CORPORATE GOVERNANCE

ES-CON JAPAN Ltd.

Last updated: July 26, 2024
ES-CON JAPAN Ltd.

Takatoshi Ito, President and Representative Director
Inquiries: Management Department, Management Division; tel. +81-3-6230-9308
Securities code: 8892 https://www.es-conjapan.co.jp/english/

The following is a report on the state of corporate governance at ES-CON JAPAN Ltd.:I. Basic thinking regarding corporate governance, capital structure, corporate attributes, and otherbasic information

1. Basic thinking

We regard corporate governance as a critical factor, both in implementation and continued reinforcement, in becoming a vital entity
within society. Corporate governance is key to achieving enduring growth in corporate value and enhancing corporate transparency
and soundness based on our purpose, vision, and principles of action.

<Purpose (The Group’s raison d'être in society and the value of its presence from society’s perspective)>“IDEAL to REAL: Bringing ideals into reality to create a new future”
We create value rooted in the community, helping to bring about cherished cities and living environments in which residents cantake pride.
The value we create represents our contributions to society. Consequently, each of us seeks to realize original forms of selfactualization through that value.
While designing an ideal future, we will be creating a new future, with the aim of being regarded as a unique, essential presence by
all our shareholders.
<Vision (Our ideal shape for achieving our Purpose)>
To develop not just buildings but the lives of those who live in them, with their happiness in mind—this is the kind of life developer
we aspire to be.
Through solutions proposed by cross-departmental teams made up of the best and brightest, we create a new prosperity
unprecedented in the real estate industry, connecting people with people and communities with the future.
<Principles of Action (principles formulated to realize our vision)>
1. Provision of new value
We will use our information networks, planning ability, and product development expertise to tap the unlimited potential of realestate and to create new value that responds to every need of our clients.
2. Sustainability management
We will respond to various social challenges with precision and pursue scenarios in which our company and society can growsustainably and side by side.
3. Growth and stability
Rather than pursuing volume and scale, we aspire to achieve high-quality growth based on a keen awareness of capital andcash efficiency. At the same time, we seek to build firm financial and operational foundations capable of accommodating a broad
range of business risk.
4. Management awarenessWe will strive to achieve a strong offense in management that is always one step ahead by ensuring that all Group employees
are aware of management issues and by continuing to be a company that practices rapid decision-making.
5. Compliance
We will comply with all applicable laws, regulations, and societal norms both within and outside Japan; maintain a keenawareness of compliance and governance issues; take appropriate action as human beings; and form an organization withgreat bottom-up communication.
6. Gratitude
We will act at all times in ways that demonstrate our clear appreciation and respect for colleagues, whether within or outside thecompany. We will seek to build and maintain strong working relationships.
The Corporate Governance Report and Securities Report published on our website present our basic corporate governance policies(https://www.es-conjapan.co.jp/english/ir/governance.php).
Our corporate governance structure is outlined below.
The Company is a company with an audit and supervisory committee. Together with the board of directors, the Auditors Committee
manages, supervises, and audits business execution.
The board of directors consists of ten members: three executive directors, three non-executive directors, and four directors who aremembers of the Auditors Committee. To enhance management oversight functions, the six independent external directors are thethree non-executive directors and three of the four directors who are members of the Auditors Committee. In principle, the board of
directors meets at least once a month for thoroughgoing reporting and deliberations on all important matters, in addition to reportingon the state of execution of its decisions, to ensure the timely and accurate ascertainment of management information and effective
controls.
In principle, the Auditors Committee meets once a month. To enhance its independence, as described above, three of the fourCommittee members are independent external directors. They interview core personnel in business divisions, review important
documents such as circulars for approval, and collaborate with the accounting auditor and the internal auditing department to audit
the legality and validity of the directors’ performance of duties. In addition, it strengthens governance by selecting two full-time
Auditors Committee members.
The Nomination and Remuneration Advisory Committee has been established as an advisory body to the board of directors tostrengthen the independence, objectivity, and accountability of board functions related to matters such as the nomination andremuneration of directors.

The Nomination and Remuneration Advisory Committee is described in greater detail under 3 and 4 of Principle 3-1 [FullDisclosure], [Optional Committee], and Supplementary Principle 4-10-1 of Principle 4-10 [Use of Optional Approach].

[Reasons for Not Implementing the Principles of the Corporate Governance Code]We comply with all principles stated in our Corporate Governance Code.

[Disclosure Based on the Principles of the Corporate Governance Code][Supplementary Principle 1-2-4. Exercise of Shareholder Rights at General Meetings of Shareholders]
We make it easier for shareholders to exercise their voting rights through the adoption of an Internet-based electronic voting system
and use of the Electronic Voting Platform. We also provide English translations of announcements of regular general meetings ofshareholders for foreign investors.
[1-4. Cross-shareholdings](1) Policy on cross-shareholdings
We may choose to hold shares of stock in publicly traded firms as cross-shareholdings when the management policies of such
publicly traded firms mesh with our management strategies and we believe these shareholdings contribute to improving
corporate value over the medium to long term. Each year, we verify the effect of these shareholdings and report the result to theboard of directors. In principle, we sell such shares if we determine, at the point in time three years after we began holding theshares, that we cannot achieve the initially expected effect.
(2) Details of verification of effect of holding cross-shareholdings
Every year, based on the above policy on cross-shareholdings, we confirm our progress toward the goals of crossshareholdings. We determine whether to continue holding these cross-shareholdings based on comparison to capital costs andother measures.
(3) Standards for exercising voting rights on cross-shareholdings
In principle, we exercise all voting rights on cross-shareholdings. A decision to support or oppose resolutions is made based on
the perspectives of medium- to long-term increases in value and sustained growth of both our Company and the companies inwhich we invest, as well as enhancements in the governance structures of these companies.
[1-7. Related Party Transactions]
All proposed conflict of interest transactions with directors including officers of important subsidiaries, non-director executive officers,
or executive officers are submitted to the board of directors for deliberations. We respect the opinions of external directors in
aspects such as the reasonability, appropriateness, and soundness of such transactions to determine whether or not to proceed.
In addition, any transactions with major shareholders are determined after careful consideration to ensure they will not deviate fromthe standards governing transactions with third parties.
[2-4. Ensuring internal diversity, including promoting the active participation of women]
Supplementary Principle 2-4-1（Ensuring Diversity of Core Human Resources）
Recognizing that our human resources represent the foundations of our corporate activities and our most important management
resource, we have established a medium- to long-term strategy calling for human resource foundations characterized by three key
goals: securing and cultivating human resources to support business growth; promoting employee health and safety; andmaintaining environments that allow diverse human resources to thrive.
On this basis, in addition to developing workplace environments in which employees can demonstrate their abilities to the fullest
while engaged in rewarding work, we promote diversity in our human resources to help them thrive.
We hire human resources and promote core human resources on an individual basis with an emphasis on their abilities and trackrecord, regardless of gender, nationality, form of employment, age, or other factors. In this way, we promote the proactive hiring andpromotion to core positions of diverse human resources, thereby realizing sustainable growth and growth in corporate value.
(1) Initiatives to secure diversity① Percentage of women among new hires (total for new graduates and midcareer hires)
Pursuant to the Act on the Promotion of Female Participation and Career Advancement in the Workplace, we haveformulated an action plan to maintain the percentage of women among new hires at an average of 35% or higher over three
years.
 2021: 56 new hires, of whom 26 (46%) were women 2022: 68 new hires, of whom 29 (43%) were women 2023: 64 new hires, of whom 31 (48%) were women② Promotion of women employees to managerial and management positions (end of March 2024)
 Women directors: 1 person
 Women Executive Officers: 1 person
 Women in managerial positions: 4 persons③ Hiring of a certain number of midcareer hires each year to serve as immediate assets to the organization and theirpromotion to managerial and management positions
 2021: 36 midcareer hires, of whom seven were in managerial positions and one was an Executive Officer
 2022: 43 midcareer hires, of whom 20 were in managerial positions
 2023: 42 midcareer hires, of whom 10 were in managerial positions④ We hire non-Japanese workers, regardless of nationality, and provide them opportunities to thrive in each section.
⑤ We provide highly experienced senior employees with opportunities to thrive through a reemployment program for thosepast the mandatory retirement age of 65 years.
⑥ We resumed hiring new graduates eleven years ago. We currently hire about 30 new graduates each year. We plan tocontinue hiring about 30 new graduates per year as we work toward stable hiring and training for the next generation of
employees.
(2) Internal environmental improvements① In promoting active participation and career advancement of diverse human resources, we have introduced a broad rangeof modes of employment, including staggered working hours, shortened working hours, and programs for working fromhome. We administer an engagement survey to all employees as part of activities to build better workplace environments.

② We are striving energetically to build rewarding working environments. We have set the targets of reducing overtime work,
achieving a figure of 50% of men taking advantage of childcare leave and similar programs, and increasing the percentageof women as new hires to at least 35% as part of our General Employer Action Plans under the Act on Advancement of
Measures to Support Raising Next-Generation Children and the Act on the Promotion of Women’s Active Engagement inProfessional Life.
③ We have formulated plans to reduce overtime work by improving business efficiency, including no-overtime days intended toreduce working hours.
④ We have established the Health & Culture Fostering Team as an organization under the direct supervision of the President’s
Office to promote health management, and have been recognized as one of the 2024 Certified Health & Productivity
Management Outstanding Organizations (Large Enterprise Category).
⑤ We strive proactively to hire people with disabilities and to improve working environments for them. Some people withdisabilities hired by the Company who reside in rural districts work at an indoor farm (Cordiale Farm), assigned to work
centered on hydroponic farming.
(3) Basic HR Development Policy
We recognize the importance of the purposeful engagement of our employees with their work and the stable development of
human resources and sustained enhancements of our human capital that result in to improve our corporate value over the
medium to long term. In 2023, we established a new Basic HR Development Policy (HR requirements applicable to all
employees), and are endeavoring to train our human resources.
1

Passing along our DNA (values)

Working with a sense of gratitude at all times, keenly aware of our drive
to be a company that builds projects and does business to contribute tosociety while putting customers first2

Lofty ambitions and a sense of mission

Sensing our mission to contribute to society through our work

3

Integrity, intelligence, and mental andphysical strength

Working with integrity, intelligence, and mental and physical strength tocarry out diverse work on a daily basis

4

Outstanding leadership

Involving others as we move forward with our work and businessinitiatives with passion, consideration, and an awareness of numericalfigures at all times

5

Foresight, strategy

Learning constantly while responding with keen sensitivity to changes inthe external environment

6

Networking and communication skills

Building human networks based on trust through internal and external
communications

7

Experience with innovation

Striving and taking on challenges to realize innovative businesses in thespirit of pursuing new business models for the industry[2-6. Roles of Corporate Pension Funds as Asset Owners]
At this time, we have adopted only a defined-contribution pension plan. We do not play an active role in the investment of a reservefund. As such, we have not implemented specific measures regarding this principle.
[3-1. Full Disclosure]
1. Matters such as Company objectives (e.g., purpose, vision and principles of action), management strategies, management
plans, and management policies are described in this Report under “1. Basic thinking regarding corporate governance”; in the
Securities Report; and on the Company website. (https://www.es-conjapan.co.jp/english/ir/governance.php).
With respect to management plans, the Company has published its Long-Term Vision 2030, which presents the company it
wishes to be by FY2030 and the company’s desired heading. The Company has also released its fifth medium-term
management plan, covering the FY2024-2026 three-year period. The Long-Term Vision 2030 and fifth medium-term
management plan are described in the Securities Report and on the Company website (https://www.esconjapan.co.jp/english/about_us/plan.php).
2. Basic thinking and basic policies on corporate governance based on each of the principles of the CodeOur basic thinking and basic policies regarding corporate governance are described under “1. Basic thinking regarding
corporate governance” in this Report, in the Securities Report, and on our website (https://www.esconjapan.co.jp/english/ir/governance.php).
3. Board of directors policies and procedures for determining the remuneration of senior management and directors
The Company has established the Nomination and Remuneration Advisory Committee as an advisory body to the board of
directors to strengthen the independence, objectivity, and accountability of board functions related to matters such as
nomination and remuneration of directors. This Committee makes decisions on proposed remuneration amounts for individual
directors who are not members of the Auditors Committee and deliberates on policies governing remuneration decisions,
including the establishment of and revisions to officers’ remuneration systems, remuneration levels, and evaluation systems,
and makes decisions on related proposals. Policies and procedures for remuneration decisions are described below under“Disclosure of policies for decision-making on remuneration amounts or their calculation method.”
4. Board of directors policies and procedures for the appointment/dismissal of senior management and nomination of candidate
directors
We appoint members of senior management after deliberations in the Nomination and Remuneration Advisory Committee toselect proposed candidates followed by comprehensive assessments by the board of directors of the candidates’ track record,
reputation, experience, and so forth.
Senior management members recognized to have failed to satisfy the conditions of the appointment policies described above
and presenting no indication that they may do otherwise in the future are dismissed by the board of directors following

deliberations in the Nomination and Remuneration Advisory Committee. Senior management members, including the CEO, aresubject to annual performance evaluations by the Nomination and Remuneration Advisory Committee. Reappointment decisions
are made based on these evaluations.
Candidates for directors who will not serve as members of the Auditors Committee are nominated based on comprehensive
assessments of their familiarity with Company management and businesses and the knowledge, experience, track record,character, discernment, and so forth needed to contribute to Company growth. The Nomination and Remuneration Advisory
Committee deliberates on and selects proposed candidates; this is followed by decisions by the board of directors after
deliberations in the Auditors Committee.
Candidates for directors who will serve as members of the Auditors Committee are nominated based on comprehensive
assessments of matters such as specialized knowledge and experience in management, law, accounting, finance, or otherareas and recognition of outstanding character and discernment.
5. Explanations with respect to individual appointments/dismissals of senior management and nominations of directors based on 4
above
Explanations of individual appointments of senior management and nominations of candidate directors are provided in theannouncements of regular general meetings of shareholders. These provide brief career histories of the candidates and thereasons for their selection as candidate directors. The appointment and nomination of independent external directors is basedon comprehensive assessments of each candidate’s knowledge, experience, and other factors, in accordance with theCompany’s own criteria for evaluating independence, in addition to the independence requirements established by the Tokyo
Stock Exchange.
Supplementary Principle 3-1-3 (Sustainability Initiatives, Disclosure under the TCFD Framework)(1) Sustainability initiatives
As articulated by our Purpose, IDEAL to REAL (Bringing ideals into reality to create a new future), we seek to realize two goals:
contributing to a sustainable society and achieving sustained profit growth by responding to social issues. We promotesustainability management as a life developer committed to creating ideal lifestyles in response to changing needs. Based on
our ESG management principles, the department in charge of ESG promotion, led by the director responsible for sustainability
and whose personnel are drawn from each section, is divided into three teams: the E team (environment); the S team (social);
and the G team (governance). The division sets annual targets to advance initiatives related to the environment, social issues,and governance.
The Company also sets forth sustainability management as one of its Principles of Action (formulated in November 2023) andrecognizes the importance of steadily promoting it.
For that reason, the Company evaluates and classifies the importance of various challenges in sustainability management fromthe perspective of stakeholders and Group management to identify materialities (priority challenges), after which it sets forthcorresponding indicators and targets and takes on the task of addressing such challenges.
[Materialities in sustainability management]
Materialities
Use of diverse human resources
Enforcement of complianceReinforcing governance and risk management that
includes Group companies
Promoting a decarbonized society
Realizing a society characterized by well-being*Covers Scope 1 and Scope 2

Main targets to achieve by FY2030
Female recruitment ratio of 35% or higher
Improvement of engagement surveys
etc.
Implementation of compliance promotion measures in harmony with
Chubu Electricetc.
Enhancing effectiveness and making continuous improvements tothe board of directors
Greenhouse gas reductions of 40%* (over FY2022)
Contributing to regional revitalization and improving quality of life bypromoting urban development sensitive to the environment and tosociety

See on our website (https://www.es-conjapan.co.jp/corp/esg/) for more information on our sustainability initiatives.
(2) Investing in human capital and intellectual property① Investing in human capital
Recognizing that human capital and human resources constitute the foundations of our corporate activities and our mostimportant management assets, we are moving ahead to invest in and to ensure returns to human capital.
Based on the Basic HR Development Policy established in 2023, in addition to onboarding for all new employees joining theorganization, we provide level-specific training for specific posts and roles, e-learning, and on-the-job training (OJT) withineach section.
Given the nature of our businesses, which require specialized knowledge of real estate, construction, and other fields, we
provide subsidies and support for acquiring various qualifications, including registered real estate transaction specialist, firstclass registered architect, and real estate securitization master. We are strong supporters of employee self-improvement
efforts.
We offer external off-the-job training and 360-degree evaluations at the managerial level as part of efforts to develop future
management human resources. In addition to giving employees the opportunity to recognize their own management
capabilities, these evaluations create opportunities to enhance management capabilities and strengthen awareness frommanagerial perspectives through means including coaching.
To bolster our initiatives related to human rights, based on an awareness of the importance of safeguarding the humanrights of all stakeholders involved in our businesses, we carry out due diligence on human rights based on the Chubu
Electric Power Group Basic Human Rights Policy and work to identify, evaluate, prevent, mitigate, and correct human rights
issues within the Group.

② Intellectual property management
Since, in light of the nature of our businesses, managing intellectual property focuses on trademarks and similar rights, we
strive to ensure thorough management with support from outside experts.
(3) Disclosure under the TCFD framework
Based on the goal of achieving a carbon neutral society by 2050, we are seeking to create new value for the environment
through next-generation urban development efforts. As part of plans based on the key management strategy of countering
climate change, we have selected staff from management and each department to create a department in charge of EST
promotion. This department works to disclose information based on the TCFD framework recommendations. Our Group ofcompanies announced its endorsement of the TCFD in June 2022.
Please visit our website for more information disclosures based on the TCFD recommendations (related to climate changerisks/opportunities under the themes of Governance, Strategy, Risk Management, and Metrics and Targets).
https://www.es-conjapan.co.jp/english/about_us/environment.php[4-1. Roles and Responsibilities of the Board of Directors]
Supplementary Principle 4-1-1
The Company’s Articles of Association specify that decisions on important business execution may be delegated, in whole or in part,to directors. Directors to whom such authority has been delegated based on decisions by the board of directors are tasked withmaking decisions on individual matters of business execution, thereby accelerating the decision-making process and enhancing theoversight functions of the board of directors.
The board of directors formulates management strategies and objectives and oversees the status of their execution.
In addition, the status of the execution of individual business matters is reported to the board of directors without delay. A system ismaintained whereby the board of directors can monitor related progress.
Rules on internal authority and other provisions specify standard amounts of money for respective duties used to determine thematters submitted to the board of directors for deliberations and the scope of delegation to directors. Management proceeds in strict
compliance with these rules.
Supplementary Principle 4-1-3
To train the next generation of corporate management, we are striving to develop Executive Officers as candidates for future
successors to senior management. The Company has delegated Executive Officers and employee Executive Officers and specifies
terms of office for Executive Officers. Through everyday business execution, the Representative Director and directors strive tocommunicate and to pass on to managerial candidates the management philosophy and corporate values based on the
management philosophy. The Company provides support for self-improvement by providing opportunities for external training.
Efforts seek to train future managerial candidates in on-the-job training by assigning missions on important topics related toCompany growth and missions leading to the acquisition of the Company’s human resource requirements (skills and abilities
needed by the Company). The state of their understanding of, implementation of, and succession to the ES-CON JAPAN DNA andtheir mastery of the Company’s human resource requirements for management are confirmed through annual evaluations by the
Nomination and Remuneration Advisory Committee and the results of external evaluations. These, in turn, are applied in theselection of candidate directors and in on-the-job training in the next fiscal year.
[4-8. Effective Use of Independent External Directors]
Six of the Company’s ten directors are independent external directors. We plan to continue to appoint independent external directors
who possess qualities that will contribute to sustained growth in the Company’s corporate value.
[4-9. Criteria for Evaluating Independence and Qualification for Independent External Directors]
As criteria for evaluating the independence of independent external directors, based on the requirements for the independence of
external directors as specified by the Tokyo Stock Exchange and other domestic financial instruments exchanges, we evaluate theindependence of individual directors by checking to ensure that they currently and in all of the past three fiscal years satisfy thefollowing requirements:(1) Not an important trading partner (*1) of the Company or person who executes business thereof (*2)(2) Not an important lender (*3) of the Company or a person who executes business thereof(3) Not a consultant, accounting specialist, or legal specialist receiving significant sums of money or other property from theCompany other than executive compensation (However, if the recipient of such property is a corporation, association, or otherorganization, this shall refer to a person affiliated with such organization.)(4) Not a major shareholder (*5) of the Company or a person who executes business thereof(5) Not a recipient of a large sum (*4) of donations from the Company (However, if the recipient of such donations is a corporation,
association, or other organization, this shall refer to a person affiliated with such organization.)(6) None of the following is true for the individual’s spouse and relatives within the second degree of consanguinity:① Those under (1)-(5) above② Person who executes business or non-executive director or auditor of the Company or Company subsidiary③ A representative employee or other employee of the Company’s accounting auditor*1 An “important trading partner” refers to a trading partner with whom annual trade exceeds 2% of its consolidated net sales in themost recent fiscal year if paid by the Company or 2% of the Company’s consolidated net sales in the most recent fiscal year if
paid to the Company.
*2 A “person who executes business” refers to a person who executes business as stipulated in Article 2, Paragraph 3, Item 6 of
the Ordinance for Enforcement of the Companies Act.
*3 An “important lender” refers to a lender of more than 2% of the Company’s consolidated total assets.
*4 A “large sum” refers to a sum of more than 10 million yen per year for an individual or more than 2% of the organization’s annual
gross income in the most recent fiscal year for a person affiliated with a corporation, association, or other organization.
*5 A “major shareholder” refers to a holder of at least 10% of voting rights, whether directly or indirectly.
[4-10. Use of Optional Approach]
Supplementary Principle 4-10-1
As described under Principle 3-1 [Full Disclosure], 3 and 4 above, the Company has established a Nomination and Remuneration
Advisory Committee under the board of directors. For more information on the powers and roles of this committee, see “[Optional

Committee] Supplemental explanation” under “II-1. Matters related to institutional structure, organizational management, etc.” in thisreport.
[4-11. Preconditions for Ensuring Effectiveness of Board of Directors and Auditors Committee]
Supplementary Principle 4-11-1
The Company board of directors consists of directors who are not members of the Auditors Committee, selected based on factors
such as past experience and track record, and directors who are members of the Auditors Committee, appointed based on
qualifications and experience as specialists in law, accounting, or taxation as well as auditing experience. As shown in the officers'
skills matrix below, this structure ensures a well-balanced and diverse board in terms of knowledge, experience, and ability.
The Articles of Association call for the board of directors to include no more than 10 directors who are not members of the Auditors
Committee and no more than five directors who are members of the Auditors Committee. The Company considers the current sizeof the board of directors to be appropriate.
Officer Skills Matrix (◎: outstanding skills; 〇: high skills)
Name

Takatoshi Ito

MinoruNakanishi

MitsuhikoMatsuzawa

AtsushiKawashima*1

Keiko Otsuki*1

Hiroaki Hattori*1

Masayoshi
Nishitake*1

Tomohiko
Wakayama

HirotoMizobata*1

Tadashi
Fukuda*1

Tomohiko
Egashira*2

Position

President andRepresentativ
e Director

SeniorManaging
Director
Head ofManagement
Planning
Division

Director, Headof
Management
Division andHead ofPresident’s
OfficeExternal
director(Independent
officer)

External
director(Independent
officer)

External
director(Independent
officer)

External
director
AuditorsCommittee
member(Independent
officer)

Director
AuditorsCommittee
memberExternal
director
AuditorsCommittee
member(Independent
officer)

External
director
AuditorsCommittee
member(Independent
officer)Managing
Executive
Officer
Head ofDevelopment
Division

Generalmanagement

HR, PR, IT
Management
systems,
general affairs,planning,
legal affairs,
affiliatematters
company
specificallymanagement,
assigned byfinance,the president,
accounting,
ESG,
HR strategy
compliance

DutiesDiscernment of
top management
Corporate
manage－ment

Discernment ofexecutive
management

SkillsManagement
auditing skills
Business skills

Related toreal estatebusiness

Industryknowledge

◎
◎

◎

◎

〇

◎

〇

Finance, securities

◎

〇

〇

Financial accounting

〇

〇

〇

◎

Accounting
Legal affairs

General legal
affairs〇〇

Supervision
Supervision
Supervisionand oversight and oversight and oversightofofofmanagement management management
and
and
and
management management management
execution,
execution,
execution,
Nomination
Nomination
Nomination
and
and
and
Remuneration Remuneration Remuneration
Advisory
Advisory
Advisory
Committee
Committee
Committee

◎

◎

〇

〇

◎

〇

◎

〇

Development
operations ingeneral

◎

◎

◎

〇

〇

◎

〇

〇

〇

〇

〇

〇

〇

〇

◎

〇

◎

〇

〇

Risk management

〇

〇

ESG

〇

〇

〇

〇

HR, labor

〇

〇

〇

〇

IT

Audits, internal audits

〇

◎

◎

◎
◎
◎

◎

〇

〇

〇

<Notes>*1 The Tokyo Stock Exchange has been notified that this director serves as an independent external officer.
*2 Delegated Executive Officer
Mitsuhiko Matsuzawa is a newly appointed director on June 25, 2024.

Supplementary Principle 4-11-2
The state of concurrent duties of directors is reported in the Securities Report and announcements of regular general meetings ofshareholders.
One of the Company’s external directors who is a member of the Auditors Committee is a full-time director. This structure enables
effective utilization of external directors.
Supplementary Principle 4-11-3
To the efficacy of the board of directors, the Company undertakes a survey in which respondents grade, on a five-point scale, thefollowing eight items: the composition of the board of directors; the management of the board of directors; risk management; efficacy
improvements; evaluation and remuneration of senior management; stakeholder engagement; officer training; and the overall
efficacy of the board of directors.
With respect to the efficacy of the board of directors, the results of this survey in 2022 showed that the board is regarded to begenerally effective. Nevertheless, improvements are underway on the following points identified as issues based on survey results:
 Composition of the board of directors: Ensuring diversity (promoting women directors, promoting directors with management
experience)
In response to this issue, we appointed as new external directors the following individuals: in March 2021, a woman (Keiko Otsuki)
and a candidate with management experience (Atsushi Kawashima); in March 2023, a candidate with management experience(Hiroaki Hattori). Keiko Otsuki possesses strong insights into securities and finance. External directors Atsushi Kawashima andHiroaki Hattori bring a wealth of experience with and knowledge of corporate management. We believe their appointments enhancethe diversity of the board of directors.
In addition, the eight currently appointed Executive Officers (employees) include one woman.
(See the Securities Report for career histories of directors.)(Japanese Only)[4-14. Director and Auditor Training]Supplementary Principle 4-14-2
While the Company strives to create training opportunities to enable directors to effectively fulfill their roles and responsibilities,
including provision of information on various seminars and distribution of training materials, we intend to focus even more efforts on
this area to enhance training methods still further and to increase training opportunities.
[5-1. Policy for Constructive Dialogue with Shareholders]
The Company promotes constructive dialogue with shareholders through proactive IR activities.
The practice of IR activities is overseen by the Representative Director and the director in charge of IR.
The Company employs an approach open to reasonable requests for interviews from shareholders.
The Company has established departments in charge of finance and accounting within the Management Planning Division anddepartments in charge of public relations, general affairs, and legal affairs within the Management Division, maintaining anorganizational structure that ensures the organic coordination of functions to help promote dialogue and make it possible toascertain the composition of shareholders. Feedback is provided to the board of directors as appropriate regarding matters such as
shareholder opinions ascertained through dialogue.
In addition, the Company appropriately manages insider information through rigorous control of material facts not yet announced
publicly based on insider trading control rules.
[Actions aimed at realizing management mindful of the cost of capital and stock price]
In order to improve our shareholder and corporate value, we engage in management mindful of the cost of capital and stock pricebased on the basic approach and the nature of initiatives that seek to realize profit growth, achieve a mindful approach to capitalefficiency, ensure aggressive shareholder returns (continuation of progressive dividend policy), and establish constructive dialogue
with shareholders and institutional investors.
As key indicators, in our fifth medium-term management plan (covering the FY2024-2026 three-year period), we have adopted ROE
exceeding the cost of shareholder equity and ROIC exceeding WACC, and are currently working to achieve a high level of capitalefficient management.
[Indicators emphasized (targets)]

FY2025
ROE
13.4%
Cost of shareholders’ equity*
ROIC
3.4%
WACC
*Calculated by the Company based on β-values over a fifteen-year period

FY202613.9%
3.5%

FY2027

14.0%
Approx. 8.3%
3.6%
Approx. 2.2%

Details are described in the Long-Term Vision 2030 and on p. 16 of the fifth medium-term management plan (https://www.esconjapan.co.jp/english/about_us/plan.php).

2. Capital structure
Percentage of foreign shareholders

Less than 10%[Major Shareholders]Name

Number of shares owned

Ownership ratio (%)

Chubu Electric Power Co., Inc.

49,599,000

51.21

The Master Trust Bank of Japan, Ltd. (account in trust)

4,424,800

4.57

Tenma Seiryu Co., Ltd.

3,610,000

3.73

Custody Bank of Japan, Ltd. (account in trust)

2,642,600

2.73

Seiryu Corporation Co., Ltd.

2,100,000

2.17

Takatoshi Ito

1,286,600

1.33

JPMorgan Securities Japan Co., Ltd.

649,507

0.67

JP MORGAN CHASE BANK 385781

556,565

0.57

Keiko Akashi

531,000

0.55

UBS AG LONDON ASIA EQUITIES

437,402

0.45

Controlling shareholder (other than parent company)―

Parent company

Chubu Electric Power Co., Inc. (listed on Tokyo Stock Exchange andNagoya Stock Exchange) (Securities code) 9502

Supplemental explanation(1) The above table of major shareholders presents ownership ratios based on shares owned as of March 31, 2024.
(2) Of the shares held by Custody Bank of Japan, Ltd. (account in trust), 1,393,000 shares consist of shares of Company stock
owned by the share-based payment benefits trust for officers and shares of Company stock owned by the share-based payment
benefits type employee-stock ownership plan (ESOP) trust adopted by the Company. These shares of Company stock arerecorded on the consolidated and nonconsolidated financial statements as treasury stock.
(3) In addition to the above, the Company owns 1,732,950 shares of treasury stock.
(4) Ownership ratios of major shareholders exclude treasury stock (1,732,950 shares).

3. Corporate attributes
Listed exchange and market category

Prime Market, Tokyo Stock Exchange

Fiscal year ends

March

Category of industry

Real estate(Consolidated) number of employees at the end of themost recent fiscal year
(Consolidated) net sales at the end of the most recent
fiscal year
Number of consolidated subsidiaries at the end of themost recent fiscal year

100 or more but less than 500
100 billion or more but less than 1 trillion yen
10 or more companies

4. Guidelines on policies for the protection of minority shareholders in cases such as transactions with
controlling shareholders

Chubu Electric Power qualifies as the parent company, holding 51.26% of voting rights in the Company.
The Company is positioned as a primary subsidiary that handles the real estate business in the Chubu Electric Power Group. Its
focus is on making full use of the brand power of the Group as well as leveraging the social credibility and recognition of theCompany that comes from being listed on the stock market to grow business performance in transactions outside the Group and, in
so doing, contribute to enhancing the Group’s corporate value.
The parent company nurtures its real estate business as a new revenue pillar, with a view to achieving Chubu Electric Power GroupManagement Vision 2.0. Thus, in cooperation with the various companies of the Chubu Electric Power Group, the Company ispushing forward with urban development efforts that realize secure and comfortable living for community residents.
The parent company respects the independence of the management of the Company. In its transactions with the Company, it is thepolicy of the parent company to proceed with such transactions fairly from a position of equal footing as a business partner inaccordance with the Chubu Electric Power CSR Declaration. Likewise, in its transactions with the parent company, as with its
transactions with other companies, the Company determines the transaction conditions with the parent company on a rational basis
while examining contractual terms and market prices and engages in said transactions only after fully examining the pros and consof the transactions, their conditions and other factors to ensure that they are not unfairly detrimental to the interests of minority
shareholders.
The Company has adopted a structure wherein the majority of its board of directors consists of external directors, and has
established a governance structure that is effective from the standpoint of protecting minority shareholders. With respect to theappointment and dismissal of directors, including Independent external directors, the parent company exercises its voting rights
while fully respecting the appointment or dismissal proposals made by the optional Nomination and Remuneration Advisory
Committee consisting of one external director and three independent external directors. The independence of the appointment anddismissal of members of the management team from the parent company is secured.
Based on the above, the Company judges that from a business operation standpoint, the protection of minority shareholders is
sufficiently ensured.
Additionally, to facilitate the management of Group companies by the parent company and help ensure the independence ofCompany decision-making, it is the Company’s policy to consult with or report to the parent company on matters that are notable
and significant from a management perspective. In addition to the above, the Company has set forth provisions on matters such as
the priority selection of Chubu Electric Power for energy supply and utilities construction in connection with its development projects.
However, it stipulates that Company business activities and management decisions must be based on the Company’s independent
management judgments. The Company believes these provisions provide it with a degree of independence from the parent
company.

5. Other specific conditions that could have significant impact on corporate governanceII. Status of corporate governance structure of management control organizations related to
managerial decision-making, execution, and oversight and other related matters

1. Matters related to institutional structure, organizational management, etc.
Organizational form

Company with an audit and supervisory committee[Directors]
Number of directors specified in the Articles of
Association

15

Term of office of director specified in the Articles of
Association

1 yearChairperson of the board of directors

President

Number of directors

10External directors appointed?

Y

Number of external directors

6

Number of external directors designated as
independent officers

6

Relationship to the Company (1)NameAttributeab

Relationship to the Company*
c
d
e
f
g
h
i
△

j
k
Masayoshi Nishitake
From another company
Hiroto Mizobata
Certified public accountant
Tadashi Fukuda
Attorney at law
Atsushi Kawashima
From another company
Keiko Otsuki
From another company
Hiroaki Hattori
From another company* Categories of relationships to the Company* ○: the individual currently has or recently had such a relationship; △: the individual had such a relationship in the past.
* ●: a close relative of the individual currently has or recently had such a relationship; ▲: a close relative of the individual
had such a relationship in the past.
a. Person who executes business of a listed company or subsidiary thereofb. Person who executes business of a parent company of a listed company or non-executive director thereofc. Person who executes business of a sister company of a listed company
d. Person for whom a listed company is an important trading partner or person who executes business thereof
e. Important trading partner of a listed company or person who executes business thereof
f. Consultant, accounting specialist, or legal specialist receiving a large sum of money or other property from a listed company,
other than executive compensation
g. Major shareholder of a listed company (or person who executes business of the shareholder if said major shareholder is a
corporate person)
h. Person who executes business of a trading partner (not falling under d, e, or f) of a listed company (the individual concerned
only)
i. Person who executes business of a company that shares external directors with the Company (the individual concerned only)
j. Person who executes business of a recipient of donations from a listed company (the individual concerned only)
k. Other
Relations to the Company (2)Name

Masayoshi Nishitake

Hiroto Mizobata

Auditors
Independent Supplemental explanation
Committee
officer
related to applicable item
member

Mr. Nishitake satisfies theCompany's criteria forevaluating theindependence of its
independent external
directors.

Mr. Mizobata satisfies theCompany’s criteria forevaluating theindependence of its

Reasons for appointment
Mr. Nishitake has been appointed as anexternal director. He is judged fit for the post inlight of his remarkable discernment, hisabundant experience, and his strong trackrecord at financial institutions. He has been
named an independent officer because hesatisfies the requirements for independence andneutrality and because his appointment posesno risk of conflicts of interest between him andordinary shareholders.
Mr. Mizobata possesses a wealth of experienceand a wide range of knowledge as certified
public accountant, certified tax accountant, andmanager. He has been appointed external
director to take advantage of his experience andindependent external
directors.

Tadashi FukudaAtsushi KawashimaKeiko Otsuki

Hiroaki Hattori

knowledge in Company management. He has
been named an independent officer because hesatisfies the requirements for independence andneutrality and because his appointment posesno risk of conflicts of interest between him andordinary shareholders.
Mr. Fukuda possesses a wealth of corporate
legal experience and a wide range ofknowledge as attorney at law. He has been
Mr. Fukuda satisfies theappointed external director to take advantage ofCompany’s criteria for
his experience and knowledge in Company
evaluating themanagement. He has been named an
independence of its
independent officer because he satisfies theindependent externalrequirements for independence and neutrality
directors.
and because his appointment poses no risk of
conflicts of interest between him and ordinary
shareholders.
Mr. Kawashima possesses a wealth ofexperience and a strong track record ofachievements over many years as a leading
Mr. Kawashima satisfies the manager at Kenedix, Inc. He has been
appointed external director to allow the
Company’s criteria for
Company to draw fully on his experience andevaluating theknowledge. He has been named an
independence of its
independent officer because he satisfies theindependent externalrequirements for independence and neutrality
directors.
and because his appointment poses no risk of
conflicts of interest between him and ordinary
shareholders.
Ms. Otsuki possesses a wealth of experienceand a strong track record of achievements,
including work as a securities analyst overseas.
Ms. Otsuki satisfies theShe has been appointed an external director toCompany’s criteria for
apply her deep insights, gained through thisevaluating theexperience and knowledge, to Company
independence of its
management. She has been named an
independent external
independent officer because she satisfies the
directors.
requirements for independence and neutrality
and her appointment poses no risk of conflict ofinterest between her and ordinary shareholders.
Mr. Hattori possesses a wealth of experienceand a strong track record of achievements overmany years as a leading manager at Minato
Bank, Ltd. He has been appointed external
Mr. Hattori satisfies the
director to allow the Company to draw on the
Company’s criteria forresulting high level of knowledge that heevaluating thepossesses. He has been named an
independence of its
independent officer because he satisfies theindependent externalrequirements for independence and neutrality
directors.
and because his appointment poses no risk of
conflicts of interest between him and ordinary
shareholders.

[Auditors Committee]
Auditors Committee membership and attributes of chairperson

Total membership(persons)
Auditors Committee

Full-time member(s)(person[s])4Director(s) and employees assigned to assist in theduties of the Auditors Committee?

2

Y

Internal director(s)(person[s])1External director(s)(person[s])3Chairperson
External director

Matters related to independence of such director(s) and employees from executive directors
While these director(s) and employees are assigned to assist in the duties of the Auditors Committee in the form of concurrent
assignment of personnel in charge of internal auditing, since the department in charge of internal auditing is an organization underthe Auditors Committee, decisions by and the consent of the Auditors Committee are required for the transfer and personnel
evaluations of such employees. As such, their independence is secured through a structure whereby the command and control
authority of executive directors does not extend to duties related to the Auditors Committee.
State of cooperation among the Auditors Committee, accounting auditor, and internal auditing department<Cooperation between the Auditors Committee and the accounting auditor>
In principle, the Auditors Committee quarterly receives an explanation of matters such as the state of accounting auditing andinternal control auditing from the accounting auditor and exchanges information with the accounting auditor.
<Cooperation between the Auditors Committee and the internal auditing department>
In principle, the internal auditing department attends each meeting of the Auditors Committee, reporting on the formulation ofinternal auditing plans, the state of their implementation, and their results.

[Optional Committee]
Optional committee corresponding to a nominationcommittee or a remuneration committee established?

Y

State of establishment of optional committee, its membership, and attributes of its chairperson

Name of committee

Total
membership(persons)

Full-timemember(s)(person[s])Internal
director(s)(person[s])Independent
external
director(s)(person[s])Outsideexpert(s)(person[s])Other(person[s])Chairperson

Optional
committee
Nomination andcorresponding to Remuneration Advisory
a nomination
Committee
committee

4

0

1

3

0

0

Internal
director

Optional
committee
Nomination andcorresponding to Remuneration Advisory
a remuneration
Committee
committee

4

0

1

3

0

0

Internal
director

Supplemental explanation
Remuneration and nomination procedures
The Company has established the Nomination and Remuneration Advisory Committee as an advisory body to the board of directors
for the purpose of strengthening the independence, objectivity, and accountability of board functions with regard to matters such as
the nomination and remuneration of directors. This Committee consists of three or more members, a majority of whom must be
external directors. Its membership is appointed by resolution of the board of directors.
In the nomination process, the Nomination and Remuneration Advisory Committee makes decisions on draft resolutions for regular
general meetings of shareholders regarding the appointment and dismissal of directors who are not members of the Auditors
Committee and directors who are members of the Auditors Committee; proposals for the appointment and dismissal of theRepresentative Director, managing directors, and Executive Officers; the proposed assignment of duties of executive directors; andproposed related basic policies. It also deliberates on matters such as those related to succession plans. Members of senior
management, including the CEO, are subject to annual performance evaluations regarding matters such as the status ofachievement of business performance objectives and deliberations on reappointment by the Nomination and Remuneration
Advisory Committee.
With regard to remuneration, the Nomination and Remuneration Advisory Committee makes decisions on proposed remuneration
amounts for individual directors who are not members of the Auditors Committee and deliberates on policies governing
remuneration decisions, including the establishment of and revisions to officers’ remuneration systems, remuneration levels, andevaluation systems, and makes decisions on related proposals.
The current membership of the Committee is as follows:
Takatoshi Ito (President and Representative Director, Chairperson of the Committee)
Atsushi Kawashima (independent external director)
Keiko Otsuki (independent external director)
Hiroaki Hattori (independent external director)[Independent External Directors]
Number of independent external directors

6Other matters related to independent external directors[Criteria for evaluating the independence of its independent external directors]
Section I. 1. Basic thinking: [Disclosure Based on the Principles of the Corporate Governance Code]: [4-9. Criteria for Evaluating
Independence and Qualification for Independent External Directors] of this Report describes the criteria established by theCompany for evaluating the independence of external directors.

[Incentives]
Status of implementation of measures related toproviding incentives to directors

Adoption of performance-based reward system and stock option
systemSupplemental explanation related to this item
In December 2017, we issued stock options to Company directors and employees and to employees of subsidiaries. The purpose indoing so was to strengthen morale and motivation of Company directors and employees to improve Company businessperformance into the future, to further improve profitability and corporate value over the long term, and to enhance solidarity within
the Company.
In addition, under a resolution of the regular general meeting of shareholders held March 20, 2015, as part of revisions of the
remuneration system for directors, we abolished the existing retirement benefits system for directors and adopted a performancebased stock award system for directors (excluding directors who are members of the Auditors Committee, external directors, andnon-executive directors) for the purpose of strengthening the awareness of directors of the responsibility to contribute to medium- tolong-term business performance and corporate value. Performance-based rewards are determined based on degree of contribution
to accounting results and business performance in the fiscal year, with consideration for degree of responsibility according to job
title.
On January 30, 2020, we established an optional Nomination and Remuneration Advisory Committee as an advisory body to theboard of directors to strengthen independence, objectivity, and accountability in decisions concerning director remuneration.
The remuneration system for officers consists of a base remuneration component in the form of fixed monthly remuneration; anannual incentive remuneration component based on yearly business performance; and a medium-term incentive remuneration
component based on business performance during the period of the medium-term management plan. This system is intended tocontribute to continuing progress toward performance targets and increases in corporate value.
Recipients of stock options

Internal directors, external directors, Company employees, andemployees of subsidiaries

Supplemental explanation related to this item
Sixth stock options
Date of resolution on issue: December 1, 2017
Number of stock options: 6,701 (as of September 30, 2023)
Class of shares subject to stock options: common stock
Pay-in amount on stock options: 1 yen per stock option
Pay-in amount on exercise of stock options: 627 yen per share
Period for exercise of stock options: April 1, 2021 through December 26, 2025
Holdings as of March 31, 2024
Internal directors: Zero (0) stock options held by zero (0) persons
External directors (including former external directors):
Zero (0) stock options held by zero (0) persons
Company employees: 5,406 stock options held by 55 persons
Employees of Company subsidiaries: Zero (0) stock options held by zero (0) persons[Director Remuneration]
State of disclosure (of individual director remuneration)

Individually disclosed for only some directors

Supplemental explanation related to this item
Directors whose total remuneration exceeds 100 million yen
Takatoshi Ito
Minoru NakanishiShown below is director remuneration in the 29th term (January 1, 2023 – March 31, 2024).
Directors (excluding external directors)
325 million yen
4 personsExternal directors
59 million yen
6 persons
In addition to the above amounts paid, performance-based stock awards for officers have been paid to four directors and(delegated) executive officers (excluding directors who are members of the Auditors Committee, external directors, and nonexecutive directors). The 21st regular general meeting of shareholders held March 25, 2016, the 25th general meeting ofshareholders held March 26, 2020, the 26th regular general meeting of shareholders held March 26, 2021, the extraordinary general
meeting of shareholders held November 29, 2023, and the 29th regular general meeting of shareholders held June 25, 2024

resolved to establish this performance-based stock award system for officers as a framework apart from the system of remuneration
described above.
Policies established for decision-making on remuneration
amounts or their calculation method?

Y

Disclosure of policies for decision-making on remuneration amounts or their calculation method<<Policies and procedures for board of directors decision-making on remuneration for senior management and directors>>
The Company applies the following policies and procedures to determine amounts of remuneration for directors who are or are notmembers of the Auditors Committee:<<Basic policies for decision-making on remuneration for directors who are not members of the Auditors Committee>>
1. Basic policies for decision-making on officers’ remuneration(1) Basic policies for decision-making on remuneration
The basic policies call for appropriate remuneration for directors who are not members of the Auditors Committee to be
determined by confirmation of business results and comparisons to other firms within the same industry by the Nomination andRemuneration Advisory Committee. This structure is also intended to increase the rate of annual and medium-term incentive
remuneration and maintain and increase management motivation in light of the inherent volatility of the Company’s businesses.
In addition, a stock allocation system has been established as a system of nonmonetary remuneration for medium-term
incentive remuneration. Remuneration decisions under this system are based on the perspective of considering total
shareholder return (TSR) as an indicator that reflects shareholder perspectives and sets as clear objectives returns toshareholders and increased corporate value.
(2) Content and structure of remuneration and constituent ratios, timing, etc.
Three types of remuneration are available for directors who are not member of the Auditors Committee (excluding external
directors): fixed monthly base remuneration; annual incentive remuneration based on annual performance; and medium-term
incentive remuneration based on performance during the period of the medium-term management plan. The ratios of these
constituent elements are determined based on each director’s post and responsibilities.
Remuneration for external directors consists only of base remuneration in fixed monthly amounts.
A fixed monthly base remuneration is paid each month; annual incentive remuneration is paid after the end of each business
year; and medium-term incentive remuneration is paid by awarding points after the end of the business year. The number ofpoints awarded is finalized in the final business year of the medium-term management plan using consolidated operating
income and TSR (total shareholder return) as the basis for calculations. With certain exceptions, following the conclusion of atransfer restriction agreement, Company shares are delivered in accordance with the total number of points granted (at the timeof retirement from any position of director, etc. of the Company when transfer restrictions have been lifted).
Provided below is an overview of a case of payment of target amounts of incentive remuneration.
Remuneration item

Representative
director

Vicepresident
and director

Seniormanaging
director

Managing
director

Director

Base remuneration

55%

54%

52%

55%

55%

Annual incentive
remuneration

30%

29%

29%

30%

27%

Medium-term
incentive
remuneration

15%

17%

19%

15%

18%

Purposes and overview of payment
Remuneration reflecting differences in roles inmanagement oversight and business execution anddifferences in scope of responsibilities for each post.
Amounts are determined based on officer category andpost.
Annual incentive remuneration is paid in amounts
corresponding to each period’s performance, using
consolidated net income and consolidated operating
income as indicators, to incentivize business execution
to achieve the goals set in business plans; determinedbased on evaluations of progress with businessmeasures over the course of the fiscal year andprogress toward goals set in business plans.
Medium-term incentive remuneration is paid in the formof Company shares based on evaluations of progress
toward goals set in the medium-term management planand fluctuations in corporate value, using consolidated
operating income and total returns to shareholders as
stipulated in the medium-term management plan as
indicators. This remuneration seeks to incentivize
business execution with sustained growth in mind.
Rights to receive Company shares obtained inaccordance with performance in each year of themedium-term management plan are evaluated, from anexternal perspective, for each period of the mediumterm management plan. Rights are finalized based on
the results thereof.

2. Method for calculating annual incentive remuneration
Annual incentive remuneration is funded from a fixed percentage of profits. Funds are allocated based on the specific post andprogress toward goals set in business plans.
Remuneration funds = consolidated net income × coefficient A × coefficient B based on achievement of consolidated operating
income targets
Remuneration amount = remuneration funds × (individual points ÷ total points)

Coefficient A:

The coefficient is set to realize the target remuneration amount upon achievement of goals set in businessplans for the initial fiscal year of the medium-term management plan. This value is revised for each period of
the medium-term management plan.
Coefficient B:
Set to zero if less than 80% of the consolidated operating income target is achieved. The maximum is amultiple of 1.5 (i.e., +50%).
Individual points: Post-specific points + performance points (achievement of consolidated operating income target andPresident’s commitment evaluation)
3. Method for calculating medium-term incentive remuneration
The base number of shares for each post is determined in the first fiscal year of the medium-term management plan. Points areawarded based on progress toward each year’s consolidated operating income target. Points awarded for the full year are
aggregated in the final year of the medium-term management plan. Following deliberations by the Nomination andRemuneration Advisory Committee, these aggregate points granted for the eligible period are multiplied by a linked coefficient
determined by the Board of Directors based on the rate of divergence between the Company’s TSR and that of TOPIX realestate shares on the Tokyo Stock Exchange Prime Market to determine the number of shares awarded.
(Each year)
Points awarded for the full year = base number of shares for each position × performance-linked coefficient ①(Following end of eligible period)
Finalized points granted = aggregate points granted for the eligible period × performance-linked coefficient ②
Performance-linked coefficient ②:
Determined by the board of directors following deliberations by the
Nomination and Remuneration Advisory Committee based on the rateof divergence between the Company’s TSR and the growth rate of
TOPIX real estate shares on the Tokyo Stock Exchange Prime Market

Performance-linked coefficient ①:
Consolidated operating income achievement rate
Consolidated operating income target
achievement rate

Linkedcoefficient

Rate of divergence

Linked coefficient

Less than 100%0Less than 60%

0.5

100% or more but less than 110%

1.0

60% or more but less than 80%

0.7

110% or more but less than 120%

1.2

80% or more but less than 90%

0.9120% or more

1.5

90% or more

1.0

4. Resolutions of the regular general meeting of shareholders concerning officers’ remuneration
The 21st regular general meeting of shareholders held March 25, 2016 passed a resolution capping remuneration for directors
who are not members of the Auditors Committee to no more than 400 million yen annually (excluding the employee salary
portion for directors concurrently serving in employee positions). On June 25, 2024, when the Securities Report was submitted,
this resolution applied to six officers.
The extraordinary general meeting of shareholders held November 29, 2023 passed a resolution capping remuneration for
directors who are members of the Auditors Committee at no more than 100 million yen annually. As of June 25, 2024, thisresolution applied to four officers.
5. Decisions on amounts of individual remuneration for directors who are not members of the Auditors Committee(1) Decision-making policy
We strive to ensure transparency with regard to officer remuneration through Nomination and Remuneration Advisory
Committee deliberations. The Committee consists of one internal director and three independent external directors. As anadvisory body to the board of directors, the Nomination and Remuneration Advisory Committee decides on proposed individual
remuneration amounts for directors who are not members of the Auditors Committee; deliberates on policies for decision-making
on remuneration-related matters, such as the establishment of and revisions to officers’ remuneration systems, remunerationlevels, and evaluation systems; and decides on related proposals.
(2) Remuneration decision-making process
The secretariat of the Nomination and Remuneration Advisory Committee prepares materials related to revisions toremuneration. The Representative Director prepares a rough draft of individual remuneration reflecting evaluations of eachdirector’s commitment. Based on the decision-making policies, the Nomination and Remuneration Advisory Committee
evaluates business results and key performance indicators (KPIs) as well as procedures and evaluation results, then makes
decisions on the proposed individual remuneration amounts. The final decision is made by the board of directors.
(3) Results of activities of the Nomination and Remuneration Advisory Committee (January 2023 – May 2024)
The Committee met ten times from January 2023 through May 2024 and deliberated on the following matters:
Meeting Date

Matters Considered
Appointment of directors as alternate members of the Auditors Committee
Proposals for the individual base remuneration of directors who are not members of the Auditors Committee andExecutive Officers in FY2023

January 27, 2023

Proposals for the individual base remuneration of directors who are members of the Auditors Committee andExecutive Officers in FY2023
Management of the annual incentive program in FY2023
Annual schedule of the Nomination and Remuneration Advisory Committee for FY2023

April 27, 2023
July 25, 2023

Plan for this fiscal year under the succession plan
Annual schedule of the Nomination and Remuneration Advisory Committee for FY2023
Progress of the succession plan
Executive Officer report on results for the First Half of the 29th Term.
Deliberation of proposals for the appointment of directors who are not members of the Auditors Committee

August 29, 2023

Deliberation of proposals for the appointment of directors who are members of the Auditors Committee
Deliberation of proposals for the appointment of the Representative Director and responsible directors

Revision of remuneration for directors who are members of the Auditors Committee
Partial change to stock remuneration scheme
September 29, 2023
December 22, 2023

Progress of the succession plan
Formulation and determination of proposals for the appointment of executive officers
Schedule for holding meetings of the Nomination and Remuneration Advisory Committee
Confirmation of annual performance by executive directors and executive officers
Formulation and determination of proposals for the appointment of directors who are not members of the Auditors
Committee and responsible executive officers

March 26, 2024

Formulation and determination of proposals for the appointment of directors who are members of the Auditors
Committee
Formulation and determination of proposals for the appointment of executive officers
Payment of annual incentive remuneration for executive directors and executive officers
Interim incentive remuneration
Changes to and continuation of payment of stock to officers
Appointment of executive officers

April 17, 2024

Payment of annual incentive remuneration for executive directors and executive officers
Payment of interim incentive remuneration

April 19, 2024
April 24, 2024

Changes to and continuation of payment of stock to officers
Proposals for individual basic remuneration for directors who are not members of the Auditors Committee andresponsible executive officers for FY2024
Proposals for individual remuneration for directors who are members of the Auditors Committee for FY2024
Succession plan for current fiscal year(4) Stock options and performance-based stock award system
Under a resolution passed by the board of directors at its meeting held December 1, 2017, stock options are issued to directors
at fair prices to those eligible to receive them. These stock options are issued and allocated to eligible directors within the scopeof conditions that would not be unduly advantageous.
The board of directors determines the numbers of shares to be allocated through comprehensive consideration of matters suchas the post of each director and his or her performance and contributions. (This decision is entrusted by the board to the
President and Representative Director.)<<Remuneration for directors who are members of the Auditors Committee>>(1) This consists of fixed based remuneration in amounts determined within the range of the total amount approved by the
resolution of the general meeting of shareholders held November 29, 2023.
(2) The policy on base remuneration calls for base remuneration to be determined in light of the results of audits of legality andpropriety in business execution contributing to sustained increases in corporate value and in light of job responsibilities.
(3) Draft policies governing remuneration and related issues for individual directors who are members of the Auditors Committee
are determined by the Nomination and Remuneration Advisory Committee. Decisions on base remuneration are made throughconsultation among directors who are members of the Auditors Committee.
(4) In its December 1, 2017 meeting, the board of directors resolved to award stock options to directors who are members of the
Auditors Committee at a premium. These premium stock options are issued to recipients at fair value in a manner that accords
no undue advantages to the eligible directors who are members of the Auditors Committee.
Decisions on numbers of stock options to be allocated are made through consultation among directors who are members of the
Auditors Committee, based on comprehensive consideration of matters such as individual posts and individual contributions.

[Support Structure for External Directors]

To make it possible to share management-related information with executive directors and to enable dynamic management, full-timeexternal directors attend important meetings held periodically with executive directors and core personnel of business, financial, andmanagement departments.
Other activities include exchange of perspectives between external directors and the Representative Director and interviews withexecutive directors and core personnel of business departments. This structure enables information sharing on matters such as thestate of business execution and issues within each section.
Documents related to board of directors meetings are distributed by the secretariat in advance to ensure sufficient time for thoroughdeliberations on and study of proposals and reports.
[Presidents and Representative Directors and other officers who have left office]Names of former Presidents and Representative Directors and other officers serving as consultants, advisors, etc.
Not applicable

2. Matters related to functions such as business execution, auditing and oversight, nomination, and decisionmaking on remuneration (overview of current corporate governance structure)<Overview of the Company’s corporate governance structure>
The Company is a company with an audit and supervisory committee. Business execution is managed and supervised by the boardof directors and the Auditors Committee.
(1) Board of directors (ten directors, six independent external directors; the chair assumed by the President and Representative
Director)
 The board of directors in principle meets at least once a month to enhance management oversight functions through thoroughdeliberation and review of important matters.
 To secure speed and dynamism in business execution, the Articles of Association require the delegation of decision-making onimportant matters of business execution to executive directors. The scope of such delegation is managed strictly inaccordance with monetary and other standards set forth in the Job Authority Rules approved by the board of directors. The
state of the execution of important delegated business matters is promptly reported to the board of directors.

(2) Auditors Committee (includes two full-time members and three independent external directors)
 The Auditors Committee in principle meets once a month. If required by Auditors Committee members, the accounting auditor
and internal auditing staff, as well as members of senior management, including executive directors, attend these meetings toprovide timely and appropriate reports.
 Auditors Committee members engage in the periodic exchange of perspectives with the President and Representative Director
and, if necessary, interviews with members of senior management, including executive directors, striving to ascertain the stateof business execution and related issues in individual business departments.
 The full-time Auditors Committee member attends important Company meetings, such as periodic meetings of the
management committee and head office meetings attended by executive directors and core personnel of individual businessdepartments, to share information on the state of management and progress with business plans.
(3) Internal auditing system
The internal auditing office is a subsidiary organization of the Auditors Committee. In meetings of the Auditors Committee (heldmonthly in principle), the internal auditing office reports on the status of internal audits and audit results and exchanges
information with Auditors Committee members. The office strives to ensure effective audits.
(4) Nomination and Remuneration Advisory Committee
As an advisory body to the board of directors, the Nomination and Remuneration Advisory Committee deliberates and makes
decisions on matters such as director nomination and remuneration.
A majority of its membership consists of external directors to enhance the independence and transparency of nomination andremuneration.

3. Reasons for selection of the current corporate governance structure(1) The supervision and effectiveness of the board of directors are strengthened by having directors who are members of the
Auditors Committee possess voting rights at board of directors meetings.
(2) Delegation of important business to executive directors ensures promptness, mobility, and flexibility in execution, preventing lossof business opportunities.

(3) Directors who are members of the Auditors Committee are involved in decision-making regarding nomination and remunerationof other directors based on their right to state their opinions on the process, enhancing its transparency.
(4) The Nomination and Remuneration Advisory Committee, an advisory body to the board of directors, deliberates and makes
proposed decisions on matters related to the nomination and remuneration of directors who are not members of the Auditors
Committee (decisions on individual proposed remuneration amounts, proposed remuneration policies, and proposed
nominations and reappointments). A majority of its membership consists of external directors. This is intended to strengthen
further independence and objectivity in matters such as director nomination and remuneration.
(5) Close mutual cooperation is maintained among the Auditors Committee, the internal auditing department, and the accounting
auditor to ensure the efficacy of audits.
For the above reasons, we believe that the Company's current system for contributing to sustained growth in corporate value is an
optimal one.

III. State of implementation of measures involving shareholders and other stakeholders
1. State of initiatives to invigorate discussion at regular general meetings of shareholders and facilitate theexercise of voting rights
Supplemental explanation
Exercise of voting rights throughelectromagnetic means

To make it easier for shareholders to exercise their voting rights, we haveadopted an infrastructure to allow electronic voting via the Internet and theElectronic Voting Platform.

Use of the Electronic Voting Platform andother initiatives to improve the environment
for exercise of voting rights by institutional
investors

Same as above

Provision of English translations ofannouncements of regular general meetingsof shareholders (summaries)

We prepare English translations of announcements of regular general meetingsof shareholders (from which business reports are omitted) and post them to our
website (https://www.es-conjapan.co.jp/english/).

Other The regular general meeting of shareholders was held June 25, 2024.
 Announcements convening the 29th regular general meeting of shareholders
was posted to the Company website on June 3, 2024.
 During the general meeting of shareholders, the chair presents a business
report and explains the resolutions, in addition to engaging in a question-andanswer session with shareholders.

2. State of IR-related activities
Supplemental explanation

Explanation
provided byrepresentative?

Preparation and publication of disclosure
policyIt is posted on our website and included in the Securities Report.

Holding periodic briefings for individual
investors

Not held at present

N

These meetings were held twice in FY2023: in mid-February after
the announcement of financial results and in mid-August after theclosing of the second quarter. Each briefing is approximately one
hour and includes presentations of business specifics and an
overview of financial results, business strategies, and othermatters by a representative, followed by a Q&A session forparticipants.
In line with the change in the fiscal year end date, we will holdbriefings every May and November starting in FY2024.
Some 30 people participate in these events, including analysts andfund managers from Japan and overseas.

Y

Holding periodic briefings for foreign
investors

Each quarter, as requested, we engage in individual IR activities
through face-to-face or web conferencing.

Y

Posting of IR materials to the website

Information on financial results and other materials subject totimely disclosure, Securities Reports, company briefing materials,
information on the state of corporate governance, announcementsof regular general meetings of shareholders, the medium-term
management plan, and other financial materials, materials
describing projects, and videos and slides from semiannual
briefings on financial results are posted to the Company website(https://www.es-conjapan.co.jp/)(Partially in Japanese only). In
addition, IR staff accept questions concerning IR directly via theInternet (https://www.es-conjapan.co.jp/inquiry/ir/).
To enhance disclosure and provision of information to overseas
investors and other parties, we post to our English website
translations of financial highlights (summaries), major press
releases, and business information.
(https://www.es-conjapan.co.jp/english/)Establishing an IR section (person in charge)

The Management Department in the Management Division serves
as the section in charge of IR. The CIO serves as the director in
charge of IR. The head of the Management Department serves as
the IR administration contact point.

Other

The Company website includes an IR site for overseas investors.
Here we publish English versions of summaries of accounts,
announcements of regular general meetings of shareholders, andmaterials from briefings on financial results.

Holding periodic briefings for analysts andinstitutional investors

3. State of efforts concerning respect for stakeholder position
Supplemental explanation

Provisions on respect for the position of
stakeholders in internal rules, etc.

As stated in the Purpose, Vision, and Principles of Action set forth under ourmanagement philosophy system, our goal is to exercise management that leads
to lasting and essential contributions to society. We seek to create new futures
rooted in the community as a presence regarded as unique and essential by ourshareholders. Based on this approach and through the following activities, wewill strengthen value for each stakeholder:(1) Based on our Principles of Action and Conduct Charter, we pursue ourbusiness activities based on a keen awareness of all our stakeholders.
(2) Based on the Employee Rulebook and Basic Policy on Human Capital
Development (Basic Requirements for Human Capital), we train personnel
to enable the sustainable improvement of corporate value and train
personnel to impart the skills required to ensure sustainable improvements
in corporate value.
(3) Based on the Compliance Declaration, we respond to all stakeholders fairly,
impartially, and honestly.
(4) We disclose management information, including non-financial information,
in a timely manner; improve corporate value; and make proactive returns toshareholders.

Implementation of environmental protection
activities, CSR activities, and related efforts

The Company identifies efforts to address social challenges by promoting
sustainability management as a key management strategy. By promoting
Companywide initiatives, directedly largely by the department in charge of ESG
promotion and the Health Management Team, which was established tostrengthen promotion of health management, the Company focuses on
increasing essential corporate value that cannot be measured by financial
information alone.
See our website (https://www.es-conjapan.co.jp/corp/esg/) for more informationon our sustainability initiatives.

Formulation of policies related to theprovision of information to stakeholders

The Corporate Ethics and Conduct Charter and Compliance Declaration
stipulate efforts toward transparency and openness to stakeholders.

IV. Matters related to internal control systems
1. Basic outlook on internal control systems and their development status[Basic policies on development of internal control systems]

In accordance with the Companies Act and the Ordinance for Enforcement of the Companies Act, the Company develops thefollowing systems to ensure the propriety of its business operations (“internal control systems” hereinafter).
1. Systems for ensuring that the execution of duties by directors and employees complies with laws, regulations, and the Articles of
Association (Legal compliance systems)
Based on our Corporate Ethics and Conduct Charter, which clearly express commitment to practicing corporate ethics andfulfilling corporate social responsibilities (CSR), the Company has established the Compliance Code of Conduct as a code of
conduct under which officers and employees act in strict compliance with laws, regulations, the Articles of Association, andsocial norms, and the Compliance Manual. The Company has also stipulated systems in Compliance Rules to ensure thoroughimplementation of the Compliance Code of Conduct and the Compliance Manual. The Compliance Office promotes thoroughcompliance in cooperation with other Company sections, as instructed by the officer in charge of compliance.
The Internal Auditing Office is responsible for auditing compliance. This office reports its findings regularly to the board of
directors and to the Auditors Committee.
The Company has established and operates a hotline to allow officers and employees to directly report information concerning
actions that may be in violation of laws and regulations and other concerns.
2. Systems related to retention and management of information related to the execution of duties of directors (information retention
and management systems)
In accordance with the Document and Information Management Rules established by the board of directors, information related
to the execution of duties of officers and employees is recorded in documents or electromagnetic media (“documents, etc.”
hereinafter) and duly retained and managed.
3. Rules and other systems related to managing risk of loss (risk management systems)
The Company’s basic risk management policies are established in the Risk Management Rules. Procedures for responding tomaterialized risks are stipulated in the Crisis Management Rules.
For risks related to business projects, regular study meetings (head office meetings), etc. held by directors, persons responsible
in related departments, and others examine in detail risks related to all initiatives and determine policies for response.
The Risk Management Committee monitors cross-sectional risks and ensure Companywide sharing of related information.
Companywide response to matters posing the risk of serious impact on management are studied and implemented byconvening crisis task forces headed by the President.
In addition, to secure the accuracy and reliability of financial reporting, Company identifies, assesses, and documents risks inoperational processes and elsewhere based on the Internal Control Rules and periodically checks on the status of
implementation of control activities.
4. Systems for ensuring efficient execution of the duties of directors (efficient job execution systems)
The board of directors establishes Companywide targets shared by officers and employees based on management policies thatreflect trends in business conditions. The board presents specific action guidelines for related departments as necessary toachieve these targets. Directors and individual departments carry out practical activities to realize these plans.
An efficient execution structure that clarifies responsibilities based on the Job Authority Rules is established for everyday
business execution. In addition, efforts are made to ascertain information in a timely manner and to ensure effective controls,
including reporting on the state of execution at board of directors meetings and reporting on the state of business execution at
regular study meetings (head office meetings), etc. by directors and persons responsible in related departments.
Budgets are controlled through monthly reporting to the board of directors by the Finance and Accounting Department on thestatus of budget execution and performance.
The Internal Auditing Office monitors to indicate whether business execution is effectively implemented.
5. Systems for ensuring appropriate operations in the Group consisting of the Company and its subsidiaries (Internal control
systems in the Group)(1) Systems for reporting to the Company on matters related to the execution of duties of subsidiary directors and others
Important matters concerning Group member companies to be deliberated by or reported to the board of directors are stipulated
in the Affiliate Management Rules, the ES-CON ASSET MANAGEMENT Ltd. Management Rules, and the FUEL Inc.
Management Rules. These rules also identify matters to be reported to related operations departments and the President’s
Office. Liaison councils are convened as necessary.
(2) Rules and other systems related to managing risk of loss at subsidiaries
The Risk Management Rules call for information sharing and consideration of countermeasures by the Risk Management
Committee on risk of loss at Group member companies. In addition, the president of each Group member company serves as its
chief risk officer, and is responsible for checking on the progress of risk management, reporting to the board of directors,
implementing risk management training, and promoting risk management awareness.
(3) Systems for ensuring that the duties of subsidiary directors and others are executed efficiently
Under the Affiliate Management Rules, the ES-CON ASSET MANAGEMENT Ltd. Management Rules, and the FUEL Inc.
Management Rules, Group member companies submit medium- to long-term and annual management plans and reports onbudgets, monthly management conditions, and financial results. Management analysis and guidance are implemented on thatbasis. In addition, basic policies are established on the guidance and development of Group member companies; efforts are
made to strengthen ties between Group member companies; and liaison councils are convened as necessary.

(4) Systems for ensuring that the execution of duties by directors and employees of subsidiaries complies with laws, regulations,and the Articles of Incorporation
The Compliance Rules call for the presidents of Group member companies to participate as members in Group compliancesystems as the individuals with ultimate responsibility for compliance within their companies. The Internal Auditing Office
implements internal audits of Group member companies under the Internal Audit Rules.
6. Matters related to directors and employees assigned to assist with the duties of the Auditors Committee
The Company assigns employees in the Auditors Committee Office, a subsidiary organization of the Auditors Committee, toassist with the duties of the Auditors Committee.
7. Matters related to the independence of directors and employees assigned to assist with the duties of the Auditors Committee
from other directors (excluding directors who are members of the Auditors Committee)
Employees assisting with the duties of the Auditors Committee work under the direction and supervision of the Auditors
Committee. Any organizational changes, human-resource evaluations, or personnel transfers of such employees require priorconsultation with the Auditors Committee.
8. Matters related to ensuring the efficacy of instructions to directors and employees assigned to assist with the duties of the
Auditors Committee
To ensure the efficacy of instructions to employees assigned to assist with the duties the Auditors Committee, the full-time
Auditors Committee member performs human resource evaluations of these employees.
9. Systems involving in reporting to the Auditors Committee(1) Systems for reporting by Company directors (excluding directors who are members of the Auditors Committee) and employees
to the Auditors Committee
The Company maintains a system whereby officers and employees report to the Auditors Committee not just the mattersprovided for in laws and regulations, but other matters with serious potential impact on the Company and Group member
companies; status of internal audits; and the status of reports to the compliance hotline and the nature of these reports.
(2) Systems for reporting to the Auditors Committee by officers and employees of subsidiaries and persons receiving reports fromthem
Officers and employees of Group member companies are required to promptly provide appropriate reports when asked by the
Auditors Committee to report on matters related to business execution.
Officers and employees of Group member companies who discover matters posing serious potential harm to Group member
companies, such as violations of laws and regulations, are required to report immediately to related operations departments, thePresident’s Office, or the whistleblowing hotline.
The Company maintains systems to allow reporting to the Company Auditors Committee on the status of reports from officers
and employees of Group member companies and the nature of these reports.
10. Systems for ensuring that persons who report information to the Auditors Committee are not treated disadvantageously due totheir reports
The Company prohibits unfavorable or disadvantageous treatment of officers and employees of Group member companies whoreport to the Auditors Committee due to their reports. Officers and employees of Group member companies are madethoroughly aware of this prohibition.
11. Procedures for prepayment or reimbursement of costs for execution of Auditors Committee duties and other matters related topolicies on processing of costs or obligations arising from the execution of such duties
Requests from the Auditors Committee for the prepayment or reimbursement of costs for execution of its duties shall beprocessed swiftly unless it can be demonstrated that such costs or obligations are not necessary to the execution of suchduties. A fixed amount is budgeted each year for payment of costs arising from the execution of Auditors Committee duties.
12. Other systems for ensuring that auditing by the Auditors Committee is conducted effectively
The Auditors Committee holds periodic meetings to exchange perspectives with the President and Representative Director andwith the accounting auditor.
The Company has established a system to make audits performed by the Auditors Committee more effective by placing theInternal Audit Office under the direction of the Auditors Committee as its subsidiary organization.
13. Basic thinking on exclusion of antisocial forces and state of initiatives therefor(1) Basic thinking on exclusion of antisocial forces
As part of our compliance initiatives related to antisocial forces, under the Corporate Ethics and Conduct Charter, wecategorically renounce all ties to antisocial forces or groups. In addition, the Compliance Code of Conduct calls for a resolute
attitude against antisocial forces, a policy of strict noninvolvement in illegal or antisocial actions, and refusal to provide orreceive economic gains or any other benefits related to antisocial forces.
Furthermore, the Company’s Guidelines on Responding to Antisocial Forces ensures thorough understanding of related matterswithin the Company and helps maintain a resolute stance on excluding antisocial forces across the organization.
To maintain the efficacy of these systems, before engaging in transactions, the Company has all new trade partners screenedby an independent agency regarding their integrity and verifies that the potential trade partner is entirely free of ties to antisocial
forces.

(2) State of initiatives toward exclusion of antisocial forces
We have completed the following initiatives for excluding antisocial forces:a. We have established sections responsible for response and officers responsible for guarding against inappropriate
demands.
b. We work with external specialists (attorneys, police departments with jurisdiction, Centers for Removal of Criminal
Organizations, compliance consultants).
c. We gather information on antisocial forces through external specialists and implement screening by independent agencies
regarding integrity.
d. We maintain guidelines on responding to antisocial forces.
e. We implement compliance training.

V. Other
1. Measures to defend against takeover bids
Measures
Measuresadopted
adoptedtotodefend
defendagainst
againsttakeover
takeoverbids?
bids?

NN

Supplemental explanation related to this item―

2. Other matters related to corporate governance structure, etc.

Status of internal controls related to the timely disclosure of Company information(1) Handling of material facts
Material facts related to important decisions are submitted to the board of directors for approval. Material facts related toimportant decisions requiring approval are reported in advance by the head of the related department to the chief information
officer. After the relevant information has been determined, the material facts in question are shared with the PR/IR section.
These reports are submitted concurrently to the Risk Management Committee which monitors risks and related conditions
across the organization and ensures Companywide information sharing.
The PR/IR section verifies the need for timely disclosure. The findings are reported to the officer in charge of disclosure, whomakes final decisions on whether to disclose the information.If he or she determines that such disclosure is necessary, theinformation is disclosed in a timely and appropriate matter.
(2) Handling of financial results information
Financial results are disclosed swiftly following preparation of disclosure documents, such as summaries of accounts, by thesection in charge of financial accounting; review of these documents by the PR/IR section; and approval by the board of
directors for information on the status of financial results.
(3) Handling of subsidiary information
Facts related to decisions by and occurrences at subsidiaries and subsidiary financial results information are disclosed in atimely and appropriate manner if disclosure is deemed necessary by the procedures described above. Such disclosures arehandled via the Company section in charge of the subsidiary.
(4) Handling of important information
To prevent insider trading and related purposes, the Insider Trading Control Rules specify the measures to prevent leakage ofinsider information and related notes or restrictions. In addition, persons responsible for handling of information are appointed.
Such information is managed strictly in accordance with these rules.
Corporate governance structure(simplified)
General meeting of shareholders
Reporting

Nomination andRemuneration
Advisory Committee

Deliberation/
determination

Consultation

Appointment, dismissal

Board of directors
Six directors who are not members of the
Auditors Committee(of which three are external directors)
Four directors who are members of the
Auditors Committee(of which three are external directors)
Appointment,
dismissal

Reporting

Supervising

Reporting

Auditors Committee
Cooperation

Cooperation

Accounting auditor

Reporting

Auditors Committee office

President and Representative Director

Appointment,
dismissal

Appointment,
dismissal

Cooperation

Internal Auditing Office

Reporting

Reporting
Reporting
Risk Management
Committee

ReportingInstructions

Management Committee

Auditing

Reporting

Departments/Group companies

Accounting audit

Overview of system for timely disclosure(schematic)
Each company and department (all officers and employees)
Reporting

Head of related department
Reporting

CIO
Information provision

Information provision

Risk Management Committee

Section in charge of disclosure(Consisting of risk management committee
members from each section)(IR/PR section)

Reporting

Reporting

CIO (disclosure judgment)
Financial reports
information

Facts related todecisionsRepresentative Director

Board of directors

CIO
Disclosure instructions

Section in charge of disclosure(IR/PR section)

Disclosure

Facts related tooccurrences