Corporate Governance Report
CORPORATE GOVERNANCE

Keihanshin Building Co., Ltd.

Last Update: June 21, 2024

Keihanshin Building Co., Ltd.
Tsuneo Wakabayashi, President
Contact: Corporate Planning Department+81-6-6202-7331
Securities code: 8818
https://www.keihanshin.co.jp/english/

An overview of corporate governance of Keihanshin Building Co., Ltd. (the “Company”) is described below.

I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic
Information
1. Basic Views
We believe in the importance of improving management efficiency and integrity through establishing a transparent and fairmanagement organization, speeding up the decision-making for important matters on the management, and strengthening thesupervisory function of business execution, all of which contribute to improving corporate value.
We are well aware that it is the duty of the Company’s directors and employees to put these ideas into practice, as well ascomplying with all laws and regulations and maintaining discipline, with consideration towards environmental and social issues
to conduct a fair, transparent and appropriate business in an atmosphere of free competition. In this way, we show all
stakeholders, including our shareholders, customers, business partners, employees, and local communities, that we value the trustthat they place in us.
Our Company’s officers and employees are small in number, allowing for uncomplicated information gathering and operations
management when compared to a large-scale corporation with many staff members. Our corporate organization reflects thisfeature. We also appropriately arrange our human resources and strive to maintain a sense of balance between each department
and committee to fully exert the functions of our organization.

Reasons for Non-compliance with the Principles of the Corporate Governance Code[Supplementary Principle 2.4.1: Ensuring Diversity in Appointing Core Human Resources, Etc.]
1. Views on ensuring diversity
As expressed by the statement, “respect for the individual,” in our Code of Conduct, we believe that fostering a corporate
atmosphere where each and every employee with diverse individuality, personality, and values respects each other maximizes
individual abilities, and ultimately forms a foundation for the Company’s development in a society that is becoming increasingly
diverse and complicated.
Diversity includes various elements such as gender, nationality, and background. We recognize that we should provide anenvironment and opportunities where all of our employees can equally play an active role according to their abilities, regardlessof background, and as a result, diverse human resources will play a central role in the management of the Company.
2. Status of ensuring diversity(1) Appointment of women to managerial positions
We have recently seen an increase in the retention rate of female employees hired as new graduates, backed by the developmentof a work environment that takes work-life balance into consideration. Currently, female employees account for half of all
employees below the managerial level, and there have been more opportunities for them to play an active role in recent years. We
aim to increase the ratio of women in managerial positions by further focusing on internal human resources development in the
future.
(2) Appointment of foreign nationals to managerial positions
Currently, we have no foreign nationals in managerial positions. This is because we have operated our business only in Japan
since our founding and the number of foreign candidates is extremely small at the hiring stage. We will continue to conduct fair
selection in both hiring and promotion to provide opportunities and an environment where all human resources can equally play1

an active role according to their abilities.
(3) Appointment of mid-career hires to managerial positions
We have supplemented the skills required for our business operations by hiring outside human resources. In particular, all of ourengineering staff related to construction and equipment have been hired from outside the Company, and currently, 80% or more ofmanagerial positions are held by mid-career hires. We will continue to acquire human resources from external sources while also
focusing on the development of employees hired as new graduates, aiming to ensure diversity in our core human resources.
3. Policies on human resources development and workplace environment development to ensure diversity
We have established policies on human resources development and workplace environment development to ensure diversity as
follows.
(1) Policy on human resources development(a) Under our Corporate Philosophy, Keihanshin Building aims “to act efficiently, evolve, and create a vital corporate
atmosphere,” and will focus on developing human resources that will form the core of our corporate atmosphere as we strive forsustainable growth into the future.
(b) Based on the belief that “the growth of a company is nothing other than the sum of the growth of its individual employees,”
we will actively work to acquire diverse human resources and develop each employee according to his/her individuality,
personality, and values.
(c) We encourage diverse human resources to autonomously grow in the right place, regardless of whether he/she is hired as a
new graduate or an experienced hire, gender, or age.
(2) Policy on a workplace environment development(a) In order to achieve efficient management with a small number of employees, we will develop a workplace environment where
employees with diverse individuality, personality, and values respect each other and all employees can play an active roleaccording to their abilities.
(b) We will work to create a safe and work-friendly environment where each and every employee can maximize his/her ability by
developing systems and programs that enable diverse work styles, also taking employees’ work-life balance into consideration
while enhancing productivity and operational efficiency.
[Principle 2.6: Roles of Corporate Pension Funds as Asset Owners]
We have a defined benefit corporate pension plan. Since the size of our pension assets is relatively small, no specialized personnel
have been assigned; however, we outsource the management of our pension assets to an external institution and check the
management status on a regular basis.

Disclosure Based on the Principles of the Corporate Governance Code[Updated][Principle 1.4: Cross-Shareholdings]
1. Policy on cross-shareholdings
We will not have any cross-shareholdings that are not expected to support the Company’s sustainable growth and medium to longterm enhancement of corporate value. As of March 31, 2024, we own 25 listed stocks as cross-shareholdings.
The Board of Directors annually examines the validity of cross-shareholdings in terms of the quantitative perspectives, such aswhether dividends and rental income are commensurate with cost of capital, and the qualitative perspectives found in business
relations. We will divest any shareholdings which are deemed to be less effective. We have divested all shares of seven listed
stocks we had owned as part of our cross-shareholdings policy since 2015 when the corporate governance code was enacted. We
also sold part of the shares of the three listed stocks. The total amount of sales during this period was 11.7 billion yen.
2. Criteria for the exercise of voting rights attached to cross-shareholdings
We exercise our voting rights based on a comprehensive judgment from the viewpoint of whether each investee company ismanaged in a way that will lead to the maintenance and enhancement of corporate value over the medium to long term, to meetthe expectations of its shareholders and other stakeholders.
In case of prolonged poor business performance, management instability, scandals including legal or regulatory violations, orother negative issues at investee companies, we will fully confirm the purpose of proposals, and vote against any company or
shareholder proposal that damages the interests of the Company as a shareholder.
[Principle 1.7: Process for Considering Related Party Transactions]
The approval of the Board of Directors is required for any transactions between the Company and Directors, Executive Officers,
or major shareholders that would constitute competition or a conflict of interest with the Company, and material or irregulartransactions with other related parties are treated in an equivalent manner.

2

We check regularly for the existence of any transactions with Directors or other related parties.
[Principle 3.1: Full Disclosure](i) Company objectives (corporate philosophy, etc.), business strategies and business plans
Our Corporate Philosophy has three facets: “to provide valuable commercial space to customers so as to contribute to thecommunity through the advancement of customers’ and our businesses,” “to earn and value our customers’, shareholders’ andemployees’ trust by operating our company according to quality-first values,” and “to act efficiently, evolve, and create a vital
corporate atmosphere.” Based on this Corporate Philosophy, we are engaging in business activities aiming to contribute to society,while earning and valuing the trust placed in us by a wide range of stakeholders through our business. To put this Corporate
Philosophy into practice, we have established our Code of Conduct and Behavioral Standards, and shared our basic stance with all
officers and employees.
Please refer to the Company’s website for details of our Corporate Philosophy and other related matters:
https://www.keihanshin.co.jp/english/company/policy/
Based on our distinct leasing business, encompassing diverse facilities including office buildings, datacenter buildings, WINS
buildings (off-track betting parlors), commercial buildings, logistics warehouses, and other properties, we aim for sustainablegrowth from a medium to long term perspective. New investments are made with a focus on regional diversification and locationin an effort to minimize the risk of loss in the event of economic fluctuations and disasters. Furthermore, we work to prevent
profitability decline such as by reshuffling assets and investing to increase their value.
Under our current business strategies, we place a high priority on maximizing cash flows generated by our business in our efforts
to enhance corporate value. We also recognize the importance of achieving returns that exceed capital costs on a profit basis, andthe Board of Directors annually compares and examines capital costs versus profitability for each property.
With this recognition, we have established the Long-Term Business Plan for the period to the fiscal year ending March 31, 2033,
to implement our strategies from a medium to long term perspective. In the Long-Term Business Plan, we aim for ROA
improvement through initiatives on flow business, etc., realizing the improvement and increase of ROE as a result. Please refer tothe Company’s website for specifics of the Long-Term Business Plan:
https://www.keihanshin.co.jp/english/ir/policy/development/(ii) Basic views and policy on corporate governanceOur basic views on corporate governance are set forth in section I. 1. of this report.
We have also established the Corporate Governance Guidelines as our basic policy on corporate governance. Please refer to theCompany’s website for details of the Corporate Governance Guidelines:
https://www.keihanshin.co.jp/assets/dl/pdf/ir/policy/governance/governance_231222.pdf (in Japanese only)(iii) Policies and procedures for determining Directors’ remuneration
Please refer to “Disclosure of Policy on Determining Remuneration Amounts and the Calculation Methods Thereof” under“Director Remuneration” in section II. 1. of this report for the policies and procedures used to determine Directors’ remuneration.
(iv) Policies and procedures for the appointment and dismissal of management executives and the nomination of candidates for
Director and Audit & Supervisory Board Member
We select candidates for Directors and Audit & Supervisory Board Members through comprehensive evaluations of theircharacter, knowledge, capabilities, experience, and potential to contribute to the Company. In particular, the Company focuses on
the perspective of enhancement of the supervisory function by utilizing lawyers and accountants with highly specialized expertise
as well as persons with experience in corporate management, as outside directors.
The President prepares a list of candidates for Directors, and the Board of Directors deliberates and makes decisions in light ofreports on the results of deliberations in the Nomination and Remuneration Committee.
The President prepares a list of candidates for Audit & Supervisory Board Members and gains the consent of the Audit &Supervisory Board in accordance with the provisions of the Companies Act, after which the Board of Directors deliberates andmakes decisions.
Appointment or dismissal of the Chairman and the President will be deliberated and decided at the Board of Directors based on
the deliberations in the Nomination and Remuneration Committee.
With regard to the dismissal of the Chairman or the President, if deemed necessary by the Nomination and Remuneration
Committee, the Nomination and Remuneration Committee may exclude Internal Directors from its composition and report to theBoard of Directors after seeking opinions of Outside Directors and Outside Audit & Supervisory Board Members.
(v) Explanations regarding individual appointments, dismissals, and nominations
The reasons for the nomination of candidates for Directors and Audit & Supervisory Board Members are presented in the3

Reference Documents for the General Meeting of Shareholders, and other important personnel changes are disclosed as
appropriate.
[Supplementary Principle 3.1.3: Initiatives on Sustainability, etc.]
1. Initiatives on sustainability
We recognize our contribution to achieving a sustainable society through business as a key management issue, and we havedesignated “A company that will continue to contribute to a sustainable society with each and every employee growing throughinventiveness and challenges and providing valuable commercial space that meet the needs of the times” as a corporate vision in
10 years’ time under the Ling-Term Business Plan. Please refer to the Company’s website for our basic views, policy, and specificinitiatives on sustainability:
https://www.keihanshin.co.jp/english/sustainability/
2. Investment in human capital and intellectual property and related matters
Under our Corporate Philosophy, we aim “to act efficiently, evolve, and create a vital corporate atmosphere.” We recognize thatinvesting in the human capital that will form the core of our corporate atmosphere and enhancing productivity through thepromotion of digitalization are key management issues toward realizing sustainable growth into the future.
Regarding our initiatives to develop human resources, based on the belief that “the growth of a company is nothing other than thesum of the growth of its individual employees,” we are enhancing a qualification support system aimed at providing employeeswith opportunities for self-improvement, etc., in addition to employee training tailored to each role and level.
Regarding the digitalization of work processes, we have already secured a work-friendly environment within the Company fordiverse personnel through the establishment of remote working environments, etc. In the future, we will also continue to work toenhance productivity by utilizing digital technology including centralization of data for each building using cloud services.
3. Respect for human rights
Our Code of Conduct advocates fostering a corporate culture, “Respect for the individual,” and we recognize respect for theindividuality and personality of employees as a matter of priority. Our Human Rights Policy below sets forth our stance on
respect for human rights in conducting corporate activities with respect for the dignity and basic human rights of employees aswell as all the people who are related to our business.
Based on this policy, we conduct human rights due diligence and work to manage and reduce human rights risks in our business.
Please refer to the Company’s website for details of Human Rights Policy：
https://www.keihanshin.co.jp/english/company/policy/
4. Disclosure based on the TCFD framework
We recognize addressing climate change and other environmental problems as a key management issue, and we have identified
challenges such as “strengthening of resilience to climate change” and “sustainable use of resources by measures to reduce theburden on the environment” as materiality. We are making efforts to contribute to resolving the social issues associated withclimate change through our businesses.
As part of these efforts, we declared our endorsement of the TCFD recommendations in November 2021. We have implemented
measures including the evaluation of the impact of climate change on our businesses, based on the analysis of several different
scenarios.
Please refer to the Company’s website for specific details of disclosure based on the TCFD framework:https://www.keihanshin.co.jp/english/sustainability/environment/[Supplementary Principle 4.1.1: Scope of Matters Delegated to Management]
Under the Board of Directors Regulations, we have designated important matters of business execution to be resolved by the
Board of Directors, in addition to the matters stipulated in laws, regulations, and the Articles of Incorporation.
Moreover, the Board of Directors resolves or decides on the disposition, transfer, borrowing, etc. of important assets in cases
where the amount involved exceeds certain designated amounts, established individually based on the nature of the risk
associated with each operation. Decisions on other such matters are delegated to the Management Meeting.
[Principle 4.9: Independence Criteria for Independent Outside Officers]
We have formulated the criteria regarding the independence of Outside Officers, in order to ensure objectivity and transparency inthe corporate governance of the Company. Please refer to “Other Matters Concerning Independent Directors and Independent
Auditors” under “Matters Concerning Independent Directors and Independent Auditors” in section II. 1. of this report for details.
[Supplementary Principle 4.10.1: Appropriate Involvement and Advice from Independent Outside Directors through the
Establishment of an Independent Nomination and Remuneration Committee]

4With an aim to ensure objectivity and transparency in matters related to the personnel and remuneration of the management team,
we have established a Nomination and Remuneration Committee. The majority of the committee members, including thechairperson, are Independent Outside Directors. Please refer to the Supplementary Explanation regarding “Voluntary
Establishment of Committee(s) equivalent to Nomination Committee or Remuneration Committee” under “Directors” in section
II. 1. of this report for our basic views on the independence of committee members and their authority and roles, etc.
[Supplementary Principle 4.11.1: Basic Views on the Composition and Scale of the Board of Directors]
We operate with only a few officers and employees, and we have an advantage in terms of the relative ease of information
gathering and operational administration.
The Board of Directors currently comprises seven (7) Directors, of whom four (4) are Independent Outside Directors. We believethat this is appropriate to begin with, in terms of both composition and scale, from the perspective of utilizing Outside Directors
to strengthen its supervisory function over the execution of business. However, looking ahead, we will proactively consider arange of different alternative compositions to further enhance the quality of management, including with regard to aspects such as
gender and international diversity.
We disclose the combination of skills possessed by the Company’s Directors and Audit & Supervisory Board Members in the
Reference Documents for the General Meeting of Shareholders.
[Supplementary Principle 4.11.2: Concurrent Positions Held by Directors and Audit & Supervisory Board Members]
We disclose the significant concurrent positions held by the Company’s Directors and Audit & Supervisory Board Members in the
Reference Documents for the General Meeting of Shareholders, Annual Securities Report, and other materials. The approval of
the Company’s Board of Directors is required for a Director or Audit & Supervisory Board Member to serve concurrently as an
officer of another listed company, and this is only permitted within reasonable limits, in terms of the performance of roles andresponsibilities.
[Supplementary Principle 4.11.3: Analysis and Evaluation of the Effectiveness of the Board of Directors as a Whole]With the purpose of ensuring effectiveness in the Board of Directors and enhancing the corporate value, self-assessments havebeen carried out by the Board of Directors since 2017.
In 2024, an external institution sent out a questionnaire to all Directors and Audit & Supervisory Board Members in Decemberof the previous year to January of this year. In February, a discussion was held based on the summary of the questionnaire
conducted by the external institution.
As a result, opinions were given that the Board of Directors was functioning effectively in general, it was confirmed that theBoard of Directors as a whole is operating appropriately. We have confirmed that we have been making efforts to improve theissues that were recognized as issues in the effectiveness evaluation. As future issues, the Board of Directors needs to spend
sufficient time discussing the progress of the long-term business plan formulated in May last year, management that is consciousof cost of capital and stock prices, and the purpose of cross-shareholdings.
In addition, regarding the supervisory function of the Board of Directors regarding sustainability initiatives, which was raised as
an issue last year, we shared the recognition that it is necessary to continue regular and long-term monitoring.
We will continue to engage in enhancing the function of the Board of Directors by implementing periodic analysis and evaluationof the board’s effectiveness.
[Supplementary Principle 4.14.2: Policy on Training for Directors and Audit & Supervisory Board Members]
The Company provides training for newly appointed Directors and Audit & Supervisory Board Members on issues such as theirlegal authority and obligations, utilizing outside institutions when needed. This is followed by more learning opportunities
including training related to themes affecting the duties of Directors and Audit & Supervisory Board Members and inspections of
the Company’s properties.
We are working to enhance the quality of training by confirming its status of implementation during the annual evaluation of theeffectiveness of the Board of Directors.
[Principle 5.1: Policy for Constructive Dialogue with Shareholders]
Executive Officers responsible for administration are in charge of dialogue between the Company and shareholders. The related
departments within the Company coordinate with the officers accordingly in providing necessary information to promote
constructive engagement between them.
We make every effort to help our shareholders to understand our management strategy and business environment better byholding briefing sessions with the presence of the President or Executive Officers responsible for administration and disclosing
information on the corporate website.
The opinions and requests received from shareholders and analysts at company briefings, etc. are used to further enhance our
dialogue. All dialogue records are shared among Directors and Audit & Supervisory Board Members, and relayed to the related5departments and the management to use for active review of our business strategies.
During the silent period before announcing our financial results, we will restrict dialogue with our shareholders and keep theinsider information strictly confidential.
[Action to Implement Management That Is Conscious of Cost of Capital and Stock Price]
In the Long-Term Business Plan announced in May 2023, the Company aims to achieve ROA of 5.0% and ROE of 8.0% or morein the fiscal year ending March 31, 2033, the final year of the plan, in order to realize management that is conscious of cost ofcapital and stock price. In addition, the Company has set the dividend payout ratio target around 45%, and will consider
implementing shareholder returns that are conscious of capital efficiency, such as the acquisition of treasury shares, incomprehensive consideration of the economic situation and the Company's stock price.
Please refer to the Company’s website for details：
https://www.keihanshin.co.jp/english/ir/policy/development/

62. Capital Structure
Foreign Shareholding Ratio

20% or more and less than 30%

Status of Major Shareholders[Updated]
Name or Company Name

Number of Shares Owned

Percentage (%)

GINSEN Co., Ltd.

6,440,446

13.16

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

4,382,800

8.96

INTERTRUST TRUSTEES (CAYMAN) LIMITED SOLELY IN ITS

2,285,000

4.67

Sumitomo Mitsui Banking Corporation

2,133,000

4.36

KINDEN CORPORATION

1,393,000

2.85

KAJIMA CORPORATION

1,376,306

2.81

San ju San Bank, Ltd.

1,287,000

2.63

Custody Bank of Japan, Ltd. (Trust Account)

1,222,300

2.50

The Hyakujushi Bank, Ltd

891,700

1.82

SSBTC CLIENT OMNIBUS ACCOUNT

886,462

1.82

CAPACITY AS TRUSTEE OF JAPAN-UP

Name of Controlling Shareholder, if applicable(excluding Parent Company)
Name of Parent Company, if applicable

None

Supplementary Explanation-

3. Corporate Attributes
Listed Stock Exchange and Market Segment

Prime Market of the Tokyo Stock Exchange

Fiscal Year-End

MarchBusiness Sector

Real Estate

Number of Employees (Consolidated) as of the End
Fewer than 100of the Previous Fiscal YearNet Sales (Consolidated) as of the End of the
10 billion yen or more and less than 100 billion yen
Previous Fiscal Year
Number of Consolidated Subsidiaries as of the End
Fewer than 10of the Previous Fiscal Year7

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

5. Other Special Circumstances which May Have Material Impact on Corporate Governance-

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

Company with Audit & Supervisory Board**Referred to in the Corporate Governance Code reference translation as "Company with Kansayaku Board"

Directors
Number of Directors Stipulated in Articles of
10
Incorporation
Directors' Term of Office Stipulated in Articles of
1 year
Incorporation
Chairperson of the Board

Chairman (excluding in case concurrently serving as President)

Number of Directors

7

Election of Outside Directors

ElectedNumber of Outside Directors

4

Number of Independent Directors

4Outside Directors’ Relationship with the Company (1) [Updated]
Relationship with the Company*
Name

AttributesaTakashi Yoshida

CPA

Masao Nomura

From another company

Atsushi Miyanoya

From another company

Chiho Takeda

Lawyer

b

c

d

e

f

g

h

i

j

k

*Categories for “Relationship with the Company”.
(Use “○” 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 aclose relative of the Director fell under the category in the past.)
a. Person who executes business of the Company or a subsidiary
b. Person who executes business or a non-executive director of a parent company
c. Person who executes business of a fellow subsidiaryd. Person/entity for which the Company is a major client or a person who executes business for such person/entity
e. Major client of the Company or a person who executes business for such client8f.

Consultant, accounting expert, or legal expert who receives large amounts of cash or other assets in addition to Director/Audit& Supervisory Board Member compensation from the Company
g. Major shareholder of the Company (in cases where the shareholder is a corporation, a person who executes business of thecorporation)h. Person who executes business for a client of the Company (excluding persons categorized as any of d, e, or f above) (applies
to self only)
i. Person who executes business for another company holding cross-directorships/cross-auditorships with the Company (applies
to self only)
j. Person who executes business for an entity receiving contributions from the Company (applies to self only)
k. OtherOutside Directors’ Relationship with the Company (2) [Updated]

Name

Designation as
Independent
Director

Supplementary Explanation of
the Applicable Relationship

Takashi Yoshida〇

Independent Director
CPA

Masao Nomura〇

Independent Director
From another company

Atsushi Miyanoya〇

Independent Director
From another company

Chiho Takeda〇

Independent Director
Lawyer9

Reasons for Appointment
Reason for appointment as an Outside Director:
to utilize his highly specialized expertise anddiverse range of insights, gained from many yearsof experience as a certified public accountant, inthe management of the Company.
Reason for designation as an Independent
Director: because there is no risk of a conflict ofinterest in view of the relationships between the
Company on one side, and Mr. Takashi Yoshida
and the companies and other organizations hebelongs to on the other.
Reason for appointment as an Outside Director:
to utilize his many years of experience as acorporate manager of a comprehensive energy
service provider and diverse range of insights inthe management of the Company.
Reason for designation as an Independent
Director: because there is no risk of a conflict ofinterest in view of the relationships between the
Company on one side, and Mr. Masao Nomura
and the companies and other organizations hebelongs to on the other.
Reason for appointment as an Outside Director:
to utilize his many years of experience in industry
analysis and business evaluation based on
economic and industrial trends and diverse range
of insights in the management of the Company.
Reason for designation as an Independent
Director: because there is no risk of a conflict ofinterest in view of the relationships between the
Company on one side, and Mr. Atsushi Miyanoya
and the companies and other organizations hebelongs to on the other.
Reason for appointment as an Outside Director:
to utilize her abundant experience as a lawyer anddiverse range of insights in the management of
the Company.
Reason for designation as an Independent
Director: because there is no risk of a conflict ofinterest in view of the relationships between the
Company on one side, and Ms. Chiho Takeda andthe companies and other organizations she
belongs to on the other.

Voluntary Establishment of Committee(s) equivalent toEstablished
Nomination Committee or Remuneration Committee

Status of Voluntarily Established Committee(s), Attributes of Members Constituting the Committee and the Committee
Chair (Chairperson)

Voluntarily
Established
Committee
Equivalent toNomination
Committee
Voluntarily
Established
Committee
Equivalent toRemuneration
Committee

Committee’s
Name

All
Members

Full-timeMembers

InsideDirectors

OutsideDirectors

OutsideExperts

Other

Chairperson

Nomination andRemuneration
Committee

6

6

2

4

0

0

Outside Director

Nomination andRemuneration
Committee

6

6

2

4

0

0

Outside Director

Supplementary Explanation
With an aim to ensure objectivity and transparency in matters related to the personnel and remuneration of the management team,
we have established a Nomination and Remuneration Committee. The majority of the committee members, including thechairperson, are Independent Outside Directors. The Nomination and Remuneration Committee deliberates on the following
matters in advance of the Board of Directors, and reports the results of these deliberations to the Board of Directors.
The Board of Directors makes final decisions on matters deliberated by the Nomination and Remuneration Committee, but webelieve that independence and authority of the committee are fully secured because the majority members of the Board of
Directors are Independent Outside Directors concurrently serving as the Nomination and Remuneration Committee members.
1. Personnel matters for management executives(1) Proposals to the General Meeting of Shareholders regarding the appointment of candidates for Directors and the dismissal of
Directors(2) Establishment, revision, or abolishment of basic policies, rules, procedures, etc., regarding the appointment of Directors(3) Appointment and dismissal of the President and the Chairman(4) Succession of the President and Chief Executive Officer(5) Appointment and dismissal of Executive Officers(6) Other matters recognized as necessary by the Nomination and Remuneration Committee
2. Matters concerning the remuneration of management executives(1) Details of remuneration of individual Directors and Executive Officers(2) Establishment, revision, or abolishment of basic policies, rules, procedures, etc., regarding the remuneration of Directors andExecutive Officers(3) Other matters recognized as necessary by the Nomination and Remuneration Committee

10

Audit & Supervisory Board Members**Referred to in Corporate Governance Code reference translation as "kansayaku"
Establishment of Audit & Supervisory Board

Established

Number of Audit & Supervisory Board Members
4
Stipulated in Articles of Incorporation
Number of Audit & Supervisory Board Members

3

Status of Coordination between Audit & Supervisory Board Members, Independent Accounting Auditors, and Internal
Auditing Division
The Audit & Supervisory Board Members meet with the Independent Accounting Auditor and exchange information as necessary.
In addition, they receive reports from the Independent Accounting Auditor on the results of audits and examine issues related to
the financial statements and other matters. The Audit & Supervisory Board Members also meet with the Audit Department, which
is a part of the internal auditing division, at the start of each fiscal year to discuss the annual plan, and receive reports on the
results of each internal audit.

Appointment of Outside Audit & Supervisory Board
Appointed
Members
Number of Outside Audit & Supervisory Board
2
Members
Number of Independent Auditors

2

Outside Audit & Supervisory Board Members’ Relationship with the Company (1)Relationship with the Company*
Name

AttributesaHideharu Nagasawa

From another company

Hideyuki Kamijo

Tax Accountant

b

c

d

e

f

g

h

i

j

k

l

m

*Categories for “Relationship with the Company”.
(Use “○” when the Audit & Supervisory Board Member presently falls or has recently fallen under the category; “△” when the
Audit & Supervisory Board Member fell under the category in the past; “●” when a close relative of the Audit & Supervisory
Board Member presently falls or has recently fallen under the category; and “▲” when a close relative of the Audit &Supervisory Board Member fell under the category in the past.)
a. Person who executes business of the Company or a subsidiaryb. A non-executive director or an accounting advisor of the Company or its subsidiaries
c. Person who executes business or a non-executive director of a parent company
d. An audit & supervisory board member of a parent company of the Company
e. Person who executes business of a fellow subsidiaryf. Person/entity for which the Company is a major client or a person who executes business for such person/entity
g. Major client of the Company or a person who executes business for such clienth. Consultant, accounting expert, or legal expert who receives large amounts of cash or other assets in addition to director/Audit& Supervisory Board Member compensation from the Company
i. Major shareholder of the Company (in cases where the shareholder is a corporation, a person who executes business of thecorporation)j. Person who executes business for a client of the Company (excluding persons categorized as any of f, g, or h above) (applies
to self only)
k. Person who executes business for another company holding cross-directorships/cross-auditorships with the Company (applies
to self only)
l. Person who executes business for an entity receiving contributions from the Company (applies to self only)
m. Other11Outside Audit & Supervisory Board Members’ Relationship with the Company (2)Name

Hideharu
Nagasawa

Hideyuki Kamijo

Designation as
Independent
Auditor〇〇Supplementary Explanation of
the Applicable Relationship

Reasons for Appointment

Independent Auditor
From another company

Reason for appointment as an Outside Audit &Supervisory Board Member: to utilize his many
years of experience in the corporate planningdepartment and technical department of a leading
electronics manufacturer and diverse range of
insights in the management of the Company.
Reason for designation as an Independent
Auditor: because there is no risk of a conflict ofinterest in view of the relationships between the
Company on one side, and Mr. Hideharu
Nagasawa and the companies and otherorganizations he belongs to on the other.

Independent Auditor
Tax Accountant
From another company

Reason for appointment as an Outside Audit &Supervisory Board Member: to utilize his
experience in business execution in the real estateindustry and as an auditor, as well as considerable
knowledge of finance and accounting, in the auditof the Company.
Reason for designation as an Independent
Auditor: because there is no risk of a conflict ofinterest in view of the relationships between the
Company on one side, and Mr. Hideyuki Kamijo
and the companies and other organizations hebelongs to on the other.

Matters Concerning Independent Directors and Independent Auditors
Number of Independent Directors and Independent
6
Auditors

Other Matters Concerning Independent Directors and Independent Auditors[Independence Criteria for Independent Outside Officers]
The Company has formulated the following criteria regarding the independence of outside officers, in order to ensure objectivity
and transparency in the corporate governance of the Company. If outside officers do not fall under any of the following items, it isjudged that they are sufficiently independent from the Company.
1. A person who is a principal business partner (Note 1) of the Company or its business executor (Note 2)
2. A person for whom the Company is a principal business partner or its business executor
3. A principal shareholder (Note 3) of the Company (If this is a corporation, association, or any other organization, this refers to aperson belonging to such organization.)
4. A business executor of a corporation of which the Company is a principal shareholder
5. A person who belongs to an auditing firm that serves as the Company’s Independent Accounting Auditor
6. A consultant, accounting expert, or legal expert who receives money or other assets exceeding 10 million yen annually from theCompany in addition to officer remuneration (If the person receiving such assets is a law firm, auditing firm, consulting firm,or any other corporations, or association or any other organization, this refers to a person belonging to such organization.)
7. A person who receives donations exceeding 10 million yen annually from the Company (If the person receiving such large
amount of donations is a corporation, association, or any other organization, this refers to a person belonging to suchorganization.)128. A person who belongs to a company with whom the Company has a relationship for the mutual appointment of Officers
9. A person whose spouse or relative within the second degree of kinship falls under any of the above items 1 through 8
10. A person who fell under any of the above items 1 through 8 within the past three years
11. A person who has been in office for a total of more than 8 years as an outside officer
12. In addition to the preceding items, a person who may have a conflict of interest with general shareholders, and who isreasonably judged to be unable to perform his or her duties as an independent outside officer(Notes) 1. A “principal business partner” refers to any of the followings:(1) A person who has transactions with the Company, and the annual transaction amount is 2% or more of theconsolidated net sales of either the Company or said person; or(2) A financial institution from which the Company makes loans, and the outstanding loans from such institution are 2%
or more of the Company’s total consolidated assets.
2. A “business executor” refers to an executive director, corporate officer or executive officer.
3. A “principal shareholder” refers to a shareholder who holds 10% or more of the Company’s voting rights in his or her
own or another name as of the end of the most recent fiscal year.

Incentives
Implementation Status of Measures related toIncentives Granted to Directors

Introduction of Performance-linked Remuneration Plan
Other

Supplementary Explanation for Applicable Items
Please refer to “Disclosure of Policy on Determining Remuneration Amounts and the Calculation Methods Thereof” under“Director Remuneration” in section II. 1. of this report.

Persons Eligible for Stock Options

Supplementary Explanation for Applicable Items-

Director Remuneration
Status of Disclosure of Individual Directors’
No Disclosure for any Directors
Remuneration

Supplementary Explanation for Applicable Items[Updated]
Total remuneration paid to Directors and Audit & Supervisory Board Members for the fiscal year under review

Classification

Number ofmembers paid

Subtotal by type of remuneration
Base remuneration

Performance-linked
remuneration

Non-monetary
remuneration

Total amount of
remuneration

Director(Outside Directors)

7 persons(4 persons)

123,870
thousand yen(33,600
thousand yen)

15,764thousand yen(-)

43,729thousand yen(-)

183,363
thousand yen(33,600
thousand yen)

Audit &
Supervisory Board
Member(Outside Audit &Supervisory Board
Members)

3 persons(2 persons)40,800thousand yen(15,600
thousand yen)

(-)

(-)

40,800thousand yen(15,600
thousand yen)

13

(Notes) In addition to the above, employee salaries of 18,607 thousand yen were paid to Directors who concurrently serve as
employees.

Policy on Determining Remuneration Amounts andEstablished
the Calculation Methods Thereof

Disclosure of Policy on Determining Remuneration Amounts and the Calculation Methods Thereof

14

The Company’s officer remuneration system is composed of “monetary remuneration” and “restricted stock remuneration.” The
maximum total amounts of each, approved at the Company’s Annual General Meeting of Shareholders, are 220 million yen perannum for Directors including 50 million yen per annum for Outside Directors, and 50 million yen per annum for Audit &Supervisory Board Members in monetary remuneration, and 50 million yen per annum in restricted stock remuneration for
Directors (excluding Outside Directors).
[Remuneration for Directors]
We determine remuneration for Directors in line with the shareholders’ interests so that it will serve as an appropriate incentive
program leading to a sustainable increase in the shareholder value. As a basic policy, we aim to secure appropriate levels of
remuneration for Director, corresponding to the degree of their responsibilities.
The Board of Directors has resolved to determine remuneration in accordance with the following basic policy, beginning from
remuneration for the fiscal year ended March 31, 2023.
(Policy for Determining Remuneration for Individual Directors)
The remuneration for Executive Directors consists of base remuneration, bonuses as performance-linked remuneration, andrestricted stock as non-monetary remuneration.
The remuneration for the Chairman consists of base remuneration as fixed remuneration and restricted stock as non-monetary
remuneration as the Chairman will perform the expected role as a chairperson of the Board of Directors for increasing theshareholder value in the medium to long term, despite being not directly involved in business operations.
The Company will pay only the base remuneration to Outside Directors in consideration of their duties.
If the Nomination and Remuneration Committee determines that the indicator used to calculate performance-linked remunerationis achieved to a standard degree against the target, the composition of each type of remuneration paid to the Representative
Directors shall be set to 60% base remuneration, 20% bonuses, and 20% restricted stock remuneration.
The indicator used to calculate performance-linked remuneration is the degree of achievement of “business profit before
depreciation and amortization” and “initiatives on sustainability,” as set forth as targets in the Long-Term Business Plan, and bothare comprehensively taken into consideration in the calculation, in order to realize sustainable enhancement of corporate value
and to expand the scale of the Company and create new profit model through portfolio expansion.
The Board of Directors resolves on the amounts of remuneration for individual Directors, with reference to consideration by the
Nomination and Remuneration Committee, whose majority is composed of Independent Outside Directors.
[Remuneration for Audit & Supervisory Board Members]
The remuneration for Audit & Supervisory Board Members comprises only the base remuneration. The amount of remunerationfor each Audit & Supervisory Board Member is determined by the Audit & Supervisory Board.

Support System for Outside Directors and/or Outside Audit & Supervisory Board Members• The Personnel & General Affairs Department is responsible for communication and support for Outside Directors and Outside
Audit & Supervisory Board Members. This encompasses all matters required for attendance at the Company’s important
meetings.
• When Outside Directors attend meetings of the Board of Directors, they receive advance briefings from the Executive Officers
responsible for administration and the General Manager of the responsible division, as well as the distribution of briefing
materials, as necessary, through face-to-face visits, telephone discussions, email, or other means.
• Agenda items to be submitted to meetings of the Board of Directors of the Company are, as a general rule, deliberated on inadvance at the Management Meeting. The Audit & Supervisory Board Member (Standing) attends the Management Meeting,
explains the content of Board of Directors agenda items to Outside Audit & Supervisory Board Members, and works towards thesubsequent formation of an opinion by the Audit & Supervisory Board. The Audit & Supervisory Board Member (Standing) also
reports on other important matters to Outside Audit & Supervisory Board Members at meetings of the Audit & Supervisory
Board.

Statuses of Persons who have Retired as Representative Director and President, etc.
Information on Persons Holding Advisory Positions (Sodanyaku, Komon, etc.) after Retiring as Representative Director andPresident, etc.

Name

Job title/
position

Responsibilities

Terms and Conditions of
Employment(Full/part time, with/without
remuneration, etc.)

15

Date when former
role as president/
CEO endedTerm

Kenjiro
NakanoSpecialAdvisorActivities in businesscircles, social
contribution activities,
etc. (no involvement
in management)

Part time, with remuneration

June 21, 2022

Undetermined

Number of Persons Holding Advisory Positions (Sodanyaku, Komon, etc.)
1
After Retiring as Representative Director and President, etc.

Other Related Matters-

2. Matters Concerning Functions of Business Execution, Auditing and Supervision, Nomination, andRemuneration Decisions (Overview of Current Corporate Governance System) [Updated](1) The Board of Directors holds a meeting once per month, as a general rule, to determine important matters related to
management and supervise the status of the execution of business, on which it receives periodic reports. We appoint Directors
who have abundant experience and/or advanced expert knowledge, technical skills, or similar attributes, and strive to further
enhance the transparency and fairness of our corporate activities.
(2) The Management Meeting, an executive body attended by Directors, Executive Officers, and others nominated by thechairperson, holds a meeting once per month, as a general rule. It deliberates and reports on the policies, plans, status, and resultsof business execution, under the basic policy determined by the Board of Directors. The Management Meeting also deliberates on
Board of Directors agenda items in advance. The Audit & Supervisory Board Member (Standing) attends the Management
Meeting and expresses opinions.
(3) The Officers and General Managers Meeting is held once per week, as a general rule, attended by officers and General
Managers of each division, for purposes such as mutual information sharing and communication between divisions. The Audit &Supervisory Board Member (Standing) attends the Officers and General Managers Meeting, providing an opportunity forconveying requests and opinions to each division.
(4) Regarding auditing, we have established the Audit & Supervisory Board, appointed the Independent Accounting Auditor, andestablished the Audit Department as an internal auditing division.
(5) We have advisory agreements with law firms, and request opinions as necessary regarding the Company’s business and otherissues.
(6) We have established an internal Compliance Committee and Risk Management Committee to strengthen the compliance andrisk management systems. These committees report periodically to the Board of Directors. The activities of the committees arealso subject to audit.
(7) The Audit & Supervisory Board holds a meeting once per month, as a general rule. The Audit & Supervisory Board Member(Standing) plays a central role in presenting detailed reports to the Outside Audit & Supervisory Board Members on matters suchas the proceedings of the Management Meeting, the content of Board of Directors agenda items, the content of audits carried out
by the Independent Accounting Auditor and the Audit Department, and the subsequent status of improvements, and works
towards the formation of an opinion by the Audit & Supervisory Board. The Audit & Supervisory Board Member (Standing) also
conveys the opinions of Outside Audit & Supervisory Board Members at various meetings, as appropriate, and ensures they arereflected within the Company.
(8) The Audit & Supervisory Board Member (Standing) plays a central role in ensuring the regular exchange of information with
the Independent Accounting Auditor and the Audit Department, utilizing the Audit Department’s audit results in audits by the
Audit & Supervisory Board Members, and endeavoring to implement efficient and effective auditing.
(9) The Personnel & General Affairs Department follows the directions of Audit & Supervisory Board Members in the executionof duties by Audit & Supervisory Board Members.
(10) We have an auditing agreement with GYOSEI & CO. regarding the Company’s accounting audit, and we undergo audits
based on the annual audit plan, including matters concerning internal controls under the Financial Instruments and Exchange Act.
Name of Certified Public Accountants who executed duties:
Engagement Partners Atsushi Takada and Yoshihiko Hamada
Composition of team assisting auditing duties:
Certified Public Accountants: 7

16

Others: 5

3. Reasons for Adoption of Current Corporate Governance System• Our businesses as a corporate group consist of standard real estate leasing and other businesses incidental thereto, such asbuilding management and contracted works. These businesses span a limited domain. Moreover, most of the real estate we own islocated in the Kinki area, centered around Osaka. Consequently, we operate businesses with all of our officers and employees
working at the head office, with the exception of a few employees stationed in the Tokyo metropolitan area. As a result, thelocation for important meetings, the preservation of important documents and records such as meeting minutes and internal
decision documents, and hardware such as information-processing equipment for our accounting system are all centralized at thehead office. It is therefore possible to ascertain the status of the development of internal controls, implement various audits, andaudit and supervise the execution of business by officers and employees more efficiently and effectively than would be the case ata large company with many divisions. In this way, in addition to maintaining systems for swift decision-making and businessexecution, we maintain a framework to continually monitor and oversee these processes. We have chosen the form of a company
with an audit & supervisory board because we believe that this maintains a high level of management supervision by Audit &Supervisory Board Members and the Audit & Supervisory Board.
• We have appointed four (4) Outside Directors. Each Outside Director has abundant experience and advanced insight into fields
such as accounting and corporate management. Our Outside Directors have been appointed in the expectation that they willcontribute to the Company’s management decision-making and fulfill a supervisory function over other Directors from an
independent and objective perspective.

17

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Meetings of Shareholders and Facilitate Exercise of Voting Rights[Updated]
Supplementary Explanation
Scheduling

of

the

GeneralMeetingof

Shareholders During Non-Peak Days

The 101th Annual General Meeting of Shareholders was held on June 21,
2024.

Electronic Exercise of Voting Rights

We have implemented the exercise of voting rights by electronic means.

Participation in a Platform for the Electronic
Exercise of Voting Rights and Other Initiatives
to Enhance Environment for Institutional

We participate in the Electronic Voting Platform for institutional investors
operated by ICJ, Inc.

Investors to Exercise Voting Rights
Provision of Notice (or Summary of Notice) of
the General Meeting of Shareholders in

An English translation of the Notice of the General Meeting of Shareholders isposted on the Company’s website.

EnglishOther

We post the Notice of the General Meeting of Shareholders on the Company’s
website.

2. Status of IR-related Activities
Supplementary Explanation

Formulation and Publication of Disclosure
Policies
Regular Investor Briefings held for Individual
Investors
Regular Investor Briefings held for Analysts
and Institutional Investors

Online Disclosure of IR Information

Establishment of Department and/or Placementof a Manager in Charge of IR

Explanation by arepresentative
director or arepresentative
executive officer

Our Disclosure Policy is posted on the Company’s
website.
We hold regular company briefing sessions for individual
shareholders.

Held

The President provides an explanation of the results forthe previous fiscal year and the future outlook twice per
year at the company briefing sessions organized by the
Securities Analysts Association of Japan.

Held

We have established an Investor Relations section on the
Company’s website, where we post management policy,
financial information, stock and bond information, IR
materials (consolidated financial results, annual securities
reports, Integrated Reports, the FACT BOOK, messages
to shareholders, company briefing session materials,etc.), IR events (the IR calendar, company information
sessions, the General Meeting of Shareholders),
electronic public notices, CSR and other information. The
URL of the Company’s website is:https://www.keihanshin.co.jp/english/
The Corporate Planning Department is responsible forinvestor relations.

18

3. Status of Measures to Ensure Due Respect for Stakeholders[Updated]
Supplementary Explanation
Establishment of Internal Rules Stipulating
Respect for the Position of Stakeholders

Implementation of Environmental Preservation
Activities and CSR Activities, etc.

Formulation of Policies, etc. on Provision ofInformation to Stakeholders

We have set forth our aim “to earn and value our customers’, shareholders’ andemployees’ trust by operating our company according to quality-first values” in
our Corporate Philosophy. We also prescribe our policy on engaging withindividual stakeholders such as customers, shareholders, investors, partnercompanies, local communities, and employees in our Human Rights Policy andSustainability Policy.
• We recognize addressing environmental challenges as a key management
issue, and we have identified challenges such as “strengthening of resilience toclimate change” and “sustainable use of resources by measures to reduce theburden on the environment” as materiality. We are prioritizing efforts tosustainably enhance corporate value and achieve a sustainable society. Specificinitiatives include reducing environmental burden by switching toenergy-saving equipment and efforts to extend the service life of buildings andequipment and save on resources through planned repair and renewal. We areworking to obtain third-party building environmental certification toobjectively evaluate these initiatives.
• We have also designated “co-existence and co-prosperity with local
communities” as materiality, and, as a real estate company fully grounded inlocal communities, we are actively and continuously engaged in initiatives
such as donations and participation in litter clean-up activities, as well as
sponsoring local events.
The Keihanshin Building Code of Conduct stipulates that “We willcommunicate openly not only with our shareholders, but also with thecommunity widely, and disclose corporate information timely, accurately, andproperly.” We not only disclose the information required under the timely
disclosure standards established by the securities exchange but also actively
utilize the Company’s website and other forums to broadly provide useful
information for stakeholders.

19IV. Matters Concerning the Internal Control System
1. Basic Views on Internal Control System and Status of Development
We have established the following Basic Policy on Development of the Internal Control System Based on the Companies Act,setting forth our policy regarding each item required for the development of the internal control system, based on Article 362,
Paragraph 5 of the Companies Act. The President and Directors develop a system for the proper and efficient execution ofbusiness of the corporate group composed of the Company and its subsidiaries (hereinafter, the “Group”) in accordance with thispolicy, review this policy annually to address changes in the business environment, and endeavor to improve and enhance it, by
submitting proposals to the Board of Directors, as necessary.
1. Systems to ensure that the execution of duties by Directors complies with laws, regulations and the Articles of Incorporation(1) The Directors perceive establishing the Group’s compliance as one of the most important management issues, respect theGroup’s Corporate Philosophy, and act in accordance with the Code of Conduct and Behavioral Standards, based on the
Compliance Regulations, to comply with laws, regulations, and other social norms, as well as internal rules such as the Articles ofIncorporation. The Executive Officers responsible for administration oversee the operation of the In-House Reporting Systemestablished to receive reports and provide consultations regarding compliance violations and related issues. The Executive
Officers responsible for administration report periodically on the results of this oversight to the President.
(2) The Directors utilize the Compliance Committee to ascertain the status of implementation of compliance measures within theGroup and implement education and training for Directors, Executive Officers, and employees to ensure thorough compliancemanagement. The Directors report the activities of the Compliance Committee periodically to the President, and also to theManagement Meeting and the Board of Directors, as necessary.
(3) The Directors present the Group’s policy against anti-social forces, which threaten social order and safety and sound corporate
activities, in the Code of Conduct and Behavioral Standards. The Directors also develop systems for the Group to address theseforces, face them resolutely in cooperation with the police and other external agencies and endeavor to eliminate any relations
with them.
(4) The Head of the Audit Department implements audits of the Group’s compliance status, as appropriate, and reports the resultsof these audits to the President, the Compliance Committee, and, where necessary, the Board of Directors.
2. Systems for the preservation and management of information associated with the execution of duties by Directors(1) The Directors record information associated with the execution of their individual duties in physical or electronic documents
and appropriately preserves and manage these documents based on internal rules such as the Document Management Regulations
and the Information Systems Management Regulations.
(2) The Executive Officers responsible for administration revise and improve the Document Management Regulations, theInformation Systems Management Regulations, and other rules concerning the preservation and management of information, as
necessary, ensure that the manner of preserving important information ensures retrievability, and develop systems to enable thisinformation to be viewed as necessary.
(3) The Head of the Audit Department implements audits of the status of preservation and management of important information,
as appropriate.
3. Regulations on the management of the risk of losses, and other systems(1) The general manager of each department manages the risks associated with the business of his/her own department, based on
the Risk Management Regulations.
(2) The Directors utilize the Risk Management Committee to implement the overall, integrated management of risks; specifically:(a) The comprehensive management of risk identification and risk evaluation(b) The establishment and revision of risk management policies and plans(c) Summarizing risk management status
The Directors report periodically on these matters to the President, and also to the Management Meeting and the Board of
Directors, as necessary.
(3) We develop the Business Continuity Plan and thoroughly disseminate information on the action the Company should take inthe event of an emergency.
(4) The Head of the Audit Department implements audits of the status of regular risk management by each department, as
appropriate, and reports the results of these audits to the President and the Risk Management Committee.
4. Systems to ensure the efficient execution of duties by Directors(1) We hold a meeting of the Board of Directors once per month, as a general rule. The Board of Directors determines importantmatters related to management and supervises the status of the Directors’ execution of business, among other matters, inaccordance with the Board of Directors Regulations.
(2) The Directors report and deliberate on the execution of duties and plans at the Management Meeting, under the basic policy

20

determined by the Board of Directors, to enable more efficient execution of duties.
(3) The Directors make the decisions necessary for the execution of duties, in accordance with the Organization Regulations, theDuties Division Regulations, the Administrative Authority Regulations, and other rules. We revise these regulations as necessary
due to the revision or abolition of laws and regulations or to promote more efficient execution of duties.
(4) Execution of important business matters requires an approval in advance from the person with decision-making authority,
based on the Application Circulation Regulations.
(5) Executive Officers are appointed by the Board of Directors to ensure the efficient execution of duties.
5. Systems to ensure that the execution of duties by employees complies with laws, regulations and the Articles of Incorporation(1) The Directors have established the Compliance Regulations, the Code of Conduct, and the Behavioral Standards, whichclearly set forth specific matters that should be complied with, to ensure that employees always engage in their duties with anawareness of compliance.
(2) The Directors ensure the continuation and function of the activities of the Compliance Committee to maintain and enhance anin-house system based on compliance management and sound corporate culture. The Directors also report periodically on thematters for which they are responsible to the President, and also to the Management Meeting and the Board of Directors, asnecessary, to ascertain the status of activities of the Compliance Committee. The Directors also ensure the appropriate operationof the In-House Reporting System established to receive reports and provide consultations regarding internal complianceviolations and related issues.
(3) The Head of the Audit Department implements accounting audits, operational audits, and special audits based on the Internal
Audit Regulations, and reports to the President on the status of execution of duties by employees.
6. Systems to ensure proper business operations within the Group(1) The Directors and related divisions direct and manage the Company’s subsidiaries based on the management direction
agreements, service agreements, and other agreements with each subsidiary, to ensure appropriate business operations andenhance efficiency within the Group, in accordance with the Affiliates Management Regulations.
(2) The Directors and related divisions ascertain matters concerning the execution of duties by directors, employees, and others at
subsidiaries of the Company by requesting reports from subsidiaries at meetings and other forums held by the Group, as well asviewing the minutes of meetings of the boards of directors of subsidiaries, their financial statements, approval documents, andother information. In this way, they confirm that the execution of duties at subsidiaries conforms to laws, regulations, and therelevant articles of incorporation, ensure appropriate business operations and enhance efficiency within the Group.
(3) The Directors also apply the Risk Management Regulations to each company in the Group and utilize the Risk Management
Committee to develop systems to appropriately ascertain and address the status of risk management.
(4) Transactions between companies within the Group are handled appropriately with reference to laws, regulations, accounting
principles, and other social norms.
(5) Audit & Supervisory Board Members and the Head of the Audit Department implement audits or internal audits of eachcompany in the Group, confirm that the execution of duties conforms to laws, regulations, and the relevant articles ofincorporation, and ensure the effectiveness and suitability of internal controls across all aspects of the Group’s operations. They
also report the annual audit plan and the status and results of implementation thereof to the Board of Directors, as necessary.
7. Matters concerning employees whom Audit & Supervisory Board Members ask to be assigned to assist with their duties(1) The Personnel & General Affairs Department is designated as the section that assists Audit & Supervisory Board Members in
the execution of their duties. Personnel in the Personnel & General Affairs Department assist Audit & Supervisory Board
Members as necessary.
(2) We respect the opinions of Audit & Supervisory Board Members when deciding on the assignment of dedicated employees toassist with the duties of Audit & Supervisory Board Members.
8. Matters concerning the independence from Directors of employees assigned to assist with Audit & Supervisory Board
Members in their duties(1) The performance evaluations of dedicated employees assigned to assist with Audit & Supervisory Board Members in theirduties are carried out by the Audit & Supervisory Board Member (Standing), and the opinion of the Audit & Supervisory Board isrespected regarding the appointment, dismissal, or reassignment of these employees.
(2) A system is in place that allows Audit & Supervisory Board Members to instruct the employees assigned to assist with them intheir duties to act independently of the Directors, in order to ensure the effectiveness of the directions given to these employees by
Audit & Supervisory Board Members.
9. Systems to enable directors, executive officers, audit & supervisory board members, and employees of the Group, and persons
who have received reports from any of the above, to report to the Company’s Audit & Supervisory Board Members, and othersystems for reporting to Audit & Supervisory Board Members

21

(1) Directors in the Group report to the Company’s Audit & Supervisory Board Members on the following matters:(a) Matters that risk causing significant damage to the Company(b) Important matters concerning internal audit and risk management(c) Important matters concerning compliance violations(d) Other matters equivalent to (a), (b), or (c) above(2) Directors, executive officers, audit & supervisory board members, and employees of the Group, and persons who havereceived reports from any of the above, provide the necessary reports and information based on the requests of each Audit &Supervisory Board Member of the Company, as determined by the Audit & Supervisory Board.
(3) The Company’s Directors develop systems to ensure that directors, executive officers, audit & supervisory board members,
and employees of the Group who have made reports to the Company’s Auditor & Supervisory Board Members, as well as persons
who have received reports from any of the above and made reports to the Company’s Audit & Supervisory Board Members, are
not treated disadvantageously as a result. The Directors make this known broadly within the Group.
10. Other systems to ensure effective audits by Audit & Supervisory Board Members(1) The Audit & Supervisory Board creates opportunities for the regular exchange of opinions and information with the President,
the Independent Accounting Auditor, and the Head of the Audit Department, respectively.
(2) The Audit & Supervisory Board Members attend meetings of the Board of Directors, the Management Meeting, the Officers
and General Managers Meeting, and other important meetings, view the minutes of meetings of the Board of Directors, approval
documents, and other important documents, and request explanations from Directors, Executive Officers, and employees asnecessary, in accordance with the division of duties established by the Audit & Supervisory Board, to ensure the effectiveness ofauditing.
(3) The Audit & Supervisory Board utilizes law firms, the Independent Accounting Auditor, and others when deemed necessary
for the formation of independent opinions and the implementation of audits.
(4) Claims for necessary expenses and obligations incurred by Audit & Supervisory Board Members in the course of executing
their duties are paid promptly.

2. Basic Views on Measures for Eliminating Anti-Social Forces and Status of Development
1. Basic Views
We perceive the elimination of anti-social forces, which threaten social order and safety and sound corporate activities, as one of
the most important management issues.
2. Status of development(1) We establish our policy to sever all relations with anti-social forces in the Code of Conduct and Behavioral Standards, which
set forth the behavioral ethics and specific behavioral standards that our officers and employees should comply with inperforming their duties.
(2) We designate a section to handle related issues, which works together with other relevant sections to respond to any situation
and builds a framework for close communication and cooperation with the responsible police station, other external agencies, andother nearby companies.
(3) We regularly make our internal information and knowledge broadly known to our officers and employees to eliminate any
unfair demands from anti-social forces and strengthen our capacity to resist them.
(4) We are working to incorporate clauses concerning the elimination of anti-social forces in the important contracts and otheragreements we enter into.

22

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

Not Adopted

Supplementary Explanation for Applicable Items-

2. Other Matters Concerning the Corporate Governance System
Overview of the Timely Disclosure System
1. Internal systems
We have established the Regulations on the Management of Insider Information and the Prevention of Insider Trading, aimed at
the timely and appropriate disclosure and management of corporate information, and we manage insider information inaccordance with these regulations. Information deemed to be a “material fact about business” is managed centrally by the
Executive Officers responsible for administration, who prevent any leaks, and conduct timely disclosure.
The details are described below.
(1) In the case of a fact that occurred(a) If a fact occurs that requires disclosure, or may require disclosure, under the timely disclosure rules established by the
securities exchange, the manager of the relevant department or subsidiary promptly reports this information to the General
Manager of the Corporate Planning Department.
(b) The General Manager of the Corporate Planning Department closely examines the content of this report and conveys it to
the Executive Officers responsible for administration. The General Manager of the Corporate Planning Department and the
Executive Officers responsible for administration obtain the opinions of the Independent Accounting Auditor or the Audit &Supervisory Board Members as necessary.
(c) The Executive Officers responsible for administration consider, together with the President, whether the content of the reportcorresponds to information requiring disclosure.
(d) If the content of the report is determined to correspond to information requiring disclosure, it is disclosed immediately.
(e) The Corporate Planning Department is responsible for information disclosure procedures. As a general rule, information isdisclosed through the TDnet system operated by the Tokyo Stock Exchange. The relevant information is also posted on the
Company’s website promptly after disclosure.
(2) In the case of a decision or financial results information(a) Where the Board of Directors will resolve a matter that requires disclosure, or may require disclosure, under the timely
disclosure rules established by the securities exchange, the Executive Officers responsible for administration consider, together
with the President, whether the content of the matter corresponds to corporate information requiring disclosure, in advance ofthe resolution taking place.
(b) If the content of the matter is determined to correspond to corporate information requiring disclosure, it is disclosed
immediately upon the approval of the Board of Directors.
(c) The Corporate Planning Department is responsible for information disclosure procedures. As a general rule, information isdisclosed through the TDnet system operated by the Tokyo Stock Exchange. The relevant information is also posted on the
Company’s website promptly after disclosure.

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2. Internal system related to timely disclosure of information

END

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