” and stated that it will strive to appropriately
respond to issues surrounding sustainability as its basic policy.
In addition, the Group identified the following six important items (materiality) in June 2024. In
identifying the materiality, the Group first identified the social issues, and then it prepared a materiality
map using the two axes of “level of importance to stakeholders” and “level of importance to the Group”
in order to arrange and prioritize the issues. The items were then determined following deliberations by
the Sustainability Committee and approval by the Board of Directors.
Kotobuki Spirits Group materiality
・Contributing to a sustainable, environmentally-friendly society
・Providing safe and reliable products
・Hiring and development of human resources while respecting diversity
・Establishing sustainable supply chains
・Coexisting and shared prosperity with local communities
・Enhancing corporate governanceFor status of the Group’s initiatives on sustainability, refer to the sustainability page of the Company’s
website.
https://www.kotobukispirits.co.jp/sustainability/(ii) The impact of climate change-related risks and earning opportunities on its business activities andrevenueIn April 2023, the Company expressed support for the recommendations of the TCFD (Task Force on
Climate-related Financial Disclosures). With the establishment of the Sustainability Committee andsupport for TCFD recommendations, the Company will further strengthen analysis of and response tobusiness risks and opportunities brought about by climate change and promote related information
disclosure, and advance initiatives that support the realization of a decarbonized society by 2050. The
Company’s initiatives based on the above are presented in its securities reports.
(iii) Investments in human capital
The Group aims to thoroughly practice participative management in which each and every employee
participates in management with a sense of ownership, underpinned by the fundamental policy underwhich all employees strive to turn customers, workplace peers, and other stakeholders into enthusiastic
fans. To this end, the Group works to instill management philosophy in its employees, strategically placepersonnel, establish career paths and provide training for enhanced human resource development,
promote diversity in human resources such as active participation by women, and change the mindset ofthe management.
(iv) Investments in intellectual property
As a corporate group that contributes to society, the Group invests in research and development taking
into account rapid changes in social trends as well as market and consumer needs. In the confectionery
manufacturing business, the Group explores and researches raw materials that are useful for developing
high value-added products, and in businesses other than confectionery manufacturing, the Group
researches beneficial substances and nutrients in collaboration with academic institutions with a focus on
health functions, against the backdrop of people’s increased awareness on health associated with theaging of population. Through these research efforts, the Group promotes acquisition of intellectual
properties and development of products pertaining to the health and foods fields.
[Supplementary Principle 4.1.1] Roles and Responsibilities of the Board of Directors (the scope of mattersdelegated to the management)-4-

The Company’s Board of Directors is bound by stipulations of the Articles of Incorporation, laws andregulations. Meanwhile, the Company’s “Regulations of the Board of Directors” stipulate matters to beresolved by the Board of Directors. Through its pure holding company structure, the Company aims to achievea swift and flexible approach to decision-making and Group management carried out with a sense of
immediacy by keeping the Group’s functions of management supervision separate from its functions ofbusiness execution. To such ends, the Company’s “Regulations on Affiliate Management” and its“Regulations on Delegation of Authority” clearly specify the scope of authority delegated in relation todecision-making that pertains to business of Group companies, and the scope of matters subject to reporting.
[Principle 4.9] Independence standards and qualification of Independent Outside Directors
The Company appoints as Independent Outside Directors those who do not maintain interests that might
conflict with those of general shareholders, in compliance correspondingly with provisions of the
independence criteria of “the Guidelines concerning Listed Company Compliance, etc.” stipulated by the
Tokyo Stock Exchange. As for qualification required of Independent Outside Directors, the Company appoints
those who are likely to constructively engage in deliberations during meetings of the Board of Directors, froma standpoint of neutrality and objectivity.
[Supplementary Principle 4.10.1] Policy regarding the independence of the composition of the Nominating
and Remuneration Advisory Committee, etc.
The Company has established the Nominating and Remuneration Advisory Committee as an advisory bodyto the Board of Directors, with the aim of strengthening supervisory functions on the Board of Directors andenhancing the Group’s corporate governance system by ensuring transparency and objectivity in theevaluation and decision-making processes pertaining to the nomination and remuneration, etc. of Directors(including those of Group companies). Committee members and the chairperson of the Nominating andRemuneration Advisory Committee are appointed by resolution of the Board of Directors. The Committee
shall comprise three or more members, a majority of whom shall be Independent Outside Directors, and its
chairperson shall be an Independent Outside Director, to ensure the independence of the Committee and makeits discussions substantive. Currently, the Committee comprises four Independent Outside Directors(chairperson: Matsuo Iwata and committee members: Megumi Yoshimoto, Yasuhiro Tanaka, and Keiko Ueda)
and two Inside Directors (committee members: Shinji Matsumoto and Masamichi Yamane).
When the Company deliberates on the following particularly important matters (including those of Group
companies) such as nomination and remuneration, the Board of Directors shall consult the Nominating andRemuneration Advisory Committee in advance and receive a resolution or report pertaining to such consulted
matters based on approval by a majority of the members of the Nominating and Remuneration Advisory
Committee. The Board of Directors shall also obtain appropriate involvement and advice from the Nominating
and Remuneration Advisory Committee, including those based on perspectives of diversity, such as gender,and skills.
 Matters relating to the composition and balance of the Board of Directors
 Matters relating to the appointment and dismissal of Directors
 Matters relating to the selection and dismissal of Representative Directors and senior Directors
 Matters relating to the independence standards of Outside Directors
 Matters relating to the selection and dismissal of members of the Nominating and Remuneration Advisory
Committee
 Matters relating to successorship plans Matters relating to the policies and procedures in determining remuneration of Directors
 Matters relating to the contents of remuneration of Directors
 Other matters deemed necessary by the Board of Directors[Supplementary Principle 4.11.1] Views on balance, diversity and size of the Board of Directors
The Company’s Board of Directors comprises five Inside Directors, (including one Director who is an Audit
and Supervisory Committee member), who have diverse expertise as well as a deep knowledge of the Group’sbusinesses, a sense of balance and achievement, and decision-making ability; as well as four Outside Directors(including two Directors who are Audit and Supervisory Committee members), including one female Director,
who have diverse perspectives as well as a wealth of experience and advanced knowledge and expertise
regarding corporate management, finance and accounting, legal affairs, and society and culture, etc., aiming
at lively deliberations and quick decision making. The Company strives to achieve an overall compositionand scale of the Board of Directors that is optimal from the perspectives of sustainable growth and increase-5-

in corporate value over the medium to long term. Furthermore, going forward, the procedure for selecting
Director candidates will include deliberations by the Nominating and Remuneration Advisory Committee, amajority of whose members are Independent Outside Directors. In addition, to ensure the balance and diversityof the Board of Directors as a whole in terms of knowledge, experience, and capability, which are required
for the Group’s sustainable growth and increase in corporate value over the medium to long term, the Boardof Directors of the Company has set the following skills and competencies as those that should be possessedby Directors in light of the Group’s management philosophy “to create happiness, provide happiness,” theEthics Guidelines, and management strategies.
1. Having experience in a position with responsibilities for corporate management and practical experience incorporate reforms
2. Being well-versed in solving issues on finance, accounting, and capital policies and having related
knowledge
3. Having knowledge of and experience in legal affairs and risk management
4. Having knowledge of and experience in personnel affairs, labor management, and human resource
development
5. Having knowledge of general consumer lives
6. Having knowledge of ESG
Refer to the final page of this report for a list of skills possessed by individual Directors (including Directors
who are Audit and Supervisory Committee members), which make up an appropriate balance.
[Supplementary Principle 4.11.2] Directors with concurrent assignments
Concurrent assignments of the Company’s Directors are disclosed in the General Meeting of Shareholders
Notifications and securities reports. Outside Directors of the Company concurrently serving as officers ofother listed companies are to rationally limit the scope of such duties so that they are able to devote the timeand effort required for them to appropriately fulfill their respective roles and responsibilities as Outside
Directors of the Company.
[Supplementary Principle 4.11.3] Evaluation of the effectiveness of the Board of Directors
The Company carried out an analysis and evaluation based on the results of a “Survey Related to Effectivenessof the Board of Directors” conducted for all Directors (including Directors who are Audit and Supervisory
Committee members) in May 2023 and discussion in the Board of Directors meetings. As a result, at this time,
the Board of Directors has been evaluated to be achieving overall effectiveness as it has a good overall balanceof knowledge, experience, and capability for performing the roles and responsibilities of the Board of
Directors, it maintains an appropriate size, and its meetings are run appropriately with decisions made basedon high-quality, active discussion. Going forward, the Company will conduct evaluations of the effectivenessof the Board of Directors once a year, disclosing a summary of the evaluations and continuing its efforts toimprove the Board of Director’s effectiveness.
[Supplementary Principle 4.14.2] Training policy for Directors
Upon ushering in Outside Directors, the Company provides them with opportunities to learn and understanddetails pertaining to the Company’s business environment, particularly those involving the Company’s
history, business overview, and tours of the Group’s factories. The Directors engage in diligent study to ensurethat they acquire knowledge and information necessary for them to fulfill their roles and responsibilities as
Directors. This involves, taking part in seminars that draw on external specialized institutions and other suchbodies and participating in training exchanges with external organizations and other such bodies. The Audit
and Supervisory Committee members belong to the Japan Audit & Supervisory Board Members Association,
and accordingly improve their auditing skills by gaining access to knowledge and information they need as
Audit and Supervisory Committee members by participating in various training sessions held by the
Association.
[Principle 5.1] Policy on constructive dialogue with shareholders
The Company’s policy on systemic development and initiatives for facilitating constructive dialogue with its
shareholders is as follows:(i) The Company’s investor relations activities are spearheaded by the President & CEO and the Director
and General Manager of the Corporate Planning Division;(ii) Investor relations information is handled by the Corporate Planning Division which is the department incharge of IR in coordination with related departments of the business company;-6-

(iii) The Company’s primary IR activities encompass efforts that involve holding biannual financial results
briefings and quarterly meetings with individual institutional investors and analysts, and engaging inplanning and operation of the investor relations section of the corporate website. The Company also posts
materials and video footage of its financial results briefings and general meetings of shareholders to theinvestor relations section of its corporate website;(iv) The Company shares opinions, etc. gained through IR activities by appropriately reporting such feedback
in meetings of the Board of Directors and Executive Committee; and(v) The Company appropriately and prudently controls insider information when engaging in dialogue on
the basis of its “Regulations on Information Disclosure” and its “Regulations on Preventing Insider
Trading.”[Principle 5.2] Measures to promote management with an awareness of cost of capital and share price (English
disclosure)
The cost of shareholders’ equity is calculated using the Capital Asset Pricing Model (CAPM) and is generally
recognized to be around 9%. ROE was 29.9% for the fiscal year ended March 31, 2023, and 35.1% for the
fiscal year ended March 31, 2024, significantly exceeding the cost of shareholders’ equity. Given this situation,
the Company has not set any improvement measures or targets at this time, but will continue to strive toimprove its capital profitability, create higher added value than its cost of shareholders’ equity, and increase
its corporate value.
For details, refer to the Company’s website.
FY2024(Year ended March 31, 2024)Consolidated Business Results
https://ssl4.eir-parts.net/doc/2222/ir_material_for_fiscal_ym3/156001/00.pdf (pages 46 to 47)

2. Capital Structure
Foreign Shareholding Ratio

From 10% to less than 20%[Status of Major Shareholders] Update
Name

Number of Shares Owned(Shares)

Shareholding Ratio(%)

S. Kawagoe Corporation

45,500,000

29.24

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

13,909,400

8.94

SSBTC CLIENT OMNIBUS ACCOUNT(Standing proxy: The Hongkong andShanghai Banking Corporation Limited,Tokyo Branch)

7,226,201

4.64

Custody Bank of Japan, Ltd. (Trust account)

5,662,300

3.64

The San-in Godo Bank, Ltd.

4,500,000

2.89

TORIGIN LEASE Corporation

3,505,000

2.25

Kotobuki Spirits Employee Stock Ownership
Association

2,505,636

1.61

INDUS SELECT MASTER FUND, LTD.
(Standing proxy: The Hongkong andShanghai Banking Corporation Limited,Tokyo Branch)

2,277,200

1.46

The Shoko Chukin Bank, Ltd.

1,800,000

1.16

Fukuyama Transporting Co., Ltd.

1,800,000

1.16

-7-

Controlling Shareholder (except for Parent)－

Parent (Listed Stock Market)

N/A

Supplementary Explanation Update
The information in the “Status of Major Shareholders” above is based on the shareholder register as of March
31, 2024.

3. Corporate Attributes
Listed Stock Market and Market Section

Tokyo Stock Exchange Prime Market

Fiscal Year-End

MarchType of Business

Foods

Number of Employees (Consolidated) at Endof the Previous Fiscal Year

1,000 or more

Net Sales (Consolidated) for the Previous
Fiscal Year

From ¥10 billion to less than ¥100 billion

Number of Consolidated Subsidiaries at Endof the Previous Fiscal Year

From 10 to less than 50

4. Policy for Measures to Protect Minority Shareholders in Conducting Transactions with Controlling
Shareholder－

5. Special Circumstances Which May Have Material Impact on Corporate GovernanceNo items to report.

-8-II. Business Management Organization and Other Corporate Governance Systems regarding
Decision-making, Execution of Business, and Supervision in Management
1. Organizational Composition and Operation
Organization Form

Company with audit and supervisory committee[Directors]
Maximum Number of Directors Stipulated in
Articles of Incorporation

15

Term of Office Stipulated in Articles ofIncorporation

1

Chairperson of the Board

President

Number of Directors

9

Appointment of Outside Directors

Appointed

Number of Outside Directors

4

Number of Independent Officers Designatedfrom among Outside Directors

4Outside Directors’ Relationship with the Company (1) Update

Name

Attribute

Relationship with the Company*
a

b

c

d

e

f

g

h

i

j

k

Matsuo Iwata

From another company〇

Megumi Yoshimoto

From another company〇

Yasuhiro Tanaka

Certified public tax
accountant〇

Keiko Ueda

Attorney at law〇* 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; and“” when a close relative of the director fell under the category in the pasta. Executive (a person who executes business; hereinafter, the same) of the Company or its subsidiaryb. Non-executive director or executive of the parent of the Company
c. Executive of a fellow subsidiary of the Company
d. 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, accounting professional or legal professional who receives a large amount of monetaryconsideration or other property from the Company besides compensation as a director
g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a
corporation)h. Executive of a client or supplier of the Company (which does not correspond to any of d., e., or f.) (thedirector himself/herself only)
i. Executive of a corporation to which outside officers are mutually appointed (the director himself/herself
only)

-9-

j. Executive of a corporation that receives a donation from the Company (the director himself/herself only)
k. OtherOutside Directors’ Relationship with the Company (2) Update

Name

Membershipof Audit andSupervisory
Committee

Designationas
Independent
Officer

Supplementary
Explanation of
the Relationship

Matsuo Iwata〇－

Megumi Yoshimoto〇－- 10 -

Reasons for Appointment
Mr. Matsuo Iwata has been
involved in corporate
management over many years,
and accordingly draws on theabundant experience andextensive knowledge he has
gained as a manager throughout
his career. Accordingly, theCompany has appointed him to
the position of Outside Director
upon having deemed that he iscapable of applying suchstrengths to management of theCompany from a perspective ofneutrality and objectivity.
Moreover, the Company has
furthermore assigned him thedesignation of Independent
Officer given that there are no
special interests between him
and the Company, and he does
not pose concerns regarding
potential conflict of interest
with general shareholders.
Ms. Megumi Yoshimoto
possesses abundant experienceand extensive knowledge
gained through many years’
experience as an announcer andthrough working as a lecturer
and professor at multiple
universities. She also possesses
a distinctive perspective as awoman. Accordingly, theCompany has appointed her tothe position of Outside Director
upon having deemed that she iscapable of applying suchstrengths to management of theCompany from a perspective ofneutrality and objectivity. She
has never in the past been
directly involved in the
management of a company.
However, the Company judges
she will appropriately fulfill her
duties as an Outside Director

Yasuhiro Tanaka〇－

Keiko Ueda〇－

- 11 -

based on the above reasons.
Moreover, the Company has
furthermore assigned her thedesignation of Independent
Officer given that there are no
special interests between her
and the Company, and she does
not pose concerns regarding
potential conflict of interest
with general shareholders.
Mr. Yasuhiro Tanaka wields
expert knowledge and abundant
experience in the realms offinance and accounting as acertified public tax accountant.
Accordingly, the Company has
appointed him to the position of
Outside Director upon having
deemed that he is capable ofapplying such strengths tomanagement of the Company,
from a perspective of neutrality
and objectivity. He has never inthe past been directly involvedin the management of acompany. However, theCompany judges he willappropriately fulfill his duties
as an Outside Director based on
the above reasons. Moreover,
the Company has furthermore
assigned him the designation of
Independent Officer given that
there are no special interests
between him and the Company,and he does not pose concerns
regarding potential conflict ofinterest with generalshareholders.
Ms. Keiko Ueda is qualified as
an attorney at law and wields
expert knowledge and abundant
experience in the realm of legal
affairs as an attorney at law. She
also possesses a distinctive
perspective as a woman.
Accordingly, the Company has
appointed her to the position of
Outside Director upon having
deemed that she is capable ofapplying such strengths tomanagement of the Company
from a perspective of neutrality
and objectivity. She has neverin the past been directly
involved in the management of
a company. However, theCompany judges she willappropriately fulfill her duties
as an Outside Director based on
the above reasons. Moreover,
the Company has furthermore
assigned her the designation of
Independent Officer given that
there are no special interests
between her and the Company,
and she does not pose concerns
regarding potential conflict ofinterest with generalshareholders.
[Audit and Supervisory Committee]
Committee’s Composition and Chairperson’s Attributes
Total
Committee
Members

Full-timeMembers

Inside Directors

OutsideDirectors

Chairperson

3

1

1

2

Inside director

Audit andSupervisory
Committee

Appointment of Directors and/or Employees to Support
Duties of the Audit and Supervisory Committee

Not appointed

Reasons for Applying Current Systems
The Audit and Supervisory Committee does not assign employees to assist in the duties of the Audit andSupervisory Committee because it cooperates with the Internal Audit Department as necessary.
Cooperation among Audit and Supervisory Committee, Financial Auditor and Internal Audit Department
With respect to mutual cooperation involving internal audits, the Audit and Supervisory Committee, andaccounting audits, the Audit and Supervisory Committee receives explanations from the Financial Auditor
regarding accounting audits, and coordinates efforts that involve exchanging information. In addition, theInternal Audit Office coordinates efforts with the Audit and Supervisory Committee and the Financial Auditor
by reporting findings of operational audits to the Audit and Supervisory Committee and the Financial Auditor.
As for such audits, the Internal Audit Office appropriately furnishes reports and exchanges opinions with the
Administrative Division which acts as an internal control department and strives to maintain internal controls
through initiatives that include following up on issues identified and areas for improvement.
[Voluntary Committees]
Voluntary Establishment of Committee(s)Equivalent to Nominating Committee orRemuneration Committee

Established- 12 -

Status of Establishment of Voluntary Committees, Composition and Chairperson’s Attributes

Name ofCommittee

Total
Committee
Members

Full-timeMembers

InsideDirectors

OutsideDirectors

OutsideExperts

Other

Chairperson

Voluntary
Committee
Equivalent toNominating
Committee

Nominating andRemuneration
Advisory
Committee

6

0

2

4

0

0

Outsidedirector

Voluntary
Committee
Equivalent toRemuneration
Committee

Nominating andRemuneration
Advisory
Committee

6

0

2

4

0

0

Outsidedirector

Supplementary Explanation Update
The Company has established the voluntary Nominating and Remuneration Advisory Committee, a majority of whose members
are Independent Outside Directors, as an advisory body to the Board of Directors. The Committee comprises six Directors. It ischaired by Outside Director Matsuo Iwata, and also includes two Inside Directors (Shinji Matsumoto and Masamichi Yamane)and three Outside Directors (Megumi Yoshimoto, Yasuhiro Tanaka, and Keiko Ueda). The Committee receives advisory requests
from the Board of Directors regarding the nomination and remuneration of Directors (including those of Group companies), andafter deliberation in the committee, the deliberation result, etc., is reported to the Board of Directors. Furthermore, theCommittee meetings are held at least once a year in principle, and may also be held whenever necessary.

[Independent Officers]
Number of Independent Officers

4

Matters relating to Independent Officers
The Company has assigned the designation of Outside Officer to all of its Independent Officers who qualify
as independent officers.
[Incentives]
Implementation of Measures to Provide
Incentives to Directors Update

Measures other than performance-linked remunerationand share options

Supplementary Explanation Update
The remuneration system for the Directors of the Company places maximum emphasis on sustainably
increasing corporate value over the medium to long term; and the Company’s basic policy when determining
the remuneration of individual Directors, is to set it at an appropriate level based on the duties and so forth ofeach Director. The remuneration system for Directors consists of the basic fixed remuneration (monetary
remuneration) and the restricted shares remuneration as medium- to long-term incentives. Directors who are
Audit and Supervisory Committee members and Outside Directors receive the basic remuneration only inconsideration of the independence of their duties.

- 13 -

Recipients of Share Options
Supplementary Explanation－[Director Remuneration]
Disclosure of Individual Directors’ Remuneration

No individual disclosure

Supplementary Explanation Update
The Company distinguishes between the remuneration paid to Directors and the remuneration paid to Audit
and Supervisory Committee members when disclosing remuneration.
Officer remuneration for the year ended March 31, 2024
Annual total amount of remuneration for Directors (excluding Audit and Supervisory Committee members):¥135,300 thousand
Annual total amount of remuneration for Directors (Audit and Supervisory Committee members): ¥31,200
thousand
Policy for Determining Remuneration Amounts
or Calculation Methods Thereof Update

Established

Disclosure of Policy for Determining Remuneration Amounts or Calculation Methods Thereof
At its Board of Directors meetings held on May 14, 2024, the Company resolved its policy on determining
the details of individual remuneration for Directors (excluding Directors who are Audit and Supervisory
Committee members; the same applies hereinafter).
In addition, the individual remuneration for Directors who are Audit and Supervisory Committee members islimited to a fixed basic remuneration (monetary remuneration), and is determined within the remuneration
limit through consultation with the Audit and Supervisory Committee members considering the duties andresponsibilities.
The policy for determining the remuneration for individual Directors.
(1) Basic policy
The remuneration system for the Directors of the Company places maximum emphasis on sustainably
increasing corporate value over the medium to long term; and the Company’s basic policy when determining
the remuneration of individual Directors, is to set it at an appropriate level based on the duties and so forth ofeach Director. The remuneration system for Directors consists of the basic fixed remuneration (monetary
remuneration) and the restricted shares remuneration as medium- to long-term incentives. Outside Directors
receive the basic remuneration only in consideration of the independence of their duties.
(2) Policy on determining individual amounts of remuneration, etc. for basic remuneration (monetary
remuneration) (including a policy for determining the time of payment and terms and conditions)
Basic remuneration for the Directors of the Company (excluding Outside Directors) is fixed monthly
remuneration determined through comprehensive consideration, also giving weight to contribution to theCompany’s performance based on position and duties, levels at other companies comparable to the numberof years worked, the Company’s performance, and the level of employee salaries.
Basic remuneration for Outside Directors is monthly fixed remuneration, determined in consideration ofduties and responsibilities, and levels at other companies, etc.
(3) Policy for determining details of non-monetary remuneration, etc., and calculation methods of amounts
or numbers thereof (including a policy for determining the time of payment and terms and conditions)- 14 -

As non-monetary remuneration, the Company shall provide the restricted shares remuneration to Directors toprovide them an incentive to sustainably increase the Company’s corporate value and further promote sharedvalue between shareholders and them.
The specific number of restricted shares remuneration provided shall be determined by considering each
Director’s position and responsibilities. The Board of Directors shall resolve the number of individually
allotted shares, and the remuneration shall be provided at a certain time every year.
(4) Method of determining details of individual remuneration of Directors
To determine the amount of individual remuneration of Directors, the Representative Director creates a
proposal in comprehensive consideration of the amounts of the basic and non-monetary remuneration for each
Director and their percentages based on the aforementioned policy within the remuneration limit for Directors
resolved at the Ordinary General Meeting of Shareholders. Then, the Board of Directors receives a report on
the deliberation of the proposal by the Nominating and Remuneration Advisory Committee, having heard theopinion of the Audit and Supervisory Committee in advance, and deliberates on the proposal and makes thedetermination at a meeting of the Board of Directors attended by Outside Directors.
Furthermore, with regard to the amount of remuneration of Directors, at the Ordinary General Meeting of
Shareholders held on June 28, 2016, approval was granted for maximum remuneration amounts, such that
remuneration for Directors (excluding Directors who are Audit and Supervisory Committee members) is toamount to no more than ¥300 million annually (of which, remuneration for Outside Directors is to amount tono more than ¥25 million annually), and remuneration for Directors who are Audit and Supervisory
Committee members is to amount to no more than ¥50 million annually.
In addition, at the Ordinary General Meeting of Shareholders held on June 25, 2024, it was resolved that, asa separate remuneration from the one previously mentioned, the additional amount of remuneration to grant
restricted shares to Directors (excluding Outside Directors and Directors who are Audit and Supervisory
Committee members; “Eligible Directors”) shall be within ¥60 million per year (excluding employee salaries
of Directors who concurrently serve as employees). As of the conclusion of the said Ordinary General Meetingof Shareholders, there were six Directors (excluding Directors who are Audit and Supervisory Committee
members) and three Directors who are Audit and Supervisory Committee members.
[Supporting System for Outside Directors]
Whereas there is no section in charge of assisting the Outside Directors, the Administrative Division andCorporate Planning Division take action as necessary, particularly in terms of furnishing prior notification
regarding matters to be discussed in the meetings of the Board of Directors and explanations in that regard.

2. Matters on Functions of Business Execution, Audit and Supervision, Nomination and Remuneration
Decisions (Overview of Current Corporate Governance System) Update<Board of Directors>
The Company’s Board of Directors has nine members (of which, four are Outside Directors), consisting of
President & CEO Seigo Kawagoe who serves as the Chairperson, and Managing Director Shinji Matsumoto,Directors Masayuki Shirouchi, and Ryoichi Sakamoto, Outside Directors Matsuo Iwata and Megumi
Yoshimoto, Director (Audit and Supervisory Committee member) Masamichi Yamane, and Outside Directors(Audit and Supervisory Committee members) Yasuhiro Tanaka and Keiko Ueda. The Company’s Board of
Directors determines important matters related to business execution and supervises execution of duties byDirectors, as stipulated in the Articles of Incorporation, laws and regulations, and pursuant to the “Regulationsof the Board of Directors” which define matters to be resolved by the Board of Directors.
To ensure that the Directors execute their duties efficiently, the Board of Directors meets once per month, inprinciple, and holds extraordinary meetings when necessary.
<Audit and Supervisory Committee>
The Company’s Audit and Supervisory Committee takes on the role of auditing the Directors’ execution ofbusiness, and has three members (of which, two are Outside Directors), consisting of Director (full-time Audit
and Supervisory Committee member) Masamichi Yamane and Outside Directors (Audit and Supervisory
Committee members) Yasuhiro Tanaka and Keiko Ueda. Meetings of the Audit and Supervisory Committee
are held once a month, in principle, on an as-necessary basis, in order to decide audit plans and report on audit
execution.

- 15 -

The Audit and Supervisory Committee members attend meetings of the Board of Directors, and also attend
the Group Executive Committee meetings and other important meetings in order to gain an understanding ofimportant decision-making processes and the status of business execution. The Audit and Supervisory
Committee members may view important documents related to business execution and may furthermore seek
explanations from Directors or employees as necessary.
<Nominating and Remuneration Advisory Committee>
On June 22, 2021, the Company established the voluntary Nominating and Remuneration Advisory
Committee, a majority of whose members are Independent Outside Directors, as an advisory body to theBoard of Directors. The Committee comprises six Directors. It is chaired by Outside Director Matsuo Iwata,
and also includes two Inside Directors (Shinji Matsumoto and Masamichi Yamane) and three other Outside
Directors (Megumi Yoshimoto, Yasuhiro Tanaka, and Keiko Ueda). The Committee receives advisory requests
from the Board of Directors regarding the nomination and remuneration of Directors (including those ofGroup companies), and after deliberation in the committee, the deliberation result, etc., is reported to theBoard of Directors. Furthermore, the Committee meetings are held at least once a year in principle, and may
also be held whenever necessary.
<Sustainability Committee>
On April 15, 2023, the Company established the Sustainability Committee. The Committee is chaired by theCompany’s President & CEO Seigo Kawagoe, and the Company’s Managing Director in charge ofmanagement Shinji Matsumoto serves as the supervising officer. Meanwhile, its membership consists of thepersons responsible for the management departments of the respective Group companies and individuals
appointed to the committee from the respective Group companies. The Committee meetings are held at least
two times a year in principle, and are also held whenever necessary. The Company maintains a basic policyof striving to appropriately respond to issues surrounding sustainability, and deliberates the identification ofmateriality, the response to the identified initiative themes and other matters.
<Internal Audit Office>
The Company’s Internal Audit Office consists of one member, General Manager of Internal Audit Office
Manabu Ashiho. The Internal Audit Office conducts internal audits with respect to the Company and theGroup, pursuant to the “Internal Audit Regulations” which stipulate basic matters regarding the Company’s
internal audits, thereby ensuring that business operations are undertaken appropriately and effectively inaccordance with relevant laws and regulations, the Articles of Incorporation, and internal regulations, andsubject to internal controls. The Company’s President & CEO makes direct appointments with respect to theInternal Audit Office, which acts as an organization under direct control of the President. Upon performing
audits, the Internal Auditors are able to seek submission of documents, explanation of content thereof, andother necessary information. They also wield authority, etc. to seek confirmation from external parties whennecessary.
<Compliance Committee>
The Compliance Committee is chaired by the Company’s President & CEO Seigo Kawagoe and theCompany’s Managing Director in charge of management Shinji Matsumoto serves as the Chief Compliance
Officer. Meanwhile, its membership consists of individuals appointed to the committee from the respective
Group companies. The committee holds meetings once every three months, in principle, on an as-necessary
basis in order to address exclusive prerogatives, pursuant to the “Compliance Regulations” which definecompliance initiatives, such as training and education on compliance and corporate ethics, action taken basedon findings of investigations into matters such as reporting through the whistleblowing system, and measuresinvolving risk management to address risk events.
The Compliance Committee acts as a system that facilitates monitoring, with its meetings attended by Director(full-time Audit and Supervisory Committee member) Masamichi Yamane and General Manager of Internal
Audit Office Manabu Ashiho.
<Group Executive Committee>
The Group Executive Committee is chaired by the Company’s President & CEO Seigo Kawagoe, and its
members include Managing Director Shinji Matsumoto, Directors Masayuki Shirouchi and Ryoichi
Sakamoto, and respective Directors and relevant department heads of the Group companies. It holds meetings
once per month, in principle, and acts to ensure managerial efficiency, soundness and transparency, while- 16 -

accelerating decision-making. To such ends, it promotes guidance and training with respect to affiliatedcompanies, while also communicating the Group’s business policies, reporting on business activities ofrespective Group companies, and supervising business execution, pursuant to the “Regulations on AffiliatedCompanies” which stipulate aims of streamlining management of the Group.
The Group Executive Committee acts as a system that facilitates monitoring, with its meetings attended by
Director (full-time Audit and Supervisory Committee member) Masamichi Yamane, Outside Directors (Audit
and Supervisory Committee members) Yasuhiro Tanaka and Keiko Ueda, and General Manager of Internal
Audit Office Manabu Ashiho as necessary.
<CPA Audit>
CPA audits are assigned to Deloitte Touche Tohmatsu LLC, which undertakes them as ordinary accounting
audits and is subject to advice on managerial issues and other such matters in the course of performing suchaudits. The Company furnishes various forms of information and data, and otherwise maintains anenvironment that facilitates the performance of swift and accurate audits. The certified public accountancy
that performs such services and assistants involved with audit work are as follows:
Designated Unlimited Liability Partner, Engagement Partner, Certified Public Accountant: Isao Kashiro
Designated Unlimited Liability Partner, Engagement Partner, Certified Public Accountant: Joji Furukawa
Four Certified Public Accountants, three persons who have passed the certified public accountant examinationand fourteen other persons

3. Reasons for Adoption of Current Corporate Governance System
When it comes to corporate governance, the Company believes the notion of ensuring that the function ofmanagement oversight enlists external objectivity and neutrality is of key importance, and enhances theoversight function of management by establishing its Audit and Supervisory Committee such that a majorityof its membership consists of Outside Directors, four of whom possess a high degree of independence. In
addition, the Company has established the voluntary Nominating and Remuneration Advisory Committee
such that a majority of its membership consists of Independent Outside Directors, in order to ensuretransparency and objectivity of the evaluation and decision process with regard to the nomination andremuneration of its Directors (including those of Group companies). As such, the Company deems that thesystem operates sufficiently for the enhancement of corporate governance.

- 17 -

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

The Company strives to send out its Notifications of General Shareholders
Meetings prior to the legally mandated deadline.

Scheduling AGMs Avoiding
the Peak Day

The Company arranges to hold its annual general meetings of shareholders
on dates that will make it possible for many shareholders to attend, andaccordingly avoids holding such meetings on dates that are likely to have aconcentration of such meetings held by other companies.

Allowing Electronic or
Magnetic Exercise of Voting
RightsThe Company has adopted the exercise of voting rights by electronic or
magnetic means.

Participation in Electronic
Voting Platform and Other
Efforts to Enhance the Voting
Environment for Institutional
Investors

The Company has adopted the exercise of voting rights using the platform
for electronic exercise of voting rights operated by ICJ, Inc.

Providing Convocation Noticein English (Translated Fully or
Partially)

The Company posts convocation notices in English (translated fully or
partially) on the Company’s website, the Tokyo Stock Exchange website
and the platform for electronic exercise of voting rights.

2. IR Activities
Supplementary Explanations
Regular Investor Briefings forAnalysts and Institutional
Investors

A Company’s representative explains details offinancial results and forward-looking strategy twice
annually, with the first-half financial and year-end
financial results.

Posting of IR Materials on
WebsiteThe following website link provides access toFinancial Reports, other timely disclosure materials,
and financial Results Briefings Materials:
https://www.kotobukispirits.co.jp/

Establishment of Department
and/or Manager in Charge ofIR

Department in charge of IR: Corporate Planning
DivisionManager in charge of IR: Shinji Matsumoto,Managing Director, Executive General Manager of
the Group Corporate Management Division

Explanation byRepresentativeYes

3. Measures to Ensure Due Respect for Stakeholders
Supplementary Explanations
Provisions to Ensure Due
Respect for Stakeholders inInternal Rules, etc.

The Kotobuki Spirits Group Ethics Guidelines constitute codes andstandards of conduct applicable to all Group employees. Accordingly, theguidelines stipulate that we show due respect toward all stakeholders
involved with the Group, while endeavoring to maintain sound and positive
relationships.

- 18 -

Formulation of Policies for
Information Provision to
Stakeholders

The Company strives to disclose information to each of its stakeholders in atimely, appropriate, and fair manner, and has accordingly established“Regulations on Information Disclosure” and “Regulations on Preventing
Insider Trading.”

IV. Matters Related to Internal Control System
1. Basic Views on Internal Control System and Progress of System Development
1. Basic policy on business operations
The Company and the Group maintain basic policies applicable to all Officers and employees with respect totheir execution of duties, underpinned by the management philosophy as follows.
[Management Philosophy]
To create happiness, provide happiness.
[Corporate Motto]
Thankfulness & Gratitude
Originality & Ingenuity
Earnestness & Sincerity[Business Creed]• We take our pleasure in pleasing our customers.
• We talk dreams each other, and strive daily to be the number one.
• We have consciousness of being professionals and true courage, and inspire people.
• We set high goals, earnestly strive, and accomplish them without fail.
• We will realize both materialistic and spiritual affluences by creating higher values.
The Company is aware that developing and operating systems that ensure proper business execution is a key
responsibility of management, and accordingly builds its internal control system as follows. The Company
keeps striving to appropriately develop its system of internal control in a manner that addresses changes in its
internal and external environments.
2. Basic policy on internal controls(1) System for retaining and managing information pertaining to execution of duties by Directors
Information pertaining to execution of duties by Directors is to be retained and managed in a manner thatenables Directors to view it as necessary, and accordingly managed in adherence to laws and regulations,as well as with the regulations on document management and other internal regulations.
(2) Regulations and other system for managing risk of loss
The Company stipulates matters involving managing risk of loss stemming business executed by theCompany and the Group in its regulations on approval document, regulations on accounting, regulations
on sales management, regulations on purchasing management, and other such regulations on managing
operations.
When risk of loss materializes, the Director in charge of duties relevant thereof addresses such risk inaccordance with stipulations of internal regulations, and accordingly makes final decisions uponengaging procedures that include deliberations of the Board of Directors and approval, tailored to thedegree of such risk.
(3) System for ensuring that the Directors execute their duties efficiently
To ensure that the Directors execute their duties efficiently, the Board of Directors holds meetings once
per month, in principle, and extraordinary meetings when necessary, during the course of which the
Directors are to make decisions on important matters and supervise the status of the Directors’ executionof business.

- 19 -

With respect to business executed on the basis of decisions made by the Board of Directors, theorganizational regulations, regulations on segregation of duties, and Regulations on Delegation of
Authority stipulate matters involving respective persons in charge and their responsibilities, andprocedures for executing their duties.
In managing their business results, the Company and the Group draw up quantitative targets constituting
business plans, in a manner that involves clearly assigning targets and remaining thoroughly committed
to profitability. The Group Executive Committee consists of the President & CEO, Officers in charge
and relevant department heads, and holds meetings on a monthly basis. Its duties involve checking
business results and status of implementation of measures, ensuring managerial efficiency, soundness,and transparency, and prompt decision-making.
(4) System for ensuring that Directors and employees execute their duties in compliance with laws,
regulations and the Articles of Incorporation
The Company and the Group clearly state the business philosophy (released on January 1, 2003) whichforms criteria for assessing all matters based on the management philosophy. Furthermore, we draw up
the “Kotobuki Spirits Group Ethics Guidelines” and “Compliance Regulations” with the aims ofclarifying our fundamental stance on corporate ethics and legal compliance, and thoroughly adhere to
the management philosophy and corporate ethics keeping all Officers and employees informed of suchmatters.
Moreover, we have established the “Compliance Committee” which acts as an organization that extends
laterally across the Group and strives to develop, maintain and improve our compliance system.
The Board of Directors develops the regulations of the Board of Directors based on laws, regulations andthe Articles of Incorporation, and furthermore sets standards for Board deliberations and reporting. The
respective Directors mutually monitor and supervise execution of the Company’s business, in accordancewith such standards for deliberations and reporting.
We have established the voluntary Nominating and Remuneration Advisory Committee, an advisory
body to the Board of Directors, a majority of whose members are Independent Outside Directors, toensure independence and objectivity of the decision on the nomination and remuneration of Directors.
The “Internal Audit Office” performs internal audits based on the Internal Audit Regulations in order toensure appropriateness of systems of business operation.
The Company and the Group have established a whistleblowing system upon having specified“Regulations on Whistleblowing” that aim to facilitate corrective action and preventative measuresappropriately taken on the basis of preventing violations of laws and regulations, etc., and achieving
early detection thereof. The Company maintains confidentiality of details reported and ensures thatwhistle-blowers are not subjected to disadvantageous treatment.
(5) System for ensuring proper business operations in the Group, which consists of the Company as well as
its parent company and subsidiaries
In managing its operations, the Group manages subsidiaries based on the “Regulations on Affiliate
Management.” Moreover, the Group Executive Committee engages in efforts that involvecommunicating the Group’s business policies, reporting on business activities of respective Group
companies, and supervising business execution.
In addition, decisions of key importance made by subsidiaries require approval procedures of theCompany’s Board of Directors, which makes adjustments to ensure that resources are allocatedefficiently.
Business transactions between companies belonging to the Group are to be appropriately carried out inaccordance with laws, regulations, accounting principles, tax laws, and other social norms.
The Internal Audit Office performs internal audits with respect to the Company and the Group, andreports its findings to the Representative Directors and Audit and Supervisory Committee of theCompany and the Group.
(6) Matters regarding employees who assist in the duties of the Audit and Supervisory Committee, mattersregarding such employees’ independence from Directors, and ensuring effectiveness of instructions given
to such employees
The Audit and Supervisory Committee may request that the Board of Directors assign an employee toassist with the duties of the Audit and Supervisory Committee when necessary. Moreover, decisions on- 20 -

the appointment, change, etc. of such employees are to be made upon having obtained prior consent fromthe Audit and Supervisory Committee in order to ensure independence in regard to such decisions.
The right to lead and direct such employees resides with the Audit and Supervisory Committee.
(7) System for enabling Directors, employees and others of the Company and its subsidiaries to report to theCompany’s Audit and Supervisory Committee, and system for ensuring that those who have reported
will not become subject to unfavorable treatment as a consequence of having reported
Directors, employees and others of the Company and its subsidiaries are to swiftly report to the Audit
and Supervisory Committee of the Company: statutory matters; incidents involving serious violations oflaws, regulations, the Articles of Incorporation, and any facts of misconduct; and, details involving
incidents that significantly affect the Company and Group, upon having become aware of such incidents.
Moreover, the Company has the department in charge of the whistleblowing system regularly report thestatus of whistleblowing and other such matters to the Audit and Supervisory Committee.
The Company ensures that the Group’s Officers and employees who have reported to the Audit andSupervisory Committee are not subject to dismissal or unfavorable treatment otherwise as a consequenceof their having reported.
(8) Other system for ensuring that Audit and Supervisory Committee audits are performed effectively
The Audit and Supervisory Committee members attend the Group Executive Committee meetings andother important meetings in order to gain an understanding of important decision-making processes andthe status of business execution of the Board of Directors. The Audit and Supervisory Committee
members may view important documents related to business execution and may furthermore seek
explanations from Directors and employees as necessary.
Moreover, the Audit and Supervisory Committee receives explanations regarding accounting audits andexplanations regarding operational audits from the Financial Auditor and the Internal Audit Office,respectively. The Audit and Supervisory Committee also coordinates efforts that involve exchanging
information.
The Company honors requests from the Audit and Supervisory Committee members for the expenses,
etc. incurred in performing their duties, unless such expenses, etc. are deemed unnecessary with respect
to performing the duties of the Audit and Supervisory Committee.
(9) System for ensuring reliability of financial reporting
The Company builds the internal control system related to financial statements to appropriately takeaction with respect to its system for evaluating internal controls based on the Financial Instruments andExchange Act, and also continuously evaluating such systems and taking corrective action to address any
deficiencies. Meanwhile, the Company ensures that its financial reporting is reliable by striving toachieve appropriate operation of such systems.
Please refer to the “Timely Disclosure System Overview” diagram in the reference materials at the end of thisreport.

2. Basic Views on Eliminating Anti-Social Forces and Progress of Related Efforts
The Company and the Group maintain a basic policy of taking a firm stance on an organization-wide basiswith respect to severing any and all ties with organizations or individuals that threaten safety and social order,
and pose a serious threat to sound business operations.
The Company has clearly stated the basic policy in the “Kotobuki Spirits Group Ethics Guidelines” and has
also prepared a manual detailing action to be taken in addressing unreasonable demands made by crime
syndicates and other antisocial forces. Our efforts in this regard involve: striving to ensure that all of our
Officers and employees are thoroughly informed; establishing a department to address such matters andassigning a manager to take charge of preventing unreasonable demands; enhancing coordination withexternal specialist institutions that include locally-based centers for removal of criminal organizations, police,
and legal advisors; and, striving to improve systems and gather information.

- 21 -

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

Not adopted

Supplementary Explanation
There are no plans for adoption at this time.

2. Other Matters Concerning Corporate Governance System
Details regarding the Group’s internal system for ensuring timely disclosure of corporate information are as
follows.
The Group handles information subject to timely disclosure as follows, premised on its fundamental stancewith respect to providing timely and appropriate disclosure of corporate information to investors, such that isnecessary in order for them to accurately determine investment value.
The Group has drawn up “Regulations on Information Management” and “Regulations on Information
Disclosure,” which accordingly stipulate basic matters necessary for management and disclosure of important
information of the Group.
1. Organization responsible for timely disclosure(1) Manager in charge of handling information: Shinji Matsumoto, Managing Director, Executive General
Manager of the Group Corporate Management Division(2) Departments in charge of information disclosure: Corporate Planning Division
2. Internal system and the disclosure process(1) Matters regarding facts of decisions madeActing under the manager in charge of handling information, the departments in charge of information
disclosure give prior consideration to the necessity of disclosing proposals requiring resolution by the
Board of Directors. If such disclosure has been deemed necessary, then the departments in charge of
information disclosure gain approval of the Board of Directors upon having reported the matter to the
President & CEO, then promptly follow procedures for disclosure.
(2) Matters regarding facts of actual events
The manager in charge of handling information and the general managers of the departments in chargeof information disclosure attend meetings of the Board of Directors and meetings of the Group Executive
Committee, and accordingly strive to swiftly gain an understanding of facts that are potentially subject
to disclosure.
If such an event occurs, then the general manager of the department involved and a manager of a
subsidiary are to promptly report the matter to the manager in charge of handling information, and thedepartment in charge of information disclosure is to immediately consider the need for disclosure. If
disclosure has been deemed necessary, then the manager in charge of handling information follows thedisclosure procedures without delay, upon having gained approval from the President & CEO.
(3) Matters regarding financial results
Acting under the manager in charge of handling information, the departments in charge of information
disclosure prepare financial results disclosure materials and report the matter to the President & CEO,then subsequently follow procedures for disclosure upon having gained approval from the Board of
Directors.

- 22 -

【Corporate Governance System】
General Shareholders Meetings
Appointm ent/Dism issal

Appointment/Dismissal

9 Directors (including 6 Directors who are not Audit andDeliberations andrecomm endations

ReportReportNominating andRemuneration
Advisory Committee/Supervision

ReportCompliance Committee

Sustainability Committee

Audit/Supervision

3 Audit and Supervisory Committee
members (of which, 2 are Outside
Directors)

Selection/Dismissal

President & CEO

Instructions

Accounting
auditsAudit and Supervisory Committee

Board of Directors
Supervisory Committee members)

Appointm ent/
Dism issal

Financial Auditor

ReportAudit cooperation

ReportInstructions Instructions

Internal Audit Office(1 General M anager)

Group Executive
Committee

Internal audits

Audit

ReportDecision

Administrative Section/Group companies- 23 -

AdviceLegal Advisors

【Timely Disclosure System (Overview Diagram)】
All sections/Subsidiaries
reportDepartments in charge of information
disclosure
discussions/reportManager in charge of handlinginformation
reportPresident & CEO
matters regarding
decisions madefinancial information

matters regarding

actual events

Board of Directors
approval/resolution

approvalManager in charge of handlinginformation
instructions
Departments in charge of information
disclosure

TDnet
Information disclosure- 24 -

【Skill Matrix for Directors】
Directors (excluding Audit and Supervisory Committee members)Experiences and expertise possessed by the Director

Name

Personnel
Corporateaffairs/ Labor
Legal affairs/
management/ Finance/
management/
Risk
Management Accounting
Humanmanagement
strategy
resource
development

GenderAttributes

Seigo Kawagoe

Male

Inside Director (full-time),
President & CEO〇

Shinji Matsumoto

Male

Inside Director (full-time),
Nominating andRemuneration Advisory
Committee member〇

Inside Director (full-time)〇〇

Inside Director (full-time)〇〇

Outside Director (parttime),
Nominating andRemuneration Advisory
Committee member〇

Masayuki Shirouchi

Male

Ryoichi Sakamoto

Male

Matsuo Iwata(Outside)

Male

Megumi Yoshimoto(Outside)〇〇

Female Outside Director (parttime),
Nominating andRemuneration Advisory
Committee member

Consumer
lives

ESG

〇

〇

〇

〇

〇

〇

〇

〇

〇

Directors (Audit and Supervisory Committee members)Experiences and expertise possessed by the Director

Name

GenderAttributes

Masamichi Yamane

Male

Inside Director (full-time),
Nominating andRemuneration Advisory
Committee member

Yasuhiro Tanaka(Outside)

Keiko Ueda
(Outside)

Male

Personnel
affairs/ Labor
Corporate
Legal affairs/
management/
management/ Finance/
Risk
Human
Management Accounting
management
resource
strategydevelopment〇〇

Outside Director (parttime),
Nominating andRemuneration Advisory
Committee member〇

Female Outside Director (parttime),
Nominating andRemuneration Advisory
Committee member〇- 25 -〇

Consumerlives

ESG〇