IR NEWS
Date: June 27, 2024
Contact: Yoichi NAKAGAWA (Mr.)
Representative Director, President

Tel: +81-3-3544-2000

Principles for Responding to the Corporate Governance Code
HANWA Co., Ltd. (“the Company”) will further introduce measures required for corporate governance hereafter inline with the trend of the times toward improved governance. In response to the enforcement of the Corporate
Governance Code, the Company believes that explanations from the Company focused on its current situations and its
views will be conducive to the common interests of its shareholders, investors, and the Company. Accordingly, we havedisclosed these principles for responding to all items of the Corporate Governance Code.
For disclosure at this time, the Company has partly revised the principles based on its current situations. The Company
will endeavor to take measures from a long-term and continuous viewpoint to increase corporate value throughreinforced effectiveness of governance.
We appreciate our shareholders and investors’ understanding.
Section 1: Securing the Rights and Equal Treatment of Shareholders
General Principle 1
Companies should take appropriate measures to fully secure shareholder rights and develop an
environment in which shareholders can exercise their rights appropriately and effectively.
In addition, companies should secure effective equal treatment of shareholders.
Given their particular sensitivities, adequate consideration should be given to the issues and concerns ofminority shareholders and foreign shareholders for the effective exercise of shareholder rights and effective
equal treatment of shareholders.
The Company strives to develop an environment to secure the rights of all shareholders. With regard tocorporate information, the Company proactively discloses information deemed beneficial to shareholders in
addition to information subject to the timely disclosure standards of the stock exchange. In addition, theCompany discloses the above information on its website without delay and makes efforts to disclose theinformation in English concurrently with its disclosure in Japanese, as far as practicable. With regard to voting
rights, the Company provides a voting method via the Internet in addition to a method in writing, so that moreshareholders have equal opportunities to exercise their rights.
Principle 1.1 Securing the Rights of Shareholders
Companies should take appropriate measures to fully secure shareholder rights, including voting rights
at the general shareholder meeting.
With regard to the provision of opportunities to exercise voting rights, the Company uses a voting site
operated by Sumitomo Mitsui Trust Bank, Limited and the Electronic Voting Platform operated by ICJ, Inc.
(Investor Communications Japan). The Company therefore recognizes that it duly provides shareholders withwide opportunities to exercise their voting rights and takes appropriate measures.
Supplementary Principles
1.1.1 When the board recognizes that a considerable number of votes have been cast against a proposal by thecompany and the proposal was approved, it should analyze the reasons behind opposing votes and whymany shareholders opposed, and should consider the need for shareholder dialogue and other measures.
The Company will appropriately incorporate shareholders’ opinions into its management. Therefore, when
the ratio of vote against for a company proposal submitted to the General Shareholders Meeting is high, theBoard of Directors will analyze the reasons and consider the need for a response, including dialogue withshareholders.
1.1.2 When proposing to shareholders that certain powers of the general shareholder meeting be delegated tothe board, companies should consider whether the board is adequately constituted to fulfill its corporate
governance roles and responsibilities. If a company determines that the board is indeed adequately
constituted, then it should recognize that such delegation may be desirable from the perspectives of agile
decision-making and expertise in business judgment.
With regard to the delegation of the matters requiring resolutions of the Shareholders Meeting to the Boardof Directors, the Company considers it a necessary condition that the Board of Directors be a structure thatcan bear the responsibilities to decide such matters. The Company has elected four outside directors whooversee the appropriateness of decision-making by the Board of Directors. As we consider it desirable todelegate authority within a confined scope even though permitted under laws and regulations, the mattersrequiring resolutions of the Shareholders Meeting delegated to the Board of Directors under the provisionsof the Articles of Incorporation at this point are issuance of shares within the authorized number of shares tobe issued, implementation of interim dividends, and acquisition of treasury stock.
1.1.3 Given the importance of shareholder rights, companies should ensure that the exercise of shareholder
rights is not impeded. In particular, adequate consideration should be given to the special rights that arerecognized for minority shareholders with respect to companies and their officers, including the right toseek an injunction against illegal activities or the right to file a shareholder lawsuit, since the exercise of
these rights tend to be prone to issues and concerns.
The Company has established Share Handling Regulations to stipulate procedures in advance for the
exercise of rights by minority shareholders, and will not prevent the exercise of rights.
Principle 1.2 Exercise of Shareholder Rights at General Shareholder Meetings
Companies should recognize that general shareholder meetings are an opportunity for constructive
dialogue with shareholders, and should therefore take appropriate measures to ensure the exercise ofshareholder rights at such meetings.
To make the Shareholders Meeting an opportunity for constructive dialogue with shareholders, theCompany discloses information at appropriate times, provides shareholders with opportunities to exercise
their voting rights, explains business conditions using methods such as slides, and thereby strives to takeappropriate measures to ensure the exercise of shareholder rights.
Supplementary Principles
1.2.1 Companies should provide accurate information to shareholders as necessary in order to facilitate
appropriate decision-making at general shareholder meetings.
The Company considers that it should promptly disclose information which would facilitate appropriate
decision-making by shareholders at the Shareholders Meeting. In addition, the Company posts the Notice of
the Shareholders Meeting on the Company’s website to broadly provide information.
1.2.2 While ensuring the accuracy of content, companies should strive to send convening notices for generalshareholder meetings early enough to give shareholders sufficient time to consider the agenda. During
the period between the board approval of convening the general shareholder meeting and sending theconvening notice, information included in the convening notice should be disclosed by electronic means
such as through TDnet or on the company’s website.
Currently, the notice for shareholders to access the electronic provision of information is to be sent out
approximately three weeks prior to the date of the General Shareholders Meeting, respecting the purpose of
the electronic provision system, the introduction of which has been mandatory since March 2023. To ensure
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that shareholders have sufficient time to consider the agenda items, regardless of the start date of theelectronic provision measure stipulated in the Companies Act, the notice of the General Shareholders Meetingis published electronically on Japan Exchange Group’s website and the Company’s website as soon as
possible after the resolution to convene the General Shareholders Meeting.
1.2.3 The determination of the date of the general shareholder meeting and any associated dates should bemade in consideration of facilitating sufficient constructive dialogue with shareholders and ensuring theaccuracy of information necessary for such dialogue.
The date of the General Shareholders Meeting of the Company is scheduled in late June, the third monthafter the fiscal year end, which is the time limit for extensions of final returns under the Corporation Tax Act.
The Company selects this schedule to ensure itself the time required for account settlement and otherprocedures necessary for holding the General Shareholders Meeting after the fiscal year end, with no intention
to prevent shareholders from attending the meeting.
We traditionally used to hold our General Shareholders Meeting on the day when the general shareholders
meetings are concentrated. However, starting from the 71st Ordinary General Shareholders Meeting, we have
moved the meeting date forward to avoid the concentrated meeting day. We will continue to provide
shareholders in Japan and overseas with sufficient time to consider the exercise of their voting rights bydisclosing convocation notices as soon as possible. At the same time, we will flexibly set the date of theGeneral Shareholders Meeting, while ensuring an appropriate time period for preparation.
1.2.4 Bearing in mind the number of institutional and foreign shareholders, companies should take steps forthe creation of an infrastructure allowing electronic voting, including the use of the Electronic Voting
Platform, and the provision of English translations of the convening notices of general shareholder
meeting.
In particular, companies listed on the Prime Market should make the Electronic Voting Platform
available, at least to institutional investors.
As mentioned above, the Company has created an infrastructure for the exercise of voting rights that allows
shareholders to use a voting site operated by Sumitomo Mitsui Trust Bank, Limited and the Electronic Voting
Platform operated by ICJ, Inc. (Investor Communications Japan), in addition to voting in writing, to ensurethat institutional and foreign shareholders have opportunities to exercise voting rights. In addition, with regard
to the Notice of the Shareholders Meeting, the essentials of the agenda are translated into English and postedon the Company’s website, etc.
1.2.5 In order to prepare for cases where institutional investors who hold shares in street name express aninterest in advance of the general shareholder meeting in attending the general shareholder meeting or
exercising voting rights, companies should work with the trust bank (shintaku ginko) and/or custodial
institutions to consider such possibility.
The Company permits shareholders recorded on the shareholder register to attend the General Shareholders
Meeting. The Company does not permit beneficial shareholders to attend the Meeting because there are nomeans by which to confirm the credibility of shareholding by substantial shareholders. However, if such arequest is made in advance and it can be confirmed with appropriate evidence that the requester is a beneficial
shareholder, the Company will consider allowing attendance at the General Shareholders Meeting and theexercise of voting rights, etc., in consultation with the trust bank and/or custodial institutions.
Principle 1.3 Basic Strategy for Capital Policy
Because capital policy may have a significant effect on shareholder returns, companies should explain
their basic strategy with respect to their capital policy.
The Company aims at comprehensively increasing corporate value and sustainable corporate growth andbelieves that the most important management responsibilities is to enable sustainable returns of earnings toshareholders while building sufficient internal reserves for the reinforcement of management base andinvestment in future growth.
If the Company intends to raise funds by means that dilute existing shares, the Company will implement
3 / 32the fundraising after the Board of Directors sufficiently examines the purpose and effect of the funds andupon careful explanations are provided to shareholders.
With regard to shareholder returns, the Company’s basic policy is to continuously pay stable dividends,
while striving to sustainably enhance corporate value and aiming to increase the amount of dividends overthe medium to long term.
In addition, the Company strives to improve capital efficiency and maintain financial soundness, taking
into account capital structure and the levels of various management indicators.
Principle 1.4 Cross-Shareholdings
When companies hold shares of other listed companies as cross-shareholdings, they should disclose theirpolicy with respect to doing so, including their policies regarding the reduction of cross-shareholdings. In
addition, the board should annually assess whether or not to hold each individual cross-shareholding,specifically examining whether the purpose is appropriate and whether the benefits and risks from eachholding cover the company’s cost of capital. The results of this assessment should be disclosed.
Companies should establish and disclose specific standards with respect to the voting rights as to theircross-shareholdings, and vote in accordance with the standards.
(1) Holding Policy
From the perspective of business partnerships, creating business opportunities, maintaining andstrengthening business relationships, etc., the Company holds shares of business partners, etc., when it isconsidered to contribute to enhancing corporate value over the medium to long term.
(2) Verification and Reduction Policy
Each year, the Board of Directors and the Management Committee regularly and comprehensively examine
the appropriateness of the holding of individual shares, taking into account factors such as investment returns
from transactions and dividends, capital efficiency, and the purpose of holding. The Company promotes thesale of shares that are deemed to be inconsistent with the purpose of the holding.
(3) Criteria for Exercising Voting Rights
The Company has established the following screening criteria for exercising voting rights. For the stock
issues that meet the criteria, the Company will scrutinize the details of the proposals and determine whether
to vote for or against them.
1) a company whose value of shares are judged to be significantly impaired according to its stock price leveland financial conditions
2) a company whose operating income, ordinary income, or net income was recorded as negative in its
business results for the previous fiscal year3) a company that caused a scandal with significant social impact, including violations of laws and regulations
or anti-social acts
4) a company that submits a proposal that is likely to hinder the purpose of shareholding and significantly
impair the value of shares, including any proposal on changes of control or substantial revisions ofcorporate organization(4) Reduction Status for the Year Ended March 2024
The Company sold all shares of 29 issues and a portion of shares of 7 issues. As of the end of March 2024,
the ratio of cross-shareholdings to consolidated net assets was 19.6%
Supplementary Principles
1.4.1 When cross-shareholders (i.e., shareholders who hold a company’s shares for the purpose of crossshareholding) indicate their intention to sell their shares, companies should not hinder the sale of thecross-held shares by, for instance, implying a possible reduction of business transactions.
If a cross-shareholder indicates an intention to sell the Company’s shares, the Company will confirm thebackground of the intention to sell the shares. However, in principle, the Company will respect the intentionof the other party and will not hinder the sale.
1.4.2 Companies should not engage in transactions with cross-shareholders which may harm the interests ofthe companies or the common interests of their shareholders by, for instance, continuing the transactions
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without carefully examining the underlying economic rationale.
In its business activities, the Company believes that it is essential to ensure economic rationality in business
transactions in order to achieve sustainable growth and increase corporate value, and this does not depend onwhether or not the Company holds policy-held stocks.
Principle 1.5 Anti-Takeover Measures
Anti-takeover measures must not have any objective associated with entrenchment of the management or
the board. With respect to the adoption or implementation of anti-takeover measures, the board andkansayaku should carefully examine their necessity and rationale in light of their fiduciary responsibility toshareholders, ensure appropriate procedures, and provide sufficient explanation to shareholders.
We have continued to implement Large Scale Purchase Countermeasures (so-called Takeover Defense)
since they were introduced in February 2007. However, we discontinued the takeover defense measures atthe conclusion of the Ordinary General Meeting of Shareholders held on June 22, 2018.
Supplementary Principles
1.5.1 In case of a tender offer, companies should clearly explain the position of the board, including any
counteroffers, and should not take measures that would frustrate shareholder rights to sell their sharesin response to the tender offer.
In the event of a large-scale purchase of our shares, we will require the purchaser to provide necessary andsufficient information, and will disclose the opinions of our Board of Directors in a timely and appropriatemanner. In addition, we will endeavor to secure the time and information necessary for shareholders toconsider, and will take appropriate measures to the extent permitted by the Financial Instruments andExchange Act, the Companies Act, and other relevant laws and regulations.
Principle 1.6 Capital Policy that May Harm Shareholder Interests
With respect to a company’s capital policy that results in the change of control or in significant dilution,
including share offerings and management buyouts, the board and kansayaku should, in order not to
unfairly harm the existing shareholders’ interests, carefully examine the necessity and rationale from theperspective of their fiduciary responsibility to shareholders, should ensure appropriate procedures, andprovide sufficient explanation to shareholders.
The Company is not currently scheduled to adopt a capital policy that results in a change of control or insignificant dilution. If the Company plans to implement such a capital policy, however, the Company will
duly consider the views of the independent outside directors and corporate auditors and make every effort toprovide careful explanations to shareholders on the background, purposes, effects, etc. in relation to theadoption of the policy.
Principle 1.7 Related Party Transactions
When a company engages in transactions with its directors or major shareholders (i.e., related party
transactions), in order to ensure that such transactions do not harm the interests of the company or thecommon interests of its shareholders and prevent any concerns with respect to such harm, the board should
establish appropriate procedures beforehand in proportion to the importance and characteristics of thetransaction. In addition to their use by the board in approving and monitoring such transactions, theseprocedures should be disclosed.
If the Company intends to engage in a transaction with a director of the Company or a company where a
director of the Company holds office as a representative (related party transaction), the Company will conduct
the related party transaction only after the Board of Directors deliberates on the transaction and gives approval.
With regard to transactions with major shareholders, financial transactions with Sumitomo Mitsui Banking
Corporation and The Dai-ichi Life Insurance Company, Limited are conducted with approval from the Boardof Directors. With regard to commercial transactions, the Company conducts them based on the Standards
for Decision-making Authority established with approval from the Board of Directors according to the sizesof the transactions, and applies the same procedures to the Company’s transactions with major shareholders
such as Nippon Steel Corporation.
5 / 32Section 2: Appropriate Cooperation with Stakeholders Other Than Shareholders
General Principle 2
Companies should fully recognize that their sustainable growth and the creation of mid- to long-term corporate
value are brought about as a result of the provision of resources and contributions made by a range ofstakeholders, including employees, customers, business partners, creditors and local communities. As such,companies should endeavor to appropriately cooperate with these stakeholders.
The board and the management should exercise their leadership in establishing a corporate culture where therights and positions of stakeholders are respected and sound business ethics are ensured.
The resources that sustain the Company’s corporate activities and increase its corporate value are theCompany’s employees who share the majority of their lives with the Company; customers who purchase theCompany’s products and services; suppliers who provide the Company with products and services; financial
institutions who provide the Company with operating funds and investment funds; and local communities
who support the Company’s business by providing infrastructure; and sustainable corporate activities andincreased corporate value result from cooperation of all of these persons. For these various stakeholders, theCompany voluntarily chooses business activities in recognition of the merit of the Company’s existence, andthe Company will further deepen cooperative relationships with each of these stakeholders.
Principle 2.1 Business Principles as the Foundation of Corporate Value Creation Over the Mid- to Long-Term
Guided by their position concerning social responsibility, companies should undertake their businesses inorder to create value for all stakeholders while increasing corporate value over the mid- to long-term. To
this end, companies should draft and maintain business principles that will become the basis for suchactivities.
The Corporate Philosophy of the Company proclaims that by “Coping with changing times and markets
quickly, Hanwa makes a great contribution to society by satisfying various needs of customers as a
‘distribution specialist.’” The Company has a policy of pursuing trading company logistics with a difference,increasing its corporate value, and fulfilling social responsibility with an emphasis on compliance.
Principle 2.2 Code of Conduct
Companies should draft and implement a code of conduct for employees in order to express their values
with respect to appropriate cooperation with and serving the interests of stakeholders and carrying out
sound and ethical business activities. The board should be responsible for drafting and revising the code of
conduct, and should ensure its compliance broadly across the organization, including the front line ofdomestic and global operations.
The Company strives to promote understanding of its corporate culture by communicating the meaning of
its corporate creed, corporate slogan, and other principles at the time of employees’ entry into the Company.
Additionally, we have established the Hanwa Group Ethical Standards, Hanwa Group Code of Conduct,
Hanwa Group Human Rights Policy, and other standards. The contents of these standards are compiled in ourCompliance Manual, which is prepared in six languages and made available for all officers and employees toaccess, thereby promoting their practice and permeation.
Supplementary Principles
2.2.1 The board should review regularly (or where appropriate) whether or not the code of conduct is being
widely implemented. The review should focus on the substantive assessment of whether the company’s
corporate culture truly embraces the intent and spirit of the code of conduct, and not solely on the formof implementation and compliance.
In addition to the initiatives described in Principle 2.2, the Company has established a Compliance
Committee, which raises awareness about compliance and responds appropriately if and when complianceincidents occur, formulating preventive measures for the future. The activities of this committee are reported
to the Board of Directors.

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Principle 2.3 Sustainability Issues, Including Social and Environmental Matters
Companies should take appropriate measures to address sustainability issues, including social andenvironmental matters.
The Company has established the Sustainability Promotion Committee and addresses the issues related to
the Company’s sustainability. The Company has also established the “Environmental Policy” and “Guidelines
for Environmental Corporate Action,” has acquired ISO 14001 certification and promotes an environmental
management program, where internal committee members and outside professionals conduct regular reviews.
The summary of the Company’s sustainability basic policy is as follows.
1. Realization of sustainability through our business
2. Building of a sound and highly transparent organization
3. Creating a workplace where diverse personalities resonate and enhance each other
4. Passing on a rich global environment to the next generation
5. Realization of a society in which everyone can live comfortably
Furthermore, based on the Sustainability Basic Policy, we have identified the following sustainability
issues (materiality) that the Group should focus on.
<Materiality to be mainly addressed through business activities>• Formation of a recycling-oriented society• Realization of carbon neutrality• Building strong and flexible social infrastructure<Materiality to be addressed to build the management foundation>• Security and development of diversified human resources• Advancement of risk management system

Supplementary Principles
2.3.1 The board should recognize that dealing with sustainability issues, such as taking care of climate change
and other global environmental issues, respect of human rights, fair and appropriate treatment of theworkforce including caring for their health and working environment, fair and reasonable transactions
with suppliers, and crisis management for natural disasters, are important management issues that canlead to earning opportunities as well as risk mitigation, and should further consider addressing thesematters positively and proactively in terms of increasing corporate value over the mid-to long-term.
The Company is promoting various initiatives to address issues related to its sustainability in order torealize the sustainable development and enhancement of corporate value of the Company and its groupcompanies (collectively referred to as the “Group”) over the mid- to long-term.
In responding to environmental issues, the Company obtained ISO 14001 certification for environmental
management according to international standards in April 2000 and is promoting environmental management.
With regard to business activities, in addition to its business development for the recycling of resources suchas steel scrap, ferrous raw material, and wastepaper, the Company has realized effective measures for“reducing (curtailing waste), reusing (reusing waste) and recycling (recycling waste)” in its activities,
including its trade business approved by the relevant countries’ regulatory environmental authorities underthe Basel Convention provisions governing procedures for the international transfer of metallic industrial
waste and the biomass fuel/RPF business, in order to contribute to the evolution of a recycling-oriented
society. In addition, we established a “Battery Team” in April 2021 and are working to realize a decarbonizedsociety, aiming to expand business related to rechargeable batteries for automobiles, etc. by utilizing theknow-how we have cultivated through the handling of battery raw material resources. Furthermore, in orderto further enhance the functions of the Battery Team, we reorganized it into a global organization in April
2023 and launched the “BATTERY GLOBAL GROUP for ELECTRIFICATION.”
Regarding respect for human rights, in accordance with the UK’s Modern Slavery Act 2015, which
prohibits modern slavery and human trafficking, the Company has disclosed a statement regarding our
response to modern slavery in our business activities and supply chain. In addition, we have formulated the
Hanwa Group Human Rights Policy (https://www.hanwa.co.jp/en/csr/society/human-rights.html)
and are working to ensure that human rights are respected across our business activities.
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Regarding employee health management, the Company established the “Hanwa Health and Productivity
Management Declaration” in April 2018, and the President and Representative Director assumed the positionof Chief Health Officer (CHO). The Company also established a Health Management Promotion Section
within the Personnel Department to promote the maintenance of physical and mental health among employees
and the development of an environment in which employees can thrive.
Regarding crisis management, the Company has established a Crisis Management Manual and a BusinessContinuity Plan (BCP) Manual for Large Scale Disasters to respond to various risks that may arise while
conducting business in a wide range of countries around the world. It works to minimize damage and ensure
the safety of employees in the event of a crisis.
Regarding compliance issues, the Company has maintained a compliance manual since April 2006 as a
guideline to be observed by all officers and employees. It has been prepared in various languages for all
officers and employees of the Group around the world to ensure thorough compliance with laws andregulations.
In addition, to respond to sustainability issues, the Company established a Sustainability Promotion
Committee in October 2021 and a system to discuss company-wide sustainability issues. Under the direction
and supervision of the Board of Directors, the Committee plays a central role in promoting initiatives
necessary for the Group to coexist with the Earth and society and pursue sustainable development.
Specific information on our sustainability initiatives, including the above, can be found on our website’s“Sustainability” page (https://www.hanwa.co.jp/en/csr) , among other pages.
Principle 2.4 Ensuring Diversity, Including Active Participation of Women
Companies should recognize that the existence of diverse perspectives and values reflecting a variety ofexperiences, skills and characteristics is a strength that supports their sustainable growth. As such,companies should promote diversity of personnel, including the active participation of women.
The Company positions creating an environment in which individual employees acknowledge various
backgrounds and values, and in which a variety of work styles can be pursued as an important managementtarget. The Diversity Promotion Office is responsible for taking measures to ensure diversity of employees.
We have introduced a supervisory scheme where senior employees supervise each new employee for a certain
period, as well as a mentor scheme especially for female as well as for non-Japanese employees. An employee
in a different section with longer work experience in the Company is assigned as a mentor to provide mental
support, to create a better working environment. In addition, the Company assigns female employees topositions that will best enable them to develop to their full potential, proactively promotes female employees
to managerial positions, and introduces study, training abroad, and job rotation programs for female
employees. Through the combination of these initiatives, the Company promotes comprehensive
development of human resources of a managerial caliber with a view to promoting female employees to
executive officer positions.
Supplementary Principles
2.4.1 Companies should present their policies and voluntary and measurable goals for ensuring diversity inthe promotion to core human resources, such as the promotion of women, foreign nationals andmidcareer hires to middle managerial positions, as well as disclosing their status.
In addition, in light of the importance of human resource strategies for increasing corporate value overthe mid-to long-term, companies should present its policies for human resource development andinternal environment development to ensure diversity, as well as the status of their implementation.
We have set a numerical target for the ratio of new female graduates hired (30% or more for career-track
positions) and for mid-career hiring (30% by FY2025). In addition, as part of our efforts to create an internal
environment to secure a diverse workforce, we are developing infrastructure for telecommuting and haveestablished an "in-house university" to create a comfortable work environment and a system where employees
can grow autonomously. As a result, the number and ratio of women, foreign nationals, and mid-career hires
are increasing year by year.
Furthermore, we have set a target of 3.7% for the ratio of female employees in managerial positions by
FY2025 and are working to form a population for promotion to core personnel. Our action plan based on the
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Act on the Promotion of Women's Active Engagement in Professional Life is available on our website.
In the development of our human resources, we have adopted the keyword "Professional & Global." We
are working to develop human resources with an expanded sense of humanity who can communicate with anunderstanding of the uniqueness and diversity of each of the world's regions. Specifically, we are promoting
the development of human resources with management knowledge, business knowledge, language skills, andinternational perspectives by combining the acquisition of knowledge and language skills through systems
that dispatch employees to MBA programs in Japan, language education institutions in and outside Japan,
and overseas subsidiaries as trainees, with practical application in the workplace by assigning them to related
positions after completion of the training program.
Principle 2.5 Whistleblowing
Companies should establish an appropriate framework for whistleblowing such that employees canreport illegal or inappropriate behavior, disclosures, or any other serious concerns without fear of sufferingfrom disadvantageous treatment. Also, the framework should allow for an objective assessment andappropriate response to the reported issues, and the board should be responsible for both establishing thisframework, and ensuring and monitoring its enforcement.
The Company has established the Internal Whistleblowing Rules and set up points of contact both insideand outside the Company that group employees can freely reach out to consult with and report on complianceand other issues with no restrictions from their organizations. The Company will not be notified of the namesof employees who report issues without their consent. Information reported to a point of contact is forwarded
to the office of the Compliance Committee with strict protection of privacy, and the Company promptly
investigates all the facts in cooperation with members of the Compliance Committee and takes measures tocorrect them, etc., as necessary. If an event is judged to be critical, the Company will disclose the relevant
information promptly and accurately, fulfill all its duties of accountability, and report the event to the Boardof Directors.
Supplementary Principles
2.5.1 As a part of establishing a framework for whistleblowing, companies should establish a point of contactthat is independent of the management (for example, a panel consisting of outside directors and outsidekansayaku). In addition, rules should be established to secure the confidentiality of the information
provider and prohibit any disadvantageous treatment.
The Company appoints external attorneys as points of contact who are independent from the management.
Such persons who are contacted for consultations report to the Company on facts that come to light throughthe consultations, give guidance, and conduct investigations with strict protection of the privacy of theconsulters who contact them. In addition, the Company appropriately handles facts reported to the points ofcontact to ensure that the information providers are not treated unfairly by the Company, regardless of whether
the information is reported anonymously or not.
Principle 2.6 Roles of Corporate Pension Funds as Asset Owners
Because the management of corporate pension funds impacts stable asset formation for employees andcompanies’ own financial standing, companies should take and disclose measures to improve humanresources and operational practices, such as the recruitment or assignment of qualified persons, in order toincrease the investment management expertise of corporate pension funds (including stewardship activities
such as monitoring the asset managers of corporate pension funds), thus making sure that corporate pension
funds perform their roles as asset owners. Companies should ensure that conflicts of interest which could
arise between pension fund beneficiaries and companies are appropriately managed.
The Company manages pension reserves through Pension Fund of Hanwa Co., Ltd. (hereinafter referred to as
the Pension Fund). Although it is difficult to say that the Company sufficiently assigns personnel who arehighly qualified and experienced in investment in pension funds due to our size and expertise, the Company
has established a Pension Committee within the Company to ensure stable and efficient management ofPension Fund and its investments. The Pension Committee is composed mainly of officers and section
managers in charge of the Personnel Department, Finance Department, and Accounting Department. The
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committee selects investment institutions to be entrusted, allocates premiums, and evaluates investment
performance. The results are submitted to the Board of Directors, Representatives of the Pension Fund, andthe Chairman of the Board of Directors. Based on the report of the Pension Committee, the Pension Fundpresents its investment policy to the investment management contractors, entrusts them to the fund, monitors
the investment status of the fund to the contractors on a regular basis, and shares the investment results with
the Pension Committee.
The selection of individual issues and the exercise of voting rights are left to the trustees, and the Company
does not direct them directly. Therefore, the Company believes that there will be no conflict of interest
between the pension beneficiaries and the Company.

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Section 3: Ensuring Appropriate Information Disclosure and Transparency
General Principle 3
Companies should appropriately make information disclosure in compliance with the relevant laws andregulations, but should also strive to actively provide information beyond that required by law. This includes
both financial information, such as financial standing and operating results, and non-financial information,such as business strategies and business issues, risk and governance.
The board should recognize that disclosed information will serve as the basis for constructive dialogue
with shareholders, and therefore ensure that such information, particularly non-financial information, is
accurate, clear and useful.
As the Company believes that appropriate information disclosure is required to enable shareholders andother stakeholders to deepen their understanding of the Company, it strives for prompt and accurate
information disclosure in accordance with the Disclosure Policy. With regard to important information
including non-financial information, not to mention disclosures under laws and regulations, the Disclosure
Committee deliberates on the necessity of disclosure and the content thereof. Important information judged
by the Committee to facilitate the shareholders’ and stakeholders’ understanding of the Company will be
provided on the Company’s website, etc.
Principle 3.1 Full Disclosure
In addition to making information disclosure in compliance with relevant laws and regulations,companies should disclose and proactively provide the information listed below (along with the disclosures
specified by the principles of the Code) in order to enhance transparency and fairness in decision-making
and ensure effective corporate governance:i) Company objectives (e.g., business principles), business strategies and business plans;ii) Basic views and guidelines on corporate governance based on each of the principles of the Code;iii) Board policies and procedures in determining the remuneration of the senior management anddirectors;iv) Board policies and procedures in the appointment/dismissal of the senior management and thenomination of directors and kansayaku candidates; andv) Explanations with respect to the individual appointments/dismissals and nominations based on iv).
i) Company objectives (e.g., business principles), business strategies and business plans;
The Company’s Corporate Philosophy proclaims that by “Coping with changing times and markets
quickly, Hanwa makes a great contribution to society by satisfying various needs of customers as a
‘distribution specialist.’” Under this Corporate Philosophy, the Company, as a user-oriented trading
company which provides high value-added product distribution and proposal-based services which meetcustomer demands, pursuits trading company logistics with distinction. The Company also has a policyof increasing its corporate value as well as fulfilling social responsibility with an emphasis oncompliance through these activities. With regard to business strategies and business plans, the Company
establishes a medium-term business plan every three years in principle and broadly discloses it.
ii) Basic views and guidelines on corporate governance based on each of the principles of the Code;We aim to fulfill our social responsibilities as a good corporate citizen so that we can gain and retain
the respect from stakeholders and be recognized as a valuable enterprise. We work to establish a highdegree of transparency in management systems to ensure full legal and regulatory compliance andrespect for social norms.
In addition, to coexist with the Earth and society and to develop sustainably, we have established theSustainability Promotion Committee and promoted management initiatives with a focus onsustainability.
iii) Board policies and procedures in determining the remuneration of the senior management and directors;
The Company has established a remuneration system consisting of monetary remuneration andcompensation in the form of company stock (restricted stock compensation) for Directors. The annual
monetary remuneration decided at the General Shareholders Meeting held in June 2006 is within the
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total amount of 860 million yen. The restricted stock compensation is within the total annual amount of
150 million yen (the maximum number of shares to be paid is 50,000 per year) decided at the 76th
General Shareholders Meeting held in June 2023. The Board of Directors determines the specific amountof remuneration for each Director. The Company has established a decision-making policy pertaining
to the content of this remuneration, a summary of which is as follows.
The basic policy of the Company’s remuneration system for Directors is to ensure that it functions
sufficiently as an incentive for the sustainable enhancement of corporate value and that it is at an
appropriate level based on the responsibilities of each position. Specifically, the remuneration system
consists of basic remuneration, which is a monthly fixed amount determined based on the standard
amount of remuneration for each position and taking into consideration the comprehensive evaluationof Directors made by the Officers Evaluation Committee chaired by the President, with an emphasis on
their attitude toward medium- and long-term issues aimed at sustainable growth and the results of theirefforts; performance-linked remuneration, which reflects the performance indicators for each fiscal yearthat the management team as a whole bears; and restricted stock compensation designed to provide
incentives to increase corporate value over the medium to long term. Outside Directors, who areresponsible for supervisory functions, are paid only basic remuneration in consideration of their duties.
In determining the ratio of remuneration by type, the Remuneration Advisory Committee considers
the level of remuneration based on the benchmarks of companies in the same scale of business andrelated industries and business categories as the Company.
With regard to procedures for determining the individual compensation of the management members
and directors, the Remuneration Advisory Committee, the majority of whose members are outside
directors and outside corporate auditors, plays a leading role in determining them, in accordance withthe following procedures.
The Officers Evaluation Committee, chaired by the President and composed of members including
outside directors and outside corporate auditors who serve as advisors, meets at least twice a year to
conduct a comprehensive evaluation of basic remuneration based on an assessment of the commitment
of directors and executive officers (excluding the President) and a qualitative evaluation of directors andexecutive officers. Based on the results of the comprehensive evaluation by the Officers Evaluation
Committee, the Remuneration Advisory Committee, the majority of whose members are outside
directors and outside corporate auditors, prepares a proposal for basic remuneration and the Board of
Directors makes a decision on the amount.
Performance-linked remuneration is determined by the Board of Directors after the Remuneration
Advisory Committee examines the proposed calculation method for each fiscal year, with the aim of
ensuring that the remuneration accurately reflects the achievements and responsibilities of eachmanagement member and director.
Restricted stock compensation is positioned as compensation for each management member’s
responsibilities to shareholders in increasing corporate value in accordance with his or her position.
With this in mind, the Board of Directors determines the specific number of shares to be paid (the amountof monetary compensation claims to be used to pay for the acquisition of shares) based on the
Remuneration Advisory Committee’s consideration of the level deemed appropriate for each position.
The amount of remuneration for each executive member of the management team other than directors(executive officers) is determined in accordance with the same system and procedures as those for
executive members who also serve as directors.
iv) Board policies and procedures in the appointment/dismissal of the senior management and thenomination of directors and kansayaku candidates;
To select internal directors, the Nomination Advisory Committee, which is chaired by an outside
director and the majority of its members consist of outside directors and outside corporate auditors,
reviews the directors of the following fiscal year based on their evaluation from directors and executive
officers and the results of their performance evaluations of employees. A draft is then submitted to theBoard of Directors where a proposal of the list of candidates is then forwarded to the Annual
Shareholders Meeting. In addition, the Nomination Advisory Committee deliberates on the positions of
directors and draws up a draft to be approved by the Board of Directors.
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With regard to internal corporate auditors, the Board of Directors selects persons deemed capable ofexecuting the duties of corporate auditors as candidates from among internal directors and executive
officers, etc. in consideration of their fields of specialty, their careers, and other factors. A proposal listof candidates is then forwarded to the Annual Shareholders Meeting with prior consent from the Boardof Corporate Auditors.
To select outside directors and outside corporate auditors, appropriate candidates are examined fromall perspectives in consideration of the balance of their abilities and any excesses or deficiencies in thefields of specialty of the outside directors and outside corporate auditors based on the fields of specialtyof those retiring and of those remaining, and a proposal of the list of candidates is then prepared.
More specific criteria for the nomination of candidates for directors and corporate auditors and theappointment and dismissal of senior management are currently under consideration, including thenecessity of such criteria. Discussions will be held at the Nomination Advisory Committee in the future.
v) Explanations with respect to the individual appointments/dismissals and nominations based on iv).
Reasons for proposals for electing the senior management, directors and corporate auditors are statedin the Notice of Shareholders Meeting, together with brief career summaries. In the event that a senior
executive is dismissed, the company will explain the background and the reason for the dismissal of theprevious executive when disclosing the replacement.
Supplementary Principles
3.1.1 These disclosures, including disclosures in compliance with relevant laws and regulations, should add
value for investors, and the board should ensure that information is not boiler-plate or lacking in detail.
With respect to descriptions in fields not legally regulated, including disclosures in compliance with
relevant laws and regulations, the Company aims to offer descriptions that are practicably clear and specificto deepen the understanding of users.
3.1.2 Bearing in mind the number of foreign shareholders, companies should, to the extent reasonable, takesteps for providing English language disclosures.
In particular, companies listed on the Prime Market should disclose and provide necessary informationin their disclosure documents in English.
To respond to increase in foreign shareholders, the Company provides fundamental information in English
language company guides and web pages, and makes the utmost efforts to schedule its English language
disclosures of settlement information, timely information disclosure, and Notice of Shareholders Meeting
concurrently with its disclosures in Japanese. In addition, the Company prepares English versions ofIntegrated Report.
3.1.3 Companies should appropriately disclose their initiatives on sustainability when disclosing their
management strategies. They should also provide information on investments in human capital andintellectual properties in an understandable and specific manner, while being conscious of theconsistency with their own management strategies and issues.
In particular, companies listed on the Prime Market should collect and analyze the necessary data on
the impact of climate change-related risks and earning opportunities on their business activities andprofits, and enhance the quality and quantity of disclosure based on the TCFD recommendations, which
are an internationally well-established disclosure framework, or an equivalent framework.
In the ”Medium-Term Business Plan 2025”, we have set "Sustainability Management" as one of our basic
policies and are working on "business/investment strategies rooted in ESG and SDGs" as well as"strengthening the organizational structure to support sustainable growth.” We also have a human resources
strategy and are working to create an environment in which a diverse workforce can work while growing
sustainably, as well as promoting the introduction of systems that support each employee's ability todemonstrate his or her strengths and take on challenges.
The Company discloses information on sustainability as appropriate through the "Sustainability” page(https://www.hanwa.co.jp/en/csr/) on its website.
With regard to the impact of climate change-related risk and profit opportunities on the Company’s
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business activities and earnings, the Company is preparing an internal system to disclose information inaccordance with the TCFD framework and gradually disclosing information as it is complied.
Principle 3.2 External Auditors
External auditors and companies should recognize the responsibility that external auditors owe towardshareholders and investors, and take appropriate steps to secure the proper execution of audits.
As the Company believes that the appropriateness of its financial information is guaranteed by the audits
by the external auditor (independent auditor), the Company fully cooperates with the independent auditor’s
audit engagements and strives to ensure coordination of the Internal Audit Department and the Board of
Corporate Auditors with the independent auditor. The Company judges that the independent auditor conducts
the auditing of the Company with the same recognition.
Supplementary Principles
3.2.1 The kansayaku board should, at minimum, ensure the following:i) Establish standards for the appropriate selection of external auditor candidates and proper evaluationof external auditors; andii) Verify whether external auditors possess necessary independence and expertise to fulfill their
responsibilities.
i) Establish standards for the appropriate selection of external auditor candidates and proper evaluation of
external auditors;
With regard to selection of the external auditor and other matters, the Board of Auditors evaluates theexternal auditor annually by comprehensively considering evaluation items such as quality control,
independence, and expertise, in addition to understanding the content of audits through audit reports andother means, as well as the status of initiatives and information exchange related to accounting audits.
ii) Verify whether external auditors possess necessary independence and expertise to fulfill their
responsibilities.
The Company has selected KPMG AZSA LLC as its independent auditor. The Board of Corporate
Auditors of the Company has confirmed that KPMG AZSA LLC possesses sufficient independence andexpertise, through the actual results of past audits of the Company, social evaluations as an audit corporation,
regular information exchanges, audit reports, etc.
3.2.2 The board and the kansayaku board should, at minimum, ensure the following:i) Give adequate time to ensure high quality audits;ii) Ensure that external auditors have access, such as via interviews, to the senior management including
the CEO and the CFO;iii) Ensure adequate coordination between external auditors and each of the kansayaku (including
attendance at the kansayaku board meetings), the internal audit department and outside directors; andiv) Ensure that the company is constituted in the way that it can adequately respond to any misconduct,
inadequacies or concerns identified by the external auditors.
i) Give adequate time to ensure high quality audits;
The Company believes that it provides necessary and adequate time for audits based on requests fromthe external auditor (independent auditor).
ii) Ensure that external auditors have access, such as via interviews, to the senior management including the
CEO and the CFO;
With regard to the point of contact between the independent auditor and the senior management of theCompany, the independent auditor holds regular interviews with the Director and President around twice ayear and requests interviews at any time as necessary. In addition, a place for hearing from other senior
management has been established consecutively or as necessary.
iii) Ensure adequate coordination between external auditors and each of the corporate auditor (J: Kansayaku)(including attendance at the Board of Corporate Auditors meetings), the internal audit department andoutside directors;
The independent auditor has a place to exchange information with the Corporate Auditors and the Internal
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Audit Department of the Company during the review of each quarterly settlement and makes inquiries, etc.,
at any time as necessary. Opportunities for regular interviews with outside directors, etc. have not yet been
determined, but there is no hindrance from conducting interviews as necessary.
iv) Ensure that the company is constituted in the way that it can adequately respond to any misconduct,
inadequacies or concerns identified by the external auditors.
If the independent auditor discovers misconduct, etc. to which the Company is required to respond or
identifies inadequacies or concerns, the independent auditor will report the fact to the management or to
the Compliance Committee depending on content. In case of significant impact, the Company will report
the fact to the Board of Directors, etc. while disclosing information in a timely and precise manner. A
director or executive officer in charge will examine potential responses to the issues identified by the
independent auditor and immediately take measures to correct or improve them as necessary.

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Section 4: Responsibilities of the Board
General Principle 4
Given its fiduciary responsibility and accountability to shareholders, in order to promote sustainablecorporate growth and the increase of corporate value over the midto long-term and enhance earnings powerand capital efficiency, the board should appropriately fulfill its roles and responsibilities, including:(1) Setting the broad direction of corporate strategy;(2) Establishing an environment where appropriate risk-taking by the senior management is supported;and(3) Carrying out effective oversight of directors and the management (including shikkoyaku and so-calledshikkoyakuin) from an independent and objective standpoint.
Such roles and responsibilities should be equally and appropriately fulfilled regardless of the form ofcorporate organization – i.e., Company with Kansayaku Board (where a part of these roles andresponsibilities are performed by kansayaku and the kansayaku board), Company with Three Committees(Nomination, Audit and Remuneration) or Company with Supervisory Committee.
In principle, the Board of Directors of the Company establishes the medium-term business plan every three
years to show the direction toward which the Company should strive. In addition, the Company stipulates thedecision-making authority according to each position and allows the management members and directors tomake management decisions within the scope of their authority to execute their duties taking a certain risk,
provided that they are required to fulfill their responsibilities for results and accountability. With respect tohighly effective oversight of the management and directors, the Company strives to ensure more appropriate
and effective oversight mainly by strengthening the function of the Board of Corporate Auditors andseparating the executive function from directors.
Principle 4.1 Roles and Responsibilities of the Board (1)The board should view the establishment of corporate goals (business principles, etc.) and the setting ofstrategic direction as one major aspect of its roles and responsibilities. It should engage in constructive
discussion with respect to specific business strategies and business plans, and ensure that major operational
decisions are based on the company’s strategic direction.
The Board of Directors of the Company decides the final contents of the medium-term business plan
drafted by the Management Committee while closely examining how specific the contents are and theappropriateness of the direction toward which the Company should strive. During the period of the mediumterm business plan, the Company judges the appropriateness of execution of duties in light of the policies set
forth in the plan.
Supplementary Principles
4.1.1 The board should clearly specify its own decisions as well as both the scope and content of the mattersdelegated to the management, and disclose a brief summary thereof.
The Company stipulates the decision-making authority of an organ according to the importance ofdecisions and monetary scale and other factors in the Regulation on the Board of Directors and the Standard
for Submission to the Board of Directors, as well as the Regulations on the Management Committee and theStandard for Submission to the Management Committee, while prescribing the scope of operationaldelegation according to the positions of the executive officers, etc. in the Standard for Approval.
4.1.2 Recognizing that a mid-term business plan (chuuki keiei keikaku) is a commitment to shareholders, theboard and the senior management should do their best to achieve the plan. Should the company fail todeliver on its mid-term business plan, the reasons underlying the failure of achievement as well as thecompany’s actions should be fully analyzed, an appropriate explanation should be given to shareholders,and analytic findings should be reflected in a plan for the ensuing years.
At the Company, the Board of Directors resolves the medium-term business plan, and all officers andemployees make every effort to achieve the targets.
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In promoting the plan, we identify and analyze the progress of each measure through regular strategy
promotion meetings and make course corrections as necessary. In addition, we report on the progress of thepromotion meetings and each theme to the Management Committee and the Board of Directors for further
discussion. For shareholders and other stakeholders, we mainly report on the progress of quantitative targets
at financial results briefing sessions and other occasions.
At the end of the medium-term business plan, we analyze the differences between the plan and actual
results and reflect this analysis in the formulation of the next plan. The details of the plan are explained toshareholders and other stakeholders at financial results briefing sessions and other events.
4.1.3 Based on the company objectives (business principles, etc.) and specific business strategies, the board
should proactively engage in the establishment and implementation of a succession plan for the CEO
and other top executives and appropriately oversee the systematic development of succession candidates,
deploying sufficient time and resources.
With regard to the personnel affairs of directors, the Company has established a Nomination Advisory
Committee as an advisory organ of the Board of Directors. The Committee, which includes outside directors
and an outside corporate auditor, examines and submits personnel proposals to the Board of Directors.
Concerning successors of the CEO and other top executives, candidates will be narrowed down based on
close examinations of the individual performance, characters, knowledge, and other factors of each director
and executive officer.
The Company does not have a specific procedural plan, such as succession plan, clearly defined. However,since FY2003, the Company has had a qualitative review system for executive officers, including executive
directors, and has presented the desirable management requirements as evaluation criteria. The results ofevaluations of all executive officers have been accumulated. Through the accumulation of evaluations andfeedback conducted every fiscal year, candidates who possess the appropriate qualities for the CEO will beselected. Considering the number of senior executives and other factors, the Company believes that it is at alevel where the rationale for and the appropriateness of the selection of successor candidates can be sharedwithin the Board of Directors.
Principle 4.2 Roles and Responsibilities of the Board (2)The board should view the establishment of an environment that supports appropriate risk-taking by thesenior management as a major aspect of its roles and responsibilities. It should welcome proposals from the
management based on healthy entrepreneurship, fully examine such proposals from an independent andobjective standpoint with the aim of securing accountability, and support timely and decisive decisionmaking by the senior management when approved plans are implemented.
Also, the remuneration of the management should include incentives such that it reflects mid- to longterm business results and potential risks, as well as promotes healthy entrepreneurship.
With regard to routine work, the Company determines decision-making authority based on a monetary
standard. It allows senior management members to make operational judgments within the scope of theirauthority and with responsibility for results and accountability. In addition, with respect to investment andnew business, the Company presents decision-making procedures and items to be confirmed, etc., forapproval to facilitate new efforts by senior management.
In terms of the management’s remuneration, we use a system combining basic remuneration that recognizescommitment to and achievement of management tasks from a medium- to long-term perspective; a bonus(performance-linked salary) determined based on each fiscal year's corporate performance; and restricted
stock compensation that aims to reflect the medium- to long-term improvement in corporate value in thecompensation of the management team. We design this system while considering perspectives such as timeframe and objectives.
Supplementary Principles
4.2.1 The board should design management remuneration systems such that they operate as a healthy incentive
to generate sustainable growth, and determine actual remuneration amounts appropriately throughobjective and transparent procedures. The proportion of management remuneration linked to mid- to
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long-term results and the balance of cash and stock should be set appropriately
The procedures for determining the specific amount of compensation for individual members of theCompany's management team are described in "[Principle 3-1.] (iii) Board policies and procedures indetermining the remuneration of the senior management and directors.
The percentage of each type of remuneration is determined by the Remuneration Committee, the majorityof whose members are outside directors and outside corporate auditors, and the Board of Directors, which
receives reports from the Committee, through deliberation and consideration in establishing the "Policy for
Determining Individual Director Remuneration," and the Company believes that the content of thesedecisions is appropriate.
4.2.2 The board should develop a basic policy for the company’s sustainability initiatives from the perspectiveof increasing corporate value over the mid-to long-term.
In addition, in light of the importance of investments in human capital and intellectual properties, theboard should effectively supervise the allocation of management resources, including such investments,
and the implementation of business portfolio strategies to ensure that they contribute to the sustainablegrowth of the company.
In order to achieve sustainable growth for the Group, the Company has established the Sustainability
Promotion Committee, which oversees our efforts to address sustainability issues. The Board of Directors
directs and oversees the efforts of the Committee, and periodically verifies the progress of the medium-termbusiness plan and other plans, thereby effectively exercising its supervisory function to ensure the sustainablegrowth of the Group. The Company's sustainability basic policy is as follows.
Sustainability Basic Policy
As “Distribution specialist” as stated in our management philosophy, the Company and its group, byresonating with various stakeholders and understanding their needs, will connect each other through tangible
and intangible services and contribute to society at large, thereby passing on prosperous planet andcomfortable society to the next generation.
1. Realization of sustainability through our businessAs a distributor, we will build a sustainable supply chain and contribute to each industry and society
by providing a wide variety of products and services, taking into account the needs of suppliers andusers at every stage of the supply chain.
2. Building of a sound and highly transparent organization
We will share the values of our corporate creed (Trust, Honesty, Ingenuity, Harmonious Cooperation,
and Comtribution) with all employees, and aim for management that is highly satisfactory to various
stakeholders by making decisions in consideration of compliance and risks through appropriate andtransparent processes.
3. Creating a workplace where diverse personalities resonate and enhance each otherWe provide a healthy and stress-free work environment for a diverse range of employees regardlessof nationality or gender, and foster a place where they can work hard for self-development and selfimprovement by providing opportunities for them to play an active role in accordance with their abilities.
4. Passing on a rich environment to the next generation
We will preserve the ecosystem by complying with business rules and environmental regulations,making effective use of resources, and reducing environmental impact. We will pass on to future
generations a global environment that is free from climate change and pollution, where a wide varietyof living creatures can coexist and natural resources such as forests and oceans can be used sustainably.
5. Realization of a society in which everyone can live comfortably
We respect the human rights of individuals and the differences in culture and customs between
countries and regions, do not engage in human rights abuses or discriminatory practices, and contributeto the development of comfortable and healthy international and local communities by realizing global
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partnerships through cross-border transactions.
Principle 4.3 Roles and Responsibilities of the Board (3)The board should view the effective oversight of the management and directors from an independent andobjective standpoint as a major aspect of its roles and responsibilities. It should appropriately evaluate
company performance and reflect the evaluation in its assessment of the senior management.
In addition, the board should engage in oversight activities in order to ensure timely and accurate
information disclosure, and should establish appropriate internal control and risk management systems.
Also, the board should appropriately deal with any conflict of interests that may arise between thecompany and its related parties, including the management and controlling shareholders.
With regard to the evaluation of business execution of directors and executive officers, the Company has
enforced the Officer Evaluation System since 2004 (as for executive officers, since 2012 when the Executive
Officer System started) and determined the evaluation every year based on the examination by the Officers
Evaluation Committee, whose members include outside directors and outside corporate auditors. Based on
the results of the evaluation, the Nomination Advisory Committee examines the placement of directors andexecutive officers and the Board of Directors makes decisions.
With respect to information disclosure, internal control and risk management, the Company has establisheda Disclosure Committee, Internal Control Committee, Compliance Committee, Security Trade Control
Committee, etc. to improve management systems for each item.
In addition, with regard to conflict-of-interest acts with related parties, the Company requires compliancewith the Code of Ethical Business Conduct, and the related provisions are also stipulated in the Rules for
Directors, Rules for Executive Officers, Rules of Employment, etc.
Supplementary Principles
4.3.1 The board should ensure that the appointment and dismissal of the senior management are based onhighly transparent and fair procedures via an appropriate evaluation of the company’s business results.
The Officers Evaluation Committee, a body in which outside directors and outside corporate auditors
participate, evaluates the senior management’s past personal performance, knowledge, abilities, etc. As theresult of the evaluation, the Nomination Advisory Committee determines drafts for the election, promotion
and dismissal of senior management members, and consults the Board of Directors for deliberation.
4.3.2 Because the appointment/dismissal of the CEO is the most important strategic decision for a company,
the board should appoint a qualified CEO through objective, timely, and transparent procedures,
deploying sufficient time and resources.
The Company has introduced an officer evaluation system that employs the evaluation of achievementlevels for medium- to long-term management issues and qualitative evaluations. Based on the evaluations
conducted every fiscal year, the evaluation criteria are checked, and the results are reviewed by the Officers
Evaluation Committee, which leads to the selection of candidates at the Nomination Advisory Committee.
Since the Company has presented the requirements for officer that they should aim for upon assuming office
as directors through evaluation criteria, we believe that those who have received excellent evaluations will
be promoted to higher positions and will ultimately be selected as candidates for the position of Chief
Executive Officer with unanimous approval.
The establishment of more specific selection standards is under consideration, including the necessity ofsuch standards, and will be discussed at the Nomination Advisory Committee in the future.
4.3.3 The board should establish objective, timely, and transparent procedures such that a CEO is dismissed
when it is determined, via an appropriate evaluation of the company’s business results, that the CEO is
not adequately fulfilling the CEO’s responsibilities.
The CEO may be dismissed, even during his/her term of office, by a resolution of the Board of Directors
after deliberation by the Nomination Advisory Committee, chaired by an outside director, in the event of aviolation of laws and regulations by the CEO or if the CEO is clearly recognized as not fulfilling the CEO’s
responsibilities properly.
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4.3.4 The establishment of effective internal control and proactive enterprise risk management systems has
the potential to supporting sound risk-taking. The board should place priority on the appropriately
establish such systems on an enterprise basis and oversee the operational status, besides utilizing theinternal audit department.
The Company has established a Compliance Committee, Internal Control Committee, Security Trade
Control Committee, etc., each of which is chaired by a director or executive officer in charge and is mainlycomposed of the heads of administrative departments. These Committees inspect risk on compliance, internal
control, trade transactions, etc., serve as points of contact for consultation, appropriately handle the issues,
and report the results to the Board of Directors as necessary.
Principle 4.4 Roles and Responsibilities of Kansayaku and the Kansayaku Board
Kansayaku and the kansayaku board should bear in mind their fiduciary responsibilities to shareholders
and make decisions from an independent and objective standpoint when executing their roles andresponsibilities including the audit of the performance of directors’ duties, appointment and dismissal ofkansayaku and external auditors and the determination of auditor remuneration.
Although so-called “defensive functions,” such as business and accounting audits, are part of the roles
and responsibilities expected of kansayaku and the kansayaku board, in order to fully perform their duties,
it would not be appropriate for kansayaku and the kansayaku board to interpret the scope of their function
too narrowly, and they should positively and proactively exercise their rights and express their views atboard meetings and to the management.
Corporate Auditors and the Board of Corporate Auditors strive to make appropriate judgments fromindependent and objective standpoints. To that end, they attend meetings of the Management Committee, theBoard of Directors and a Sales Committee jointly held by all departments, conduct visiting audits of groupcompanies, hold hearings with senior management, and establish a regular place for sharing information with
the Internal Audit Department and external auditor (independent auditor), in order to monitor the Company
and group companies. In addition, the Board of Corporate Auditors of the Company focuses on proactive
auditing to prevent scandals and strives to audit operational validity as well as legal compliance. Selecting
three outside corporate auditors who have ample knowledge and experience in corporate activities, the Boardof Corporate Auditors maintains its independence from the Board of Directors to perform operational auditing
accurately and expresses their opinions to the Board of Directors.
Supplementary Principles
4.4.1 Given that not less than half of the kansayaku board must be composed of outside kansayaku and thatat least one full-time kansayaku must be appointed in accordance with the Companies Act, thekansayaku board should, from the perspective of fully executing its roles and responsibilities, increase
its effectiveness through an organizational combination of the independence of the former and theinformation gathering power of the latter. In addition, kansayaku or the kansayaku board should securecooperation with outside directors so that such directors can strengthen their capacity to collectinformation without having their independence jeopardized.
For the Board of Corporate Auditors, a inside Corporate Auditor chiefly elected from within the Company
attends the meetings of the Management Committee and other meetings to collect management-related
information, etc., and reports the information, etc. with his/her own commentary to the outside corporate
auditors to facilitate the understanding of the outside corporate auditors while conducting interviews with thesenior management, etc. and expressing his/her views as necessary.
With regard to cooperation with outside directors to assist with their collection of information, the outside
directors attend hearings with senior management conducted by the Board of Corporate Auditors and may
jointly conduct activities according to the importance of management issues.
Principle 4.5 Fiduciary Responsibilities of directors and Kansayaku
With due attention to their fiduciary responsibilities to shareholders, the directors, kansayaku and the
management of companies should secure the appropriate cooperation with stakeholders and act in the
20 / 32interest of the company and the common interests of its shareholders.
Directors, Corporate Auditors and the management of the Company strive to execute their ideal roles incooperation with various stakeholders in order to fulfill their fiduciary responsibilities to shareholders. The
Company considers this to be conducive to the interests of the Company, and consequently to the common
interests of its shareholders. In addition, the Company discloses information to its shareholders in a timely
and appropriate manner.
Principle 4.6 Business Execution and Oversight of the Management
In order to ensure effective, independent and objective oversight of the management by the board,
companies should consider utilizing directors who are neither involved in business execution nor have close
ties with the management.
The Company has appointed four outside directors and therefore believes that the effectiveness of theBoard of Directors’ oversight function over management is duly ensured.
Principle 4.7 Roles and Responsibilities of independent directors
Companies should make effective use of independent directors, taking into consideration the expectations
listed below with respect to their roles and responsibilities:i) Provision of advice on business policies and business improvement based on their knowledge andexperience with the aim to promote sustainable corporate growth and increase corporate value over themid- to long-term;ii) Monitoring of the management through important decision-making at the board including theappointment and dismissal of the senior management;iii) Monitoring of conflicts of interest between the company and the management or controllingshareholders; andiv) Appropriately representing the views of minority shareholders and other stakeholders in theboardroom from a standpoint independent of the management and controlling shareholders.
The Company’s four independent outside directors have expertise in areas such as law, IT, humanresources/labor affairs, etc. in addition to experience in corporate management. They provide beneficial
advice and opinions from third-party perspectives based on their knowledge, experience, etc., at the Board of
Directors meetings and other occasions. In addition, the independent outside directors also participate in the
Officers Evaluation Committee and the Nomination Advisory Committee and appropriately express theirviews from third-party perspectives about the evaluation, election, etc. of directors and executive officers.
Principle 4.8 Effective Use of independent directors
Independent directors should fulfill their roles and responsibilities with the aim of contributing tosustainable growth of companies and increasing corporate value over the mid- to long-term. Companies
lisited on the Prime Market should therefore appoint at least one-third of their directors as independent
directors (two directors if listed on the other markets) that sufficiently have such qualities.
Irrespective of the above, if a company listed on the Prime Market believes it needs to appoint the majorityof directors (at least one-third of directors if listed on the other markets) as independent directors based ona broad consideration of factors such as the industry, company size, business characteristics, organizational
structure and circumstances surrounding the company, it should appoint a sufficient number of
independent directors.
As of the conclusion of the 77th General Shareholder Meeting held on June 26, 2024, the total number of
directors is eleven, and four independent outside directors, more than one-third of the total, have been
appointed.
The Company recognizes that each outside director has expressed useful opinions and proposals from an
independent standpoint at the Board of Directors meetings and is fulfilling his/her functions sufficiently.
Supplementary Principles
4.8.1 In order to actively contribute to discussions at the board, independent directors should endeavor toexchange information and develop a shared awareness among themselves from an independent and21 / 32

objective standpoint. Regular meetings consisting solely of independent directors (executive sessions)would be one way of achieving this.
Independent outside directors regularly participate in meetings consisting of full-time corporate auditorsand outside corporate auditors to exchange information and share their understanding.
4.8.2 independent directors should endeavor to establish a framework for communicating with the
management and for cooperating with kansayaku or the kansayaku board by, for example, appointing
the lead independent director from among themselves.
Although the Company has not appointed a lead independent outside director, an independent outside
director serves as the chairperson of the Nomination Advisory Committee and the Board of Directors
Evaluation Committee, playing a leading role in communicating with the management team and collaboratingwith the corporate auditors.
4.8.3 Companies that have a controlling shareholder should either appoint at least one-third of their directors(the majority of directors if listed on the Prime Market) as independent directors who are independentof the controlling shareholder or establish a special committee composed of independent persons
including independent directors to deliberate and review material transactions or actions that conflictwith the interests of the controlling shareholder and minority shareholders.
The composition of the Company's major shareholders (top 10) as of the latest record date is as disclosed
on the Company's website, etc. In addition, the Company recognizes that there are no shareholders, including
so-called substantial shareholders who are not listed in the shareholders' register, who fall under the categoryof controlling shareholders of the Company because no shareholder or investor has submitted a report on theholding of shares at a level that has a controlling relationship with the Company in the Statement of LargeVolume Holdings submitted to the Finance Bureau in accordance with the Financial Instruments andExchange Act.
Principle 4.9 Independence Standards and Qualification for independent directors
Boards should establish and disclose independence standards aimed at securing effective independence
of independent directors, taking into consideration the independence criteria set by securities exchanges.
The board should endeavor to select independent director candidates who are expected to contribute tofrank, active and constructive discussions at board meetings.
With regard to standards for judgment when electing independent outside directors, we make use of articles
referring to independence of outside officers stated in the Enforcement Rules for Securities Listing
Regulations and the Guidelines for Listing Examination, etc., both established by the Tokyo Stock Exchange,on which the Company is listed. However, at a meeting of the Board of Directors held on September 26, 2017,
the Company passed a resolution regarding “Independence Standards for Outside Officers” as follows.
“Independence Standards for Outside Officers”
When an outside officer (outside director and outside corporate auditor) of the Company does not fall under
any of the following cases, he or she is judged independent from the Company.
1. A major shareholder of the Company (meaning a shareholder who holds either directly or indirectly 10%
or more of the total voting rights of the Company at the end of the most recent fiscal year), or an executing
person thereof.
2. A person belonging to or an executing person of a company of which the Company is a major shareholder(holding10% or more of the total voting rights of the company at the end of the most recent fiscal year.)
3. A major business partner of the Company (whose annual transaction with the Companyexceeds2% of theconsolidated net sales of the Company during the most recent fiscal year), or an executing person thereof.
4．A major lender to the Company (whose outstanding loans to the Company at the end of most recent fiscal
year exceeds2% of the consolidated total net assets of the Company), or an executing person thereof.
5．A representative or an employee who belongs to the audit corporation that is the accounting auditor of
the Company.
6. A consultant, legal professional, certified public accountant, tax accountant, or other person providing a
specialist service who received 10 million yen or more of monetary consideration or other properties per
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year from the Company other than officer remuneration in the most recent fiscal year (referring to a person
belonging to the organization if the one who received the relevant property is an organization such as
corporation and association.)
7．A person who received the annual total of 10 million yen or more of donations or aid funds from theCompany in the most recent fiscal year (referring to an executing person who belongs to the organization
if the one who received the relevant donations or aid funds is an organization such as corporation andassociation.)
8．A person who falls under any of 1 to 7 above in the past three years
9．A person whose close relative falls under any of 1 to 8 above.
(Note1.)An executing person refers to an executive director, executive officer, corporate officer, or staff
executing business of an entity(Note2.)A close relative means a relative within the second degree of kinship
Even if a person falls under any of the above criteria, such person maybe elected as a candidate forindependent outside officer if the person satisfies the requirements of an outside director or an outside
corporate auditor under the Companies Act, has specialization and experience necessary in view of theCompany’s current situations and his/her knowledge and viewpoint are judged to be beneficial to theCompany’s management, on the condition that the Company provides explanations to shareholders of thereasons of its judgement and the fact that the person satisfies the requirements of an independent outside
officer.
Principle 4.10 Use of Optional Approach
In adopting the most appropriate organizational structure (as stipulated by the Companies Act) that issuitable for a company’s specific characteristics, companies should employ optional approaches, asnecessary, to further enhance governance functions.
To improve governance functions, the Company has established the Nomination Advisory Committee andthe Remuneration Advisory Committee responsible for preparing drafts for personnel affairs, andcompensation of directors and executive officers, and the Officers Evaluation Committee, which evaluates
each director and executive officer as a basis for reviewing personnel and remuneration proposals. In addition,
the Company has established committees such as the Disclosure Committee, Compliance Committee, Internal
Control Committee, Security Trade Control Committee, Investment Examination Committee, and othercommittees to deal with companywide issues in the execution of business operations. Each committee
examines relevant matters, gives advice as necessary, and provides the Management Committee and theBoard of Directors with its opinions.
Supplementary Principles
4.10.1 If the organizational structure of a company is either Company with Kansayaku Board or Company
with Supervisory Committee and independent directors do not compose a majority of the board, in orderto strengthen the independence, objectivity and accountability of board functions on the matters of
nomination (including succession plan) and remuneration of the senior management and directors, thecompany should seek appropriate involvement and advice from the committees, including from theperspective of gender and other diversity and skills, in the examination of such important matters asnominations and remuneration by establishing an independent nomination committee and remunerationcommittee under the board, to which such committees make significant contributions.
In particular, companies listed on the Prime Market should basically have the majority of the membersof each committee be independent directors, and should disclose the mandates and roles of thecommittees, as well as the policy regarding the independence of the composition.
With regard to the evaluation, appointment, and remuneration of directors and executive officers, theCompany has established three committees: the Officers Evaluation Committee, the Nomination Advisory
Committee, and the Remuneration Advisory Committee, to ensure the independence and objectivity of thesupervisory function of the Board of Directors. Specifically, an outside director serves as the chairperson of
the Nomination Advisory Committee while the President serves as the chairperson of the Officers Evaluation
Committee and the Remuneration Advisory Committee. In addition, the Officers Evaluation Committee, with23 / 32

the participation of independent outside directors and independent outside corporate auditors (collectively
referred to as the "Independent Outside Officers." In addition, the Company has replaced the words"independent outside directors shall be the principal members" with "independent outside officers shall be
the principal members" and "the majority of the members shall be independent outside directors" with "themajority of the members shall be independent outside officers" in these supplementary principles.),determines the individual evaluation of each director and executive officer based on evaluations ofachievement levels for medium- to long-term management issues and qualitative evaluations, etc. Based on
the results of these evaluations, the Nomination Advisory Committee and the Remuneration Advisory
Committee, the majority of whose members are independent outside officers, consider appointment andremuneration proposals.
The Nomination Advisory Committee and the Remuneration Advisory Committee are mainly composedof independent outside officers to ensure independence from the management. The role of the Nomination
Advisory Committee is to discuss the composition of the management team and directors (including
candidates), and the role of the Remuneration Advisory Committee is to discuss the overall remuneration
system for the management team and directors. Each committee has the authority to discuss matters stipulated
in their respective committee regulations and to report to the Board of Directors the decisions made by thecommittee.
Principle 4.11 Preconditions for Board and Kansayaku Board EffectivenessThe board should be well balanced in knowledge, experience and skills in order to fulfill its roles andresponsibilities, and it should be constituted in a manner to achieve both diversity, including gender andinternational experience, work experience and age, and appropriate size. In addition, persons withappropriate experience and skills as well as necessary knowledge on finance, accounting, and the law should
be appointed as kansayaku. In particular, at least one person who has sufficient expertise on finance andaccounting should be appointed as kansayaku.
The board should endeavor to improve its function by analyzing and evaluating effectiveness of the board
as a whole.
The Company operates in a wide range of business fields. The Company has internal directors who arewell versed in each field to match our business balance. Five out of the Company’s seven internal directors
are internationally minded, with experience of international assignments. Outside directors (two of whom arefemale outside directors) are also selected based on their outstanding expertise in legal affairs, IT, humanresources/labor affairs, etc. in addition to experience in corporate management.
The Company believes that it should appoint personnel who are valuable to our management decisions as
directors, regardless of gender, internationality, or other factors. As for female directors, two women havebeen appointed as outside directors. In the future, the company will continue its efforts to promote female
employees to management positions so that we can have female directors from within the company. There
are no foreign directors. This is because, in light of the fact that we have inadequate internal systems,
including language support, and that approximately 65% of our current sales are from transactions in Japan,
the Company believes that there is no strong need for foreign directors at this time. The Company intends tocontinue to discuss the necessity of including foreigners among the candidates for directors at meetings of
the Nomination Advisory Committee as an issue to be studied in the future.
Some corporate auditors with financial knowledge who used to work at banks have been appointed.
Although the Company judges that corporate auditors possess management experience, business experience,and skills that are appropriate for their duties as business auditors, they are not all necessarily well versed infinance, accounting, and legal affairs, but they are naturally striving to improve their skills. However, theCompany judges that the corporate auditors complement each other in auditing operations and that the Boardof Corporate Auditors as a whole possesses sufficient auditing capabilities. The Company believes that it isuseful for it to appoint corporate auditors from the perspective of enhancing effective governance at this point
in time, rather than relying on external standards such as organization of origin.
In addition, the Board of Directors endeavors to improve its functions in consideration of the evaluationsof individual directors and the views expressed by corporate auditors.

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Supplementary Principles
4.11.1 The board should identify the skills, etc., that it should have in light of its managing strategies, and havea view on the appropriate balance between knowledge, experience and skills of the board as a whole, andalso on diversity and appropriate board size. Consistent with its view, the board should establish policies
and procedures for nominating directors and disclose them along with the combination of skills, etc. thateach director possesses in an appropriate form according to the business environment and businesscharacteristics, etc., such as what it known as a “skills matrix.” When doing so, independent directors
with management experience in other companies should be included.
Regarding the appointment of directors and corporate auditors, please refer to Principle 3-1 iv). The
Company believes that the main skills required of each director and corporate auditor to ensure theeffectiveness of the Board of Directors are "corporate management," "sales/business strategy," "overseas
experience," "finance/accounting," "legal/risk management," "human resources/labor affairs," and"IT/digital.” The expertise possessed by each director and corporate auditor is as shown in the skill matrix,
and we appoint persons with each skill in a well-balanced manner.
The Board of Directors of the Company consists of eleven members, including four independent outside
directors, three of whom have management experience at other companies.
Skill Matrix

4.11.2 Outside directors, outside kansayaku, and other directors and kansayaku should devote sufficient timeand effort required to appropriately fulfill their respective roles and responsibilities. Therefore, where
directors and kansayaku also serve as directors, kansayaku or the management at other companies, such
positions should be limited to a reasonable number and disclosed each year.
Currently, internal officers only hold concurrent positions as officers of the Company’s group companies.
The Company believes it is desirable for its directors and corporate auditors to focus their efforts on the
Company. However, concurrent service as officers of other listed companies may broaden their knowledge
and, in turn, have a positive impact on their managerial decisions at the Company. Therefore, the Company
does not rule out concurrent positions unless they become excessive.
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Ryuji Hori, Outside Director, concurrently serves as Representative Director and President of TMI
Ventures Co., Ltd., Outside Director of Riskmonster.com and Outside Corporate Auditor of Lotte Co., Ltd.
Kamezo Nakai, Outside Director, concurrently serves as Outside Director of TAIHEI Engineering Co., Ltd.
Reiko Furukawa, Outside Director, concurrently serves as External Member of the Board of NHK Spring Co.,
Ltd. Chika Sato, Outside Director, concurrently serves as Outside Director of Asahi Group Holdings, Ltd.
Hideyuki Takahashi, Outside Corporate Auditor, concurrently serves as Outside Director of Aozora Bank,
Ltd. and Sunshine City Corporation. There are no special transaction relations between the above companies
and the Company.
4.11.3 Each year the board should analyze and evaluate its effectiveness as a whole, taking into consideration
the relevant matters, including the self-evaluations of each director. A summary of the results should be
disclosed.
The effectiveness of the Board of Directors is not only confirmed on a daily basis by the corporate auditors
through their attendance at Board of Directors meetings, hearings with business departments, and exchange
of information with the Internal Audit Department, but the Company has also established a Board of Directors
Evaluation Committee chaired by one of the outside directors. This committee introduces a mechanism toreport evaluation results and make recommendations to the Board of Directors based on the results of aquestionnaire survey of all directors and corporate auditors. The outline of the most recent evaluation of theeffectiveness of the Board of Directors is disclosed on “Corporate Governance” page(https://www.hanwa.co.jp/en/company/governance.html) of the Company’s website and other media.
Principle 4.12 Active Board Deliberations
The board should endeavor to foster a climate where free, open and constructive discussions andexchanges of views take place, including the raising of concerns by outside directors.
The Company has endeavored to set an appropriate size for the Board of Directors since the introductionof the executive officer system, in order to facilitate active discussion at the Board of Directors meeting.
Supplementary Principles
4.12.1 The board should ensure the following in relation to the operation of board meetings and should attempt
to make deliberations active:i) Materials for board meetings are distributed sufficiently in advance of the meeting date;ii) In addition to board materials and as necessary, sufficient information is provided to directors by thecompany (where appropriate, the information should be organized and/or analyzed to promote easy
understanding);iii) The schedule of board meetings for the current year and anticipated agenda items are determined inadvance;iv) The number of agenda items and the frequency of board meetings are set appropriately; andv) Sufficient time for deliberations.
i) Materials for board meetings are distributed sufficiently in advance of the meeting date;Materials for the Board of Directors meeting are distributed three business days before the meeting.
Since most agenda items of the Board of Directors meetings are deliberated at the Management
Committee prior to the Board of Directors meetings, the Company distributes the materials for theManagement Committee to the outside directors and outside corporate auditors at the timing of theManagement Committee, and thereby makes efforts to compensate for the short lead time between the
distribution of materials for the Board of Directors meeting and the meeting date.
ii) In addition to board materials and as necessary, sufficient information is provided to directors by theCompany (where appropriate, the information should be organized and/or analyzed to promote easy
understanding);
As mentioned above, all of the materials for the agenda items of the Management Committee are
distributed to the outside directors and outside corporate auditors to provide information. Questions andrequests for explanations regarding individual items are handled by the relevant divisions. Additionally,
for items that require extensive explanation, we have introduced a system where we request the drafting
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department to create an explanatory video in advance to facilitate understanding of the contents of theagenda items.
iii) The schedule of board meetings for the current year and anticipated agenda items are determined in advance;
The schedule for the Board of Directors meetings for the next fiscal year is determined one year inadvance to facilitate scheduling. With respect to agenda items, the approximate timing is determined foritems related to financial results and items stipulated by laws and regulations, but there are also many
spot agenda items, making it difficult to anticipate them in advance.
iv) The number of agenda items and the frequency of board meetings are set appropriately;
The time allotted for a meeting is half a day, in principle, but this period is generally extended tocomplete deliberations as necessary without adjusting the number of agenda items, chiefly because therespective agenda items have inherent circumstances and urgency. The Board of Directors meeting is inprinciple held once a month, and twice in the months when quarterly financial results are announced.
v) Sufficient time for deliberations.;
As mentioned above, because the time allotted for a meeting is in principle half a day and extended
as necessary, the Company believes that sufficient time for deliberations is secured.
Principle 4.13 Information Gathering and Support Structure
In order to fulfill their roles and responsibilities, directors and kansayaku should proactively collectinformation, and as necessary, request the company to provide them with additional information.
Also, companies should establish a support structure for directors and kansayaku, including providing
sufficient staff.
The board and the kansayaku board should verify whether information requested by directors andkansayaku is provided smoothly.
If there is anything uncertain or unclear in the various materials provided by the Company, the directors
and the corporate auditors act to acquire additional information or additional explanations to enable them toform their own judgments appropriately. If the Company is requested to provide additional information, it
will appropriately handle the request. In addition, the Company has the Secretarial Office for directors andemployees appointed as a secretariat for corporate auditors from the Corporate Planning Department work to
make adjustments with each relevant division when addressing requests from directors and requests from
corporate auditors, respectively.
Supplementary Principles
4.13.1 Directors, including outside directors, should request the company to provide them with additional
information, where deemed necessary from the perspective of contributing to transparent, fair, timely
and decisive decision-making. In addition, kansayaku, including outside kansayaku, should collectinformation appropriately, including the use of their statutory investigation power.
If there is anything uncertain or unclear regarding the contents of materials, etc. provided by the Company
for the Board of Directors meeting, directors, including outside directors, do not hesitate to request additional
material and additional information, and the Company appropriately responds to such requests to provide
additional information. The Company takes due measures to enable outside directors and corporate auditor(full-time) to attend a Sales Committee jointly held by all departments once every month and to grasp theconditions of business execution. In addition, the Board of Corporate Auditors additionally requests necessary
information and requests the relevant persons to give explanations based on the authority of the corporate
auditors. The Company instructs the provision of information conducive to audits through the Internal Audit
Department and Legal Department and otherwise takes appropriate measures.
4.13.2 Directors and kansayaku should consider consulting with external specialists at company expense,
where they deem it necessary.
If the directors and corporate auditors determine it to be necessary to consult with external specialists inorder to fulfill their roles and responsibilities, the Company does not hesitate to appoint external specialists
at the Company’s expense within an appropriate scope.

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4.13.3 Companies should ensure coordination between the internal audit department, directors and kansayaku
by establishing a system in which the internal audit department appropriately reports directly to theboard and the kansayaku board in order for them to fulfill their functions. In addition, companies shouldtake measures to adequately provide necessary information to outside directors and outside kansayaku.
One example would be the appointment of an individual who is responsible for communicating andhandling requests within the company such that the requests for information about the company byoutside directors and outside kansayaku are appropriately processed.
The Company’s Internal Audit Department is under the direct control of the Management Committee andregularly submits audit reports to the directors and corporate auditors.
With regard to the provision of information to outside directors and outside corporate auditors, theCompany appoints a person responsible for contact and adjustment for outside directors from the Secretarial
Office, and for outside corporate auditors from the Corporate Planning Department, respectively, and takes
necessary measures.
Principle 4.14 director and Kansayaku Training
New and incumbent directors and kansayaku should deepen their understanding of their roles andresponsibilities as a critical governance body at a company, and should endeavor to acquire and update
necessary knowledge and skills. Accordingly, companies should provide and arrange training opportunities
suitable to each director and kansayaku along with financial support for associated expenses. The board
should verify whether such opportunities and support are appropriately provided.
It is needless to say that the directors and corporate auditors should endeavor to acquire and deepen theirknowledge and skills as necessary to fulfill their roles and responsibilities. The Company believes that it has
selected personnel who can discern skills that are needed, skills that are lacking, and skills that must be
strengthened, and accordingly strive for self-improvement as directors and corporate auditors. With regard to
support for training, the Company provides guidance for new directors and corporate auditors when they
assume their positions and distributes materials for the Management Committee as information on the
Company’s management operations and business trends to enable every outside director and outside corporate
auditor to perform appropriate monitoring operations. In addition, the Company encourages the directors andcorporate auditors to proactively visit domestic and overseas group companies and other investees in orderto understand the current situations and issues facing the Company Group. Furthermore, the Company
provides the outside directors with opportunities to attend an internal Sales Committee meeting and receive
meeting materials. With regard to amendments to laws and regulations and other matters that affectmanagerial judgment in management activities and the monitoring thereof, the Company provides
opportunities for training by holding internal study sessions and, when necessary, by recommending thatoutside directors attend external training sessions.
Supplementary Principles
4.14.1 Directors and kansayaku, including outside directors and outside kansayaku, should be given theopportunity when assuming their position to acquire necessary knowledge on the company’s business,finances, organization and other matters, and fully understand the roles and responsibilities, including
legal liabilities, expected of them. Incumbent directors should also be given a continuing opportunity torenew and update such knowledge as necessary.
When the directors and the corporate auditors assume their positions, the Company provides guidance on
essential information and points they are required to know and introduces and arranges any outside lectures,materials, etc. that the Company recommends that they attend or study. In addition, in the event of any
amendments to laws and regulations, accounting standards, etc. that affect management, the Company will
explain the details at the Management Committee, Board of Directors meeting, and other meetings.
4.14.2 Companies should disclose their training policy for directors and kansayaku.
Training for internal directors includes guidance when they assume their positions, internal study sessions
on amendments to laws and regulations, etc., and encouragement to attend external training, etc., as necessary.
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The Company provides outside directors with opportunities to attend monthly joint meetings of sales
departments to enable them to understand the status of the Company’s business operations. The Company
also distributes Management Committee materials to outside directors and outside corporate auditors toprovide information on management decisions other than the agenda items submitted to the Board of
Directors. In addition, the Company actively encourages outside directors to visit domestic and overseas
group companies and investees, thereby providing the outside directors with opportunities to understand theGroup’s current situation.
With regard to the provision of further training opportunities and financial support for associated expenses,
the Company examines the necessity therefor, cost-effectiveness, etc., and judges the adoption or rejection
each time training is requested.

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Section 5: Dialogue with Shareholders
General Principle 5
In order to contribute to sustainable growth and the increase of corporate value over the mid- to longterm, companies should engage in constructive dialogue with shareholders even outside the generalshareholder meeting.
During such dialogue, senior management and directors, including outside directors, should listen to theviews of shareholders and pay due attention to their interests and concerns, clearly explain business policies
to shareholders in an understandable manner so as to gain their support, and work for developing abalanced understanding of the positions of shareholders and other stakeholders and acting accordingly.
The Company proactively works on IR activities for institutional investors and, in addition to quarterly
financial results briefings, participates in small meetings for business briefings, conferences hosted by
securities companies, and overseas roadshows as far as practicable. The details of meetings with investors,
investor trends, etc. are regularly reported to the directors for their perusal when management policies,
dividend policy, etc. are examined.
Principle 5.1 Policy for Constructive Dialogue with Shareholders
Companies should, positively and to the extent reasonable, respond to the requests from shareholders toengage in dialogue (management meetings) so as to support sustainable growth and increase corporate value
over the mid- to long-term. The board should establish, approve and disclose policies concerning themeasures and organizational structures aimed at promoting constructive dialogue with shareholders.
The Company has a structure in which the Corporate Planning Department is in charge of IR activities andpromotes the activities in cooperation with the Finance Department, Accounting Department, otheradministrative departments, and sales departments. The Company proactively conducts dialogue withinvestors and may approach investors to provide meetings, in addition to meetings requested by investors.
The Company thinks of IR activities as opportunities to provide investors with materials that help them todeepen their understanding about the Company’s actual business conditions and revenue structure and judge
the Company’s growth potential and future prospects. Going forward, the Company will aggressively strive
for stronger ties with investors accordingly.
[Actions to implement management that is conscious of cost of capital and stock prices] [English disclosure
available]
Regarding “Actions to implement management that is conscious of cost of capital and stock prices,” pleaserefer to page 16 of the “Outline of Financial Results for the Fiscal Year ended March 31, 2024” released in
May 2024.
[Dialogue with shareholders] [English disclosure available]
Regarding “Dialogue with shareholders,” please refer to page 17 of the “Outline of Financial Results for
the Fiscal Year ended March 31, 2024” released in May 2024.
The above explanatory materials are available on our website in the "IR Library".
https://www.hanwa.co.jp/en/ir/library/explain.html

The URL is as follows:

Supplementary Principles
5.1.1 Taking the requests and interests of shareholders into consideration, to the extent reasonable, the senior
management and directors, including outside directors, and kansayaku should have a basic position to
engage in dialogue (management meetings) with shareholders.
Dialogue with shareholders is conducted by officers of the Corporate Planning Department in charge ofIR. The President may participate in small meetings with institutional investors and overseas roadshows. In
addition, upon receiving requests from investors at individual meetings, the senior management and directors
will respond to the extent practicable.

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5.1.2 At minimum, policies for promoting constructive dialogue with shareholders should include thefollowing:i) Appointing a member of the management or a director who is responsible for overseeing andensuring that constructive dialogue takes place, including the matters stated in items ii) to v) below;ii) Measures to ensure positive cooperation between internal departments such as investor relations,
corporate planning, general affairs, corporate finance, accounting and legal affairs with the aim ofsupporting dialogue;iii) Measures to promote opportunities for dialogue aside from individual meetings (e.g., generalinvestor meetings and other IR activities);iv) Measures to appropriately and effectively relay shareholder views and concerns learned throughdialogue to the senior management and the board; andv) Measures to control insider information when engaging in dialogue.
i) Appointing a member of the management or a director who is responsible for overseeing and ensuring that
constructive dialogue takes place
The Company operates IR under control of the president and the information handling officer assists
the president. Operation is supported by directors and executive officers in administrative departments
and sales departments as necessary depending on the theme of IR.
ii) Measures to ensure positive cooperation between internal departments such as investor relations, corporate
planning, general affairs, corporate finance, accounting and legal affairs with the aim of supporting
dialogue;
The main IR operations are handled by the Corporate Planning Department, but it collaborates with
the Accounting, Finance, Legal, General Affairs, Sustainability Promotion departments, etc., as needed,
to consider responses and align views according to themes such as financial results, capital policy, legal
regulations, governance, sustainability, etc.
iii) Measures to promote opportunities for dialogue aside from individual meetings (e.g., general investor
meetings and other IR activities);
In addition to financial results briefing sessions held twice a year, the Company participates in small
meetings for business briefing, domestic and overseas conferences hosted by securities companies, andoverseas roadshows. In addition, the Company makes arrangements to mediate visits to its domestic andoverseas offices upon the request of its investors.
iv) Measures to appropriately and effectively relay shareholder views and concerns learned through dialogue
to the senior management and the board
The Company distributes to senior management a report on topics taken up at meetings with investors
as appropriate during IR periods after financial results announcement. The Company also reports to theBoard of Directors on the latest investor trends when it reports the results of its research to identify
shareholders twice a year. In addition, the Company reports IR activities to the Board of Directors fourtimes a year.
v) Measures to control insider information when engaging in dialogue.
The Company establishes the disclosure guideline for IR/SR/PR activities as a standard of its
information disclosure. To prevent the leakage of financial results information and ensure fairness, theCompany in principle sets the three-week period before the date of financial results announcement(including quarterly results) as a quiet period during which the Company withholds information
disclosure on financial results, the exchange of relevant comments, responses to related inquiries, etc.
In addition, before opening of IR periods, the results of analyses of the details of settlement are shared
among the relevant departments that settle the details of the information to be provided to investors. In
principle, two or more officers and employees of the Company conduct a meeting with an investor so
as to avoid the leakage of insider information to specific interviewers.
5.1.3 Companies should endeavor to identify their shareholder ownership structure as necessary, and it isdesirable for shareholders to cooperate as much as possible in this process.
The Company confirms the shareholders on the shareholders register every half and researches beneficial
shareholders at the end of every March and September, in order to grasp the actual composition of
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shareholders and to use that information for planning targets for its IR activities.
Principle 5.2 Establishing and Disclosing Business Strategy and Business Plan
When establishing and disclosing business strategies and business plans, companies should articulate
their earnings plans and capital policies, and present targets for profitability and capital efficiency after
accurately identifying the company’s cost of capital. Also, companies should provide explanations that areclear and logical to shareholders with respect to the allocation of management resources, such as reviewing
their business portfolio and investments in fixed assets, R&D, and human capitals, and specific measuresthat will be taken in order to achieve their plans and targets.
In May 2023, the Hanwa Group formulated the Medium-Term Business Plan 2025 covering the three-year
period from FY2023 to FY2025. In this medium-term business plan, we set the following quantitative targets
after understanding capital costs and other factors.
<Quantitative targets>
Final year (FYE 3/2026)
Ordinary income¥70.0 billion

ROE (Return on Equity)

DOE (Dividend on Equity)

12.0% or more

2.5% lower limit

Net DER

Total investment and lending

Consolidated steel transaction(Net Debt-to-Equity Ratio)

capacity

volume100% or less
¥80.0 billion
17 million tons
This medium-term business plan continues the basic policies of the Medium-Term Business Plan 2022 andis conceptualized as a three-story structure consisting of “Enhancement of management foundation” (1stfloor), “Development of business strategy” (2nd floor), and “Generate profits from investment” (3rd floor),
all based on a foundation of “Sustainability management.” By strengthening our management foundation to
support further growth and promoting business strategies that are not bound by existing frameworks, we willcontinue our efforts to achieve sustainable growth toward FY2030.
Supplementary Principles
5.2.1 In formulating and announcing business strategies, etc., companies should clearly present the basic policy
regarding the business portfolio decided by the board and the status of the review of such portfolio.
In order to achieve sustainable growth and further enhance corporate value, the Company formulates
strategies for each business segment and conducts business portfolio management.
The Board of Directors decides the medium-term performance targets in the medium-term business planand reports on the progress of the plan. In addition, strategies for each business segment are formulated andverified flexibly in light of the business environment and other factors at target meetings held twice a year.
In addition, for important new businesses and investment projects, the Investment Examination Committee
verifies profitability and identifies risks, and periodically reports to the Board of Directors and theManagement Committee on the verification of the effects after implementation, in order to evaluate thebusiness from a medium- to long-term perspective.
In the future, including this medium-term business plan, the Company will further visualize the growthpotential and capital profitability of each business segment, verify whether or not the Company is the best
owner of each business, and strive to build a business portfolio for sustainable growth.

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