Scala, Inc.
Corporate Governance Policy Appendix 1
Selection Standards for Directors and Statutory Auditors
Selections of director and statutory auditor candidates place emphasis on the diversity of theBoard of Directors and Board of Statutory Auditors by maintaining the proper balance in termsof experience, professional skills and other knowledge.

1.

Selection Standards for Director Candidates and Nomination Procedure(1) Qualifications of DirectorslDirectors must have a thorough understanding of a broad range of problems involving
management as well as a sound character, excellent insight and balanced management
perspective and skills.

lA strong commitment to compliance with laws and regulationsl

A strong desire to further upgrade skills and knowledgel

The ability to use a company-wide perspective for objectively analyzing management
and making decisions and to state opinions frequentlyl

The ability to quickly and accurately identify changes in the management environment
and market conditions and take actions as neededl

None of the director disqualification items in Article 331, Paragraph 1 of theCompanies Act is applicable(2) Procedure for Nominating Directorsl

The Board of Directors selects director candidates to be submitted at a shareholders
meeting. Approval of shareholders of a proposal for the election of directors isrequired.

l

Director candidates are selected by taking into consideration the qualifications ofdirectors and the position concerning composition of the Board of Directors.

(3) Position Concerning Composition of the Board of Directors

2.

l

For diversity, the Board of Directors is composed of individuals with a broad range ofbackgrounds in terms of professional knowledge, experience and other characteristics.

lThe suitable number of members of the Board of Directors is no more than 10,
including at least two independent outside directors.

Selection Standards for Statutory Auditors and Nomination Procedure(1) Qualifications of Statutory Auditorsl

Statutory auditors must have a sound character, excellent insight and considerable
experience and knowledge concerning their fields of specialization.

l

A strong commitment to ethicsl

A strong desire to further upgrade skills and knowledgel

The ability to objectively analyze management and make decisions and to state
opinions frequently

1l

The ability to quickly and accurately identify changes in the management environmentand market conditions and take actions as neededlNone of the statutory auditor disqualification items in Article 335, Paragraph 1 of theCompanies Act is applicable(2) Procedure for Nominating Statutory Auditorsl

The Board of Directors selects statutory auditor candidates to be submitted at ashareholders meeting. Approval of shareholders of a proposal is required for theelection of statutory auditors after receiving the consent of the Board of Statutory
Auditors.

lStatutory auditor candidates are selected by taking into consideration thequalifications of statutory auditors and the position concerning composition of theBoard of Statutory Auditors.

(3) Position Concerning Composition of the Board of Statutory Auditors
lThe majority of the members of the Board of Statutory Auditors is outside auditors inorder to ensure the independence of the auditors. At least one auditor must be anindependent officer as defined by the Tokyo Stock Exchange.

lOutside auditors are individuals with professional skills involving accounting, legalaffairs, management or other fields.

2Corporate Governance Policy Appendix 2Standards for Independence of Outside Directors and Outside Statutory Auditors
Scala has established the following requirements for independence in order to certify theindependence of outside directors and outside statutory auditors (collectively, “outside officers”).

1.

An individual cannot be a director*, statutory auditor*, executive officer or employee of Scalaor a consolidated subsidiary (the “Scala Group”) currently or at any time in the past.(*except
an outside director or outside statutory auditor)

2.

During the past five years, an individual cannot be a director, statutory auditor, executiveofficer or employee of a major shareholder holding directly and/or indirectly at least 5% of
Scala voting rights.

3.

An individual cannot be a director, statutory auditor, executive officer or employee of a major
shareholder holding at least 5% of the voting rights of the Scala Group.

4.

An individual cannot be a director, statutory auditor, executive officer or employee of acompany that has a significant business relationship with the Scala Group. A significant
business relationship is average annual transactions during the past three fiscal years that areequivalent to at least 2% of the consolidated sales of the Scala Group or of the company thathas the business relationship with the Scala Group.

5.

An individual cannot be a director, statutory auditor, executive officer or employee of asignificant lender used by the Scala Group. A significant lender is an institution with theaverage of loans to the Scala Group at the end of each of the past three fiscal years
equivalent to at least 2% of the consolidated total assets of Scala or the lender.

6.

An individual cannot be a director, statutory auditor, executive officer or employee of theprimary securities company used by Scala.

7.

An individual must not be affiliated with the accounting firm used as the independentaccounting auditor of the Scala Group.

8.

An individual must not be an attorney, certified public accountant, consultant or otherprovider of professional services who receives a large amount of cash or other financial
assets from the Scala Group, other than compensation from a group company as a director
or statutory auditor. A large amount is more than an annual average of 10 million yen during
the past three fiscal years.

9.

An individual must not be a spouse or a first or second-degree relative of an individual who issubject to one of the preceding disqualification items 1 through 8.

10. In addition, there must be no doubts about the ability of the individual to perform the duties
of an outside officer from an independent standpoint.
Even if any of the preceding disqualification items 2 through 9 apply to an individual, theindividual can be an outside officer candidate as an exception, with the disclosure of the reason
for this exception, if the individual meets the outside officer requirements of the Companies Actand Scala decides that the individual is suitable to serve as an outside officer.

Concluded.

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