Corporate Governance
Updated: August 26, 2022

Pharmarise Holdings Corporation
Masayuki Akiyama, President & COO
Inquiries: Yutaka Numata, Director
Code number: 2796
http://www.pharmarise.com
The state of corporate governance of Pharmarise Holdings Corporation (“the Company”) is described below.

I.

Fundamental Views on Corporate Governance, Capital Structure, Corporate Attributes,
and Other Key Information

1. Basic Views
As a pharmacotherapy professional, the Group believes it has mission to contribute to the local community throughactive involvement in community medical care and it has positioned the establishment of fair and transparent
corporate governance as a key management issue partly for the purpose of accomplishing this mission. The
Company constantly confirms the effectiveness of corporate governance systems and also works to strengthen andenhance systems according to the Group’s growth stage by reviewing them as necessary. The Company also makes
timely and appropriate disclosures and actively conducts IR activities to make management more transparent forshareholders and other stakeholders.
[Reasons for Non-compliance with Principles of Japan’s Corporate Governance Code] Updated[Relevant Code]Information is based on the Code after revision in June 2021.
[Supplementary Principle 3-1-3 Initiatives on Sustainability]
The Company established a Sustainability Committee chaired by the chairman of the board and chief executive
officer (CEO) in June 2021. A Sustainability Policy was established in May 2022, and the Company is currently
working to determine materiality (material issues) and measures to address them. The Sustainability Committee,
which, with the help of outside consultants, will play a more active role in future, is responsible for managing dataon GHG emissions, gaining an understanding of the current status and considering the possibility of setting targets.
In addition, the Company aims to declare its support for the TCFD recommendations.
The Company sees human resources not as an expense (cost) but as human capital that creates new value. Basedon this view, the Company is acquiring and developing the human resources it needs through a goal-oriented
backcasting approach, in order to develop a pipeline of key human resources for its management strategies and toconstantly optimize its human resources portfolio.
In terms of investment in intellectual assets, the Company plans to enhance customer experience services andintroduce strategic products under its Medium-term Management Plan LSG2024, to promote “store branding” and“innovation of services through DX.”
[Principle 4-8 Effective Use of Independent Outside Directors]
The Company has two independent Outside Directors, one of whom has management experience at othercompanies.
The independent Outside Directors not only raise questions and express opinions as appropriate at meetings of theBoard of Directors from an independent outside perspective but also frequently exchange opinions with relevant
parties including each Director, Audit & Supervisory Board Member, and senior executive, and are fulfilling their
responsibilities as the Company’s independent Outside Directors at the present stage.
In addition, based on comprehensive consideration of the Company’s operating environment and other factors, theCompany will aim to elect independent Outside Directors making up at least one-third of the Board by August
2024, which is the next time a new Board will be elected.
[Supplementary Principle 4-10-1 Policies and Procedures for Establishment of Nomination and Remuneration
Committee]
To increase the fairness, transparency and objectivity of procedures for nominating Directors and determining
remuneration, etc. for Directors and to strengthen corporate governance systems, the Company has a Nomination
and Remuneration Committee as a non-mandatory advisory body to the Board of Directors. The Committee
deliberates and prepares draft proposals on the following matters and then reports on them or proposes them to theBoard of Directors.

-1-

- Matters regarding the appointment and dismissal of Directors- Matters regarding the selection and dismissal of Representative Directors- Matters regarding the selection and dismissal of Directors with specific titles- Matters regarding remuneration, etc. of Directors- Matters regarding maximum limit on the remuneration of Directors- Matters regarding succession planning- Other important management-related matters considered necessary by the Board of Directors (such as view on
the composition of the Board of Directors in terms of diversity of gender, etc. and skills)
The Board of Directors makes decisions on the above matters, paying utmost respect to the reports and proposalsof the Committee.
Furthermore, the Committee is comprised of a majority of Outside Directors but does not consist of a majority of
independent Outside Directors. The Company believes that the independence of the Committee is ensured but
intends to elect independent Outside Directors making up a majority of the Committee by August 2024, which isthe next time a new Board will be elected.
[Disclosure Based on Principles of Japan’s Corporate Governance Code] Updated[Relevant Code]Information is based on the Code after revision in June 2021.
[Principle 1-4 Cross-Shareholdings]
At present, the Company does not hold shares of other listed companies as cross-shareholdings but it shall havecross-shareholdings based on a resolution of the Board of Directors if, taking into consideration factors such asincreased transactions with the Company and the Company’s overall return on the cross-shareholdings, the crossshareholdings were judged to contribute to enhancement of the Company’s corporate value.
[Principle 1-7 Related Party Transactions]
The Group has enacted Related Party Transaction Management Regulations and every Group company is required
to obtain the approval of its Board of Directors before conducting a related party transaction. The approved
transaction shall then be reported at the Company’s Board of Directors.
Under the audit system, immediately after the end of the accounting period, the Company draws up a list of relatedparties based on declarations of the relatives (family members within second degree of kinship, in principle) of all
the officers of the Company and its subsidiaries and companies in which they themselves or their relatives hold amajority of the voting rights (applicable parties only) as well as related party transactions (applicable parties only)
and circulates this list to the Audit and Control Office.
[Principle 2-4-1 Policies, etc. for Ensuring Diversity]
View on ensuring diversity
Given that diverse organizations have an advantage when it comes to adapting to and surviving environmental
change and that acceptance, mutual recognition and utilization of differences leads to a competitive edge, theCompany is implementing initiatives such as workplace development and management training aimed at
maximizing individual characteristics and skills whilst at the same time actively and continuously recruiting andhiring diverse human resources including women, foreign nationals and mid-career hires with various career
histories.
Under the Medium-term Management Plan LSG 2024, the Company shall encourage diverse career paths and work
styles and implement human resource measures to utilize the diversity of employees in new business creation andorganization decision-making, in addition to initiatives already underway.
Voluntary measurable targets for ensuring diversity
The percentage of mid-career hires in managerial positions is already at a fairly high level (86% in the fiscal year
ended May 31, 2022), as mid-career hires based on experience, skills and other requirements has been a driver of
the Company’s business expansion since its foundation. It is the Company’s understanding, therefore, that it is not
required to establish specific measures or targets for the appointment of mid-career hires to managerial positions.
Meanwhile, the Company has not set “voluntary and measurable targets” for the appointment of foreign nationals
to managerial positions, because the Company conducts business solely in Japan and has few employees who are
foreign nationals. The percentage of women in managerial positions stood at 21% in the fiscal year ended May 31,
2022 and the Company has set a target for the fiscal year ending May 31, 2026 of 30%.
Human resource development policies to ensure diversity
Amid the spread of new work styles and dramatic changes in the environment such as labor shortages, changing
values regarding work, and second jobs and side hustles, the Company is implementing initiatives that will motivate
its employees and allow for diverse career paths and work styles, including the adoption of a variable working-2-hours system, the establishment of satellite offices assuming diverse work styles, and the introduction of a new
personnel evaluation system.
[Principle 2-6 Asset Owners]
The Company has introduced a defined contribution pension plan and provides online and call center support onplan operation and also explains the plan structure and other details to new employees during induction training
and to mid-career employees during briefings on the Company’s personnel systems.
[Principle 3-1 Full Disclosure]i. The guiding principle of the Company as a pharmacotherapy professional in the dispensing pharmacies sector,
where it mainly operates, is “Perfection.” Accordingly, the Company’s corporate motto is “Perfection,” which
serves as the Company’s basic policy. The Company implements the following management principles based on
this basic policy.
- Social responsibility
The Company is acutely aware of its social responsibility as a company involved in medical care and actively
strives for “Perfection.”- Commitment to a sustainable future
The Company will strive for a sustainable future, attaching importance to the SDG initiatives and increasing
dialogue with all employees and stakeholders.
- Heart-felt hospitality
The Company will draw on its knowledge, expertise, experience and knowhow in its dealings with individuals,
inspiring trust and giving them peace of mind.
In addition, under “Medium-term Management Plan LSG (Leading to Sustainable Growth) 2024,” which wasannounced on December 24, 2021, the Company will build on the management infrastructure built under “Mediumterm Management Plan SFG (Steps for Future Growth) 2021,” despite further changes in the management
environment going forward, and will implement measures on the following three themes to seek further
enhancement of shareholder value and to strengthen competitiveness and grow.
(1) Increase efforts to become the corporate group preferred by investors(2) Develop business, primarily the dispensing business, to enhance revenue(3) Strengthen the management infrastructure
ii. As a pharmacotherapy professional, the Group believes it has mission to contribute to the local community
through active involvement in community medical care and it has positioned the establishment of fair andtransparent corporate governance as a key management issue partly for the purpose of accomplishing this mission.
The Company constantly confirms the effectiveness of corporate governance systems and also works to strengthen
and enhance systems according to the Group’s growth stage by reviewing them as necessary. The Company also
makes timely and appropriate disclosures and actively conducts IR activities to make management more transparent
for shareholders and other stakeholders.
iii. The Company’s policy is to determine the remuneration of Directors and the senior management based on officer
remuneration standards, within the range of the total amount resolved by the General Meeting of Shareholders, anda decision is made based on a report to the Board of Directors of the results of deliberations by the Nomination andRemuneration Committee, which is comprised of a majority of Outside Directors.
iv. Regarding the appointment of Directors and Audit & Supervisory Board Members, the Company nominates
individuals who understand the Company’s corporate philosophy, have excellent character, vast experience and ahigh level of expertise when it comes to the Company’s operations, and can contribute to enhancement of corporate
value from a groupwide perspective.
Regarding the appointment of Outside Directors and Outside Audit & Supervisory Board Members, the Company
nominates individuals who have vast experience and extensive knowledge as corporate managers and who canprovide guidance and advice on the Company’s management from an objective standpoint. Further, the Company’s
policy is to appoint individuals who are experts in fields such as accounting or law for the purpose of ensuring thesoundness of its management and multifaceted advice.
As for the appointment of Directors, the Nomination and Remuneration Committee, which is comprised of amajority of Outside Directors, deliberates on candidates and those approved by a majority of its members arereported to the Board of Directors, which then proposes them to General Meeting of Shareholders following its
own deliberation and approval.
Meanwhile, if a Director or Audit & Supervisory Board Member is deemed to merit dismissal, for example, he or
she is found to have committed fraud or a serious legal violation or is found to have seriously damaged the-3-Company’s corporate value, after the proposal for dismissal has been deliberated by the Nomination andRemuneration Committee, which is composed of a majority of Outside Directors, and approved by a majority ofits members, it is then reported to the Board of Directors, which, after thorough deliberation, resolves to submit itto the General Meeting of Shareholders and includes it in the Convocation Notice of the General Meeting of
Shareholders.
A proposal for the appointment or dismissal of an Audit & Supervisory Board Member is submitted to the General
Meeting of Shareholders with the consent of the Audit & Supervisory Board, in addition to the procedures for theappointment or dismissal of a Director outlined above.
v. Regarding explanations on the nomination of candidates for Director or Audit & Supervisory Board Member,the Company includes information such as the career history of individual candidates, reasons for their
appointment, and a skills matrix in the Convocation Notice of the General Meeting of Shareholders.
[Supplementary Principle 3-1-3 Initiatives on Sustainability]
The Company established a Sustainability Committee chaired by the chairman of the board and chief executive
officer (CEO) in June 2021. The Company established a Sustainability Policy in May 2022, and is currently
working to determine materiality (material issues) and measures to address them. With the help of outside
consultants, the Sustainability Committee will manage data on GHG emissions, gain an understanding of the current
status, and consider the possibility of setting targets. In addition, the Company aims to declare its support for the
TCFD recommendations.
The Company sees human resources not as an expense (cost) but as human capital that creates new value. Basedon this view, the Company is acquiring and developing the human resources it needs through a goal-oriented
backcasting approach, in order to develop a pipeline of key human resources for its management strategies and toconstantly optimize its human resources portfolio.
In terms of investment in intellectual assets, the Company plans to enhance customer experience services andintroduce strategic products under its Medium-term Management Plan LSG2024, to promote “store branding” and“innovation of services through DX.”
[Supplementary Principle 4-1-1 Roles and Responsibilities of the Board of Directors (1)]The Company’s Board of Directors resolves specific matters to be decided by the Board of Directors stipulated in
the Companies Act and matters to be referred to the Board of Directors stipulated in the Articles of Incorporationand the Board of Directors’ Regulations. More specifically, in the case of matters regarding management policies,
general meetings of shareholders, financial results, officers, shares, personnel matters/organization, business
operations, assets and finance, and suchlike, the Company specifies matters to be resolved by the Board of Directors
by specifying details or setting certain criteria. Other matters are approved by the officer or employee in charge
based on the detailed statement of official authority.
[Principle 4-9 Criteria and Qualifications for Determining the Independence of Independent Outside Directors]
The Company has established its own “Criteria for Independence of Outside Officers”, as shown below.
Criteria for Independence of Outside Officers
An outside officer (includes candidate for outside officer; the same applies hereinafter) that falls under any of thefollowing shall be deemed as not being sufficiently independent from the Company.
1. A person from the Company or a consolidated subsidiary of the Company (hereinafter referred to as the“Company or its subsidiaries”) (Note 1)
2. A major shareholder of the Company (who directly or indirectly holds 10% or more of the total voting rights)
3. An executive of an entity which falls under any of the following categories(1) A major business partner of the Company or its subsidiaries (Note 2)(2) A major lender to the Company or its subsidiaries (Note 3)(3) An entity which holds voting rights equivalent to 10% or more of the total voting rights of the Company or its
subsidiaries
4. A certified public accountant who belongs to an audit corporation which is an accounting auditor for the Company
or its subsidiaries
5. A person who receives significant amounts (Note 4) of monetary compensation or other property as a specialist
such as a consultant, accountant, tax accountant, lawyer, judicial scrivener, patent attorney for the Company or its
subsidiaries
6. A person who receives significant donations from the Company or its subsidiaries (Note 5)
7. Business executives of another company which has a reciprocal dispatch relationship (Note 6) with the Company
or its subsidiaries for the dispatch of Outside Officers-4-8. A person whose close relative (Note 7) falls under any of 1. to 7. above (only a key person (Note 8) with the
exceptions of items 4 and 5)
9. A person who fell under any of 2. to 8. above in the five years prior to appointment
10. Notwithstanding provisions of each of the foregoing, a person in relation to whom other special grounds whichmight give rise to a conflict of interests with the Company exist
Note 1: Refers to an Executive Director or the equivalent or an employee (collectively referred to in these criteria
as a “Business Executive”) who currently belongs to the Company or its subsidiaries or belonged to the Company
or its subsidiaries at any time in the past. Includes a Non-Executive Director in the case of an Outside Audit &Supervisory Board Member.
Note 2: The term “major business partner” refers to either a buyer of the Company or its subsidiaries’ products, etc.
(includes services rendered) or a supplier in relation to which the annual transaction amount is greater than 3% of
the consolidated net sales of the Company or the consolidated net sales of the group of which the counterparty is apart for two consecutive fiscal years.
Note 3: The term “major lender” refers to a financial institution from which the Company or its subsidiaries hasborrowed funds whereby the balance of such borrowing at the end of the Company’s fiscal year exceeds 3% of theconsolidated total assets of the Company or the consolidated total assets of such financial institution.
Note 4: The term “significant amounts” is defined as followed according to such specialist’s involvement in theservices rendered.
(1) In the case where such specialist renders services to the Company or its subsidiaries as an individual, the term
“significant amounts” denotes when compensation (excluding officers’ remuneration) received from the Company
and its subsidiaries exceeds ¥10 million a year.
(2) In the case where a corporation, association or other organization to which such specialist belongs renders
services to the Company or its subsidiaries, the term “significant amounts” denotes when the total amount ofcompensation such organization has received from the Company or its subsidiaries exceeds 3% of the suchorganization’s total annual revenue. However, even in the case where such 3% threshold is not exceeded, theamount received by such organization as compensation for services rendered with such specialist’s direct
involvement will be deemed “significant amounts” when it exceeds ¥10 million a year.
Note 5: Refers to a person who has received donations exceeding ¥10 million a year. In the case where the recipientof the donations is a corporation, association or other organization, the term “person” refers to a person belonging
to such organization who is directly involved in research, education or other activities relating to such donations.
Note 6: Refers to relationship whereby a Business Executive of the Company or its subsidiaries is an outside officerof another company and a Business Executive of such other company is an outside officer of the Company.
Note 7: The term “close relative” means a spouse or a relative within the second degree of kinship.
Note 8: The term “key person” refers to a Director or Business Executive who serves as a General Manager orhigher position or a Business Executive with authority equivalent thereto.
[Supplementary Principle 4-10-1 Policies and Procedures for Establishment of Nomination and Remuneration
Committee]
To increase the fairness, transparency and objectivity of procedures for nominating Directors and determining
remuneration, etc. for Directors and to strengthen corporate governance systems, the Company has a Nomination
and Remuneration Committee as a non-mandatory advisory body to the Board of Directors. The Committee
deliberates and prepares draft proposals on the following matters and then reports on them or proposes them to theBoard of Directors.
- Matters regarding the appointment and dismissal of Directors- Matters regarding the selection and dismissal of Representative Directors- Matters regarding the selection and dismissal of Directors with specific titles- Matters regarding remuneration, etc. of Directors- Matters regarding maximum limit on the remuneration of Directors- Matters regarding succession planning- Other important management-related matters considered necessary by the Board of Directors (such as view on
the composition of the Board of Directors in terms of diversity of gender, etc. and skills)
The Board of Directors makes decisions on the above matters, paying utmost respect to the reports and proposalsof the Committee.
Furthermore, the Committee is comprised of a majority of Outside Directors but does not consist of a majority of
independent Outside Directors. The Company believes that the independence of the Committee is ensured but
intends to elect independent Outside Directors making up a majority of the Committee by August 2024, which isthe next time a new Board will be elected.
[Supplementary Principle 4-11-1 Policies and Procedures for Appointing Directors]-5-

The Company’s Board of Directors appoints as Directors pharmacists, corporate managers and individuals fromfinancial institutions, whilst taking the perspectives of expertise and diversity into consideration, and has acomposition that allows for lively discussion from a broad perspective, in order to achieve sustainable growth andenhancement of corporate value in the medium and long term. The Company currently has 11 Directors, two of
which are independent Outside Directors. One of the independent Outside Directors has management experienceat other companies. Meanwhile, the Company has five Non-Executive Directors including two independent Outside
Directors.
Since the dispensing pharmacy business, which is the Company’s main business, has industry-specific laws andregulations and business practices peculiar to drug distribution, and a high level of expertise is required to makemanagement decisions, the Company appoints internal Directors from employees who have worked at theCompany for many years, reliably producing excellent results, and who have excellent character, insight and highethical standards. Meanwhile, as independent Outside Directors, the Company appoints individuals who are notbound by company interests and will supervise the Company’s management from a fair and impartial perspective
to protect the interests of shareholders especially minority shareholders and will give advice on management ingeneral.
Furthermore, the Company created a Directors’ skills matrix, which is included in the Convocation Notice of theOrdinary General Meeting of Shareholders held in August 2022.
[Supplementary Principle 4-11-2 Concurrent Positions Held by Directors and Audit & Supervisory Board
Members]
In the case where the Company’s Directors and Audit & Supervisory Board Members also serve as officers at otherlisted companies, such positions shall be limited to an extent that they do not prevent the Company’s Directors andAudit & Supervisory Board Members from fulfilling their respective roles and responsibilities. Moreover, in theevent that Directors and Audit & Supervisory Board Members hold concurrent positions at other listed companies,
the Company discloses such positions via the Convocation Notice, Annual Securities Report and Corporate
Governance Report.
[Supplementary Principle 4-11-3 Analysis, Evaluation and Disclosure of Effectiveness of the Board of Directors asa Whole]As in the previous fiscal year, in July 2022, the Company analyzed and evaluated the effectiveness of the Board of
Directors as whole, with reference to the opinion of an outside consultant, by conducting a survey of all officers(11 Directors and 3 Audit & Supervisory Board Members) asking them for a self-evaluation of the effectiveness of
the Board of Directors in FY2021 in terms of the “operation and composition of the Board of Directors,”“management strategies and business strategies,” “corporate ethics and risk management,” “evaluation andremuneration of senior management,” and “dialogue with shareholders.” Analysis of the survey results indicatedthat the effectiveness of the Board of Directors as a whole is ensured given that every item was generally rated
favorably.
However, some negative views were expressed, including calls for disclosure of appropriate action to address socialand environmental issues and other sustainability issues. Utilizing this feedback, the Company will continue toimprove the effectiveness of the Board of Directors going forward, including seeking further enhancement ofmaterials for meetings of the Board of Directors to make deliberations at meetings livelier through the provision ofnecessary and sufficient information, and continuously focusing on the training of Directors and Audit &Supervisory Board Members which was again the subject of feedback this fiscal year.
Other feedback received included the view that disclosures regarding sustainability initiatives and investment in
human capital and intellectual property is an issue to be addressed in the future and the opinion that there is room
for improvement in terms of the content and volume of materials for Board of Directors’ meetings and their advance
distribution and explanation. Taking this feedback on board, the Company plans to make disclosures about its
sustainability initiatives with the help of an outside consultant. Regarding the content and volume of materials formeetings of the Board of Directors and their advance distribution and explanation, the Company intends tocontinuously focus on enhancing and improving information provision, striving for livelier deliberations at
meetings of the Board of Directors and continuing to increase the effectiveness of the Board of Directors as a whole.
[Supplementary Principle 4-14-2 Training Policy for Directors and Audit & Supervisory Board Members]
Directors and Audit & Supervisory Board Members are given appropriate explanations about their legal obligations,roles and responsibilities as officers on assuming office and they attend external training sessions as appropriate.
When the Company welcomes independent Outside Directors and Outside Audit & Supervisory Board Members,senior management explains to them individually matters such as the Company’s management strategies, businessactivities and finances. Additionally, in 2022, the Company invited outside lecturers to run three sessions of officer
training (including digital governance in the DX era) to help officers adapt to the changing times and acquire theknowledge they need as officers of a listed company.

-6-

[Principle 5-1 Policy for Constructive Dialogue with Shareholders]
The Company takes actions such as the following in response to requests for meetings from shareholders.
First, decisions on IR strategy and IR policy are matters referred to the Board of Directors. In addition, the officer
in charge of disclosures oversees IR activities and dialogue with shareholders as a whole, and the Corporate
Planning Department is the department in charge. The Corporate Planning Department oversees IR materials, etc.
to support dialogue and prepares these in collaboration with the Accounting and Finance Department and otherrelevant operating companies, etc. The Corporate Planning Department also oversees IR events and holds thesewith the cooperation of each department.
As other means of dialogue besides individual meetings with investors, the Company holds financial results
briefings four times a year, takes part in IR Fiestas organized by the securities exchange and others once a year, andholds briefings for individual investors around once a year. Furthermore, the Company conducts a questionnaire
survey of shareholders and investors at the IR Fiesta venue and in one out of the two business reports (shareholder
communications) issued per year, to gather questions and feedback. The content of the questions and feedback ofshareholders and investors understood through such investor briefings and individual meetings, etc. is reported atmeetings of the Board of Directors.
As for the management of insider information during dialogue with shareholders and investors, the Company
provides training on insider trading that is mandatory for all employees. In addition, the period from the end of the
fiscal year to the date of the financial results announcement is a silent period, during which the Company refrainsfrom communicating with investors. Moreover, during dialogue with shareholders and investors, the Company iscareful to avoid selective disclosure.

2. Capital Structure
Percentage of Foreign Shareholders
Status of Major Shareholders Updated
Name / Company Name
Bic Field Corporation
The Master Trust Bank of Japan, Ltd.
Nakakita Yakuhin Co., Ltd.
VITAL-NET, INC.
HOKUYAKU Inc.
Pharmarise Employee Stockholding Association
Sayoko Ohno
HIGUCHI SANGYO CO., LTD.
Toshimichi Ohno
AGII Investment Limited Partnership
Controlling Shareholder (except for Parent
Company)
Existence of Parent Company

Less than 10%

Number of Shares Owned (Shares)
3,015,000
426,100
396,000
396,000
357,800
358,500
349,780
214,500
204,390
182,400

Percentage (%)
32.24
4.56
4.23
4.23
4.23
3.83
3.74
2.29
2.19
1.95

No

Supplementary Explanation Updated- Status of Major Shareholders above is as of May 31, 2022.
- The shareholding ratio is calculated by deducting the number of treasury shares (321,100) from the total numberof outstanding shares. The ratio was rounded to the first decimal place.

-7-3. Corporate Attributes
Listed Exchange and Market Division Updated
Fiscal Year-End
Sector Classification
Number of Employees (consolidated) as of the
End of the Previous Fiscal YearNet Sale (consolidated) as of the End of thePrevious Fiscal Year
Number of Consolidated Subsidiaries as of the
End of the Previous Fiscal YearTokyo Stock Exchange, Prime Market
May

RetailAt least 1,000
From ¥10 billion to less than ¥100 billion
From 10 subsidiaries to less than 50 subsidiaries

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

5. Special Circumstances which may have Material Impact on Corporate Governance--8-II. Business Management Organization and Other Corporate Governance Systems regarding
Decision Making, Execution of Business, and Oversight
1. Organizational Composition and Operation
Organization Form

Company with an Audit & Supervisory Board[Directors]
Maximum Number of Directors Stipulated in
Articles of Incorporation
Term of Office Stipulated in Articles ofIncorporation
Chairperson of the Board
Number of Directors
Appointment of Outside Directors
Number of Outside Directors
Number of Independent Directors Updated

12
2 years
President
11
Appointed
52Relationship with the Company (1) Updated
Name

Attributeab

Relationship with the Company (*)
c
d
e
f
g
h
i
○

j
k
Norio Watanabe
From another company
Hiromu Tada
From another company○
Tomomi Hara
From another company○
Masaya Nakanishi
From another company○
Ichijo Toda
From another company○* Categories for “Relationship with the Company”* “○” indicates that the director currently falls under the category, or did so recently, and “” indicates thatthe director fell under the category in the past.
* “●” indicates that a close relation falls under the category, or did so recently, and “▲” indicates that a close
relation fell under the category in the past.
a. Business executive (a person who executes business; hereinafter the same) of the Company or its subsidiaries
b. Non-executive director or business executive of a parent company of the Company
c. Business executive of a fellow subsidiary of the Company
d. Person whose major client or supplier is the Company or a business executive thereof
e. Major business partner of the Company or a business executive thereof
f. Consultant, accountant or legal professional who receives significant amounts of monetary consideration or otherproperty from the Company other than remuneration as an officer
g. Major shareholder of the Company (or if such shareholder is a corporation, business executive of such corporation)h. Business executive of a business partner of the Company (which does not correspond to any of d., e., or f.) (thedirector himself/herself only)
i. Business executive of a company, which has a reciprocal dispatch relationship with the Company for the dispatchof Outside Officers (the director himself/herself only)
j. Business executive of a recipient of donations from the Company (the director himself/herself only)
k. Other
Relationship with the Company (2) Updated
Name

Norio Watanabe

Independent
Officer

Supplementary Explanationof the Relationship
Outside Director Mr. Norio
Watanabe is Director andChairman of Enkoh Co., Ltd.,
which
suppliesGrouppharmacies with consumables
and other goods.
Enkoh Co., Ltd.’s transactions
with the Group in the mostrecent fiscal years amounted-9-

Reasons for Appointment
Mr. Norio Watanabe served as President of
Enkoh Co., Ltd. for many years and now, as
Chairman, continues to be involved in its
management, and has extensive experienceand deep insight as a manager. The Company
therefore judges that he will be effective in
helping strengthen the decision-making
function and oversight function of theto ¥183 million in the fiscal
year ended August 31, 2020and ¥182 million in the fiscal
year ended August 31, 2021,
and such transaction amounts
are equivalent to 3.51% and3.03% of Enkoh Co., Ltd.’s
net sales in each fiscal year
respectively.
Consequently, Enkoh Co.,
Ltd. now falls under a major
business partner (a business
partner
whose
annualtransaction amount exceeds
3% of the net sales of theGroup of which such business
partner is a part for two
consecutive fiscal years) of
the Group listed in the
Company’s
Criteria
forIndependence of Outside
Officers.

Hiromu Tada

Tomomi Hara○-

The appointment of Mr.
Tomomi Hara as Director isbased on a capital andbusiness alliance agreement
concluded by the Company
with Aspirant Group Inc. and
AGII Investment Limited
Partnership, which is operated
and managed by Aspirant
Group Inc. Under theagreement,
which
was

- 10 -

Company’s Board of Directors and appointed
him as Outside Director.
While Mr. Norio Watanabe falls under abusiness executive of a business partner of theCompany, Enkoh Co., Ltd. did not fall under amajor business partner as defined in the
Company’s Criteria for Independence ofOutside Officers until the fiscal year ended
May 31, 2021. In fact, Enkoh Co., Ltd. hasaround 5,000 diverse business partners and theGroup also does not depend on Enkoh Co.,
Ltd. as a supplier. Further, while Mr. Norio
Watanabe holds 2,700 shares of theCompany’s stock, this shareholding accounts
for 0.02% of the total number of shares issued
and the Company previously designated him
as an independent officer, judging that there
was no risk of a conflict of interest arising
between himself and general shareholders.
Since Enkoh Co., Ltd. now falls under a“major business partner of the Group” asdefined in the Company’s Criteria for
Independence of Outside Officers, theCompany is removing his designation as anindependent officer.
After working as a teacher at Jissen Gakuen
Practical Commercial High School, from April
1978, Mr. Hiromu Tada not only served as
President of Tasman Corporation, which
manufactures plastic spray containers, but also
concurrently served as advisor to Jissen
Gakuen and trustee of Chuo University. The
Company appointed him as Outside Director
based on the expectation that he will increase
the diversity of the Board of Directors basedon his experience and knowledge as a manager
and educator and can also help strengthen
corporate value enhancing management andthe oversight function.
The Company has never had any transactions
with Tasman Corporation or with Mr. Hiromu
Tada personally. Further, given that Mr.
Hiromu Tada does not own any shares in the
Company and there is also no otherinformation about him that falls under officer
attribute information, the Company designatedhim as an independent officer, judging that
there is no risk of a conflict of interest arising
between himself and general shareholders.
Mr. Tomomi Hara is responsible for thebusiness management of investees of Aspirant
Group Inc. and also has a track record of
improving business as a manager at many
companies
including
Miura
Printing
Corporation,
Parking
Management
Organization, Ltd. and SAGAMI GROUPHOLDINGS Co., Ltd. The Company
appointed him as Outside Director to have him
leverage this extensive experience and deep
insight in the Company’s management.

announced on November 8,
2018, the Company has two
individuals from Aspirant
Group Inc. participate in its
management as Directors.
Further, based on said capitaland business alliance, AGII
Investment
LimitedPartnership owns 184,200
shares of the Company’s
issued stock and 2,600,000
potential
sharescorresponding to the stockacquisitionrightsofconvertible bonds with stockacquisition rights issued by
the Company.
The appointment of Mr.
Masaya Nakanishi as Director
is based on a capital andbusiness alliance agreement
concluded by the Company
with Aspirant Group Inc. and
AGII Investment Limited
Partnership, which is operated
and managed by Aspirant
Group Inc. Under theagreement,
which
was
announced on November 8,
2018, the Company has two
individuals from Aspirant
Group Inc. participate in its
management as Directors.
Further, based on said capitaland business alliance, AGII
Investment
LimitedPartnership owns 184,200
shares of the Company’s
issued stock and 2,600,000
potential
sharescorresponding to the stockacquisitionrightsofconvertible bonds with stockacquisition rights issued by
the Company.

Masaya Nakanishi

Ichijo Toda○

Mr. Masaya Nakanishi is responsible for thebusiness management of investees of Aspirant
Group Inc. and also has a track record of
improving business as a manager at many
companies including Industrial Revitalization
Corporation Japan, Dogan Advisors, Inc. (nowDogan, Inc.) and Enterprise Turnaround
Initiative Corporation (now Regional
Economy Vitalization Corporation of Japan).
The Company appointed him as Outside
Director to have him leverage this extensive
experience and deep insight in the Company’s
management.

Mr. Ichijo Toda has not only served as the headpriest of a religious corporation but also been
involved in supporting companies as trustee ofa public interest incorporated foundation thatprovides scholarships to students and as
councillor of the Tokyo Chamber ofCommerce and Industry. The Company
appointed him as Outside Audit & Supervisory
Board Member by resolution of the 32nd
Ordinary General Meeting of Shareholders
held in August 2018 based on the judgmentthat he can be expected to provide advice
based on his extensive experience and from an
ethical perspective and can therefore properly-- 11 -

perform the duties of Audit & Supervisory
Board Member of the Company.
Mr. Ichijo Toda was then appointed as Outside
Director by a resolution of the 34th Ordinary
General Meeting of Shareholders held in
August 2020 and retired as Outside Audit &Supervisory Board Member after the close of
said general meeting.
Further, given that while Mr. Ichijo Toda holds
600 shares of the Company’s stock, thisshareholding accounts for less than 0.01% of
the total number of shares issued and that there
is also no other information about him that
falls under officer attribute information, theCompany designated him as an independent
officer, judging that there is no risk of aconflict of interest arising between himself andgeneral shareholders.
Voluntary Establishment of Committee(s)Corresponding to Nomination Committee orRemuneration Committee

Yes

Status of Establishment of Voluntary Committees, Composition and Attributes of Chairperson

Committee’s Name

Committee Corresponding toNomination Committee
Nomination and Remuneration
Committee

Committee Corresponding to
Remuneration Committee
Nomination and Remuneration
Committee

Total Members (persons)

55

Full-time Members (persons)00Internal Directors (persons)2

2

Outside Directors (persons)3

3

Outside Experts (persons)00

Other (persons)00Chairperson

Internal Director

Internal Director

Supplementary Explanation
The Nomination and Remuneration Committee is not a committee based on laws and regulations.
[Audit & Supervisory Board Members]
Establishment of Audit & Supervisory Board
Maximum number of Audit & Supervisory Board
Members stipulated in Articles of Incorporation
Number of Audit & Supervisory Board Members

Established4
3

Cooperation among Audit & Supervisory Board Members, Accounting Auditor and Internal Audit Office
After the audit by the accounting auditor each quarter, Audit & Supervisory Board Members carry out confirmationof the content of the accounting audit.
In addition, the Audit & Supervisory Board Members exchange opinions with the accounting auditor on theaccounting auditor’s site visits throughout the fiscal year.
Further, the Company has established the Audit and Control Office, which has the role of evaluating management
and business activities from an impartial standpoint, identifying issues and providing guidance. The Audit and- 12 -

Control Office conducts business audits based on an annual plan and the audit results are reported to the Board of
Directors and also the Audit & Supervisory Board.
Appointment of Outside Audit & Supervisory
Board Members
Number of Outside Audit & Supervisory Board
Members
Number of Independent Audit & Supervisory
Board Members

Appointed
22

Relationship with the Company (1) Updated
Name

Attributeabc

Relationship with the Company (*)
d
e
f
g
h
i
j
k

l m
Takayuki Enomoto
CPA○
Tsuneo Sonobe
From another company○* Categories for “Relationship with the Company”* “○” indicates that the director currently falls under the category, or did so recently, and “” indicates that the director
fell under the category in the past.
* “●” indicates that a close relation falls under the category, or did so recently, and “▲” indicates that a close relation
fell under the category in the past.
a. Business executive (a person who executes business; hereinafter the same) of the Company or its subsidiaries
b. Non-executive director or accounting advisor of the Company or its subsidiaries
c. Non-executive director or business executive of a parent company of the Company
d. Audit & Supervisory Board Member of a parent company of the Company
e. Business executive of a fellow subsidiary of the Company
f. Person whose major client or supplier is the Company or a business executive thereof
g. Major business partner of the Company or a business executive thereofh. Consultant, accountant or legal professional who receives significant amounts of monetary consideration or otherproperty from the Company other than remuneration as an officer
i. Major shareholder of the Company (or if such shareholder is a corporation, business executive of such corporation)
j. Business executive of a business partner of the Company (which does not correspond to any of f, g, or h) (the Audit& Supervisory Board Member him or herself)
k. Business executive of a company, which has a reciprocal dispatch relationship with the Company for the dispatchof Outside Officers (the Audit & Supervisory Board Member himself/herself only)
l. Business executive of a recipient of donations from the Company (the Audit & Supervisory Board Member
himself/herself only)
m. Other
Relationship with the Company (2) Updated
Name

Takayuki Enomoto

Independent
Officer○

Supplementary Explanationof the Relationship

Reasons for Appointment
Mr. Takayuki Enomoto established an
accountant office after working for an audit
corporation. He has extensive experience andhigh levels of expertise gained through many
years’ involvement in the business of corporate
accounting and tax affairs providing advice andguidance. The Company appointed him as
substitute Outside Audit & Supervisory Board
Member by resolution of the 31st Ordinary
General Meeting of Shareholders held in
August 2017, based on the judgment that hewill fulfil his duties as Audit & Supervisory
Board Member of the Company in an
appropriate manner. Since the number of Audit& Supervisory Board Members was then set tofall short of the statutory required number with-- 13 -

the retirement of the Company’s Outside Audit& Supervisory Board Member Masaru Sato on
September 13, 2017, Mr. Takayuki Enomoto
became Outside Audit & Supervisory Board
Member with effect from said date.
The Company has never had any transactions
with Enomoto CPA Office or Mr. Takayuki
Enomoto. Further, given that Mr. Takayuki
Enomoto does not own any shares in the
Company and there is also no other information
about him that falls under officer attributeinformation, the Company designated him as
an independent officer, judging that there is norisk of a conflict of interest arising between
himself and general shareholders.

Tsuneo Sonobe○

Mr. Tsuneo Sonobe isRepresentative Director andChairmanof Takazono
Corporation, which supplies
Group pharmacies withmedical devices, medical
systems and other goods.
Takazono
Corporation’stransactions with the Groupin the most recent fiscal
years amounted to ¥129
million in the fiscal year
ended March 31, 2021 and¥3 million in the fiscal year
ended March 31, 2022, andsuch transaction amounts areequivalent to 0.62% and0.02%
ofTakazono
Corporation’s net sales ineach fiscal year respectively.
Consequently,
Takazono
Corporation does not fallunder a major business
partner (a business partner
whose annual transaction
amount exceeds 3% of the
net sales of the Group ofwhich such business partner
is a part for two consecutive
fiscal years) of the Group
listed in the Company’s
Criteria for Independence ofOutside Officers.

[Independent Officers]
Number of Independent Officers Updated

4

Matters Related to Independent Officers[Incentives]
Implementation of Measures to Provide Incentives
to Directors

Other- 14 -

Mr. Tsuneo Sonobe served as Representative
Director and President of Takazono
Corporation,whichplans,
develops,
manufactures and sells medical devices andmedical systems, for many years and now, as
Chairman, continues to be involved in its
management, and has extensive experience anddeep insight as a manager. The Company
therefore judges that it can reflect his advice
from an objective and different viewpoint in its
audit structure and appointed him as Outside
Audit & Supervisory Board Member by
resolution of the 34th Ordinary General
Meeting of Shareholders held in August 2020.
Mr. Tsuneo Sonobe falls under a businessexecutive of a business partner of the Company
but does not fall under a business executive ofa major business partner. Moreover, Takazono
Corporation has around 3,000 diverse business
partners and the Group also does not depend on
Takazono Corporation as a supplier. Since Mr.
Tsuneo Sonobe was then appointed as an
Outside Audit & Supervisory Board Member
by resolution at the 34th Ordinary General
Meeting of Shareholders held in August 2020,
the Company designated him as an independent
officer.

Supplementary Explanation
In 2013, the Company introduced stock-based compensation stock options for Directors for the purpose ofenhancing their motivation and morale to contribute to the continuous improvement of business performance andcorporate value over the medium to long term and implementing business more aware of increasing stock value by
strengthening the linkage between Directors’ remuneration and the Company’s business results and share price andhaving Directors share with shareholders not only benefits from higher stock prices, but also the risks involved infalling stock prices.
However, at a meeting of the Board of Directors held on July 27, 2020, the Company reviewed the officers’
remuneration system and resolved to introduce a restricted stock compensation plan, and the proposal on this plan
was resolved at the 34th Ordinary General Meeting of Shareholders held on August 26, 2020.
Under the restricted stock compensation plan, restricted stock is allotted to the Company’s Directors within amaximum amount of ¥65 million per year (revised to a maximum amount of ¥200 million per year at the Company’s
35th Ordinary General Meeting of Shareholders held on August 26, 2021). The maximum total amount of
remuneration to be paid to the Company’s Directors was previously set at ¥500 million per year.
Meanwhile, Outside Directors and Audit & Supervisory Board Members are not eligible under the restricted stockcompensation plan.
Since the previous stock-based compensation stock options plan was abolished as a result, the Company does notplan to grant any stock acquisition rights as stock-based compensation stock options under this plan in the future.
Recipients of Stock Options
Supplementary Explanation[Remuneration for Directors]
Disclosure of Individual Directors’ Remuneration

No individual disclosure

Supplementary Explanation Updated
Remuneration amounts in the most recent fiscal year are as follows.
Remuneration paid to Directors: ¥224 million (9 Directors)
Remuneration paid to Audit & Supervisory Board Members: ¥11 million (3 Audit & Supervisory Board
Members)
Policies on Determining Remuneration Amounts
and Calculation Methods

Yes

Disclosure of Policies on Determining Remuneration Amounts and Calculation Methods
The total amount of remuneration to be paid to Directors is determined based on officer remuneration standards,
within a maximum amount of remuneration of ¥500 million per year (provided, however, that this does not include
a salary portion payable to Directors who concurrently serve as employees of the Company) as resolved at theOrdinary General Meeting of Shareholders held on August 5, 2006. Meanwhile, the total amount of remuneration
paid to Audit & Supervisory Board Members is determined within a maximum amount of ¥50 million per year, as
resolved at the Ordinary General Meeting of Shareholders held on August 5, 2006.
[Supporting System for Outside Directors (and Outside Audit & Supervisory Board Members)]
The Company makes proposals and reports to be put before the Board of Directors available to view in advanceand provides explanations in advance in response to inquiries from Outside Directors or Outside Audit &Supervisory Board Members or on any important matters. The Administrative Division is responsible for contacting
and making adjustments with Outside Directors. In addition, the Audit and Control Office and the accounting
auditor liaise with each other in their dealings with Outside Audit & Supervisory Board Members, including
exchanging opinions with them, resolving any identified issues and checking improvements.

- 15 -

2. Matters Concerning Functions of Business Execution, Auditing, Oversight, Nomination andDetermination of Remuneration (Overview of Current Corporate Governance System) Updated
As a Company with an Audit & Supervisory Board, the Company has established a system whereby the Board of
Directors makes decisions on management policies and other important matters and supervises business execution
and the Audit & Supervisory Board audits the performance of duties. Regarding the Board of Directors, in a bid tofurther enhance corporate governance, the Company appointed an additional Outside Director by resolution of the
30th Ordinary General Meeting of Shareholders on August 25, 2016 and appointed two more Outside Directors by
resolution of the 33rd Ordinary General Meeting of Shareholders on August 28, 2019 and, although one Outside
Director retired from office on May 31, 2020, the Company appointed another one by resolution of the 34th
Ordinary General Meeting of Shareholders on August 26, 2020, and currently has five Outside Directors.
The Audit & Supervisory Board appointed an additional Outside Audit & Supervisory Board Member by resolutionof the 32nd Ordinary General Meeting of Shareholders on August 28, 2018 and one Outside Audit & Supervisory
Board Member retired from office at the end of June 2019. Accordingly, while one Outside Audit & Supervisory
Board Member retired from office at the close of the 34th Ordinary General Meeting of Shareholders on August
26, 2020, the Audit & Supervisory Board appointed an additional Outside Audit & Supervisory Board Member by
resolution at the same General Meeting of Shareholders and is currently composed of a majority of Outside Audit& Supervisory Board Members, with two out of its three members being outside Audit & Supervisory Board
Members, and it fulfills its role of auditing the performance of duties through cooperation with the accounting
auditor and the Audit and Control Office.
1. General Meeting of Shareholders
Whilst the General Meeting of Shareholders is a body responsible for making certain resolutions and approvals as
the Company’s highest decision-making body, the Company also recognizes it as a forum for disclosing andexplaining in detail the Company’s actual management and direction to shareholders. Based on this recognition,
the General Meeting of Shareholders is run in a manner that allows shareholders to gain a proper understanding of
the Company.
2. Board of Directors
The Board of Directors is made up of 11 members including five Outside Directors (as of August 26, 2022) andholds extraordinary board meetings as and when necessary, in addition to ordinary board meetings once every
month. Based on the Company’s Board of Directors’ Regulations, the Board of Directors deliberates on anddetermines important matters such as management policies, management strategies, business plans, andorganization- and HR-related matters, and also supervises the business execution of the Company and its
subsidiaries. Full-time and part-time Audit & Supervisory Board Members also attend and express opinions at
meetings of the Board of Directors.
3. Audit & Supervisory Board
The Company’s Audit & Supervisory Board consists of three Audit & Supervisory Board Members including two
Outside Audit & Supervisory Board Members. One member is full-time and two members are part-time. Each Audit& Supervisory Board Member engages in activities such as attending meetings of the Board of Directors andvarious committees and conducting departmental audits in accordance with an audit policy, division of duties, andaudit plan determined by the Audit & Supervisory Board, and verifies the legality of Directors’ performance of
duties, the preservation and management of company assets, and the effectiveness of internal controls incollaboration with the accounting auditor.
4. Nomination and Remuneration Committee
The Nomination and Remuneration Committee is a non-mandatory advisory body to the Board of Directors,
established to increase the fairness, transparency and objectivity of procedures for nominating Directors anddetermining remuneration, etc. for Directors and to strengthen corporate governance systems. When requested by
the Board of Directors, the Committee deliberates on each of the matters disclosed in accordance with
Supplementary Principle 4-10-1, and makes a report to the Board of Directors. The Board of Directors makes
decisions on such matters, paying utmost respect to the reports and proposals of the Committee.
The Committee is composed of Directors appointed by resolution of the Board of Directors and shall have three ormore members, a majority of which shall be Outside Directors. Resolutions are passed by this Committee by amajority of the members present when a majority of the members entitled to participate in the vote are present.
Further, members with a special interest in a resolution may not participate in the vote.
5. Status of Committees
In the dispensing pharmacy business, dispensing errors and leaks of personal information are major risk factors.

- 16 -

The Company has established the following committees and study groups internally to strengthen the risk
management system for such risks, and is focusing on this as a priority issue.
Error Prevention Study Group
Each dispensing pharmacy has a person in charge of error prevention and a meeting is held each month to study
error prevention measures based on information about in-store incidents.
Error Prevention Committee
The committee consists of members selected from each area and conducts activities such as devising error
prevention measures based on analysis of collected incident data and raising awareness about error prevention
initiatives among stores in each area. The committee meets once a month, gathers information about incidents
that have occurred, their causes, and future prevention measures, and reports to the Board of Directors as
appropriate.
Dispensing Error Review Committee
In the event of a dispensing error, the committee verifies the level of risk reported by the respective store. In thecase of a high-level dispensing error which requires action to be taken, an Error Countermeasures Committee isimmediately established.
Error Countermeasures Committee
An Error Countermeasures Committee is established in the case of a serious dispensing error which endangers
health, and it determines how to deal with patients, medical institutions and other relevant parties.
Personal Information Protection Committee
The Company has established the Personal Information Protection Committee, with a Director as the officer incharge, in accordance with the Personal Information Protection Regulations, to avoid the risk of information
leaks.
Compliance Committee
The Compliance Committee conducts activities to comprehensively raise awareness of the compliance structure
across the entire Group including senior management, such as establishing and applying a Compliance Manualand conducting compliance training and awareness raising activities.
Sustainability Committee
The Company has established a Sustainability Committee for the purpose of promoting management thatemphasizes and considers sustainability in order to properly protect/develop the environment, society andeconomy going forward, thereby contributing to the Group’s long-term growth. The committee holds various
discussions concerning sustainability, determines sustainability-related policies, targets, measures and othermatters, and regularly reports progress to the Board of Directors. It is also monitored by the Board of Directors
and reflects its feedback and advice in initiatives.
6. Status of Internal Audits and Audits by the Audit & Supervisory Board Members
The Company has established the Audit and Control Office as an organization under the direct control of the Boardof Directors and, with one General Manager and three members, the office is responsible for verifying that internal
controls are functioning properly, including compliance with laws, regulations and internal rules and businessefficiency.
The office cooperates with the Audit & Supervisory Board and the accounting auditor such as by holding meetings
on a regular basis, exchanging opinions with them and confirming that identified issues are resolved or improved
to ensure that audits are carried out effectively.
The Audit and Control Office also conducts audits of the status and functioning of the committees listed in “5.
Status of Committees” above.
7. Status of Accounting Audits
The Company has concluded an auditing contract with Grant Thornton Taiyo LLC for accounting audit services
and undergoes audits under the contract.
(Names of certified public accountants who execute operations)
Hiroshi Tsurumi, Designated and Engagement Partner
Tomohiko Shinoda, Designated and Engagement Partner
The people assisting the Company’s accounting audit work includes 15 certified public accountants and 23 otherpeople.
8. Status of Other Third Parties Such As Lawyers
The Company has concluded consulting contracts with two law firms, and also receives advice from other lawyers
depending on the area of expertise. Furthermore, the Company has established a system for consulting experts
whenever necessary about other specialist areas such as tax affairs and labor affairs.
9. Exemption from Liability of Directors and Audit & Supervisory Board Members- 17 -

The Company’s Articles of Incorporation stipulate as a matter resolved by the General Meeting of Shareholders
that can be resolved by the Board of Directors that the Company may, by resolution of the Board of Directors,
exempt Directors (including persons who were Directors) and Audit & Supervisory Board Members (including
persons who were Audit & Supervisory Board Members) from liability for damages set forth in Article 423,
Paragraph 1 of the Companies Act, up to the limit of the amount provided for in laws and regulations. The purposeof this is to allow Directors and Audit & Supervisory Board Members to fulfil their expected roles.

3. Reasons for Adoption of Current Corporate Governance System
As a pharmacotherapy professional, the Group believes it has mission to contribute to the local community throughactive involvement in community medical care and it has positioned the establishment of fair and transparent
corporate governance as a key management issue partly for the purpose of accomplishing this mission.
Consequently, the Company constantly confirms the effectiveness of corporate governance systems, and byreviewing them as and when necessary, works hard to strengthen and enhance systems according to the Group’s
growth stage.
As a Company with an Audit & Supervisory Board, the Company has established a system whereby the Board of
Directors makes decisions on management policies and other important matters and supervises business execution
and the Audit & Supervisory Board audits the performance of duties.
Regarding the Board of Directors, the Company appointed an Outside Director by resolution of the Ordinary
General Meeting of Shareholders in August 2014 and appointed another Outside Director at the Ordinary General
Meeting of Shareholders the following year. Then, in a bid to further enhance corporate governance, the Company
appointed an additional Outside Director by resolution of the 30th Ordinary General Meeting of Shareholders on
August 25, 2016 and appointed two more Outside Directors by resolution of the 33rd Ordinary General Meeting of
Shareholders on August 28, 2019 and, although one Outside Director retired from office on May 31, 2020, theCompany appointed another one by resolution of the 34th Ordinary General Meeting of Shareholders on August
26, 2020, and currently has five Outside Directors.
The Audit & Supervisory Board consists of a majority of Outside Audit & Supervisory Board Members and it
fulfills its function of auditing the performance of duties through cooperation with the accounting auditor and the
Audit and Control Office.
Further, the Company established the Nomination and Remuneration Committee in May 2016, for the purpose ofstrengthening corporate governance. In addition, the Company has established various committees, putting in placea system for addressing risk factors such as dispensing errors.
Whilst committed to the continued strengthening and enhancement of corporate governance systems, the Company
recognizes that, thanks to the actions described above, the corporate governance systems it currently has in place
adequately fulfil their functions at the present time.

- 18 -

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Meeting of Shareholders and Smooth Exercise of Voting Rights
Supplementary Explanation
Scheduling Annual General
Shareholders Meeting Avoiding
the Peak Day

The Ordinary General Meeting of Shareholders is held in late August and theCompany selects a day on which general shareholders are expected to attend.

Other

The convocation notice and notice of resolutions is published in full on the
Company’s website.

2. IR Activities
Supplementary Explanation
Preparation and Publication ofDisclosure Policy
Regular Investor Briefings for
Individual Investors
Regular Investor Briefings forAnalysts and Institutional
Investors
Posting of IR Materials on
WebsiteEstablishment of Department
and/or Manager in Charge of IR

The Company formulated a disclosure policy for the
purpose of disclosing information about the Company
promptly, accurately and fairly, and publishes this policy
on its website.
The Company explains details of financial results,
growth strategies and future business expansion toindividual investors.
The Company holds briefings every quarter to explain
details of its financial results and business strategies toanalysts and institutional investors.
On its website (https://www.pharmarise.com/ir/), theCompany posts IR materials such as IR news, financial
results briefing materials, business reports, and annual
securities reports as well as financial highlights andshare information.
The Corporate Planning Department is the department incharge of IR.

Explanation byRepresentative

Yes
Yes

3. Measures to Ensure Due Respect for Stakeholders
Supplementary Explanation
Internal Rules Stipulated for
Respecting the Position of
Stakeholders

Implementation ofEnvironmental Activities, CSR
Activities, etc.
Development of Policies on
Information Provision to
Stakeholders

The Company has established a Compliance Committee which is chaired by the
Representative Director and President and is endeavoring to promote complianceactivities.
The Group’s pharmacies throughout Japan actively participate in community
activities including participating in community-based medical teams andemergency medical systems.
The Company’s basic disclosure policy is to seek prompt, accurate and fairdisclosure to shareholders and to also actively focus on IR activities.

- 19 -

IV. Matters Related to the Internal Control System
1. Fundamental Views on Internal Control System and the Progress of System Development
The Company has set out a basic policy on internal control as shown below. The policy was partially revised at a
meeting of the Board of Directors held on August 28, 2019.
1. System to ensure the adherence to laws, regulations, and the articles of incorporation by Directors and employees
in their execution of duties
The Company shall establish corporate ethics regulations and other regulations concerning compliance systems
and shall position these as a Behavior Standard for ensuring that officers and employees of the Company and its
subsidiaries act in compliance with laws and regulations, the Articles of Incorporation and social norms. The
Company shall also conduct activities to thoroughly instill compliance, such as providing training to officers andemployees, under the leadership of the Compliance Committee established in accordance with the Compliance
Regulations.
The internal auditing business unit shall audit the status of compliance.
These activities shall be reported to the Board of Directors and Audit & Supervisory Board Members on a regularbasis. As a way for the employees of the Company and its subsidiaries to directly provide information about legallyquestionable activities, the Company shall establish and operate a compliance helpline at an external law firm.
2. Matters regarding the retention and management of information relating to the execution of duties by Directors
The Company shall record and retain the minutes of Board of Directors’ meetings, internal approval documents,and other information on the performance of duties by Directors, either in the form of documents or electronic
recordings (hereinafter “documents, etc.”) in accordance with the Internal Approval Regulations and the Document
Management Regulations.
Directors and Audit & Supervisory Board Members shall be able to access these documents, etc. at any time inaccordance with the Internal Approval Regulations and the Document Management Regulations.
3. Regulations concerning the management of risk of loss and other systems
The Company’s departments in charge of risk in relation to matters such as compliance, environment, accidents,
quality and information security shall each establish rules and guidelines, implement training, and prepare,
distribute, etc. manuals, and the internal control business unit shall be responsible for monitoring the status of risk
across the organization and implementing company-wide measures and the operating company managementbusiness unit shall be responsible for risk management at subsidiaries and stores.
The Board of Directors shall promptly appoint a Director responsible for measures in response to any new risk thathas arisen.
4. System to ensure the efficient execution of duties by Directors
The Board of Directors shall deliberate on management policies and important management-related matters and,based on the Company’s Board of Directors’ Regulations, the Board of Directors shall deliberate on and determine
important matters such as management policies, management strategies, business plans, and organization- and HRrelated matters, and shall also supervise the business execution of the Company and its subsidiaries. The Company
shall also set groupwide targets shared by Directors and employees alike.
5. System for ensuring the appropriateness of the operations of the corporate group which consists of the Company
and its subsidiaries
The Company shall appoint Directors in charge and general managers of business units as the persons responsible
for Group business, and shall confer on them the authority and responsibility for developing a legal compliancesystem and risk management system, and the general manager of the internal control business unit shall promoteand manage these activities across the Group.
The operating company management business unit shall be responsible for the general management of subsidiaries
in accordance with the Regulations for Management of Affiliated Companies, and the administration business unit
shall regularly supervise the status of their accounts. Internal audits shall also be carried out in relation to
subsidiaries.
The representative directors of subsidiaries shall make business reports to the Company every quarter, in principle.
6. System related to employees appointed to assist Audit & Supervisory Board Members at the request of Audit &Supervisory Board Members, and matters related to the independence of such employees from Directors
Audit & Supervisory Board Members may order employees belonging to the internal audit business unit toundertake matters necessary for auditing operations, and employees necessary for auditing operations acting under
the orders of Audit & Supervisory Board Members shall engage in operations for Audit & Supervisory Board- 20 -

Members as a priority, if requested to do so, and shall not be under the command of Directors, the general managerof the internal audit business unit or other interested parties.
7. Systems of reporting to Audit & Supervisory Board Members by Directors and employees and other systems
regarding reporting to Audit & Supervisory Board Members
The Company shall have a system under which Directors and employees of the Company and its subsidiaries
promptly report to Audit & Supervisory Board Members in the case where they discover matters prescribed by law
or any fact that will seriously impact the Company or the Group. There shall also be a system under which theinternal audit business unit shall hold meetings with Audit & Supervisory Board Members on a regular basis andwhenever necessary and shall report the status of implementation of internal audits and other matters to Audit &Supervisory Board Members.
The Company shall prohibit the disadvantageous treatment of those who make a report to the Company’s Audit &Supervisory Board Members on the basis that they made such a report.
8. Other systems for ensuring the effective audit by Audit & Supervisory Board Members
The Company shall establish regular meetings for the exchange of opinions between Audit & Supervisory Board
Members and the Representative Director and President. In addition, the full-time Audit & Supervisory Board
Members shall attend other important meetings as needed, in addition to the meetings of the Board of Directors, tofigure out the process of important decision-making and the status of business execution and shall inspect importantinternal approval documents and other important documents related to business execution and ask the Directors
and employees or the Directors and employees of subsidiaries for an explanation as needed.
Audit expenses shall be borne by the Company in accordance with the requests of Audit & Supervisory Board
Members.
9. System for ensuring the reliability and validity of financial reports
Each business unit and subsidiary of the Company shall, under the leadership of the internal control business unit,
ensure the reliability and validity of financial reports by striving to maintain a sound internal control environmentin accordance with the provisions of the Financial Instruments and Exchange Act, stepping up control activities at
a groupwide level and a business process level, developing an internal control system that allows effective and fairevaluation, and endeavoring to operate the system properly.
10. System for the elimination of antisocial forces
The Company and its subsidiaries shall be resolute in their stance against antisocial forces that pose a threat to theorder of society and sound corporate activities and shall deal with them as an entire organization.
The Company’s general affairs business unit shall be the business unit which deals with any unjust demands fromantisocial forces and it shall deal with such demands in cooperation with the police and other relevant bodies.

2. Fundamental Approach to Eliminating Antisocial Forces and State of Related Efforts
The Company shall be resolute in its stance against antisocial forces that pose a threat to the order of society andsound corporate activities and shall deal with them as an entire organization. The Company’s general affairs
business unit shall be the business unit which deals with any unjust demands from antisocial forces and it shall deal
with such demands in cooperation with the police and other relevant bodies.

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

No

Supplementary Explanation-

2. Other Matters Concerning the Corporate Governance System
1. The Company believes that it is important to analyze and evaluate the risks it might face and to take necessary
countermeasures based on such analysis and evaluation. The Company shall strive to develop a system whereby itcontinually monitors the operating status of internal control systems and constantly seeks improvement andwhereby it takes appropriate action to address newly recognized risks resulting from the expansion of businessdomains, etc. and is always be prepared for the assumed risks.
2. The outline of the timely disclosure system is as follows.
The Company has set out matters regarding internal information management and operation in the Information
Disclosure Regulations, the Official Authority List for Approval of Timely Disclosure Information and the Insider
Trading Prevention Regulations, and endeavors to disclose information in a timely and appropriate manner.
(Basic Policy)
The Company fully recognizes that the timely and appropriate disclosure of corporate information to investors
forms the basis of a sound securities market and continually ensures the prompt, accurate and fair disclosure ofcorporate information from the perspective of investors and strives to execute its business in good faith.
(Internal System for Timely Disclosure)・ In the case where a matter that falls under timely disclosure occurs or might occur, the general manager of thebusiness unit specified in the Official Authority List for Approval of Timely Disclosure Information shall reportto the general manager of the Corporate Planning Department (the general manager in charge) and theinformation shall be centrally controlled by the general manager in charge.
・ In practical terms, the general manager of the business unit specified in the Official Authority List for Approvalof Timely Disclosure Information shall draft the disclosure as the proposer, have the general manager of theGeneral Affairs Department confirm the attributes of the counterparty and that the counterparty is not anantisocial force, and then have the general manager in charge check whether or not the information falls undertimely disclosure information before circulating the timely disclosure information for internal consultation.
・ Based on the approval authority specified in the Official Authority List for Approval of Timely Disclosure
Information, the flow of internal consultation shall be as follows: proposer → general manager in charge →officer in charge of information disclosure → President → approval of Board of Directors or approval of
President → report to Board of Directors (matter approved by President). Until completion of information
disclosure, the Company shall endeavor to prevent leaks by narrowing down as much as possible the personnel
who come into contact with such information and the officers and employees who come into contact with suchinformation shall not leak the information they have received to others.
・ The Company shall appoint one officer in charge of information disclosure by resolution of the Board of
Directors to constantly check that company information is disclosed in a timely and appropriate manner.
Compliance with disclosure obligations shall be regularly confirmed through the audits of the Audit and Control
Office.
(Disclosure Timing and Methods)
・ After the internal consultation process is completed, the general manager in charge shall disclose the timely
disclosure information via TDnet.
・ After disclosure via TDnet is complete, the timely disclosure information is posted on the Company’s website.
The Company uses an automated posting system provided by a specialist service provider to post the information
on its website. As a result, the Company’s timely disclosure information is automatically posted on the
Company’s website after disclosure via TDnet is complete.

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