Note: 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, theoriginal shall prevail. The Company assumes no responsibility for this translation or for direct,
indirect or any other forms of damages arising from the translation.

June 26, 2024

Initiatives on Corporate Governance by Nishimatsu Construction Co., Ltd.

Nishimatsu Construction Co., Ltd.

The basic policy of Nishimatsu Construction Co., Ltd. (the “Company”) is to improve its corporate
governance and maintain good and stable relationships over the long term between the Company andits stakeholders, in order to strive for the Company’s sustainable growth and increase its corporate
value over the mid- to long-term.
Based on this policy, we will create systems that will lead to the acceleration of decision-making by
and strengthen supervision functions of the Board of Directors as well as our business execution
systems.
In addition, by establishing our “Corporate Motto,” “Corporate Philosophy,” and “Code of Conduct,”which are put into practice by our officers and employees, and engaging in our Sustainability
Management based on “Sustainability Slogan (Basic Policy),” we will forge win-win relationships
with all our stakeholders and contribute to society.

Based on the above basic views on corporate governance, the Company establishes the following
policies for initiatives corresponding to each of the principles in the Corporate Governance Code.

1. Securing the Rights and Equal Treatment of Shareholders[1-1 Securing the Rights of Shareholders]
The Company takes appropriate measures based on laws and regulations and endeavors to develop
those circumstances which fully secure shareholders’ rights.
When a considerable number of votes have been cast against a proposal at a general meeting ofshareholders, the Company analyses the reasons and looks into the need for shareholder dialogue andother measures.
Also, in cases where it is considered desirable to delegate certain matters subject to resolution at a
general meeting of shareholders to the Board of Directors from the perspective of ensuring agility andexpertise in managerial decisions, the Company establishes a system which thoroughly fulfills its roles
1and responsibilities in corporate governance, and deals with the matter accordingly.
Adequate consideration is given to special rights that are recognized for minority shareholders(including the right to seek an injunction against illegal activities and the right to file a shareholder
lawsuit).

[1-2 Exercise of Shareholder Rights at General Meeting of Shareholders]
The Company properly provides accurate information to facilitate appropriate decision-making by
shareholders at a general meeting of shareholders.
Notice of convocation is sent at an early date to give shareholders sufficient time to consider the
proposals, and it is disclosed straight away on TDnet and the Company’s website. In addition, theCompany appropriately determines the date of the general meeting of shareholders and any associateddates.
Bearing in mind the number of institutional investors among the shareholders, the Company takes
measures to facilitate the exercise of voting rights by shareholders, including the use of the Voting
Rights Electronic Exercise Platform.
Taking into consideration the number of foreign shareholders among the shareholders, the Company
provides English translations of the notice of convocation.
Institutional investors (substantial shareholders) that hold shares in the name of a trust bank or othersuch organization are not allowed to attend and exercise their voting rights at general meetings ofshareholders as they differ from the shareholders listed in the shareholder register. However, inobservation of trends of business practices in general meetings of shareholders, the Company will
examine ways for the substantial shareholders to attend general meetings of shareholders in the future.

[1-3 Basic Strategy for Capital Policy]
In the “Midterm Management Plan 2025,” in addition to funds acquired through business activities,
we will make use of interest-bearing debt to invest in growth. From a perspective of financial
soundness, we will firmly maintain our capital adequacy ratio at around 30%, and D/E ratio at around
1.5 times. In addition, in FY2024 and FY2025, we will provide stable dividends based on a dividendon equity (DOE) ratio of around 5%. Based on the above financial plan, we are aiming for an ROE of
10% in FY2025.

2

[1-4 Cross-Shareholdings]
The Company’s policy is to hold only those equities that are necessary in terms of business operations
as cross-shareholdings, and to reduce any other equities except in special circumstances.
At the President and General Managers Meeting, the propriety of holding each individual crossshareholding is reported to the Board of Directors each fiscal year upon examining and verifying theexistence of any transactions with an issuing company, the availability of works’ and other information,and the existence of any other special circumstances. After receiving the report, the Board of Directors
verifies and judges the propriety of the shareholding individually, and discloses the details of its
verification.
The standards for exercising voting rights regarding the Company’s cross-shareholdings are as follows.
(1) In principle, voting rights shall be exercised on all proposals.
(2) We will determine approval or disapproval for each proposal from the perspective of increasing
the mid- to long-term corporate value of the company of which we maintain cross-shareholding,also taking into consideration the business conditions of the company. In particular, we will
exercise an even greater examination and make a more cautious judgement with regard to
proposals relating to matters such as corporate restructuring including mergers, the presentationof retirement benefits to officers by companies with a sluggish business performance, capitalincrease by means of third-party allotment, and the introduction of anti-takeover measures.
In the event that the Company is advised of the intention by a company holding the Company’s sharesas cross-shareholdings (Cross-Shareholder) to sell said shares, the Company shall accept this.
Even in cases where the Company engages in transactions with the Cross-Shareholder, the Company
considers the economic rationale of such transactions to be its highest priority.

[1-5 Anti-Takeover Measures]
The Company does not currently adopt any anti-takeover measures, however, in cases where suchmeasures are adopted in the future, the Board of Directors will thoroughly examine their necessity andrationale, and provide explanations to the shareholders.
In the event that a tender offer is made for shares in the Company, the Board of Directors’ views on
the offer will be promptly disclosed.

[1-6 Capital Policy that May Harm Shareholder Interests]
The Company does not currently expect to implement any capital policy resulting in a change ofcontrol or significant dilution, however, if it does so in the future, in order not to unfairly harm theexisting shareholders’ interests, the Board of Directors will thoroughly examine the necessity andrationale, and provide an explanation to shareholders.

3[1-7 Related Party Transactions]
In the event that the Company engages in transactions with its officers or major shareholders, etc. (i.e.,
related party transactions), in order to ensure that such transactions do not harm the interests of theCompany or the common interests of its shareholders, it is specified in the Regulations of the Boardof Directors that the approval of the Board of Directors is required, and in the Audit Criteria of the
Audit and Supervisory Committee with respect to auditing and approval of conflict of interest
transactions, etc. The Company’s Board of Directors monitors such transactions in line with theseprocedures.

2. Appropriate Cooperation with Stakeholders Other Than Shareholders[2-1 Management Principles as the Foundation of Corporate Value Increase Over the Mid- toLong-Term]
The Company formulates its “Corporate Motto” and “Corporate Philosophy” as the management
principles forming the basis for increasing its corporate value over the mid- to long-term.

Corporate Motto, Corporate Philosophy:
https://www.nishimatsu.co.jp/eng/company/philosophy.html[2-2 Code of Conduct]
The Company establishes the “Code of Conduct” and “Sustainability Slogan (Basic Policy” based on
its “Corporate Motto” and “Corporate Philosophy” referred to above, and implements themaccordingly.
It also conducts regular reviews each year to verify whether the Code of Conduct is being widely
implemented by all the Company’s employees.

Code of Conduct: https://www.nishimatsu.co.jp/eng/company/philosophy.html
Sustainability Slogan (Basic Policy): https://www.nishimatsu.co.jp/esg/policy.html

4

[2-3 Sustainability Issues, Including Social and Environmental Matters]
The Company responds appropriately to sustainability issues, including social and environmental
matters.
The Board of Directors recognizes that dealing with sustainability issues, such as taking care of climatechange and other global environmental issues, respect of human rights, caring for the health andworking environment of the workforce, and the establishment of a collaborative system with supply
chains into the future, are important management issues that can lead to earning opportunities as wellas risk mitigation. For this reason, it positions sustainability as a key strategy in the “NishimatsuVision 2030” and “Midterm Management Plan 2025,” and positively and proactively works toward
addressing these issues.

Integrated Report: https://www.nishimatsu.co.jp/eng/esg/report/
Environmental Initiatives: https://www.nishimatsu.co.jp/eng/esg/environment/climate.html[2-4 Ensuring Diversity, Including the Active Participation of Women](1) Policies for Ensuring Diversity, Human Resource Development and Internal Environment
Development
The Company has positioned “diversity & inclusion” as one of the pillars of our human resources
strategies, and actively recruited human resources with diverse values, knowledge, and experienceand promoted them to leadership positions in order to achieve our Corporate Philosophy and Vision.
At the same time, we have worked to create an environment in which they can demonstrate theirabilities to the fullest.
Toward the achievement of the “Nishimatsu-Vision 2030” and “Midterm Management Plan 2025,”
the Company will continue to strive to recruit, develop, and promote diverse human resources, aswell as work to implement measures to transform differences in values, abilities, and work stylesof individual employees into strengths that contribute to an increase in corporate value, including
creating a culture that encourages further use of systems that enable flexible work styles, to promotevalue creation activities.

(2) Voluntary and Measurable Goals for Ensuring Diversity
With regard to promotion of women to middle managerial positions, we will provide explanationon the Company-specific background to the matter and current status as a construction company,
and then disclose numerical goals. In terms of promotion of midcareer hires and foreign nationals
to middle managerial positions, we will explain solely about the current status, as no numericalgoal has been set. Going forward, the Company will start discussion on the establishment of
numerical goals, after considering various factors such as business fields and overseas development.
5[2-5 Whistleblowing]
The Company establishes an internal whistleblower system as described below to enable employees,
etc. to report illegal or inappropriate behavior, information relating to disclosure of information, orother serious concerns without fear of being subject to disadvantageous treatment, and to allow for an
objective assessment and appropriate response to reported information and concerns.
(1) Contact points (internal and external) are established for reporting, which may be used by officers
and employees of the Nishimatsu Construction Group and their families. The operation of theexternal contact point is outsourced to an external specialist company, and anonymity is ensured.
(2) The “Nishimatsu Hotline” is set up on our website, which serves as a contact point for our partnercompanies.
(3) Internal rules are established to prevent persons who have made reports from being subjected todisadvantageous treatment, and thereby ensures the effectiveness of the whistleblower system.
(4) The Compliance Committee chaired by an outside expert deals with compliance issues that havebeen raised through whistleblowing.
(5) The Board of Directors receives reports from the Compliance Committee and supervises the statusof the whistleblower system’s operations.

[2-6 Roles of a Corporate Pension Fund as an Asset Owner]
In order to demonstrate the roles expected as an asset owner of a corporate pension fund, the Company
assigns employees with specialized knowledge and experience to the Personnel Department, which is
the Secretariat for corporate pension fund management, and strives to improve those functions by
having said employees attend various seminars held by financial institutions handling pension fundbusiness and consulting companies. On the operational side, the Retirement Benefit System Steering
Committee implements initiatives such as the regular monitoring of the status of operations.
The Company will appropriately manage conflicts of interest that may arise between the beneficiariesof the corporate pension fund and the Company.

3. Ensuring Appropriate Information Disclosure and Transparency[3-1 Full Disclosure](1) Proactive Provision of Information
The Company carries out appropriate and timely information disclosure in accordance with laws
and regulations and the rules of the Tokyo Stock Exchange. It also strives to actively provide
information beyond that required by laws, etc. as set forth below.

6a.

Management Principles, etc., Management Strategy, and Management Plan
The Company publishes its “Corporate Motto,” “Corporate Philosophy,” “Code of Conduct,”“Sustainability Slogan (Basic Policy),” “Nishimatsu-Vision 2030,” “Midterm Management
Plan 2025,” and other information on its website.

The Company’s website (Japanese): https://www.nishimatsu.co.jp/
The Company’s website (English): https://www.nishimatsu.co.jp/eng/b. Policies and Procedures for Determining Compensation for the Management and Directors(Compensation for executive directors and Executive Officers)
The compensation of executive directors and Executive Officers consists of basic
compensation and performance-linked compensation. The compensation of Outside Directors(excluding those who are Members of the Audit and Supervisory Committee) consists solelyof basic compensation.
Basic compensation is fixed compensation (monthly compensation) that is determined basedon position, and the amount of employee salary and the industry average, etc. are taken into
consideration when calculating the said compensation.
Performance-linked compensation is variable compensation that is determined in accordancewith the degree of achievement of the performance targets. The performance-linked
compensation that forms the base is established for each position and multiplied by theperformance-linked coefficient to calculate the amount to be paid. To calculate the amount tobe paid, evaluation indices that contribute to an increase in corporate value are set for eachposition and job title, and the degree of achievement of the targets and the performancecompared with the previous fiscal year are evaluated each fiscal year.
Performance-linked compensation is separated into monetary compensation paid as a shortterm incentive, and share-based compensation paid as a long-term incentive. Monetarycompensation is paid in July each year as a bonus, and share-based compensation is granted
in June each year in the form of conversion points through a stock benefit trust, and sharesequivalent to the accumulated points are paid when an officer retires.
The ratios of basic compensation and performance-linked compensation are to be set
appropriately, based on trends among other companies in the same industry and taking into
account factors such as the Company’s management strategy, the business environment,
responsibilities, and the degree of difficulty in achieving the targets. In addition, the ratio ofmonetary compensation to share-based compensation in performance-linked compensation is
1:1. A minimum amount of compensation for share-based compensation is established, whichis the same as the minimum amount of performance-linked compensation.
7

Based on the above policies, the President prepares the proposals, and the Company consults
the Nominating and Compensation Committee, and after receiving the report from theCommittee, the compensation is determined by the Board of Directors (basic compensation
is determined in March each year and performance-linked compensation is determined inJune each year).

(Compensation of Directors who are Members of the Audit and Supervisory Committee)
Compensation of Directors who are Members of the Audit and Supervisory Committee
consists solely of basic compensation, and is determined by consultation with all the Directors
who are Members of the Audit and Supervisory Committee, taking into consideration thecompensation of the executive directors and the industry average, etc.

c.

Policies and Procedures for Appointment or Dismissal of the Management and Nominationof Candidates for Director
Candidates for Director and Executive Officers shall be appointed from among persons who
have extensive knowledge, experience and abilities, as well as outstanding character and highethical standards.
Candidates for executive director shall be appointed from among persons who have extensive
knowledge and experience in the Company’s business, or who have superior knowledge offinance and accounting, etc.
Candidates for Director who is a Member of the Audit and Supervisory Committee shall be
appointed from among persons the Company determines to be able to audit and supervise
appropriately, with emphasis on their expertise and career history.
Candidates for Outside Director shall be appointed with emphasis on their independence fromthe Company, and efforts are made to appoint persons with specialized knowledge andpersons with experience in corporate management, etc. Also, diversity of the Board of
Directors is taken into consideration.
A mandatory retirement system for executive directors and Executive Officers is established,
and a maximum term of office is put in place for Directors who are Members of the Audit andSupervisory Committee, Outside Directors, and Executive Officers.
Based on these policies, the President and Director prepares the proposals, and the Company
consults the Nominating and Compensation Committee, and after receiving the report fromthe Committee, the appointments are determined by the Board of Directors.
The dismissal of Executive Officers, including the President, shall be determined by the
Board of Directors upon deliberation by the Nominating and Compensation Committee,
based on the dismissal criteria and procedures stipulated in the Regulations of the Executive
8

Officers.

d. Explanation of Appointment, Dismissal and Nomination of Candidates for Director
The reasons for the appointment, dismissal and nomination of individual candidates for
Director are stated in the notice of the general meeting of shareholders.

(2) Full Disclosure
The Company strives to ensure that the disclosures of information add value for investors andprovides necessary information in the disclosure documents in English.
When disclosing management strategies, the Company appropriately discloses its initiatives onsustainability. It also provides information on investments in human capital and intellectual
properties, while being conscious of the consistency with its own management strategies and issues.
The Company collects and analyzes the necessary data on the impact of climate change-relatedrisks and earning opportunities on its business activities and profits, and enhances the quality andquantity of disclosure based on the TCFD recommendations, which are an internationally wellestablished disclosure framework, or an equivalent framework.

[3-2 External Accounting Auditors]
The Audit and Supervisory Committee appropriately selects candidates for External Accounting
Auditor and establishes criteria for appropriate evaluation of the External Accounting Auditor. It also
confirms whether the External Accounting Auditor has the required independence and expertise.
The Board of Directors and the Audit and Supervisory Committee examine the number of auditors andthe audit schedule, etc. based on the External Accounting Auditor’s audit plan and confirm whether
they are appropriate. They also identify changes to the audit environment during the accounting period
on a need basis, and confirm whether an appropriate amount of time for auditing is ensured.
Directors participate in the discussions of corporate managers held by the External Accounting Auditor,and exchange opinions with regard to corporate risk, evaluation of internal control, and key audit items,
etc.
The Audit and Supervisory Committee and the Audit Department, which is an internal audit
department, engage in mutual exchanges of opinions with the External Accounting Auditor on audit
plans of the other party and regularly conduct audit reporting, in order to cooperate with the External
Accounting Auditor.
The Board of Directors and the Audit and Supervisory Committee make efforts to ensure that the audit
environment of the External Accounting Auditor is appropriate, and to respond appropriately torequests from the External Accounting Auditor in relation to irregularities identified by the External
Accounting Auditor.
94. Responsibilities of the Board of Directors[4-1 Roles and Responsibilities of the Board of Directors (1) (The Company’s Strategic
Direction)](1) Formulation of Mid- to Long-Term Management Strategy and Midterm Management Plan
The Board of Directors carries out constructive discussion of mid- to long-term management
strategies and management plans, etc. and sets strategic directions for mid- to long-term
management issues.
Based on the “Midterm Management Plan,” each of the business divisions’ plans are carried out
mainly by the executive directors and Executive Officers. Progress is monitored in theManagement Meeting and reported to the Board of Directors. The Board of Directors requests thatthe executive directors and Executive Officers revise the plans as necessary.
If the targets of the Midterm Management Plan are not achieved, the reasons, etc. will bethoroughly analyzed, an explanation will be provided to the shareholders, and the analysis will bereflected in the Midterm Management Plan for the next and subsequent periods.

(2) Outline of Scope of the Matters Delegated to the Management
The Board of Directors deliberates and determines matters specified in the Regulations of theBoard of Directors, in addition to important management issues including the basic management
policy as well as matters stipulated by laws and regulations and in the Articles of Incorporation.
With regard to decision-making authority over matters other than those to be resolved by the Boardof Directors, the Rules for the President and General Managers Meeting are established, among
other rules, and the decision-making authority is delegated to executive directors and others at the
President and General Managers Meeting.

(3) Plans for Successors of the Chief Executive Officer, etc.
The Board of Directors shall clearly state the qualities and abilities required of candidates for the
next President in the form of Requirements of Candidates for President, and shall consult with theNominating and Compensation Committee to receive a report. The Requirements of Candidates
for President will be reviewed as appropriate.
Based on the Requirements of Candidates for President, the Board of Directors shall select multiple
candidates for the next President from among officers and employees, and shall consult with theNominating and Compensation Committee to receive a report.
The Board of Directors shall formulate an education and training plan for the selected candidates
for next President.

10[4-2 Roles and Responsibilities of the Board of Directors (2) (Establishment of an Environmentthat Supports Appropriate Risk-Taking)](1) Support for Decision-Making of the Management
When proposals are made by the management, including executive directors or Executive Officers,
with respect to matters that should be resolved by the Board of Directors, the Board of Directors
collects and analyses information on the reasons for the proposals and the backgroundcircumstances, and makes rational decisions. It also supports prompt and decisive decision-making
by the management when approved proposals are to be implemented, and creates systems for the
implementation of such proposals.

(2) Compensation for the Management
The Company designs the compensation system in accordance with objective and transparent
procedures, and the Board of Directors decides specific amounts of compensation after
deliberation by the Nominating and Compensation Committee.
The Company has introduced a performance-linked compensation plan so that compensation for
executive directors and Executive Officers functions as a sound incentive for sustainable growth.
Performance-linked compensation is variable compensation that is determined in accordance withthe degree of achievement of the performance targets. The performance-linked compensation that
forms the base is established for each position and multiplied by the performance-linked
coefficient to calculate the amount to be paid. To calculate the amount to be paid, evaluation indicesthat contribute to an increase in corporate value are set for each position and job title, and thedegree of achievement of the targets and the performance compared with the previous fiscal year
are evaluated each fiscal year.
Performance-linked compensation is separated into monetary compensation paid as a short-term
incentive, and share-based compensation paid as a long-term incentive. Monetary compensation
is paid in July each year as a bonus, and share-based compensation is granted in June each year in
the form of conversion points through a stock benefit trust, and shares equivalent to theaccumulated points are paid when an officer retires.

(3) Initiatives on Sustainability
From the perspective of increasing corporate value over the mid- to long-term, the Board of
Directors formulates basic policies for initiatives on sustainability and effectively supervises the
allocation of management resources based on the policies, and the implementation of the businessportfolio strategies.

11[4-3 Roles and Responsibilities of the Board of Directors (3) (Highly Effective Supervision of theManagement)]
The Board of Directors views the highly effective supervision of the management and Directors froman independent and objective standpoint as a major aspect of its roles and responsibilities. It evaluates
the status of progress of the Midterm Management Plan and business results, etc. and reflects theevaluation in its assessment of the management and Directors.
The Board of Directors nominates a Director in charge of Investor Relations and conducts supervision
to ensure that timely and accurate information disclosure is provided by the person in charge ofInformation Management. It also appropriately establishes internal control and company-wide risk
management systems and supervises the status of their operations by utilizing an internal audit
department.
The Board of Directors appropriately manages conflicts of interest between related parties of officers
and major shareholders, etc. and the Company. Procedures with respect to such matters are specified
by the Regulations of the Board of Directors, etc.
The Board of Directors establishes objective, timely and transparent procedures for the appointment
or dismissal of Executive Officers, including the President, and clarifies these in the Regulations of
the Executive Officers.
[4-4 Roles and Responsibilities of the Audit and Supervisory Committee]
The Company’s Audit and Supervisory Committee is comprised of five Directors who are Membersof the Audit and Supervisory Committee (including four Outside Directors). In addition, in an effort
to strengthen the audit system and information collection system, a person from within the Company
serves as a Full-Time Member of the Audit and Supervisory Committee.
Directors who are Members of the Audit and Supervisory Committee are aware of their authority andresponsibilities pursuant to laws and regulations, and bearing in mind their fiduciary responsibilities
to shareholders, appropriately audit and supervise the execution of Directors’ duties from an
independent and objective standpoint. They also positively and actively exercise their authority andappropriately express their views on management and audit issues to the executive directors.
Outside Directors who are Members of the Audit and Supervisory Committee receive appropriate
reports with respect to the status of audits and other matters from the Full-time Member of the Audit
and Supervisory Committee and collect information in cooperation with the dedicated staff of theSecretariat of the Audit and Supervisory Committee.

[4-5 Fiduciary Responsibilities of Directors]
Directors, with due attention to their fiduciary responsibilities to shareholders, secure the appropriate
cooperation with stakeholders and act in the interests of the Company and the common interests of its
shareholders.
12[4-6 Business Execution and Oversight of the Management]
The Company appoints six Directors who are non-executive directors, including five Outside Directors.
Also, all Outside Directors serve as members of the Nominating and Compensation Committee, which
is an advisory body to the Board of Directors.
Through the involvement of the non-executive directors in relation to nomination and compensation,
the Company strives to create an appropriate management system and ensure objectivity andtransparency in determining compensation. In this way, the effectiveness of independent and objective
management supervision by the Board of Directors is ensured.

[4-7 Roles and Responsibilities of Independent Outside Directors]
The Company makes effective use of Independent Outside Directors and establishes the following as
the roles and responsibilities to be carried out by them.
(1) Provision of appropriate advice on management policies and management improvement based on
their knowledge and experience;(2) Supervision of management through important decision-making of the Board of Directors
including the appointment and dismissal of the management;(3) Supervision of conflicts of interest between the Company and the management or controllingshareholders, etc.; and(4) Appropriate representation of the views of minority shareholders and other stakeholders at
meetings of the Board of Directors from a standpoint independent of the management andcontrolling shareholders.

[4-8 Effective Use of Independent Outside Directors]
The Company, in accordance with the Criteria for Determining the Independence of Outside Directors,
appoints at least one-third of Directors as Independent Outside Directors who have been judged to be
independent from the Company and to have no risk of conflict of interest with the general shareholders.
Communication and coordination, etc. between Outside Directors and the management is handled by
the Secretariat of the Audit and Supervisory Committee and the Administration Department.

[4-9 Criteria for Determining the Independence and Qualifications for Independent Outside
Directors]
The Company, to ensure the independence of candidates for Outside Director, formulates and discloses
the Criteria for Determining the Independence of Outside Directors. Furthermore, in addition to useof the Criteria for Determining the Independence of Outside Directors, the Company makes efforts toselect Independent Outside Director candidates who can be expected to contribute to frank, active and13constructive discussions at meetings of the Board of Directors.

Criteria for Determining the Independence of Outside Directors:
https://www.nishimatsu.co.jp/eng/company/governance.html[4-10 Use of Optional Approach]
The Company establishes the Nominating and Compensation Committee, an independent, optional
advisory body to the Board of Directors, whose main members are Independent Outside Directors,
with the aim of building an appropriate management system and ensuring management transparency,
and obtains the appropriate involvement and advice of the Committee.
The Nominating and Compensation Committee, in response to requests of consultation from the Boardof Directors, nominates candidates for Directors, appoints and dismisses Representative Directors,
appoints and dismisses the President, promotes, demotes and dismisses Executive Officers, and reports
on individual compensation for Directors and Executive Officers, etc.
In order to ensure its independence, the Nominating and Compensation Committee has a total of sevenmembers, five of whom are Outside Directors, and two of whom are executive directors. The
Committee is chaired by an Outside Director.

[4-11 Preconditions to Ensure the Effectiveness of the Board of Directors and the Audit andSupervisory Committee](1) Board of Directors and Audit and Supervisory Committee
1) Board of Directors
The Company, by having a small number of Directors and introducing an executive officer system,
strives to accelerate decision-making in relation to management by the Board of Directors andstrengthen its business execution system. Also, by increasing the proportion of Outside Directors
on the Board of Directors, it works to improve supervision over the Board of Directors.
The Board of Directors is comprised of twelve persons, six of whom are executive directors serving
as the Chairman, President, General Manager of Civil Engineering Division, General Manager of
Building Division, General Manager of Asset Value-Added Business Division and General
Manager of Management Division, as well as one Outside Director who is not a Member of the
Audit and Supervisory Committee. The remaining five are Directors who are Members of the Audit
and Supervisory Committee, including four Outside Directors.
Candidates for Director shall be appointed from among persons who have extensive knowledge,
experience and capabilities, as well as outstanding character and high ethical standards.
Candidates for executive director shall be appointed from among persons who have extensive
knowledge and experience in the Company’s business, or who have superior knowledge of finance14

and accounting, etc.
Candidates for Director who is a Member of the Audit and Supervisory Committee shall be
appointed from among persons whom the Company deems capable of appropriate audits andsupervision, with emphasis on their expertise and career history.
Candidates for Outside Director shall be appointed with emphasis on their independence from theCompany, and efforts are made to appoint persons with specialized knowledge and persons withexperience in corporate management, etc. Also, diversity of the Board of Directors is taken into
consideration.
The Company establishes a mandatory retirement system for its Directors (excluding Directors
who are Members of the Audit and Supervisory Committee and Outside Directors), in order toprevent a stiff hierarchy among the Board of Directors.
The Company consults the Nominating and Compensation Committee in relation to thenomination of candidates for Director and makes decisions in meetings of the Board of Directors
after receiving the report from the Committee, in order to contribute to the establishment of an
appropriate management system. In addition, the Company discloses a so-called “skill matrix” thatlists knowledge, experience and capabilities, etc. possessed by each candidate for Director.

2) Audit and Supervisory Committee
The Audit and Supervisory Committee is comprised of five Directors who are Members of the
Audit and Supervisory Committee (four of whom are Outside Directors).
Candidates for Outside Director who is a Member of the Audit and Supervisory Committee shallbe appointed with emphasis on independence from the Company, and efforts are made to appoint
persons with specialized knowledge and persons with experience in corporate management, as
well as persons with suitable knowledge regarding finance and accounting.
The Company establishes a Secretariat of the Audit and Supervisory Committee and places
dedicated staff in the Secretariat who are not subject to the instructions and orders of Directors
other than those who are Members of the Audit and Supervisory Committee. In addition, a systemis established of cooperation between the Secretariat of the Audit and Supervisory Committee andeach department in conducting investigations and collecting information required for auditing, inorder to ensure the effectiveness of the instructions by Audit and Supervisory Committee Members.

15

(2) Directors’ Concurrent Positions
In cases where a Director holds a concurrent position as an officer of another listed company, theCompany does not set a limit on the number of concurrent positions held, because roles andresponsibilities are different for the respective entities where he/she holds concurrent positions dueto the scale of entities, etc. On the other hand, the Company selects candidates for Director after
adequately investigating their concurrent positions and ensuring that the candidates are able toappropriately fulfill their roles and responsibilities as a Director of the Company.
The Company discloses the Directors’ concurrent positions in its securities reports and business
reports.

(3) Analysis and Evaluation of the Effectiveness of the Board of Directors as a Whole
To confirm whether the Board of Directors is appropriately carrying out its role in the Company’ssustainable growth and the increase of its corporate value, analysis and evaluation of theeffectiveness of the Board of Directors is performed once every year, and efforts are made towardenhancing the functions of and making improvements to the Board of Directors.
An outline of the results of the analysis and evaluation of the effectiveness of the Board of
Directors is disclosed in the Corporate Governance Report.

[4-12 Active Board Deliberations]
The Company’s Board of Directors is comprised of a small number of persons in order for active
deliberations, that is, free, open-minded and constructive discussions and exchanges of views to takeplace. Creation of an environment in which it is easy for Outside Directors to state their opinions
without reserve is also taken into consideration.
Of matters to be resolved by the Board of Directors, important matters mainly for sustainable growth
are deliberated in advance at the President and General Managers Meeting, where main points are
sorted out, and proposals are submitted to the Board of Directors.
In principle, materials for meeting of the Board of Directors are distributed by five business days prior
to the meeting of the Board of Directors, and the Company responds appropriately to enable Directors
to obtain materials other than those for the meetings of the Board of Directors whenever necessary.
The Company determines the yearly schedule of meetings of the Board of Directors in advance andnotifies Directors in advance.
In principle, meetings of the Board of Directors are held once every month and on the date ofdisclosure of final settlement of accounts, at the time of the decision to convene a general meeting ofshareholders, and after a general meeting of shareholders. Also, by holding extraordinary meetings ofthe Board of Directors as necessary, etc. the required time for deliberation is ensured.

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[4-13 Information Gathering and Support System]
Directors make efforts to proactively acquire information and share information held by them, in orderto fulfill their roles and responsibilities.
The Company establishes a system whereby important documents, such as documents for requesting
approval and financial accounting data, are available for inspection by all Directors at any time.
Furthermore, to ensure that adequate information is provided to Outside Directors who are Membersof the Audit and Supervisory Committee, the Company establishes a system in which Directors who
are Full-Time Members of the Audit and Supervisory Committee and dedicated staff of the Secretariatof the Audit and Supervisory Committee report and provide support to them as appropriate.
The Company created a system where the Audit Department, which is an internal audit department,
directly reports to the Board of Directors and the Audit and Supervisory Committee. Aside from thisreporting, Directors and the Audit Department work to cooperate through the Risk and Opportunity
Management Committee, which monitors the internal controls over financial reporting and conducts
business risk management. Furthermore, the Audit and Supervisory Committee Members and the
Audit Department cooperate through mutual exchanges of opinions on audit plans of the other party
and regularly conduct audit reporting.
If a Director determines that it is necessary to utilize an external expert to fulfill his/her responsibilities,
the Company covers the costs after undertaking the prescribed procedures.

[4-14 Director Training]
The Company takes measures including holding group training by external instructors and e-Learning
for all Directors, including new Directors, and providing information on external seminars, andthereby supports their learning of required knowledge.
Directors actively utilize these opportunities to deepen their understanding of their roles andresponsibilities, and they make efforts to learn required knowledge and appropriately update theirtraining, etc.
Executive directors are tasked with adequately explaining the Company’s business, organization, andfinancial situation, etc. to newly appointed Outside Directors.

5. Dialogue with Shareholders[5-1 Policy for Constructive Dialogue with Shareholders](1) Policy and System Regarding Constructive Dialogue with Shareholders
The Company strives for its sustainable growth and to increase its corporate value over the midto long-term through constructive dialogue with shareholders.
The Company nominates a Director in charge of Investor Relations to promote constructive
dialogue with shareholders, and fosters mutual cooperation between the Corporate Planning,17Administration, Accounting and other related departments, in which the Director in charge ofInvestor Relations plays a central role.
The General Affairs Department serves as the point of contact and responds to requests formeetings from institutional investors. If it is judged necessary, taking into consideration the
purpose of the meeting, the importance of its content, the attributes of the person requesting themeeting, and other factors, the meeting will be handled by the Director in charge of Investor
Relations.
The Company holds financial briefings for institutional investors and analysts twice a year, in
addition to holding explanatory meetings when it establishes its Midterm Management Plan andat other times as necessary. The President and the Director in charge of Investor Relations provide
explanations at these briefings and meetings.
The Director in charge of Investor Relations reports accordingly to the Board of Directors theopinions obtained during the dialogue with shareholders. The Board of Directors then looks into
these opinions, as necessary, and strives for the Company’s sustainable growth and to increase its
corporate value over the mid- to long-term.
The Insider Trading Management Rules are strictly applied with respect to insider information,and the Director in charge of Investor Relations makes efforts with the person responsible forInformation Management to prevent the leakage of information.
The Company will disclose information in a timely, appropriate and fair manner to all shareholders
from the perspective of fair disclosure. In order to prevent unauthorized disclosure of the financial
closing information and to ensure fairness of the disclosure of information, the Company observes
a silent period. The silent period begins at the following day of each reporting period and ends atthe publication of the quarterly financial report or financial report release. During the silent period,
the Company will neither answer nor comment to enquiries about the Company’s financial
performance.

(2) Identifying the Composition of Shareholders
The Company makes an effort to know the composition of its shareholders based on the registerof shareholders, and endeavors to ascertain its substantial shareholders through investigation by
an external investigative entity.

[5-2 Establishing and Disclosing Management Strategy and Management Plan]
The Company sets forth its target vision as a company as well as its management objectives, etc. in its“Nishimatsu-Vision 2030” and “Midterm Management Plan 2025,” after accurately identifying its
capital cost. It also sets basic policies for the business portfolio and revision of the business portfolio,
along with strategies and target figures, etc. for each business division and announces them.
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Nishimatsu-Vision 2030: https://www.nishimatsu.co.jp/eng/ir/library/plan.html
Midterm Management Plan 2025: https://www.nishimatsu.co.jp/eng/ir/library/plan.html

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