Corporate Governance Report
Last Update: January 25, 2024
KAGA ELECTRONICS CO., LTD.
Ryoichi Kado,
Representative Director,
President & COO
Contact: +81-3-5657-0111
Securities code: 8154
URL: https://www.taxan.co.jp
The status of corporate governance by the Company is described below.
I. Basic approach to corporate governance, capital structure, corporate attributes, and other basic Information
1. Basic Approach(1) The Company is cognizant that enhancing corporate governance is a key management issue and takes
measures to ensure total compliance with corporate ethics and laws and regulations and to reinforce
internal control systems while making ensuring the soundness, efficiency and transparency of business
operations and raising corporate value its fundamental policies and objectives.
(2) In view of the importance of corporate governance, we have established the CSR Promotion
Committee, SDGs Committee, and Nomination and Compensation Committee to strengthen our
corporate governance system.
(3) The Company strives to increase corporate value while maintaining good relationships withstakeholders (interested parties).
(4) The Board of Directors holds monthly regular meetings and holds extraordinary meetings on a flexible
basis as needed. The Board makes decisions on matters specified by laws and regulations and otherimportant matters relating to management and oversees the status of the performance duties by eachdirector. The Company has 6 directors (of which 3 are outside directors) and has established astructure that enables adequate deliberation and appropriate and timely decision-making. The
Company instituted an employment-based executive officer system on April 1, 2005, and instituted adelegation-based executive officer system on April 1, 2022, to further improve corporate governance.
In this way, the Company segregated management decision-making and supervisory functions frombusiness execution functions and clarified each role, and has established structures that enable timely
response to changes in the external environment while enhancing the functions of the Board of
Directors and business execution functions.
(5) Through the activities of the Information Disclosure Committee, we are working to ensure that
corporate information about the Company is disclosed in an easy-to-understand, fair, timely, andaccurate manner, and we are also working to enhance our IR and public relations staff as anorganization to implement this further.
(6) In light of the increasing emphasis placed on internal controls, the Audit office was placed under the
direct authority of the Representative Director, President & COO and works in collaboration with
Administration Headquarters, etc. to conduct audit operations regarding the appropriateness ofbusiness activities including Group companies, the status of use of company resources, and the statusof compliance with laws, regulations, and internal rules. In addition, the Company strives tocomprehensively operate internal control systems in response to enforcement of the Financial
Instruments and Exchange Act.
(7) The Supervisory Board comprises 4 members including 3 outside members. Supervisory Board
members attend all meetings of the Board of Directors and carry out their duties by actively attending
other important internal meetings and through other means. There are no interests between the
Company and the outside Supervisory Board members including personal relationships or capital
relationships. Note that although, with respect to Yoichi Sato, an agreement is entered into between-1-the Company and the law firm of which the said individual is a member, for the provision of legal
services, etc., Yoichi Sato is not a partner of that law firm and is not involved in the management ofthat firm.
In addition, Kyoko Oyanagi is the representative of the Social Insurance and Labor Advisors
Corporation with which the Company has an advisory contract, but the transaction amount is
insignificant.
Reasons for Non-compliance with the Principles of the Corporate Governance Code
The Company implements all the principles established in the Corporate Governance Code.

Disclosure Pursuant to the Principles of the Corporate Governance CodePrinciple 1-4: So-called strategic stockholdings●Stockholding policy
The company holds publicly traded shares with the aim to build, support, and develop businesses relationships
beneficial to increasing its shareholder value. Regarding stock held, business relations with the company,
equity-method net earnings, dividend payouts, book value and market value comparisons, and other matters
are reported to the board of directors once a year, and the board of directors periodically confirms whether or
not to continue to hold the shares (including decreases in the number of shares held). Information concerning
the number of shares for each issue of specified shares and the amount recorded in the balance sheet, etc.
can be found in the Annual Securities Report.
●Regarding the use of voting rights relating to strategic stockholdings
The company will use its voting rights with its stockholding objectives in mind, after careful examination of theother companyʼs management policy and the content of individual agenda items, and based on whether or not
an item will contribute to the expansion of both companiesʼ medium- and long-term shareholder value.
Principle 1-7: Related-Party Transactions
In cases where Company officers conduct transactions with related parties, the transactions are approved byresolution of the Board of Directors in accordance with the Rules on Corporate Officers and other rules. In
addition, all officers are obligated to submit a written Confirmation of Transactions with Related Parties withregard to their transactions with related parties at the end of each year. In cases where the Company conducts
transactions with major shareholders and others, the Board of Directors discusses the particulars of thetransactions in accordance with the Detailed Table of Authority.
Principle 2-4: Ensuring Diversity, Including Active Participation of Women
Supplementary Principle 2-4-1<Approach to Ensuring Diversity>
1. Appointment of Women to Managerial Positions
The Company aims to achieve a ratio of female managers of around 25% during the 2030s. Accordingly,
based on a mid- to long-term perspective, the Company will promote the creation of an environment where
women can actively participate as a matter of course and support the autonomous growth of ouremployees. At the same time, we will also continuously work to ensure that our female employees
accumulate experience, develop a career mindset, etc., and thereby steadily increase the proportion of
women among core human resources.
2. Appointment of Foreign Nationals and Mid-career Hires to Managerial Positions
Regarding foreign nationals and mid-career hires, the Company is not aware of any particular differences
arising as a result of nationality or the time when employees were hired when appointing employees tomanagerial positions. As such, our target is to maintain the current level of such appointments.
<Voluntary and Measurable Goals for Ensuring Diversity>
1. Appointment of women to managerial positions
Current (as of April, 2023): 16.5% Target: During 2020s: 17.0% / During 2030s: 25.0%
2. Appointment of foreign nationals to managerial positions
Current (as of April, 2023): 31.6% Target: Maintain current level-2-

3. Appointment of mid-career hires to managerial positions
Current (as of April, 2023): 46.3% Target: Maintain current level
Principle 2-6 Function as asset owner of corporate pensions
In order to provide retirement benefits to its employees, the company uses both a defined benefit corporate
pension plan and a defined contribution pension plan.
The management of the defined benefit corporate pension reserve is relegated to an asset management entitythat has declared its acceptance of the Stewardship Code, and the company appropriately supervises said
management, e.g. via regular reports to its relevant internal department.
Principle 3-1: Enhancement of Information Disclosures
1. The Company’s vision (corporate principles and so on), management strategies, and management plans
are posted on the Company’s website as the Kaga Electronics Corporate Philosophy and Action Guidelines athttps://www.taxan.co.jp/en/company/vision/, and information on our medium-term management strategy
can be found at https://www.taxan.co.jp/en/ir/management/management_07.html.
2. With regard to the Company’s fundamental approach and policies on corporate governance, refer to thisreport, Section I: Basic approach to corporate governance, capital structure, corporate attributes, and otherbasic information, Part 1: Basic approach.
3. With regard to policies and procedures for the determination of the remuneration of management
executives and directors by the Board of Directors, refer to this report, Director Remuneration under Section
II: Management decision-making, management organizations for execution and supervision, and otherelements of the corporate governance system.
4. At Kaga Electronics, our policy when nominating director candidates is to “nominate persons withcharacter and insight, who will contribute to the sustainable growth of the Group and corporate value overthe mid to long term as director candidates.” When selecting corporate auditors, our policy is to select“persons of appropriate character for corporate auditors, with advanced specialist knowledge and abundant
experience.”
When nominating director candidates, first, the Nomination and Compensation Committee, an advisory bodyto the Board of Directors, deliberates the nominations and makes a report to the Board of Directors, thenupon receiving this report, the Board of Directors deliberates and decides on the nominations.
When nominating corporate auditor candidates, after the Nomination and Compensation Committee hasdeliberated the matter and the consent of Board of Auditors has been obtained, a report is made to the Boardof Directors. Upon receiving this report, the Board of Directors deliberates and decides on the nominations.
The Nomination and Compensation Committee consists of 3 outside directors and 2 internal directors.
In addition, the Board of Directors decides on the selection and dismissal of upper-level management basedon the employment-based and delegation-based executive officer regulations and criteria of each type of
qualification, and after evaluation by the Group Management Headquarters Meeting and the Nomination andCompensation Committee.
5. The company will provide explanations regarding the naming and selection and dismissal of board
directors and corporate auditors at appropriate times via means such as news releases and convocation
notices for general shareholder meetings.
Supplementary Principle 3-1-3<Sustainability Initiatives>
In order to strengthen unity within the Group with regard to SDGs initiatives and promote sustainability
management, as of April 1, 2021, the Company has established the SDGs Committee chaired by the
Representative Director, President & COO and its members consisting of the officers overseeing each division,etc. We have created working groups based on the themes of “Environment,” “Society,” and “Governance,”
each reporting directly to the SDGs Committee.
As of April 1, 2022, the Company has also established the SDGs Promotion Office (now SDGs Promotion
Department), under the direct authority of the Representative Director, President & COO. With such systems inplace, we are working to formulate policies, measures, and goals that address these ESG issues, and monitor
the state of progress. To date, the SDGs Committee has held 6 times, and each working group has held once amonth, in principle, in an effort to actively engage in discussions and deliberations on each theme.
-3-Regarding the Medium- to Long-Term Sustainability Management Plan formulated on November 25, 2021,
each working group reports the progress of each KPI to the SDGs Committee every half year, and the SDGs
Committee verifies the validity of the measures and confirms the need for additional measures. Through this
PDCA cycle, the Company has taken steps to implement the ESG issues set forth in the plan.
<Disclosure Based on the TCFD or Equivalent Frameworks>
Led by the Environment Working Group, and giving reference to the TCFD recommendations framework, thematters the Company consider to be the major physical risks as well as the transition risks and opportunities
relating to climate change, and our response policies, can be found on the sustainability information page of
our website. Sustainability page: https://www.taxan.co.jp/en/csr/sdgs.html<Investment in Human Capital, Intellectual Property, etc.>
Led by the Social Working Group mentioned above, the Company worked to ensure diversity in the areas of“promotion of women’s activities” and “appointment of women, foreign nationals, and mid-career hires tomanagerial positions” under the theme of “promotion of diversity.” The Company has revised its rules andregulations to introduce a telework system on a permanent basis by reviewing work styles and developing anenvironment and systems targeted at childcare and family care under the theme of “balancing work–lifemanagement and enhancement of productivity.” Further, the Company was certified as a “2023 Health andProductivity Management Organization.”
Principle 4-1: Roles and Responsibilities of the Board (1)Supplementary Principle 4-1-1
The Board of Directors has established the Board of Directors Rules as a decision-making body for importantmatters that include the formulation of basic management policies and management plans, and decisions on
matters delegated by the General Meeting of Shareholders, in an effort to clearly define the matters to beresolved. In order to ensure timely management, the Board also has adopted an executive officer system andformulated the Rules on Work Authority to properly delegate authority. The Board assumes its roles of
appointing the executive officers to be delegated and overseeing the execution of their duties.
Principle 4-9: Independence Standards and Qualifications for Independent Outside Directors
In accordance with the Tokyo Stock Exchange standards on independence, the Company requires that there
be no special interests with the Company with regard to the election of outside directors. In addition, toreinforce the functions of the Board of Directors, outside directors are required to have extensive experienceand broad powers of judgment as corporate managers and the like.
Principle 4-10: Use of Optional Approach
Supplementary Principle 4-10-1<Approach to the Independence of the Composition of the Nomination and Compensation Committee, as wellas its Rights, Roles, etc.>
The Company has a Board of Auditors, and although outside directors do not make up a majority of membersof the Board of Directors, it has established the Nomination and Compensation Committee as a discretionary
body. Independent outside directors make up a majority of the members of the Nomination and Compensation
Committee, and an independent outside director serves as chair of the Committee. With regard to the
independence, objectivity, accountability, etc., of the functions of the Board of Directors concerned with thenomination and compensation of directors and delegation-based executive officers, as well as succession
plans, the Board of Directors receives appropriate advice and involvement from the Nomination andCompensation Committee and respects the Committee’s reports. In this way, the independence, objectivity,
and accountability of the functions of the Board of Directors are appropriately strengthened.
Principle 4-11 Preconditions for Ensuring the Effectiveness of the Board of Directors and Supervisory Board
Supplementary Principle 4-11-1-4-

The Company emphasizes ensuring diversity on the Board of Directors as a whole with different specialized
knowledge, experience, and so on with regard to nominating candidate directors so that the Board candemonstrate maximum effectiveness and efficiency.
The Company discloses a skill matrix for each director along with the career summaries of independent outside
directors and other information on our website and in the Notice of the 53rd Ordinary General Meeting of
Shareholders.
https://www.taxan.co.jp/en/ir/management/management_03.html#page1
Supplementary Principle 4-11-2
The Company discloses the materials regarding the concurrent positions of directors and Supervisory Board
members in its notice of convocation of the regular ordinary General Shareholders Meeting and securities
reports.
Further, directors and Supervisory Board members spend the time and perform the work necessary toappropriately fulfill their roles and responsibilities.
The Company discloses the status of attendance at Board of Directors meetings in its notice of convocation of
the regular ordinary General Shareholders Meeting, integrated reports, and securities reports.
Supplementary Principle 4-11-3
Every year, the Company analyzes and evaluates the effectiveness of the Board of Directors as a whole.
In terms of the method of analysis and evaluation, the Company administers self-assessment questionnaires
to all officers (including outside officers) with questions related to the effectiveness of the Board of Directors(such as the composition, operation, and functions of the Board of Directors, the provision of information tooutside officers, and governance systems). The results of the questionnaires are then analyzed and evaluated.
In the questionnaire conducted in March 2022, all officers replied that performance exceeded expected levels
across all areas. As a result, the Company has judged that the effectiveness of the Board of Directors as awhole has been ensured.
Based on the questionnaire conducted in April 2023, the Company has judged that a certain level of
effectiveness of the Board of Directors as a whole has been ensured, but challenges that we should further
address in the future, such as ensuring diversity, have also become apparent.
Principle 4-14: Director and Supervisory Board Member Training
Supplementary Principle 4-14-2
The Company provides necessary opportunities and supports the cost of acquiring knowledge relating to the
management, compliance, and so on necessary for directors and Supervisory Board members to fulfill theirroles and perform their responsibilities.
Principle 5-1: Policy on Constructive Dialogue with Shareholders● Fundamental Approach
The Company undertakes measures to engage in dialogue and other interactions with shareholders andinvestors in order to achieve continuous growth and raise corporate value in the medium to long term.
(1) Investor relations structures
Under the leadership of the president & COO, CFO and Investor Relations and Public Relations Department
handle dialogues with shareholders and investors.
(2) Methods of dialogue
The Company holds financial briefings for mass media, analysts, and institutional investors twice annually (inMay and November), as well as briefings on its business and strategy, and responds appropriately to requests
for individual visits and for information. For our shareholders and individual investors, information on
management policies, business details, results, videos of financial briefings for institutional investors, and otherinformation are posted on the Company’s website and the Company strives to enhance information
disclosures. In addition, the Company participates in large-scale briefings for individual investors and responds
appropriately to individual inquiries.

-5-(3) Internal feedback
Feedback regarding the details of dialogues with shareholders and investors is provided by the officers
responsible for management divisions and Investor Relations and Public Relations Department to the Board of
Directors and other relevant divisions as necessary.
(4) Insider trading and quiet periods
The Company does not divulge insider information during dialogues with shareholders and investors. The
Company has established Rules on Internal Information Management and Restriction of Insider Trading andstrives to manage insider information. The periods from the last day of each quarterly financial period until theannouncement of financial results for that period are designated quiet periods and dialogue and information
disclosures are restricted during those periods.
Action to Implement Management that is Conscious of Cost of Capital and Stock Price
1. Current Situation
The Company has established its Medium-Term Management Plan 2024 for the three-year period from thefiscal year ended March 2023 to the fiscal year ending March 2025. Under its basic policies – “further
reinforcement of profitability,” “reinforcement of management base,” “creation of new businesses,” and“promotion of SDGs management” – the plan sets management targets for the fiscal year ending March 2025,
the final fiscal year of the plan, for KPIs comprising net sales, operating income, and ROE, as follows.
Management Targets for FY2025/3
750 billion yen
Net Sales

Organic growth: 600 billion yen
Including new M&As: 150 billion yen

Operating Income

30 billion yen or higher

ROE

stable 10％ or higher

In the fiscal year ended March 2023, the first fiscal year of the plan, the Company continued to set new record
highs for net sales and each level of profit while also recording its highest-ever ROE, which indicates capitalefficiency. This was partly due to the tailwind provided by global supply shortages of semiconductors andelectronic components. Against the backdrop of this strong performance, the announcement of the financial
results for the fiscal year ended March 2022 sparked a clear upward trend in the Company’s stock price, which
had previously stagnated at discount levels. Since February 2023, the Company’s PBR has maintained a stablelevel of over 1.0.

（billion yen）

FY2020/3

FY2021/3

FY2022/3

FY2023/3

FY2024/3(Results)(Results)(Results)(Results)(Forecasts)

Net Sales

443.6

422.3

495.8

608.0

550.0

Operating Income

10.0

11.4

20.9

32.2

25.0

5.8

11.3

15.4

23.0

18.0

7.6

13.5

15.7

19.6

13.3

Stock prices (yen)

1,702

2,480

3,255

5,010

-

PBR (times)

0.58

0.75

0.87

1.05

-

Profit attributable toowners of parent
ROE (%)

Note: Stock price and PBR are calculated based on the closing value on the final day of each fiscal year.
2. Views on ROE
ROE can be divided into three components: net income margin, financial leverage, and total asset turnover. As
shown below, the Company has set a “stable 10% or more,” with a consciousness of the cost of shareholders’equity, as its management target ROE under the Medium-Term Management Plan. This is premised on the
Company’s view that it will be able to achieve an ROE of between 12% and 15%, estimated from its mostrecent performance and future outlook.
-6-

The most recent results for ROE have easily exceeded the Company’s estimated cost of shareholders’ equity,which is approximately 7% to 8%.
FY2020/3

FY2021/3

FY2022/3

FY2023/3

FY2025/3(Results)(Results)(Results)(Results)(Outlook)

Net profit margin (%)

1.3

2.7

3.1

3.8

3.0~3.5

Financial leverage (times)

2.7

2.6

2.6

2.4

2.0~2.5

Total asset turnover (turns)

2.1

1.9

1.9

2.2

Around 2.0

ROE (%)

7.6

13.5

15.7

19.6

12.0~15.0

6.6

8.1

7.5

8.1

10.0

<Reference>
Cost of equity(%)
3. Future Initiatives
The Company will steadily implement the measures formulated under Medium-Term Management Plan 2024,
further strengthening and accelerating these measures to continue to achieve robust results. This will enable it
to receive a proper valuation of its business growth potential and earnings potential from the stock market andcontinue to improve its PBR. Its main measures are the following four points.
Measure (1): Steadily implement Medium-Term Management Plan 2024
The Company will engage in maintaining and improving business growth and profitability through the steady
implementation of the various measures established in the Medium-Term Management Plan, aiming to achieve
the management targets in the final fiscal year of the plan.
Measure (2): Enhance shareholder satisfaction
The Company will engage in enhancing shareholder satisfaction through the steady implementation of theshareholder return policy established under the Medium-Term Management Plan (1. consolidated dividend
payout ratio of 25–35% as a measure of stable dividends, 2. pay special dividends as performance-linked
dividends, and 3. flexibly and strategically implement share repurchases).
Under the next medium-term management plan, the Company will further deepen discussions aimed atfurther advancing and enhancing shareholder return measures.
Measure (3): Promote sustainability management
The Company has engaged in CSR and ESG activities for some time. The SDGs Committee, chaired by the
President & COO, will play a central part in deepening these activities and promoting sustainability
management Group-wide.
In the fiscal year ending March 2025, specifically, the Company will engage in quantifying greenhouse gas
emissions and formulating reduction targets, and aim to enhance ESG evaluation through external institutions
such as the TCFD and CDP.
Measure (4): Maintain and further strengthen proactive IR activities
The Company will further deepen the regular communication of management information that it has
implemented for some time, centered on the Investor Relations & Public Relations Department, which is asection specializing IR. These activities include company briefing sessions, financial results briefings, and otherIR events for investors, as well as communication through the Company’s IR site, Integrated Report, andmedia (economics journals and specialist magazines). In addition, the President & COO will play a central rolein energetically undertaking constructive dialogue with shareholders and investors, including those overseas.
The opinions and other comments received through these IR activities will be shared in meetings of the Boardof Directors and utilized, including in the review of management strategy.

-7-

2. Capital Structure
Foreign shareholding ratio

At least 20% and less than 30%

Status of Major Shareholders
Number of Shares Held

Ratio (%)

The Master Trust Bank of Japan, Ltd. (Trust Account)Name2,824,700

10.75

OKOZE CO., LTD

1,840,000

7.00

Custody Bank of Japan, Ltd. (Trust Account)

1,801,000

6.86

KAGA ELECTRONICS Employee Shareowners Association

1,604,434

6.11

MUFG Bank, Ltd.

1,137,634

4.33

Mizuho Bank, Ltd.

950,334

3.62

Isao Tsukamoto

730,645

2.78

THE BANK OF NEW YORK MELLON 140044

540,360

2.06

Mitsubishi Electric Corporation

500,300

1.90

Nippon Life Insurance Company

459,394

1.75

Existence of controlling shareholder (other than parent company)―――

Existence of parent company

None

Supplementary Explanation
1) Numbers of shares held are as of November 30, 2023.
2) The Company holds 2,431,861 shares of treasury stock, but the Company is not included in the major
shareholders listed above.
3) Shareholding ratios are calculated with treasury stock excluded.

3. Company Attributes
Listing stock market and market section

Prime Market

Fiscal year-end

March

Business type

Wholesale

Number of Employees (consolidated) as of the end

1,000 or moreof the previous fiscal year
Sales (consolidated) as of the end of the previous

100 billion yen to less than 1 trillion yen

fiscal year
Number of consolidated subsidiaries as of the end

50 to less than 100of the previous fiscal year

4. Policy on Measures to Protect Minority Shareholders when Conducting Transactions and the likewith Controlling Shareholder―――

5. Other Special Circumstances which may have a Material Impact on Corporate Governance
None.

-8-

II. Management Decision-Making, Management Organizations for Execution and Supervision, andStatus of other Corporate Governance Systems
1. Matters Relating to Organizational Structure, Operations, etc.
Organizational format

Company with an Audit &Supervisory Board

Directors
Number of directors specified in Articles of Incorporation

20

Term of office of directors specified in Articles of Incorporation

1 yearChairperson of the board

President & COO

Number of directors

6

Appointment of outside directors

Outside directors are appointed

Number of outside directors

3

Number of outside directors designated as independent directors

3

Relationships with the Company (1)Name
Susumu Miyoshi
Akira Tamura
Noritomo Hashimoto

Affiliation
Formerly affiliated withanother company
Formerly affiliated withanother company
Formerly affiliated withanother company

Relationship with the Company*
a

b

c

d

e

f

g

h

i

j

△
△
△

* Categories for Relationship with the Company* Marked with ○ if the director currently falls or has recently fallen under the categoryMarked with △ if the director fell under the category in the past
* Marked with ● if a close relative of the director currently falls or has recently fallen under the categoryMarked with ▲ if a close relative of the director fell under the category in the pasta. Executive of the Company or subsidiary of the Company
b. Executive or non-executive director of the parent company of the Company
c. Executive of a fellow subsidiary of the Company
d. Person with the Company as a major client or supplier or an executive thereof
e. Major client or supplier of the Company or an executive thereof
f. Consultant, accountant, or legal professional who receives a large amount of monetary consideration orother property from the Company other than compensation as an officer of the Company
g. Major shareholder of the Company (or an executive of a major shareholder if the shareholder is a legal entity)
h. Executive of a client or supplier of the Company (which does not correspond to any of d, e, or f) (thedirector himself/herself only)
i. Executive of a company with which the Company mutually appoints outside officers (the director
himself/herself only)
j. Executive of a company or organization that receives donations from the Company (the director
himself/herself only)
k. Other-9-kRelationships with the Company (2)Name

Independent

Supplementary Explanation

Officerof Applicable Items
The Company executed anadvisory agreement with Susumu
Miyoshi in August 2010, but theagreement was terminated when
he was The Company requests
that Mr. Miyoshi be elected as an
outside director so that he canreinforce the functions of theBoard of Directors by reflecting
his extensive appointed director.

Susumu Miyoshi○

Akira Tamura○

The Company executed anadvisory agreement with Akira
Tamura in July 2011, but theagreement was terminated when
he was appointed director.
The Company engages inpurchase and sale transactions
and other transactions with
Sohgo Security Services Co.,
Ltd., of which Mr. Tamura was an
executive until June 2011, but
the amounts of the transactions
account for a very small
percentage of each companyʼssales (less than 0.01% in thefiscal year ended March 2023).

- 10 -

Reasons for Appointment
Mr. Miyoshi has a wealth ofexperience and a wide range ofknowledge as a top
management, and the Company
requests that he be elected as an
outside director in the
expectation that he will reinforce
the functions of the Board of
Directors by providing
supervision and advice on overallmanagement based on thisknowledge.
Mr. Miyoshi was formerly an
executive of a trading partner of
the Company, but he has
resigned from that position, andthe Company has determinedthat there is no risk of affecting
the determinations ofshareholders and investors or
conflicts of interests with generalshareholders. Accordingly, he
has been designated as anindependent officer.
Mr. Tamura has a wealth ofexperience as a top
management and a high levelof knowledge cultivated inseveral companies, and theCompany requests that he beelected as an outside director in
the expectation that he willreinforce the functions of theBoard of Directors by providing
supervision and advice on overallmanagement based on thisknowledge, particularly on
management strategy andbusiness administration.
Mr. Tamura was formerly an
executive of a trading partner of
the Company, but he has
resigned from that position andthe transaction amounts are verysmall(less than 0.01%), and theCompany has determined that
there is no risk of affecting thedeterminations of shareholders
and investors or conflicts ofinterests with generalshareholders. Accordingly, he
has been designated as anindependent officer.

Name

Independent

Supplementary Explanation

Officerof Applicable Items
The Company executed anadvisory agreement with
Noritomo Hashimoto in July
2016, but the agreement was
terminated when he wasappointed director.
The Company engages inpurchase and sale transactions
and other transactions with
Mitsubishi Electric Corporation ofwhich Mr. Hashimoto wasan executive until June 2016,
but the amounts of thetransactions account for a verysmall percentage of eachcompanyʼs sales (less than
0.1% in the fiscal year ended
March 2023).

Noritomo○

Hashimoto

Existence of a discretionary committee

Reasons for Appointment
Mr. Hashimoto has a wealth ofexperience and a high level ofknowledge as a top
management, and the Company
requests that he be elected as
an outside director in the
expectation that he will reinforce
the functions of the Board of
Directors by providing
supervision and advice on overallmanagement based on thisknowledge, particularly on
management strategy andpersonnel affairs.
Mr. Hashimoto was formerly an
executive of a trading partner of
the Company, but he has
resigned from that position andthe transaction amounts are verysmall(less than 0.06%), and theCompany has determined that
there is no risk of affecting thedeterminations of shareholders
and investors or conflicts ofinterests with generalshareholders. Accordingly, hehasbeen designated as anindependent officer.

Yes

corresponding to a nominating or remunerationcommittee
Status of establishment of discretionary committees, composition of committee members, and attributes of
the committee chairman (chairperson)

Name of thecommittee
Discretionary
committee
equivalent to
the Nomination
Committee
Discretionary
committee
equivalent totheCompensation
Committee

All
Full-timecommittee committee
members members(persons) (persons)Internal
directors(persons)

outsidedirector(persons)

External
experts(persons)

Others(persons)

Committee
chairman(chairperson)

Nomination
andCompensation
Committee

5

2

2

3

0

0

outsidedirector

Nomination
andCompensation
Committee

5

2

2

3

0

0

outsidedirector

Supplementary Explanation- 11 -

Overview of the Nomination and Compensation Committee
・Purpose of establishment
The voluntary-based Nomination and Compensation Committee has been established for the purpose ofstrengthening the supervisory function of the Board of Directors and enhancing corporate governance systems
by ensuring transparency and objectivity of evaluation and decision-making processes relating to nominationand compensation, etc., of directors, auditors, and delegation-based executive officers.
・Roles and Activities of the Nomination and Compensation Committee
In response to inquiries from the Board of Directors, the Committee deliberates and reports to the Board of
Directors on matters related to the appointment and dismissal of directors, corporate auditors, and delegationbased executive officers, appointment and dismissal of directors with titles, compensation of directors,

corporate auditors, and delegation-based executive officers, and other important management issues that theBoard of Directors deems to be necessary.
In the fiscal year ended March 2023, the Nomination and Compensation Committee held 5 times, attended by
100% of the committee members. The deliberations mainly focused on the “officer structure,” “body design,”“appointment of executive officers,” and “performance-linked remuneration.”・Structure of the Nomination and Compensation Committee
The Committee shall comprise 3 or more directors appointed by the Board of Directors, a majority of whomshall be independent outside directors. The Committeeʼs chairperson shall be appointed from among theCommittee members who are independent outside directors.
The current composition of the Committee is as follows.
Isao Tsukamoto, Representative Director, Founder & CEO / Ryoichi Kado, Representative Director, President &COO / Noritomo Hashimoto, Outside Director (Chair) / Susumu Miyoshi, Outside Director / Akira Tamura,Outside Director
Supervisory Board Members
Whether the company has a Supervisory Board

Established

Number of Supervisory Board members specified in

４

Articles of Incorporation
Number of Supervisory Board members

４

Status of cooperation among Supervisory Board members, accounting auditors, and internal audit department
The Company has entered into an audit agreement with PricewaterhouseCoopers ARATA LLC and undergoes
statutory audits. The accounting auditors regularly propose audit plans and report the results of year-end
accounting audits and quarterly reviews to the Supervisory Board members, and exchange with them opinions
on important considerations. In addition, the accounting auditors and Supervisory Board members exchange
information and opinions on any other matter as and when needed to ensure mutual cooperation.
The Company established an Audit Office as an internal audit organization. The Audit Office conducts internal
audits in cooperation with Supervisory Board members. Specifically, the Supervisory Board members and the
Audit Office conduct prior consultations regarding audit plans, and the Audit Office provides periodic reports on
the audit results to the Supervisory Board members. The Supervisory Board requests reports from the Audit
Office and engages in other collaboration as necessary.
Appointment of outside Supervisory Board members

Outside Supervisory Board
members are appointed

Number of outside Supervisory Board members

3

Number of outside Supervisory Board members
designated as independent Supervisory Board members
Relationships with the Company (1)- 12 -

3

Name

Relationship with the Company*

AffiliationaSusumu Kitsunai

Certified public accountant

Yoichi Sato

Attorney

Kyoko Oyanagi

Other

b

c

d

e

f

g

h

i

j

k

l

○

m

* Categories for Relationship with the Company* Marked with ○ if the Supervisory Board member currently falls or has recently fallen under the category,marked with △ if the member fell under the category in the past
* Marked with ● if a close relative of the Supervisory Board member currently falls or has recently fallen
under the category, marked with ▲ if a close relative of the Supervisory Board member fell under the
category in the pasta. Executive of the Company or subsidiary of the Company
b. Non-executive director or accounting counselor of the Company or subsidiary of the Company
c. Executive or non-executive director of the parent company of the Company
d. Supervisory Board member of the parent company of the Company
e. Executive of a fellow subsidiary of the Company
f. Person with the Company as a major client or supplier or an executive thereof
g. Major client or supplier of the Company or an executive thereofh. Consultant, accountant, or legal professional who receives a large amount of monetary consideration or otherproperty from the Company other than compensation as an officer of the Company
i. Major shareholder of the Company (or an executive of a major shareholder if the shareholder is a legal entity)
j. Executive of a client or supplier of the Company (which does not correspond to any of f, g, or h) (the Supervisory
Board member himself/herself only)
k. Executive of a company with which the Company mutually appoints outside officers (the Supervisory Board
member himself/herself only)
l. Executive of a company or organization that receives donations from the Company (the Supervisory Board member
himself/herself only)
m. Other

Relationships with the Company (2)Name

Independent
Officer

Supplementary
Explanationof Applicable Items

Susumu Kitsunai○――

Yoichi Sato○――
- 13 -

Reasons for Appointment
Mr. Kitsunai has extensive knowledge ofand experience in corporate management,
and as a certified public accountant,finance and accounting and is expected toprovide advice from multifaceted
perspectives based on his viewpoint as aprofessional. The Company
believes he can appropriately perform
audits and supervision of the Company andappointed Mr. Kitsunai as an outside
Supervisory Board member.
In addition, the Company has determinedthat Mr. Kitsunai can serve as a significant
curb on decision-making with regard to thefairness and transparency of tax related
management policies from his perspective
as a certified public accountant and canmaintain objectivity and neutrality inmanagement monitoring functions basedon his extensive experience and knowledge
as a professional, and accordingly,
nominated him as an independent director.
Mr. Kitsunai does not have any special
interests in the Company, and theCompany has determined that there is norisk of conflicts of interest with generalshareholders.
Mr. Sato has many years of advanced legal
experience as a judge and attorney, andKyoko Oyanagi○

Kyoko Oyanagi is therepresentative for
Sakura Management
Office, and although theCompany entered anadvisory agreementwith Sakura
Management Office inJune 2004, the amountof said transaction
accounts for a verysmall percentage ofsales of Sakura
Management Office(less thanapproximately 3% in
the fiscal year ended
March 2023).

Independent Officers
Number of independent officers

6- 14 -

considering his knowledge and experience
as a professional, the Company believes hecan appropriately perform audits andsupervision of the Company and appointed
him as an outside Supervisory Board
member.
In addition, the Company has determinedthat Mr. Sato can serve as a significant
curb on decision-making with regard to thefairness and transparency of compliance,
legal risks, and management policies fromhis perspective as a legal professional andcan maintain objectivity and neutrality inmanagement monitoring functions basedon his extensive experience and knowledge
as a professional, and accordingly,
nominated him as an independent director.
Mr. Sato also serves as an attorney (ofcounsel) at Alpha Partners Law Offices.
Although the company has entered into alegal advisory contract with Alpha Partners
Law Offices, because Mr. Sato is not apartner attorney of the law firm and is not
involved in the management of the law
firm, the company deems that he does nothave any special interest in the company
and that there is no risk of a conflict ofinterest with general shareholders.
Ms. Oyanagi possesses extensive
knowledge and experience in corporate
management and as a labor and social
security attorney, and to ensure thesoundness of the Company in reforming
work styles, investing in human capital,and promoting womenʼs activities, theCompany has elected her as an outside
auditor, as it is believed that she willconduct accurate audits and oversight froma professional and multifaceted
perspective.
In addition, the Company has determinedthat she will be able to ensure objectivity
and neutrality in management monitoring
functions based on her extensive
knowledge and experience as aprofessional, and it is expected that she
will be able to serve as a significant curb
on decision-making with regard to thefairness and transparency of social security,labor, etc., from the perspective of a laborand social security attorney. Accordingly, it
has nominated her as an independent
officer.
Ms. Oyanagi also serves as arepresentative of Sakura Management
Office. Although the Company has enteredan advisory agreement with Sakura
Management Office, the value of saidtransaction is minimal. The Company has
determined that there is no risk of affecting
the determinations of shareholders andinvestors or conflicts of interests withgeneral shareholders. Accordingly, she has
been designated as an independent officer.

Other matters relating to independent officers
All outside officers that meet the qualifications for independent officer have been designated as independent
officers.

Incentives
Implementation status of policies relating to granting

Introduction of performance-linked remuneration

directors incentives

program and other matters

Supplementary explanation of this matter
Remuneration of the directors of the Company (excluding outside directors) comprises fixed remuneration,
which is paid at a fixed amount, performance-linked remuneration and stock-based remuneration. For details,
please refer to “II. Management Decision-Making, Management Organizations for Execution and Supervision,and Status of other Corporate Governance Systems, Director Remuneration, Policy on determining
remuneration amounts or the method of calculating those amounts.”
Recipients of stock options
Supplementary explanation of this matter―――

Director Remuneration
Disclosure of the remuneration of individual directors

Some items are disclosed individually

Supplementary explanation of this matter
The Annual Securities Report for the Year Ended March 31, 2023 indicates the following amounts ofremuneration paid to directors. In accordance with laws and regulations, amounts are disclosed for somedirectors individually in the report.
Total amounts of remuneration, etc.
7 directors: Amount paid 998 million yen(291 million yen as fixed remuneration, 666 million yen as performance-linked remuneration,

40 million yen as restricted stock compensation)
4 outside directors : Amount paid 40 million yen
Total remuneration, etc. paid to persons who received 100 million yen or more in remuneration, etc.
Isao Tsukamoto:298 million yen paid

Ryoichi Kado:

209 million yen paid

Shinsuke Takahashi: 121 million yen paid
Shintaro Kakei:

121 million yen paid

Eiji Kawamura:

106 million yen paid
The Company has such as policy

Existence of a policy on determining remuneration
amounts or the method of calculating those amounts

Details of the disclosure of the policy on determining remuneration amounts or the method of calculating thoseamounts- 15 -

・Basic policy
The Company's basic policy is to set the remuneration of directors at an appropriate level based on theirrespective responsibilities in determining the remuneration of individual directors as a remuneration systemthat is linked to shareholders' profits so that it can fully function as an incentive to secure and retain excellent
human resources who will implement the realization of the Company's management philosophy andcontinuously improve corporate value. Specifically, remuneration for executive directors consists of fixed
remuneration, which is paid at a fixed amount, performance-linked remuneration and stock-based
remuneration, while remuneration for outside directors, who are responsible for supervisory functions, consistsof fixed remuneration only in consideration of their responsibilities.
Furthermore, the content of remuneration for directors is designed to be reasonable, objective and transparent
in terms of both the content of remuneration and decision-making procedures.
・Policy regarding the determination of the amount of remuneration, etc. for each individual in fixed
remuneration
The fixed remuneration for directors of the Company shall be fixed monthly remuneration in cash, which shallbe determined in accordance with the position and responsibilities, etc., while taking into consideration thelevels of other companies, the business performance of the Company, and the level of employee salaries, andreviewing the remuneration as appropriate in a comprehensive manner.
・Policy for determining the details of performance-linked remuneration, etc. and non-monetary remuneration,etc. and the method for calculating the amount or number of such remuneration
Performance-linked remuneration, etc. is monetary remuneration reflecting performance indicators in order toraise awareness of the need to improve performance for each fiscal year, and an amount calculated inaccordance with the degree of achievement of the target values for operating income, ordinary income and net
income attributable to owners of parent for each fiscal year is paid as a bonus at a specified time. The target
performance indicators and their values are based on the profit-oriented management set forth in the Medium
Term Management Plan, and will be reviewed in accordance with changes in the business environment,
respecting the report of the Nomination and Compensation Committee. The amount of performance-linked
remuneration is based on the consolidated business results.
Non-monetary remuneration, etc. is granted at a set time after the end of the fiscal year as restricted stockcompensation with a transfer restriction period of up to 20 years, which is designed to provide incentives forthe sustainable enhancement of the Company's corporate value and to promote further value-sharing withshareholders through the holding of the Company's shares. The number of shares to be granted is determinedin consideration of the position, responsibilities, stock price, etc., and with respect to the report of theNomination and Compensation Committee.
・Policy on determination of the ratio of the amount of monetary remuneration, the amount of performancelinked remuneration, etc., or the amount of non-monetary remuneration, etc., to the amount of individual
remuneration, etc., of directors
The ratio of type of remuneration for directors (excluding outside directors) is determined based on the reportof the Nomination and Compensation Committee, taking into consideration the position, responsibilities, andtrends in the remuneration levels of other companies with similar business scale as the Company.
・Matters related to the decision policy concerning the details of remuneration, etc. for individual directors
Based on the delegated resolution of the Board of Directors, Representative Director, Founder & CEO and
Representative Director, President & COO are delegated the authority to determine the amount of fixed
remuneration for each director, the allocation of performance-linked remuneration (bonuses, etc.) based on
the performance of the business for which each director is in charge, and the number of shares to be allottedto each individual in the form of restricted stock compensation.
The Board of Directors consults the Nomination and Compensation Committee on the draft and obtains its
report to ensure that such authority is properly exercised by the Founder & CEO and President & COO, and theFounder & CEO and President & COO, who have received the above delegation, make decisions with respect tothe content of this report.
- 16 -

・Matters concerning the method of decision when the decision on the details of remuneration, etc. isdelegated to a director or other third party
The Representative Director, Founder & CEO and Representative Director, President & COO determine thespecific details of the amount of remuneration, etc. and the number of shares to be allotted to each individual
based on the delegated resolution of the Board of Directors. The Board of Directors shall take measures tomake decisions after consultation and reporting by the Nomination and Compensation Committee to ensurethat such authority is properly exercised by the Founder & CEO and President & COO.
The Founder & CEO and President & COO determine the details of individual remuneration for each director
by fully respecting the advice and report of the Nomination and Compensation Committee, while taking into
consideration the Company's overall performance, stock price, the role of each director, the impact of eachdirector on the Company's performance and other circumstances.
・Matters related to the resolution of the General Meeting of Shareholders regarding the remuneration of
directors and Supervisory Board members
The maximum amount of remuneration for directors was resolved at the 54th General Meeting of
Shareholders held on June 29, 2022 to be no more than 1,000 million yen per year (of this amount, up to
100 million yen is for outside directors; salaries for services as employees are not included). The number of
directors as of the close of this General Meeting of Shareholders was 11 (including 4 outside directors).
In addition, at the 50th Ordinary General Meeting of Shareholders held on June 28, 2018, it was resolvedthat the annual amount of monetary remuneration claims to be paid to directors (excluding outside directors)
for the granting of restricted stock shall be 100 million yen or less, separately from the above maximum
amount of remuneration. The number of directors (excluding outside directors) as of the close of this General
Meeting of Shareholders was 8.
At the 27th Ordinary General Meeting of Shareholders held on June 29, 1995, it was resolved that the
maximum amount of remuneration to be paid to Supervisory Board members shall be 60 million yen per
year. The number of Supervisory Board members as of the close of this General Meeting of Shareholders was
4. The remuneration for Supervisory Board members is determined through discussions among theSupervisory Board members.
Support system for outside Directors (outside Supervisory Board members)
The Company established the Board of Directors Administrative Office to the Board of Directors toappropriately convey information by distributing materials relating to Board meeting agenda items to all
directors, including outside officers prior to Board meetings, and providing supplementary explanations to
outside officers as necessary. The Office also prepares a schedule for ordinary meetings of the Board of
Directors for the following fiscal year by the end of each fiscal year and informs all directors including outside
officers.
Status of Resignation by President & COO and Other Positions
Names and Other Information of Consultants and Advisors who were Formerly President & COO or in other
Positions

Name

Tomohisa
Tsukamoto

Title or
Rank

Details of Duties
Operational support

Advisorfor the overallbusiness of the GroupWork Format andConditions(Full-time, part-time, forcompensation or gratis, etc.)
Part-time
With compensation

Total Number of Consultants and Advisors who were
Formerly President & COO or in other Positions:

1

Other matters―――- 17 -

Date of
Resignation
by President
andOther Positions

Term in
Office2014/4/1

1 year2. Matters relating to functions such as business execution, audits and supervision,
nomination, and remuneration decisions (overview of current corporate governancesystems)(1) Board of Directors
The Board of Directors comprises 6 directors in total including 3 outside directors. In principle, the Board
meets once each month and holds extraordinary meetings when necessary.
Board makes deliberates and decisions on matters specified in laws and regulations, the Articles ofIncorporation, and other internal rules, reports on the status of the execution of business and other necessary
information, and supervises the execution of duties by directors. Supervisory Board members attend Board of
Directors meetings and actively express their opinions.
(2) Supervisory Board
The Supervisory Board comprises 4 members including 3 outside Supervisory Board members. In principle,
the Supervisory Board meets once each month and holds extraordinary meetings when necessary.
(3) The Group Management Headquarters Meeting
The Company has established the Group Management Headquarters Meeting, which is convened by the
Representative Director, President & COO as a body to deliberate and decide on important executive policies
related to Group management. In principle, the Conference meets once each week. Also, advice is requested
from the Representative Director, Founder & CEO, as necessary.
(4) Management Meeting
The Company established a Management Meeting, which is convened by the Representative Director, President& COO to coordinate Group management, confirm policies, and so on. In principle, the Council meets once
each month.
(5) Nomination and Compensation Committee
Please refer to Section II: Management Decision-Making, Management Organizations for Execution andSupervision, and Status of other Corporate Governance Systems, Directors, Existence of a discretionary
committee corresponding to a nominating or remuneration committee, and the Supplementary Explanation inthis report.
(6) CSR Promotion Committee
The CSR Promotion Committee is chaired by the Representative Director, President & COO. The Company
established Information Disclosure Committee, Risk Management Committee, and Compliance Committee
and Personal Information Management Committee as subordinate organizations. These organizations work tonormalize decision-making and the execution of business operations throughout the Group.
(7) SDGs Committee
The SDGs Committee is chaired by the Representative Director, President & COO and its members consist of
the officers overseeing each division, etc. The Company has created working groups based on the themes of“Environment,” “Society,” and “Governance,” each reporting directly to the SDGs Committee. The activities of
the working groups include formulating policies and measures related to ESG issues, setting goals, andmonitoring the status of progress.
(8) Audit Office
The Audit Office is under the direct authority of the Representative Director, President & COO. It works incollaboration with the Administration Headquarters, etc. to audit the validity and use of management
resources, as well as the status of compliance with laws, regulations, and internal rules, in relation to allbusiness activities, including those at Group companies. The Company is also conducting evaluations of ourinternal control systems in response to the enforcement of the Financial Instruments and Exchange Act.
- 18 -

(9) Execution of business
The allocation of duties to directors and executive officers are determined by decisions of the Board of
Directors, and each carries out their duties.
(10) Audit and supervision of directors by Supervisory Board members
The Company established and implements Supervisory Board Member Audit Standards.
(11) Status of audits
Audits in the Company are planned and carried out by the 4 Supervisory Board members.
The Company also undergoes audits by PricewaterhouseCoopers Arata LLC.
(12) Nomination and Compensation Decisions
Concerning nomination, please refer to Section I: Basic approach to corporate governance, capital structure,corporate attributes, and other basic Information, Disclosure Pursuant to the Principles of the Corporate Governance
Code, Principle 3-1: Enhancement of Information Disclosures of this report.
Concerning compensation decisions, please refer to Section II: Management Decision-Making, Management
Organizations for Execution and Supervision, and Status of other Corporate Governance Systems, Director
Remuneration of this report.
(13) Limited Liability Agreements
The Company has entered into contracts with directors (excluding executive directors, etc.) and outside corporate
auditors based on the provisions of the Companies Act, Article 427, Paragraph 1 to limit their liability for damages
under Article 423, Paragraph 1 of the said Act. The maximum amount of liability for damages based on thisagreement shall be the amount stipulated in laws and regulations. Furthermore, this limitation of liability shall only
be recognized when the execution of duties that was the cause of the liability of the director or outside corporate
auditor was performed in good faith and without gross negligence.

3. Reasons for the selection of the current corporate governance system

With regard to systems for supervising directors, auditing the status of the execution of duties by directors,
and so on, the Company believes that the Board of Director functions are reinforced by reflecting in the
Companyʼs management the opinions of the 3 outside directors presented from an independent perspective.
In addition, the Supervisory Board members are expressly required by internal rules to participate in Board of
Directors meetings regularly meet with the accounting auditors, and engage in other activities, and a systemof supervision, auditing, and curbs relating to management is established by the 4 Supervisory Board
members. Management supervisory functions are performed from a third-party perspective through theappointment of 3 outside Supervisory Board members, and the Company believes that the governancesystems are functioning properly.

- 19 -

III. Implementation Status of Policies Relating to Shareholders and Other Stakeholders
1. Status of initiatives to make general shareholders meetings more active and facilitate theexercise of voting rights
Supplementary Explanation
Electronic exercising of voting rights

The Company introduced electronic exercising ofvoting rights to create an environment that facilitates
the exercise of voting rights by shareholders in orderto reflect the intentions of a greater number ofshareholders.

Participation in an electronic voting platform and

The Company participates in an electronic voting

other measures to enhance the voting

platform to create an environment that facilitates theenvironment for institutional investors

exercise of voting rights by domestic and overseas
institutional shareholders in order to reflect theintentions of a greater number of shareholders.

Provision of notifications of convocation

The Company prepares notifications of convocation in(summaries) in English

English and posts them on the Companyʼs website.

Other

The Company strives to create convocation notices
that are easy for shareholders to read and understandby using graphs and photographs, colorization, UD
fonts, and some convocation notices that arecompatible with PCs and smartphones.

2. Status of investor relations activities
Existence ofSupplementary Explanation
Preparation and publicationof disclosure policy

Periodic briefings forindividual
shareholders

The Companyʼs disclosure policy is posted on its
website.
Disclosure policy: The Company conducts investor
relations activities to provide timely and appropriate
information to shareholders and investors. When
disclosing information, the Company releases material
facts in compliance with the timely disclosure rules of
the Tokyo Stock Exchange and promptly posts therelevant information on its website. In addition, theCompany, at its discretion, also distributes materials andposts information that it believes to be valid on its
website in a timely manner to increase understanding of
Kaga Electronics.
The Company holds "briefing meetings for individual
investors" which are conducted by the executive officer
in charge of investor relations. More details, including
materials from the day of the event, are posted on the
Company's website.
●”Briefing meetings for individual investors” on the
Companyʼs IR site (Japanese only):https://www.taxan.co.jp/jp/ir/event/event_02.html
In the fiscal year ended March 2023, the following
sessions are organized.
1) February 22, 2022 (held in Tokyo)- 20 -

explanations by arepresentative-None

* The proceedings of the meeting may be viewed fromthe site below (Daiwa Investor Relations Co., Ltd.) with alink posted on the Company's IR site (Japanese only).
http://www1.daiwair.jp/qlviewer/ecast/2202228154idzg4pya/index.html
2) December 1st, 2023 (held in Osaka)* The proceedings of the meeting may be viewed fromthe site below (Daiwa Investor Relations Co., Ltd.) with alink posted on the Company's IR site (Japanese only).
https://www1.daiwair.jp/qlviewer/ecast/2212018154chayzm7/index.html
3) May 26, 2023 (held on online)

Regular briefings foranalysts
and institutional investors

Additionally, the head of Investor Relations and Public
Relations Department visits branch offices of securities
companies to give individual investors presentation onsuch themes as the Company's profile and its growthstrategy.
In the fiscal year ended March 2023, however, theCompany refrained from such activities due to theoutbreak of the coronavirus.
The Company holds "analyst and institutional investor
financial briefings", which are organized subsequent tothe announcement of interim and year-end financial
results, where financial results and management
strategy are presented by Representative Director,
President & COO and by the executive officer in chargeof investor relations.
Additionally, IR briefing sessions are also organized as
appropriate for individual business projects. The
presenter is, in principle, President & COO.
In the fiscal year ended March 2023, the following
sessions are organized.
<Earning Presentations>
May 26, 2022: Earnings presentation for the fiscal year
ended March 2022
November 24, 2022: Earnings presentation for the firsthalf of the fiscal year ended March 2023
<Business strategy presentations>
March 30, 2022: EMS business strategy presentationand virtual factory tour
*The proceedings of the financial results briefings may
be viewed by video streaming through the Company's
IR site, along with presentation materials and "Main
Q&A" notes. In addition, presentation materials for pastbusiness briefings are posted on the Company's IR
website.
Earnings presentations:
https://www.taxan.co.jp/en/ir/event/event_01.html
Business strategy presentations:
https://www.taxan.co.jp/en/ir/event/event_04.html- 21 -Yes

Periodic briefings tooverseas investors

For investors in Europe and North America, theRepresentative Director, President & COO visit
shareholders and investors to engage in constructive
dialogue to enhance corporate value. In the fiscal year
ended March, 2023, the Company conducted a visit toinvestors in the U.K. in February.

Yes

For Asia, the head of Investor Relations & Public
Relations Department engages in dialogues with thediverse range of institutional investors on such subjects
as the Company's management policy, financial results
and growth strategy. In the fiscal year ended March
2023, the Company conducted visits to investors in
Singapore and Taiwan in March.
In addition, the Company meets with overseas investors
on an as-needed basis through individual meetings via
the Internet and teleconferences, in addition to visits to
the Company.
Posting of investor relationmaterials on the Company
websiteAside from annual financial reporting, the Company
started publishing Integrated Report from the fiscal year
ended March 2019 which marks its 50th anniversary,with the aim of communicating not only financial but
also non-financial information of value to the investors.
Through integrated reporting, the Company seeks toprovide extensive IR resources and information by
including messages from the top management on
corporate philosophy, business strategy aimed atsustainable growth, overseas expansion as a global firm,
as well as ESG information relating to corporate
governance and sustainability initiatives, etc.
* Integrated Report:
https://www.taxan.co.jp/en/ir/ir_library/library_05.html
In addition to integrated reports, various other materials
are posted on the Company's IR site including earnings
releases, earnings presentation materials, annual
reports and Group reports (business reports).
* IR Library: https://www.taxan.co.jp/en/ir/ir_library/

Establishment of adepartment(or appointment of amanager)for investor relations

Aiming to strengthen strategic IR communication, weestablished a dedicated organization directly report to
the Representative Director, President & COO sinceApril 2018.
Department in charge: Investor Relations & Public
Relations Department(4 people)
Responsible person: Ichiro Shirai, General Manager,
Investor Relations & Public Relations Department

3. Status of initiatives for respecting the perspectives of stakeholders
Supplementary Explanation
Provisions relating to respecting
The Company respects the perspectives of stakeholders and, in order tothe position of stakeholders
build good relationships, has adopted the following as a fundamental
pursuant to internal
policy: “Become a company that pleases shareholders, businessregulations, etc.
partners, employees, and other stakeholders and contribute to society.”
The Company has also established the following rules: Rules on Internal
Information Management and Restriction of Insider Trading,
Environmental Impact and Assessment Rules, Environment
Management Manual.
- 22 -

Implementation ofenvironmental conservation
activities and CSR activities, etc.

(1) Environmental preservation activities
The Company is cognizant that initiatives to address environment
problems are an important aspect of corporate activities, and based on
the following policy regarding environmental initiatives, has established
a company-wide environment management system and undertakes
measures to protect the global environment, prevent pollution, and soon in all its business activities. The Company has also established an
Environmental Promotion Committee to carry out environmental
programs and engages in company-wide measures such as green
procurement and the sorting of waste materials.
Environmental policy: The Kaga Electronics Group always considers the
future of electronics, strives to meet the needs of customers, protects
the irreplaceable earth, and works toward better protection andimprovement of the natural environment.
(2) CSR measures etc.
In light of the current importance of the corporate social responsibility,
the Company established a CSR Promotion Committee and is creating arisk management system. The Company also established an
Information Disclosure Committee, Risk Management Committee,
Compliance Committee, and Personal Information Management
Committee as subordinate organizations of the CSR Promotion
Committee, and each undertakes active measures. Additionally, in viewof the importance of corporate governance, the Company has taken
steps to strengthen related systems by establishing the SDGs
Committee on April 1, 2021, and the Nomination and Compensation
Committee on June 29, 2021. Furthermore, in order to strengthen unity
within the Group with regard to SDGs initiatives and promotesustainability management, on April 1, 2022, the Company establishedthe SDGs Promotion Office(now SDGs Promotion Department）, under
the direct authority of the Representative Director, President & COO.

Formulation of policies, etc.,
relating to the provision of
information to stakeholders

With timely disclosure as its fundamental policy on the provision of
information to stakeholders and others, the Company provides timely
information to the Tokyo Stock Exchange, holds press conferences, andissues news releases. Information Disclosure Committee, a subordinate
organization of the CSR Promotion Committee, serves as theadministrative body for the release of information and confirms
information disclosure matters on a continuous basis.

- 23 -

IV. Matters relating to Internal Control Systems, etc.
1. Basic approach to internal control systems and status of establishment
1. With regard to the establishment of system to ensure the execution of duties by directors of the Company
and Group Companies in accordance with laws and regulations and the Articles of Incorporation, the Company
and its Group are aware that enhancing corporate governance is an important management issue and ourfundamental policy is ensuring compliance with corporate ethics and laws and regulations and reinforcing internal
control systems while maintaining the soundness, efficiency, and transparency of management and raising
corporate value.
To achieve such compliance, the Company has established Rules on Officers applicable to directors and the Boardof Directors Rules applicable to the Board of Directors. To ensure appropriate management, the directors monitor
each otherʼs status of execution of duties at regularly-held Board of Directors meetings and at extraordinary
meetings held on a dynamic basis as necessary. The Company has also established Organization Rules, Ruleson the Allocation of Work Duties, Rules on Work Authority, and Rules on Internal Approval, clarifying the scopeof authority of each director and ensuring that mutual supervision by directors is effective.
In addition, the Company established an Audit Office under the direct authority of the Representative Director,
President & COO. The Audit Office works in collaboration with the Administration Headquarters, etc., to monitor
the status of compliance with laws and regulations, the Articles of Incorporation, and other internal rules.
The Company also has a Supervisory Board, and the Supervisory Board members including outside members
conduct detailed audits regarding the execution of duties by the directors.
The Company also established a CSR Promotion Committee (Corporate Social Responsibility Promotion
Committee) chaired by the President & COO and established Information Disclosure Committee, Risk
Management Committee, and Compliance Committee and Personal Information Management Committee as
subordinate organizations. These organizations work to normalize decision-making and the execution of business
operations throughout the Group.
2. The systems for the preservation and control of information relating to the execution of duties by directors
Information relating to the execution of duties by directors is appropriately and accurately controlled andpreserved according to the qualities of the recording media in accordance with the Document Control Rules,
which set forth the standards on the preparation and retention of documents, and the Document Control in
Handling Manual, which sets forth detailed provisions on document retention procedures and periods.
3. Rules and other systems relating to control of the risk of loss
Potential risks that the Group faces include matters relating to economic conditions, exchange rates, country
risks, price competition, product procurement capabilities, internal brand risks, legal regulation, market risks,major litigation, severance pay obligations, personal information, accidents, the environment, and information
management. Responding divisions have been set for each risk and necessary and appropriate systems havebeen established to control risks under the authority of risk control officers and managers in each division.
If any of the risks mentioned above should occur, the corresponding responding divisions will immediately takenecessary and appropriate responsive measures to minimize the occurrence of damage under the direction of
the risk control officers and managers.
In addition, with the establishment of the Risk Management Committee as a subordinate organization to the
CSR Promotion Committee, the Company established a system to respond promptly and appropriately to risks
foreseen by the Group.
4. Systems for ensuring the efficient execution of duties by the directors of the Company and Group companies
The foundations of systems for ensuring the efficient execution of duties by the directors of the Company andGroup companies are periodic meetings of the Board of Directors and extraordinary meetings of the Board
held when necessary. Meetings of the Management Meeting are held prior to meetings of the Board of
Directors with regard to important matters that are within the scope of duties of the directors to conduct priordeliberations so that the Board can engage in enhanced deliberations and make prompt decisions.

- 24 -

The Company also introduced delegation-based and employment-based executive officer systems to separate
management decision-making and supervisory functions from business execution functions and to clarify eachrole, and has established structures that enable timely responses while enhancing the functions of Board of
Directors and business execution functions. In addition, having an appropriate number of directors allows foradequate deliberation and appropriate and timely decision-making.
With regard to specific execution of duties, the Board of Directors sets company-wide targets, formulates
medium-term management plans to achieve those targets, and establishes necessary and appropriate systems
for the execution of duties so that each executive officer responsible for business divisions can carry out thoseplans.
In addition, The Company has also established Organization Rules, Rules on the Allocation of Work Duties,
Rules on Work Authority, and Rules on Management of Affiliated Companies regarding the allocation of workduties, authority, and so on to the directors of the Company and Group companies. These rules provide for theefficient execution of work duties.
5. Systems for ensuring compliance by Company and Group Company employees with laws and regulations
and the Articles of Incorporation in the performance of their duties
The Basic Compliance Rules were established as a code of conduct to ensure compliance with laws andregulations and the Articles of Incorporation by employees of the Company and Group companies when
executing their duties. To ensure the effectiveness of these rules, the Company also established theCompliance Committee as a subordinate organization of the CSR Promotion Committee, establishing a systemthat can make appropriate group-wide responses.
In addition, the Company established an Audit Office under the direct authority of the Representative Director,
President & COO. The Audit Office works in collaboration with the Administration Headquarters, etc., tomonitor the status of compliance with laws and regulations, the Articles of Incorporation, and other internal
rules.
The Company has also established an internal reporting (whistleblowing) system that allows employees todirectly and anonymously report conduct by the Company or Group companies in violation of laws andregulations or the Articles of Incorporation to the Representative Director, Founder & CEO, Representative
Director, President & COO, Supervisory Board members, the CSR Promotion Committee, or the Sexual
Harassment Investigation and Countermeasures Committee.
6. System to ensure the appropriateness of business operations by the corporate group comprising theCompany and its affiliated companies
The Company established the Rules on Management of Affiliated Companies to ensure appropriate business
operations by affiliated companies and conducts control in accordance with those rules. Also, coordination
among Group companies and key decisions require deliberation and decisions by the Companyʼs The GroupManagement Headquarters Meeting and Board of Directors.
In addition, the Companyʼs Audit Office works in collaboration with the Administration Headquarters, etc., toachieve overall uniformity in Group business activities, conducts audits regarding the appropriateness of thosebusiness activities and compliance with laws and regulations and the Articles of Incorporation and so on, andindicates improvements to be made in business activities.
Furthermore, Group companies submit all minutes of their Board of Directors meeting to the Company andmake monthly reports on business activities, status of budget implementation, and important matters relating
to ensuring the appropriateness of business activities.
7. Matters relating to employees supporting the work of Supervisory Board members
The Companyʼs Rules on the Allocation of Work Duties include provisions relating to employees who assist
Supervisory Board members in the performance of their duties. Supervisory Board members cause employees,
to support them in the performance of audit operations, focusing on work in the Audit Office, as necessary.
8. Matters relating to the independence from the directors of employees supporting the work of Supervisory
Board members and matters relating to ensuring the effectiveness of indications by Supervisory Board
members to employees- 25 -

The Companyʼs Rules on the Allocation of Work Duties provide that in cases where an employee is affiliatedwith the Audit Office and other departments that assist Supervisory Board members in the performance of
their duties, only Supervisory Board members have the authority to issue instructions and orders relating tothat work. In cases of transfer, evaluation, and disciplinary disposition of such employees, the consent of theSupervisory Board is required.
9. Systems for directors and employees of the Company and Group companies to report to Supervisory Board
members and other systems for reporting to Supervisory Board members
If a Company director discovers facts that present a risk of causing substantial damage to the Company, sucha director must immediately report those facts to the Supervisory Board pursuant to the Rules on Corporate
Officers, and the Company has established systems for timely and accurate reporting to the Supervisory
Board.
If an employee of the Company, director or employee of a Group company discovers facts in violation of laws
and regulations or the Articles of Incorporation or discovers facts that present a risk of causing substantial
damage to the Company or the respective Group company, such director or employee must immediately
report to the Supervisory Board in accordance with the Rules on Work Authority, and the Company has
established systems that enable employees to make reports directly to the Supervisory Board.
10. Systems for ensuring that the persons who make reports to the Supervisory Board are not subject todisadvantageous treatment as a result of making such reports
Reports made via the internal whistleblowing system can be made anonymously and through the use of a post
office box. Since reporting individuals cannot be identified, there is a system in place to prevent
disadvantageous treatment of persons making reports.
11. Matters relating to procedures for advance payment or reimbursement of expenses arising in the course ofSupervisory Board members performing their duties and policies regarding handling of expenses or obligations
arising in the course of Supervisory Board members performing their duties
When requests are made by Supervisory Board members for advance payment of expenses or for
reimbursement of expenses paid or obligations incurred, except in cases where it can be established that those
expenses and so on did not arise in the course of Supervisory Board members performing their duties, theCompany shall comply with such requests.
12. Other systems for ensuring effective implementation of audits by Supervisory Board members
The Companyʼs Supervisory Board members are required to attend Board of Directors meetings and otherimportant internal meetings and must express their opinions as necessary. Also, the Company established aSupervisory Board and operates that board appropriately in accordance with the Supervisory Board Rules.
The Company also established Supervisory Board Member Audit Standards setting forth the optimal audit
structure for each board member, audit standards, and conduct policies for Supervisory Board members,
ensuring the effectiveness of audits conducted by Supervisory Board members.

2. Basic approach to the elimination of antisocial forces and status of development
Responses for the elimination of antisocial forces
The Companyʼs basic approach is not to maintain any relationships whatsoever with antisocial forces thatthreaten social order and safety and to maintain a resolute attitude regarding the refusal of all improper
demands from antisocial forces as set forth in its Fundamental Compliance Rules and Employment Rules.
In cases where the Company receives improper demands from antisocial forces, the General Affairs
Department and CSR Promotion Committee collaborate and cooperate with crisis management advisors andattorneys to make an organizational response as necessary. The Company also holds regular discussions withattorneys, meets with police departments and other external specialized organizations, and participates intraining and other activities in an effort to gather information.

- 26 -

V. Other
1. Existence of takeover defense measures
Existence of takeover defense measures

None

Supplementary explanation relating to this matter―――
2. Other matters relating to corporate governance systems, etc.
1. Corporate governance systems
To enhance its corporate governance, the Company strives to create more appropriate systems including
responses to amendments of applicable laws and regulations.
In addition, the Company comprehensively operates internal control systems in accordance with enforcementof the Financial Instruments and Exchange Act.
2. Internal system check functions relating to information disclosures and the status of internal systems
In light of the importance of corporate social responsibility (CSR), the Company established a CSR Promotion
Committee and established an Information Disclosure Committee, Risk Management Committee, Compliance
Committee, and Personal Information Management Committee as subordinate organizations to enhanceinternal systems.
The Company also established a Management Planning Office under the direct authority of the Representative
Director, President & COO & COO to gather and manage information from group subsidiaries and affiliatedcompanies and strives to make appropriate and timely disclosures of information through the system set
forth in the attached figure.

- 27 -

Corporate Governance Organizational Diagram

General Meeting of Shareholders
Proposals,consultation

Board of Directors

Audit

Board of Auditors

collaboration

adviceSDGs
Committee

Environment
Working group
Society
Working group
GovernanceWorking group

CSR Promotion
Committee
Compliance
Committee

Risk Management
Committee
Information
Disclosure
Committee

Personal Information
Management
Committee

The Group Management
Headquarters Meeting
Management Meeting

Divisions,Group companies- 28 -Audit

Audit Office
Audit

Accounting
Auditors

Representative Director,
Representative Director,
Founder & CEO
Deliberation,
President & COO

Audit

Collaboration

Nomination andCompensation Committee

Appointments,
dismissals

Appointments,
dismissals

Appointments,
dismissals

collaboration

Information Disclosure System Organizational Diagram

Information Disclosure（Disclosed on TDnet, EDINET, and Company website）

Investor Relations andPublic Relations Department（in charge of public announcement

General Affairs Department（in charge of timely
disclosure）

other than timely disclosure）

Disclosure instructions

Head of Administration
Headquarters(Information disclosureManager）

Notification ofresolutions

Board of Directors

The Group Management
Headquarters
Information Disclosure Committee Reporting of（Body that investigates information disclosure decisions （chairman︓Representative Director,
President & COO）
disclosure）

Preparation of disclosure

Financial information,statements, reporting of events

discussion and reporting

Corporate Strategy Office, Investor Relations andPublic Relations Department, General Affairs Department, Personnel
Department, Finance and Accounting Department（Departments that deliberate on information disclosure）

Reporting and financial information

Divisions / Subsidiaries- 29 -of important mat