Japan Tobacco Inc.
To Our Shareholders
Supplementary Explanation for “Item 3: Election of Five (5) Audit & Supervisory
Board Members” of the 38th Ordinary General Meeting of Shareholders
Japan Tobacco Inc. (JT) plans to propose Mr. Shigeru Taniuchi (“Mr. Taniuchi”) as a
candidate for Outside Audit & Supervisory Board Member (the “Proposal”) at the 38thOrdinary General Meeting of Shareholders to be held on March 24, 2023.
We would therefore like to provide a supplemental explanation regarding Mr. Taniuchi’s
independence and his knowledge, experience, and skills as below.
Shareholders are encouraged to use the information as a reference when exercising yourvoting rights.
1. Background to Provide Supplementary Explanation
The Company provides a supplementary explanation to inform our shareholders that theCompany believes that there is no concern about Mr. Taniuchi’s suitability andindependence as an Outside Audit & Supervisory Board Member of the Company despite
his work experience in the Ministry of Finance, which is headed by the Minister of Finance
who is the Company’s largest shareholder.
2. Supplementary Explanation from the Company(1) Our Approach to Appointment of Audit & Supervisory Board Members
Audit & Supervisory Board Members assertively exercise its authority as an independentorganization entrusted by shareholders, including attending and speaking at the Boardof Directors meetings and other important meetings as well as actively inspecting
business sites. In addition, they also conduct audits appropriately from an objective
viewpoint in accordance with the characteristics of the duties of the Outside/Standing
Audit & Supervisory Board members.
The Audit & Supervisory Board Members strive to ensure sound and sustainable growthof the Company and to maintain and enhance the trust from society by overseeing theperformance of duties by the Directors and Executive Officers.
As stipulated in the “JT Corporate Governance Policy(Note),” candidates for the Audit &Supervisory Board Members are nominated by resolution of the Board of Directors as
persons who are expected to perform their duties appropriately from a position
independent of the Board of Directors. The resolution is made after securing
opportunities to receive appropriate advice from Independent Outside Directors byhaving the Advisory Panel on Nomination and Compensation deliberate on a candidate

proposal formed by the President and report the content and results of its deliberations
to the Board of Directors, upon receiving prior consent from the Audit & Supervisory
Board.
(2) Independence of Mr. Taniuchi
Mr. Taniuchi entered the Ministry of Finance in 1986 and worked in fields such as finance,taxation, and legal affairs, including in the Regional Taxation Bureau. We judge there isno concern about independence because a certain period of time has passed since heretired from important positions at the Ministry of Finance, and satisfies the Criteria forEvaluating the Independence of Outside Executives of the Company (retrospective
period: the past five years) and the requirements of an independent auditor prescribedby the Tokyo Stock Exchange, Inc.
(3) Roles and Skills Expected of Mr. Taniuchi
Mr. Taniuchi has extensive experience over many years of serving in a wide range ofimportant positions in ministries and agencies, and through this has acquired extensive
experience and deep knowledge of such fields as finance and legal affairs. In addition,
as Deputy Director-General or Director-General at the Ministry of Health, Labour andWelfare, he was in charge of measures for welfare and the needy, collection of remainsof war dead, revision of medical fees, revision of nursing care fees, and other issues.
Also as Head of the office of the Cabinet Secretariat, he was involved in the issues
including declining birthrates and loneliness and isolation, as well as other multifacetedissues related to local communities and the environment. Through such diverse
interactions in both the public and private sectors, he has developed a deep knowledgeof society. We judge that his broad outlook and high standing underpinned by his wideranging experience will enable him to make a significant contribution to the effective
auditing of the Group in this highly uncertain business environment.
The Audit & Supervisory Board is composed of members with abundant experiences in
the fields of management, law, finance, accounting and others. We believe that hisextensive experience and insight in many fields will contribute to a more rigorous andappropriate auditing system, and that his roles as Standing Audit & Supervisory Board
Member and Outside Audit & Supervisory Board Member facilitate improvements toauditing from a third party perspective, and will lead to a strengthening of the Group’s
corporate governance.
If “Item 3: Election of Five (5) Audit & Supervisory Board Members” is approved as
proposed, the skills matrix for the new Audit & Supervisory Board member structure isas follows.

Skills Matrix of Candidates for the Company’s Audit & Supervisory Board Members (NewStructure)

Areas in which
the skills areexpected to beparticularly
effective

Corporate
Management
GlobalManagement
Corporate
Finance,
Accounting
and Capital
PolicyLegal,Complianceand RiskManagement
IT /Information
Security
Corporate
Governance
Sustainability /Environment
and Society
D&I /Organizational
Behavior andHuman
Resource
Management
Business
Development /M&A

Hideaki
KashiwakuraStanding Audit& Supervisory
Board Member

Audit & Supervisory Board Members
Tsutomu
ShigeruNobuo Inada
HashimotoTaniuchiStandingAudit &Supervisory
Standing Audit
Outside Audit
Board& Supervisory& Supervisory
MemberBoard Member
Board Member
Outside Audit& Supervisory
Board Member

HirokoYamashina

Outside Audit& Supervisory
Board Member

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* D&I (Diversity and Inclusion)

As stated above, the Company believes that Mr. Taniuchi is qualified to serve as an
Outside Audit & Supervisory Board Members of the Company because he isindependent and has sufficient knowledge, experience, and skills required of an Audit &Supervisory Board Member of the Company.
(Note) “JT Corporate Governance Policy” is posted on the Company’s website.
https://www.jt.com/about/corporate_governance/index.html