Corporate Governance Report
Last Update: June 26, 2024
EXEO Group, Inc.
Tetsuya Funabashi, President & CEO
Contact: Accounts and Finance Division(TEL: +81-3-5778-1105)
Securities Code: 1951
http:// www.exeo.co.jp/

The corporate governance of EXEO Group, Inc. (the “Company”) is described below.

I.

Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other
Basic Information

1. Basic Views
The Company and its subsidiaries (the “Group”) aim to maintain the full trust of shareholders and all otherstakeholders by operating with integrity and a high standard of transparency. To this end, we recognize that
establishing and maintaining an organizational structure and management systems through which corporate
governance can effectively function is an important management issue. Moreover, it is our basic policy tomake ongoing improvements to strengthen corporate governance mechanisms that are suitably tailored to theGroup’s circumstances, including the assessment of structures for monitoring management in light of changes
in social conditions, laws and other developments.
[Reasons for Non-compliance with the Principles of the Corporate Governance Code]
The Company has implemented all principles of Japan's Corporate Governance Code (June 11, 2021 revision).
[Disclosure Based on the Principles of the Corporate Governance Code]Update[Principle 1.4: Cross-Shareholdings]
With respect to regular stocks listed on domestic or foreign stock exchanges which are held for reasons otherthan pure investment purposes, the Company reassesses the benefits of holding each individual stock every
year, quantitatively verifying dividend income and related returns and also conducting a careful qualitative
examination as to whether the shareholding contributes to improvement in the Company's corporate value.
The Company will continue to hold stocks if verification results show that holding them is beneficial and seek
to reap the benefits from holding them. However, if the benefits of holding shares have diminished, theCompany will seek improvement in the situation for a time but will consider selling the stocks if there is noprospect of improvement. The benefits of shareholdings are reassessed through verification of each individual
stock by the Board of Directors and the Management Council.
Regarding the exercise of voting rights associated with cross-shareholdings, the Company votes in favor of
proposals which will enhance corporate value and votes against proposals judged detrimental to corporate
value.
Misconduct, compliance breaches and activities which pose a serious problem to ESG initiatives are deemed
detrimental to corporate value. The Company judges whether to vote in favor or against proposals based on acareful case-by-case examination of such activities and each proposal.

-1-

[Principle 1.7: Related Party Transactions]
The Company categorizes competitive transactions and conflict-of-interest transactions between Directors
and the Company as matters to be approved by the Board of Directors and checks and manages competitivetransactions, conflict-of-interest transactions, related party transactions and important concurrent positions inother companies or organizations every period.
[Supplementary Principle 2.4.1]
The Company states its views on the achievement of diversity in the Diversity & Inclusion Declaration. The
Company is committed to assigning active roles to diverse human capital, including women, those who joined
the Company as mid-career employees, and non-Japanese.
Goals and the status of goal achievement as well as information about the Company's diversity promotion
policy, details about its specific initiatives, and the status of promotion of diversity are available at its website.
https://www.exeo.co.jp/en/company/sustainability/#csr_diversity
The Company's human capital development policy and internal environment development policy set out
themes for initiatives that include the development of a corporate culture and workstyle reforms, the creationof opportunities for diverse human resources to participate actively, and support for such human capital. The
status of progress in initiatives under each theme is also disclosed on the Company's website.
In the global business (including overseas subsidiaries), the ratio of non-Japanese managers is around 90%.
In addition, the ratio of those who joined the Company as mid-career employees among all managers is higher
than 30%. The Company will continue to assign and recruit human capital who can respond flexibly toenvironmental change on an as-needed basis, aiming to maintain the same ratios.
[Principle 2.6: Roles of Corporate Pension Funds as Asset Owners]
The Retirement Pension Asset Management Committee composed of the General Manager of the Corporate
Planning Division, the General Manager of the Accounts & Finance Division, the General Manager of the
Human Resources Department, trade union officials as representatives of beneficiaries and others determines
the policy for management of pension assets and conducts regular monitoring to ensure reasonable
management of pension assets.
Regarding operation of the corporate pension plan, the organization in charge has human resources with thenecessary experience and qualifications and also provides training, and the Company comprehensively
evaluates and monitors the pension operator, taking factors such as performance and investment policy into
consideration.
[Principle 3.1: Full Disclosure]I) The Company conducts business operations in line with its corporate philosophy "Cultivating Technological
Capabilities, Seeking Affluence and Contributing to Society" and with integrity and transparency as its basic
code of conduct for management.
In addition, the Company has also established the Group Purpose, which clearly states the significance of theGroup's existence in society as, “Bring the benefits of connectivity to all”.
In May 2021, the Company announced its 2030 Vision and Medium-term Management Plan, which indicate
the direction of its business operations based on its corporate philosophy and Group Purpose.
In line with its 2030 Vision "Engineering for Fusion - Engineering connecting everything in society to the
future," the Group will practice ESG management and help solve social issues through innovation andengineering, aiming to be a corporate group that is needed in Japan and around the world.
Please refer to the Company's website (Management Policy section on the Investor Relations page) for detailsof the 2030 Vision and FY2025 results targets and other details under the Medium-term Management Plan.
II) The Group aims to maintain the full trust of shareholders and all other stakeholders by operating withintegrity and a high standard of transparency. To this end, we recognize that establishing and maintaining anorganizational structure and management systems through which corporate governance can effectivelyfunction is an important management issue. Moreover, it is our basic policy to make ongoing improvements
to strengthen corporate governance mechanisms that are suitably tailored to the Group’s circumstances,including the assessment of structures for monitoring management in light of changes in social conditions,laws and other developments.
III) "Board policies and procedures in determining the remuneration of the senior management and directors"
are as stated in "II. Business Management Organization and Other Corporate Governance Systems regarding-2-

Decision Making, Execution of Business, and Oversight [Remuneration for Directors/Executive Officers]
Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods" below.
IV) The Company adopts the following method for the nomination of director candidates. After deliberationby the Nomination Committee, which is an internal organ of the Board of Directors, the Representative
Director recommends individuals of outstanding character and insight who possess high ethical standards, thepower to implement reforms, leadership and other qualities, and the Board of Directors deliberates thesuitability of the candidates, makes an informal decision and refers the matter to the General Meeting of
Shareholders.
The Board of Directors determines the appointment and dismissal of Representative Directors and Directors
with special titles.
When a Director needs to be dismissed, the Board of Directors puts a proposal for the dismissal of such
Director before the General Meeting of Shareholders.
The Company adopts the following method for the nomination of Audit & Supervisory Board Member
candidates. The Representative Director recommends individuals with the deep insight needed to fulfil therole of Audit & Supervisory Board Member, including experience of corporate management and specialist
knowledge about finance and accounting and, obtains the consent of the Audit & Supervisory Board before
referring the matter to the General Meeting of Shareholders.
V)The Company discloses the reasons for nominating Director and Audit & Supervisory Board Member[Supplementary Principle 3.1.3][Sustainability initiatives]
Information about the Company's sustainability initiatives is available at its website.
https://www.exeo.co.jp/en/company/sustainability/#Integrated_report[Initiatives on human capital and intellectual properties]
The Company is working on developing and reinforcing its human resources, the most important management
resource of a company. In July 2021, the Company established the Human Resources Development Divisionand has since been proceeding with human resources deployments and development planning across the entire
Group with consciousness of total optimization.
The Company has also been proactive in making inventions that contribute to safety and efficiency
improvement and has considerable achievements in this respect. At the same time, the Company has enhanced
initiatives in intellectual properties, including employee training on the importance of such properties.
The Company discloses information about some of its intellectual properties and contents of its humanresources strategy in the Medium-Term Management Plan.
https://www.exeo.co.jp/en/ir/keiei.html[Risks and revenue opportunities related to climate change]
In December 2021, the Company expressed its support for the TCFD and joined the TCFD Consortium. In
April 2022, the Company established the Sustainability Committee as an advisory body to the Management
Council and the Sustainability Promotion Office as an organization dedicated to sustainability. The
Company will further enhance these initiatives to solve social issues, including environmental and climatechange problems, and proactively disclose information about risks and opportunities in line with the TCFD
framework.
[Supplementary Principle 4.1.1]
The Company's Board of Directors mainly makes decisions on the execution of important business provided
for in laws and regulations and the Rules of the Board of Directors and oversees Directors' execution of duties.
The Responsibility Rules and other regulations clearly stipulate the scope of delegation to senior management.
[Principle 4.9: Independence Standards and Qualification for Independent Directors]
The Company strives to secure independent officers in accordance with Article 436-2 and Article 445-4 of the
Securities Listing Regulations of Tokyo Stock Exchange, Inc. (TSE) and the independence criteria ("Listing
Guidelines") of the TSE.
The reasons for appointment of each independent officer are as stated in "II. Business Management
Organization and Other Corporate Governance Systems regarding Decision Making, Execution of Business,
and Oversight" below.
-3-[Supplementary Principle 4.10.1]
The Company has set up the Nomination Committee and the Compensation Committee, each consisting of
Directors including Independent Directors elected by the Board of Directors, thus raising common
understanding of criteria for the evaluation and compensation of each Director, etc. in its efforts to improve
the oversight function. The majority of each committee comprises Independent Outside Directors and eachcommittee is chaired by an Outside Director.
(Succession planning)
The Company recruits and invites management human resources from outside the Group as well as internally.
From among them, the Representative Director selects a person who can contribute to the sustainable
development of the Company with deep understanding of the Group's philosophy and management vision, as
well as a high sense of ethics and leadership, as their successor. The decision is made through deliberations
by the Nomination Committee and the Board of Directors.
[Supplementary Principle 4.11.1]
The Company seeks to energize the Board of Directors and improve governance by ensuring balance anddiversity in the composition of Directors in terms of career history, field of expertise and suchlike.
The Company believes that the number of Directors on the Board allows it to respond quickly and accurately
to a dramatically changing environment and it has sought to speed up decision-making still further throughthe adoption of an Executive Officer system.
Skill matrix of the Directors and reasons for their appointment are described in the Convocation Notice of theGeneral Meeting of Shareholders.
The Company's policy and procedure for the appointment of Directors are as stated in "Principle 3-1 (IV)"above.
[Supplementary Principle 4.11.2]
The extent of concurrent positions held by Directors and Audit & Supervisory Board Members is reasonable,
allowing them to fulfil the roles and responsibilities expected of them.
The Company annually discloses important concurrent positions held by Directors and Audit & Supervisory
Board Members and the main activities of Outside Officers in the Convocation Notice of the General Meetingof Shareholders.
[Supplementary Principle 4.11.3]
To enhance the function of the Board of Directors and corporate value, the Company evaluates theeffectiveness of its Board of Directors based on the results of questionnaire surveys among all Directors andAudit & Supervisory Board Members, which are collected and analyzed by an external organization to ensure
objectivity and discussed at meetings of the Board of Directors. It has been confirmed that the Company's
Board of Directors has adequate scale and composition and is appropriately operated to ensure proper
decision-making on important management agenda and supervision of business execution. As part of its
efforts to strengthen governance, the Company strives to increase the ratio of female officers. In June 2023,
the Company increased the number of female Independent Outside Directors by one. The number of female
Independent Outside Directors has become two, and the number of female Independent Outside Audit &Supervisory Board Members is two. The Company has four female officers, who account for 24% of total
officers.
The Company also continued to take measures such as distributing materials for meetings of the Board of
Directors earlier, enhancing preliminary explanations for Independent Outside Directors and Independent
Outside Audit & Supervisory Board Members, and having Independent Outside Directors conduct onsite
inspections. The Vector Meeting, which is designed to discuss divisions’ business strategies in early stages
and to align their directions, discussed 35 topics in fiscal 2023. The Sustainability Committee thoroughly
discusses initiatives to improve sustainability, including initiatives related to ESG and the SDGs, and reports
to the Board of Directors regularly. In discussions at meetings of the Board of Directors, Outside Officers
actively make appropriate comments based on sufficient knowledge from an independent perspective and theCompany recognizes that the benefits they bring in strengthening the effectiveness of the Board of Directors
are surely becoming evident.
Going forward, based on these results of board evaluation and opinions, the Company’s Board of Directors
will fully consider measures for improving its effectiveness and continue to implement initiatives forenhancing its functions.
-4-[Supplementary Principle 4.14.2]
Directors and Audit & Supervisory Board Members strive to improve their knowledge and skills
independently and also take part in outside training and receive officer training on an ongoing basis.
[Principle 5.1: Policy for Constructive Dialogue with Shareholders]
The Company's Corporate Communication Unit, Corporate Planning Division is in charge of investor
relations, with full-time staff dedicated to dialogue with shareholders. The Company attaches importance tocommunication with shareholders and investors and adopts a basic policy of working to increase
understanding about the Group, striving to be fairly evaluated and trusted through open general meetings ofshareholders and proactive IR activities to facilitate understanding.
[Supplementary Principle 5.1.2]
I) The Company has three full-time staff members in charge of IR in its Corporate Communication Unit,
Corporate Planning Division and the officer in charge of corporate planning is designated as the officer incharge of IR.
II)The staff in charge of IR attend important meetings and exchange opinions with relevant business units asappropriate to gather the information they need to engage in constructive dialogue on matters such as businessperformance, the progress of various measures, and operating strategies for the future.
III) Twice a year, the Company holds financial results briefings for institutional investors and securities
analysts at which the Representative Director explains the business results and other matters. The Company
also holds business briefings and field briefings to increase understanding about the Company's businessactivities and its technological and field capabilities.
IV)The Company gathers questions and opinions about dialogue as appropriate and provides direct feedback
to senior management, which is then utilized mainly in reviews of the Company's management.
V) The Company has established a Guideline on Prevention of Insider Trading and Basic Guidelines for IR
Activities to ensure management of insider information.
[Action to implement management that is conscious of cost of capital and stock price]
The Company aims to achieve an ROE of 9.0% in FY2025 under the Medium-Term Management Plan (20212025). The Company places emphasis on cost of capital in management. Initiatives emphasizing cost of capitaland the stock price are disclosed in presentation materials or the Integrated Report.
https://www.exeo.co.jp/en/ir/ir.html[Status of Dialogue with Shareholders]
The status of dialogue with shareholders is disclosed in integrated reports.
https://www.exeo.co.jp/en/ir/ir.html

2. Capital Structure
Foreign Shareholding Ratio

From 20% to less than 30%[Status of Major Shareholders] Update
Name / Company Name
The Master Trust Bank of Japan, Ltd. (Trust Account)
Custody Bank of Japan, Ltd. (Trust Account)
ESOP Association of EXEO Group, Inc.
NORTHERN TRUST CO. (AVFC) RE SILCHESTERINTERNATIONAL INVESTERS INTERNATIONALVALUE EQUITY TRUSTSUMITOMO LIFE INSURANCE COMPANY
Sumitomo Realty & Development Co., Ltd.
NORTHERN TRUST CO.(AVFC)RE U.S. TAXEXEMPTED PENSION FUNDS
Custody Bank of Japan, Ltd. (Mitsui Sumitomo Trust &Banking Co., Ltd. Retirement Benefit Trust Account)-5-

Number of Shares Owned
15,330,500
9,466,100
4,843,011

Percentage (%)
14.59
9.01
4.61

4,531,500

4.31

2,296,980
2,081,600

2.19
1.98

2,066,400

1.97

1,834,000

1.75

NORTHERN TRUST CO.(AVFC)RE NON TREATY
CLIENTS ACCOUNTSSBTC CLIENT OMNIBUS ACCOUNT
Controlling Shareholder (except for Parent
Company)
Parent Company

Supplementary Explanation

1,642,300

1.56

1,539,787

1.47

None

Update1. Status of Major Shareholders above is as of March 31, 2024.
2. The Company holds 1,735 thousand shares of treasury stock, which are not included in the table above.
3. The large shareholding report (change report) made available for public inspection on August 16, 2023
reports that Silchester International Investors LLP held the following shares. However, the Company has
confirmed no beneficial ownership of the number of shares held in the name of this party as of March 31,
2024, and therefore, the following is not taken into consideration in the above status of major shareholders.
(Name/number of shares owned/ownership percentage)
Silchester International Investors LLP/9,066 thousand/8.26%
4. The large shareholding report (change report) made available for public inspection on October 6, 2023
reports that Mizuho Bank, Ltd. held the following shares. However, the Company has confirmed no beneficial
ownership of the number of shares held in the name of this party as of March 31, 2024, and therefore, thefollowing is not taken into consideration in the above status of major shareholders.
(Name/number of shares owned/ownership percentage)
Mizuho Bank, Ltd./899 thousand/0.82%
Mizuho Securities Co., Ltd./198 thousand/0.18%
Asset Management One Co., Ltd./3,366 thousand/3.07%
5. The large shareholding report (change report) made available for public inspection on February 6, 2024
reports that Schroder Investment Management (Japan) Limited held the following shares. However, theCompany has confirmed no beneficial ownership of the number of shares held in the name of this party as ofMarch 31, 2024, and therefore, the following is not taken into consideration in the above status of major
shareholders.
(Name/number of shares owned/ownership percentage)
Schroder Investment Management (Japan) Limited/4,267 thousand/4.00%
6. The large shareholding report (change report) made available for public inspection on June 17, 2024 reportsthat Silchester International Investors LLP held the following shares. However, the Company has confirmed
no beneficial ownership of the number of shares held in the name of this party as of March 31, 2024, andtherefore, the following is not taken into consideration in the above status of major shareholders. As of April
1, 2024, the Company implemented a 2-for-1 share split of its common stock. Accordingly, the change reportis based on information after the stock split.
(Name/number of shares owned/ownership percentage)
Silchester International Investors LLP/19,786 thousand/9.26%-6-

3. Corporate Attributes
Listed Stock Market and Market Section
Fiscal Year-End
Type of Business
Number of Employees (consolidated) as of
the End of the Previous Fiscal YearSales (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
March
ConstructionMore than 1000
From ¥100 billion to less than ¥1 trillion
From 100 to less than 300

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

5. Other Special Circumstances which may have Material Impact on Corporate Governance--7-

II. Business Management Organization and Other Corporate Governance Systems regarding
Decision-making, Execution of Business, and Oversight in Management
1. Organizational Composition and Operation
Company with an Audit & Supervisory Board

Organization Form

[Directors]
Maximum Number of Directors Stipulated in
Articles of Incorporation
Term of Office Stipulated in Articles ofIncorporation
Chairperson of the Board
UpdateNumber of Directors
Appointment of Outside Directors
Number of Outside Directors
Number of Independent Directors

15
2 years
President
13
Appointed
55Outside Directors’ Relationship with the Company (1)NameAttribute

Relationship with the Company*
a

b

c

d

e

f

g

h

i

j

k

Yasushi Kohara
From another company
Naoko Iwasaki
Academic
Tatsushi Mochizuki Other
Keiji Yoshida
From another company
Tomoko Aramaki
CPA*
Categories for “Relationship with the Company”* ”○” when the director presently falls or has recently fallen under the category;“△” when the director fell under the category in the past
* “●” when a close relative of the director presently falls or has recently fallen under the category;“▲”when a close relative of the director fell under the category in the pasta. Executive of the Company or its subsidiaries
b. Non-executive director or executive of a parent company of the Company
c. Executive of a fellow subsidiary company of the Company
d. A party whose major client or supplier is the Company or an executive thereof
e. Major client or supplier of the listed company or an executive thereof
f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or otherproperty from the Company besides compensation as a director
g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is alegal entity)
h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f)(the director himself/herself only)
i. Executive of a company, between which and the Company outside directors/ Audit & Supervisory Board
Member are mutually appointed (the director himself/herself only)
j. Executive of a company or organization that receives a donation from the Company (the director
himself/herself only)
k. Others-8-Outside Directors’ Relationship with the Company (2)Name
Yasushi Kohara

Designationas
Independent
Director○

UpdateSupplementary Explanation of
the Relationship(Corporationsor
otherorganizations at which thedirector was an executive）
Toyota Motor Corporation
Toyota Tokyo Corolla Co., Ltd.
(currently TOYOTA Mobility
Tokyo Inc.)
Osaka Toyota Motor Co., Ltd.
Since no major business or otherrelationship exists between the
Company and the above
corporationsor
otherorganizations, the Company
judges that Mr. Kohara has no
special interest which will affect
the Company's decision-making.

Naoko Iwasaki○(Corporationsor
otherorganizations at which thedirector was an executive）
Nanyang
Technological
University, Singapore (present
position)
Ministry of Internal Affairs andCommunications(present
position)
Chair of APEC Smart Silver
Innovation Committee (present
position）
Cabinet Office (Present position)
Waseda University
International Academy of CIO
Japan (present position)
Since no major business or otherrelationship exists between the
Company and the above
corporationsor
otherorganizations, the Company
judges that Ms. Iwasaki has no
special interest which will affect
the Company's decision-making.
-9-

Reasons of Appointment
Mr. Kohara has abundant experienceandinsights
incorporate
management through his posts at the
Toyota Group, and has provided
appropriate advice and suggestionsin important management decisionsof the Company, appropriately
fulfilling his role as Outside
Director. The Company expects hewill continue to contribute tostrengthening the oversight functionof the Board of Directors andprovide advice from a broad
managerial
perspective
andtherefore reappointed him as an
Outside Director.
The Company also nominated Mr.
Kohara as an Independent Officer as
he does not meet the criteria for
judging that a conflict of interest
with common shareholders mightarise, as set out in the TSE's Listing
Guidelines.
Ms. Iwasaki is an international firstline researcher and expert on
utilization of ICT in areas such as
international relations, national andlocal government administration,
disaster response, and BCP, aging ofsociety, and the promotion of activeroles for women, and has provided
appropriate advice and suggestionsin important managerial decisions
on the Company, appropriately
fulfilling her role as an Outside
Director. The Company expects she
will continue to contribute tostrengthening the oversight functionof the Board of Directors andprovide appropriate advice from a
broad managerial perspective andtherefore reappointed her as Outside
Director.
The Company also nominated Ms.
Iwasaki as an Independent Officer as
she does not meet the criteria for
judging that a conflict of interest
with common shareholders mightarise, as set out in the TSE's Listing
Guidelines.

Tatsushi Mochizuki○

Corporationsorganizations

at

or
other
which thedirector was an executive）
Ministry of Internal Affairs andCommunications
Cabinet Office
Mie Prefecture
Japan Agency for Local
Authority Information Systems
InstituteofScientificApproaches for Fire & DisasterNational
Association
Chairpersons of Town andVillage Assemblies
Gyoseishoshi
LawyerExamination Research Center
Since no major business or otherrelationship exists between the
Company and the above
corporationsor
otherorganizations, the Company
judges that Mr. Mochizuki has no
special interest which will affect
the Company's decision-making.
Keiji Yoshida○(Corporationsor
otherorganizations at which thedirector was an executive）
JFE Engineering Corporation
Japan
Water
Steel
Pipe
Association
Since no major business or otherrelationship exists between the
Company and the above
corporationsor
otherorganizations, the Company
judges that Mr. Yoshida has no
special interest which will affect
the Company's decision-making.

Tomoko Aramaki○(Corporationsor
otherorganizations at which the Audit& Supervisory Board Member
was an executive)
Century Audit Corporation(currently Ernst & Young
ShinNihon LLC)

- 10 -Mr. Mochizuki has been involved in
key positions such as central
government ministries and local
governments for many years.
Havinginsights
accumulated
through his career, he has provided
appropriate advice and suggestionsin important management decisionsof the Company, appropriately
fulfilling his role as Outside
Director. The Company expects hewill continue to contribute tostrengthening the oversight functionof the Board of Directors andprovide appropriate advice from a
broad managerial perspective andtherefore reappointed him as
Outside Director.
The Company also nominated Mr.
Mochizuki as an Independent
Officer as he does not meet thecriteria for judging that a conflict ofinterest with common shareholders
might arise, as set out in the TSE's
Listing Guidelines.
Mr.
Yoshidahasabundant
experience and insights in corporate
management through his posts as an
officerat
JFE
Engineering
Corporation, etc., and has provided
appropriate advice and suggestionsin important management decisionsof the Company, appropriately
fulfilling his role as Outside
Director. The Company expects hewill continue to contribute tostrengthening the oversight functionof the Board of Directors andprovide appropriate advice from a
broad managerial perspective andtherefore reappointed him as
Outside Director.
The Company also nominated Mr.
Yoshida as an Independent Officer
as he does not meet the criteria for
judging that a conflict of interest
with common shareholders mightarise, as set out in the TSE's Listing
Guidelines.
Ms. Aramaki
hasabundant
experience and expertise in financeand accounting as a certified public
accountant and tax accountant andinsights in corporate management
and has provided appropriate advice
and suggestions in importantmanagement decisions of theMinistry of International Tradeand Industry
IBM Japan, Ltd.
Aramaki CPA Office (present
position)
PARIS MIKI HOLDINGS, Inc.
Conference Committee on AssetManagement by Japan Pension
Service
Member of Outside Expert
Committee, Organization for
Postal Savings, Postal Life
Insurance and Post Office
Network (present position)
Ministry of Internal Affairs andCommunications(present
position)

Company, appropriately fulfilling
her role as Outside Director. The
Company expects she will continue
to contribute to strengthening theoversight function of the Board of
Directors and provide appropriate
advice from a broad managerial
perspective
andtherefore
reappointed her as Outside Director.
The Company also nominated Mr.
Yoshida as an Independent Officer
as he does not meet the criteria for
judging that a conflict of interest
with common shareholders mightarise, as set out in the TSE's Listing
Guidelines.

Since no major business or otherrelationship exists between the
Company and the above
corporationsor
otherorganizations, the Company
judges that Ms. Aramaki has no
special interest which will affect
the Company's decision-making.
Voluntary Establishment of Committee(s)Corresponding to Nomination Committee orRemuneration Committee

Established

Committee’s Name, Composition, and Attributes of Chairperson
Committee Corresponding toNomination Committee
Nomination Committee

Committee Corresponding toCompensation Committee
Compensation Committee

All Committee Members

55

Full-time Members

00Inside Directors

22

Outside Directors

33Outside Experts

0

0

Other

0

0

Outside Directors

Outside Directors

Committee’s Name

Chairperson- 11 -

Supplementary Explanation

UpdateThe Company set up the Nomination Committee and the Compensation Committee as the Board of Directors’internal committees to further enhance its corporate governance. The Nomination Committee discusses thenomination and dismissal of candidates for Directors, and the Compensation Committee discusses thecompensation and bonuses for Directors and other matters. These committees report to the Board of Directors.
The information in "Committee’s Name, Composition, and Attributes of Chairperson" above reflects thesituation in FY20232. The composition of the committees in FY2023 is as follows.
Nomination Committee(Chairperson) Tatsushi Mochizuki, Outside Director(Members) Directors Kouichi Mino, and Shigeki Hayashi and Outside Directors Yasushi Kohara, Naoko
IwasakiCompensation Committee(Chairperson) Yasushi Kohara, Outside Director(Members) Directors Noriyuki Watabe, and Yuichi Koyama, and Outside Directors Keiji Yoshida, andTomoko Aramaki
The company continuously appointed above directors in their same position as the commitee member in theboard meeting held on June 26, 2024.
[Audit & Supervisory Board Members]
Establishment of Audit & Supervisory Board
Maximum Number of Audit & Supervisory
Board members Stipulated in Articles ofIncorporation
Number of Audit & Supervisory Board members

Established5
5

Cooperation among Audit & Supervisory Board members, Accounting Auditors and Internal Audit
Departments
Audit & Supervisory Board Members strive for effective cooperation in order to form a fair audit opinion,
cooperating with the accounting auditor through the exchange of opinions at the time of formulation of the
fiscal year plan for accounting audits and regular meetings such as report meetings about quarterly and fiscal
year audits, and cooperating with internal audit business units through the exchange of opinions at the timeof formulation of the fiscal year plan for internal audits and regular meetings such as report meetings on
business audits.
Appointment of Outside Audit & Supervisory Board Members

Appointed

Number of Outside Audit & Supervisory Board Members

3

Number of Independent Audit & Supervisory Board Members

3

Outside Audit & Supervisory Board Members’ Relationship with the Company (1) Update
Name

Attribute

Relationship with the Company*
a

b

c

d

e

f

g

Kimiko Takahashi
LawyerEiko Osawa
CPA
Akira Harashima
From another company* Categories for “Relationship with the Company”* ”○” when the director presently falls or has recently fallen under the category;- 12 -

h

i

j

k

l

m

*

“△” when the director fell under the category in the past“●” when a close relative of the director presently falls or has recently fallen under the category;“▲”when a close relative of the director fell under the category in the pasta. Executive of the Company or its subsidiaryb. Non-executive director or accounting advisor of the Company or its subsidiaries
c. Non-executive director or executive of a parent company of the Company
d. Audit & Supervisory Board Member of a parent company of the Company
e. Executive of a fellow subsidiary company of the Company
f. A party whose major client or supplier is the Company or an executive thereof
g. Major client or supplier of the Company or an executive thereofh. Consultant, accountant or legal professional who receives a large amount of monetary consideration orother property from the Company besides compensation as a director/auditor
i. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is alegal entity)
j. Executive of a client or supplier company of the Company (which does not correspond to any of f, g, or h)(the Audit & Supervisory Board Member himself/herself only)
k. Executive of a company, between which and the Company outside directors/auditors are mutually appointed(the Audit & Supervisory Board Member himself/herself only)
l. Executive of a company or organization that receives a donation from the Company (the Audit &Supervisory Board Member himself/herself only)
m. Others

Outside Audit & Supervisory Board Members’ Relationship with the Company (2) Update

Name

Kimiko Takahashi

Eiko Osawa

Designationas
Independent
Audit&
Supervisory
Board
Members○○

Supplementary Explanation of
the Relationship(Corporationsor
otherorganizations at which the Audit& Supervisory Board Member
was an executive)
KPMG Minato Audit Firm
(currently KPMG AZSA & Co.)
Mitsui Company
Kimiko Takahashi Law Firm(present position)
The Japanese Institute ofCertified Public Accountants
Since no major business or otherrelationship exists between the
Company and the above
corporationsor
otherorganizations, the Company
judges that Ms. Takahashi has no
special interest which will affect
the Company's decision-making.
(Corporationsor
otherorganizations at which the Audit- 13 -

Reasons of Appointment

Ms. Takahashi has abundant
experience and expertise in financeand accounting as a Certified Public
Accountant and attorney-at-law, andthe Company believes that she willappropriately perform her duties as
Audit & Supervisory Board
Member. The Company therefore
appointed her as an Outside Audit &Supervisory Board Member.
The Company also nominated Ms.
Takahashi as an Independent Officer
as she does not meet the criteria for
judging that a conflict of interest
with common shareholders mightarise, as set out in the TSE's Listing
Guidelines.

Ms. Osawa has worked at a major
auditing firm and has abundant
global experience and expertise in

& Supervisory Board Member
was an executive)
Asahi Shinwa & Co. (currently
KPMG AZSA & Co.)
Showa Ota & Co. (currently
Ernst & Young ShinNihon LLC)
Shin Nihon & Co. (currently
Ernst & Young ShinNihon LLC)
Osawa CPA Office (present
position)

Akira Harashima○

Since no major business or otherrelationship exists between the
Company and the above
corporationsor
otherorganizations, the Company
judges that Ms. Osawa has no
special interest which will affect
the Company's decision-making.
(Corporationsor
otherorganizations at which the Audit& Supervisory Board Member
was an executive)
Tokio Marine & Nichido Fire
Insurance Co., Ltd.
Tokio Marine Holdings, Inc.
Since no major business or otherrelationship exists between the
Company and the above
corporationsor
otherorganizations, the Company
judges that Ms. Takahashi has no
special interest which will affect
the Company's decision-making.

finance and accounting as a
Certified Public Accountant, and theCompany believes that she willappropriately perform her duties as
Audit & Supervisory Board
Member. The Company therefore
appointed her as an Outside Audit &Supervisory Board Member.
The Company also nominated Ms.
Osawa as an Independent Officer as
she does not meet the criteria for
judging that a conflict of interest
with common shareholders mightarise, as set out in the TSE's Listing
Guidelines.

The Company has appointed Mr.
Harashima as an Outside Audit &Supervisory
Board
Member,expecting that he will appropriately
perform his duty as Audit &Supervisory Board Member, using
his extensive experience incorporate
management
andexcellent insight into global
business that he has gained having
served as an officer at Tokio Marine
Holdings, Inc. and other companies.
The Company also nominated Mr.
Harashima as an Independent
Officer as she does not meet thecriteria for judging that a conflict ofinterest with common shareholders
might arise, as set out in the TSE's
Listing Guidelines.

[Independent Directors/ Auditors]
8

Number of Independent Directors/Auditors
Matters relating to Independent Directors/ Auditors

The Company has designated all outside officers who fulfill the requirements for independent officers as
independent officers.
[Incentives]
Incentive Policies for Directors

Other

Supplementary Explanation- 14 -

At the 65th Ordinary General Meeting of Shareholders held on June 21, 2019, it was resolved to introduce asystem of remuneration for granting restricted shares to Directors in order to provide them an incentive tosustainably increase the Company's corporate value and to further promote shared value between shareholders
and eligible Directors, in place of stock options.
It was approved that the annual amount of remuneration for performance-linked restricted stock shall not
exceed ¥50 million and the annual amount of remuneration for continuous service-linked restricted stock shallnot exceed ¥50 million.
Recipients of Stock Options
Supplementary Explanation-[Director Remuneration]
Disclosure of Individual Directors’
Remuneration
Supplementary Explanation

No Individual Disclosure

UpdateThe Amount of Remuneration and Related Payments to Directors and Audit & Supervisory Board Members
in FY2023
Officer
Total amount Total amount by type of remuneration, etc. (¥ Millions) Number ofClassification of
Monetary remuneration
Non-monetary eligible
remuneration, Base
officers
Bonus
Long-termetc.
(persons)
compensation
incentives(¥ Millions)(Restricted
stock)
Directors(excluding
213
105
69
37
8
OutsideDirectors)
Audit &
Supervisory
Board
Members(excluding
40
40
3
OutsideAudit &
Supervisory
Board
Members)
Outside57
57
5
Directors
OutsideAudit &
Supervisory
28
28
4
Board
Members(Note) 1. The above figures include one director and two Audit & Supervisory Board Members who retired
at the conclusion of the 69th Ordinary General Meeting of Shareholders held on June 23, 2023.
2. Regarding Ms. Tomoko Aramaki, who retired from the position of Audit & Supervisory Board Member
and was assigned as Director at the closing of the 69th Ordinary General Meeting of Shareholders held on- 15 -

June 23, 2023, remuneration for her post of Director and that for her post of Audit & Supervisory Board
Member is separately incorporated under the total amount of remuneration and the number of Directors andAudit & Supervisory Board Members described above.
3. Outside Directors and Audit & Supervisory Board Members are independent from the Company's businessexecution, and thus compensation for them consists solely of base compensation.
Policy on Determining Remuneration Amounts
and Calculation Methods Update

Established

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods■ Basic policy
The Company's basic policy concerning decision-making about compensation for directors and its calculation
is as follows:- To effectively incentivize the directors to contribute to increasing corporate value in the long term
- To maintain a compensation level for securing and maintaining outstanding talent- To employ a transparent and fair decision-making process■ How to determine compensation and a calculation method
The specific policy concerning the decision-making about compensation for directors and its calculation isdeliberated by the Compensation Committee, which is comprised of Directors including Independent Outside
Directors selected by the Board of Directors and chaired by an Independent Outside Director, and thendetermined by resolution of the Board of Directors.
■ Structure of Compensation
Compensation for Directors (excluding Outside Directors) consists of base compensation, bonuses, andrestricted shares. The constituents shall account for about the following percentages. (Compensation for the
Director who is also an employee includes a salary and bonuses for them as an employee.)
Fixed compensation(Base compensation)
60%

Performance-linked
compensation(Bonuses)30%

Long-term incentives(Restricted stock)10%■ Base compensation
The base compensation is a fixed amount set for each position appropriately considering business environment
and industry standards.
■ Performance-linked compensation, etc.
As performance-linked compensation, etc., bonuses are paid to Directors (excluding Outside Directors). The
bonuses are basically linked to the fiscal year’s performance and determined by comprehensively taking into
account the business environment and other elements. The Company uses consolidated net sales, operating
income and consolidated net income as indicators for calculating bonuses, aiming to make Directors aware of
their responsibility for overall consolidated results as management team members. The Company calculates
bonuses by multiplying base compensation by a number that reflects the degree to which business targets havebeen achieved, together with a qualitative assessment.
■ Long-term incentives
The Company delivers restricted shares as long-term incentives to Directors (excluding Outside Directors).
Restricted shares are composed of performance-linked restricted shares and continuous service-linked
restricted stock.
Type

Performance-linked indicator

Performance-linked restricted
stock

Consolidated operating income- 16 -

Overview and reason for
selection of indicator
Performance-linked restricted
stock are basically linked to thedegree of achievement of
medium-to-long term
consolidated income

Continuous service-linked
restricted stock―

performance targets and areallotted to Directors according toposition to give them medium tolong-term incentives towards
achieving sustainable growth ofcorporate value and to have themshare the same value with ourshareholders. The consolidated
performance indicator isconsolidated operating income,which is directly linked to theachievement of targeted
performance and common value
shared with our shareholders.
The lifting of the restriction isconditional upon Directors
remaining in the position of
Director or other certain
positions of the Company
continuously for a given period.

[Supporting System for Outside Directors and/or Auditors]
The Company strives to cooperate effectively with Outside Directors and Outside Audit & Supervisory Board
Members through the provision of various materials and explanations by relevant business units to enableappropriate decision-making and the formation of opinions.

- 17 -

[Retired presidents/CEOs holding advisory positions (Corporate Counselor, Advisor, etc.)]
Information on retired presidents/CEOs holding advisory positions (Corporate Counselor, Advisor, etc.)
Date when
Employment terms
Job title/
former role
Name
Responsibilities(Full/part time, with/without
Term
positionas president/
compensation, etc.)
CEO ended
FuminoriCounselor Business[Form of employment] Part- June 21, 2019 November
Kozonofederationtime[Remuneration] Yes
2024
activities, CSR
Osamu
Honorary Business[Form of employment] Part- June 27, 1997 No fixed
Murakami advisor
federationtime[Remuneration] No
term ofactivities, CSR
officeShunji
Honorary Business[Form of employment] Part- June 27, 2003 No fixed
Kaibuchiadvisorfederationtime[Remuneration] No
term ofactivities, CSR
officeSeiji
Honorary Business[Form of employment] Part- June 23, 2008 No fixed
Takashima advisor
federationtime[Remuneration] No
term ofactivities, CSR
officeKunio
Honorary Business[Form of employment] Part- June 21, 2013 No fixed
Ishikawa
advisorfederationtime[Remuneration] Yesterm ofactivities, CSR
officeNumber of retired presidents/CEOs holding
advisory positions (Corporate Counselor,
Advisor, etc.)

5

Others
1. Counselors and honorary advisors are appointed by resolution of the Board of Directors.
2. Counselors and honorary advisors have no involvement whatsoever in the execution or oversight of theCompany's business.

2.Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration
Decisions (Overview of Current Corporate Governance System) Update
The Company is a company with an Audit & Supervisory Board. In the governance framework, the Company
has adopted an operating officers system to separate the management decision-making and supervisory
function and business execution function to achieve prompt and appropriate decision-making and businessexecution, while further strengthening our corporate governance. After the conclusion of the ordinary general
meeting of shareholders in June 2024, the Company has thirteen Directors (including five Outside Directors),
five Audit & Supervisory Board Members (including three Outside Audit & Supervisory Board Members),
and thirty-one operating officers. All Outside Directors and Outside Audit & Supervisory Board Members are
independent officers who are independent of management and in a neutral position.
The Board of Directors chaired by the President & CEO makes decisions on important matters and supervises
business execution, while operating officers execute operations based on the Board of Directors’ decisions.
Furthermore, the Company discusses important business execution matters at a Management Council.
In the fiscal year under review, 15 Board of Directors meetings and 16 Audit & Supervisory Board meetings
were held. At the end of the fiscal year under review, the Outside Directors had an attendance rate of 98% and
the Outside Audit & Supervisory Board Members had an attendance rate of 100%. To enable Outside Officers
to contribute to fruitful discussions at meetings of the Board of Directors, the Company distributes Board
meeting materials to them at an early stage and explains the backgrounds to and purposes and details of agenda
items of Board of Directors meetings.
In addition, the Company set up the Nomination Committee and the Compensation Committee as the Boardof Directors’ internal committees to further enhance its corporate governance. The Nomination Committee
discusses matters such as the nomination of Director candidates and the dismissal of Directors. The- 18 -

Compensation Committee discusses the compensation and bonuses for Directors and other matters. These
committees report to the Board of Directors.
The Company has developed a system to achieve compliance with laws and regulations, operational
effectiveness and efficiency, and the reliability of financial reporting under its basic policy on the internal
control system and has established the Internal Control Committee (chaired by the President & CEO), whichmonitors and evaluates the overall operation of the internal control system.
Under the Internal Control Committee, the Company has the related committees below.
- Compliance Committee- Business Risk Management Committee- Information Security Committee
The Company has a dual reporting system for internal auditing. The Internal Audit Department cooperates
with the internal audit business units of major Group companies to conduct audits to ensure proper operations
at the Company and its subsidiaries. They also audit the development and operation of internal control
systems, including those for financial reporting. The Internal Audit Department reports the results of internal
audits directly to the Company’s Board of Directors, Management Council, and Compliance Committee
whose quarterly meetings are attended by full-time Audit & Supervisory Board Members.
Regarding Audit & Supervisory Board Members’ audits, Audit & Supervisory Board Members attend
meetings of the Board of Directors and other important meetings in order to audit procedures and resolutionsof such meetings in accordance with audit policies, audit plans, etc. They also implement audits of the statusof operations and assets through interviews with Representative Directors and other members of the senior
management of the head office, major business offices and subsidiaries and through on-site audits. In addition,
they exchange opinions on subjects such as initiatives for promoting digital transformation, administrative
frameworks that are suited to each area and characteristics, the promotion of research and development on agroup-wide basis, and securing and cultivating human resources and the safety and health of employees fromthe perspective of human capital.
In their audits, Audit & Supervisory Board Members attend meetings of the Board of Directors and otherimportant meetings, ask Directors and others about their execution of duties and audit business operations andproperty at major business sites and subsidiaries.
The status of accounting audits for the Year Ended March 31, 2023 is as follows.
a.Name of the audit corporation
Grant Thornton Taiyo LLC
b.Continuous audit period
3 yearsc.Certified public accountants who carry out the audit
Designated limited liability partner, managing partner, certified public accountant Tatsuya Arai
Designated limited liability partner, managing partner, certified public accountant Daishi Nishimura
Designated limited liability partner, managing partner, certified public accountant Koki Otsuka
d.Composition of assistants for audit work
Twelve certified public accountants
Sixteen other assistants

3. Reasons for Adoption of Current Corporate Governance System
The Company opted to be a company with an Audit & Supervisory Board. The Company adopted such asystem judging that it can ensure appropriate corporate governance under a system where Audit & Supervisory
Board Members and the Audit & Supervisory Board attend meetings of the Board of Directors and otherimportant meetings and ask the Board of Directors and others about their execution of duties and conduct
audits of business operations and property at major business sites and group companies from a fair andimpartial perspective in accordance with an audit policy and audit plan.
The Company believes that the function and role of Outside Directors and Audit & Supervisory Board
Members is to oversee and supervise the Company's management from an independent and neutral perspectiveby making comments in light of their extensive experience and deep insights. The Company also believes that
Outside Audit & Supervisory Board Members fulfil a management supervisory function by drawing on
objectivity, high levels of expertise and perspectives gained from extensive experience and deep insight intheir audits.

- 19 -

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting Rights
Early Notification of General
Shareholder Meeting
Scheduling Annual General
Shareholders Meeting
Avoiding the Peak Day
Allowing Electronic Exerciseof Voting Rights

Participation in Electronic
Voting Platform and Other
Initiatives to Enhance theEnvironment for Institutional
Investors to Exercise Their
Voting Rights
Providing Convocation Noticein English

Supplementary Explanations
Starting from the 51st Ordinary General Meeting of Shareholders (June2005), the Company began dispatching convocation notices for the general
meeting of shareholders earlier.
Starting from the 50th Ordinary General Meeting of Shareholders (June
2004), the Company began scheduling the ordinary general meeting ofshareholders to avoid peak dates.
The Company introduced electronic voting from the 51st Ordinary General
Meeting of Shareholders (June 2005) and shareholders can now exercise theirvotes through a smartphone, computer or other device that can connect to theInternet.
Starting from the 53rd Ordinary General Meeting of Shareholders (June2007), the Company participated in the Voting Rights Electronic Exercise
Platform operated by ICJ Co., Ltd. to facilitate voting by institutional
investors.

The Company publishes an English version of the convocation notice(condensed version) on its website and the TSE's website.

2. IR Activities Update
Supplementary Explanations
Preparation and Publication ofDisclosure Policy

Regular Investor Briefings forAnalysts and Institutional
Investors
Regular Investor Briefings forOverseas Investors

Posting of IR Materials on
WebsiteEstablishment of Department
and/or Manager in Charge of
IR
Other

The Company discloses Company information in a timely
and appropriate manner and actively engages in IR
activities, to increase understanding about the Company
among shareholders, investors and other stakeholders, toensure a fair evaluation, and to build trust.
The Company holds two briefing sessions a year to explain
the financial results for the first two quarters and the fullyear financial results. Each briefing is attended by a few
dozen institutional investors and securities analysts.
The Representative Director visits overseas institutional
investors in Europe, North America and other regions
every year to explain business trends, results and otherimportant matters.
The Company has also been holding meetings online inrecent years due to the COVID-19 pandemic.
The Company posts various IR materials on its website
throughout the year, including summaries of consolidated
financial results, presentation materials, and monthly
orders received, in addition to the "About Us," "OurBusiness," "Investor Relations" and "Topics" sections.
The Company also has an English website for overseas
shareholders and investors and posts various materials in
English.
The Company has three full-time members of staff incharge of IR in the Corporate Communication Unit,
Corporate Planning Division.
The Company actively conducts meetings withinstitutional investors and securities analysts in Japan and- 20 -

Explanation byRepresentative

Yes

Yes

overseas throughout the year and endeavors to give theman accurate understanding of business trends, businessresults and other important matters.
In addition to the financial results briefings conducted
twice a year, the Company creates opportunities for the
Representative Director to explain business trends,
business results and other important matters to Japaneseinstitutional investors and securities analysts directly.
The Company also holds business briefings, onsite tours
and briefings for individual investors as necessary.

3. Measures to Ensure Due Respect for Stakeholders Update
Stipulation of Internal Rules
for Respecting the Position of
Stakeholders

Implementation ofEnvironmental Activities, CSR
Activities etc.

Development of Policies on
Information Provision to
Stakeholders

Other

Supplementary Explanations
The Group conducts business operations in line with its basic CSR policy andcorporate philosophy "Cultivating Technological Capabilities, Seeking
Affluence and Contributing to Society" and with integrity and transparency
as its basic code of conduct for management.
In the EXEO Group Basic Actions Declaration, upholding and complying
with the EXEO Group Basic Ethics as the basic code of conduct are
confirmed to be the ongoing, unchanging responsibility of the members of theGroup to its stakeholders. The Declaration also commits the Group topracticing its philosophy.
Coexistence with the global environment is a social responsibility ofcorporations and is a significant element in creating a sustainable society. The
Group solves social issues through its activities in the Telecommunications
Carrier Business, Urban Infrastructure Business, and System Solutions
Business. The Group also pays careful attention to coordination with theenvironment in its business activities and endeavors to reduce theenvironmental impact that inevitably accompanies such activities.
Further, the Group pushes forward with its environmental management
system (ISO 14001), for which it has maintained certification since May
2000, by engaging in Group-wide environmental protection activities basedon a PDCA cycle, in its efforts to reduce environmental impact on an ongoingbasis.
The Company recognizes that information disclosure is an importantmanagement issue and that disclosing information in an appropriate manneris essential in order to obtain the understanding of all stakeholders.
Accordingly, the Company actively discloses information judged to beimportant (financial and non-financial) via its website, its integrated reportand other means, in addition to disclosures required by law.
With the aim of swiftly and flexibly responding to increasingly diverse
customer needs, developing business and improving operating results, Team
EXEO promotes diversity and inclusion aiming to foster a culture of mutual
acceptance of a wide range of values regardless of characteristics such as
gender, belief, nationality, disability, sexual orientation or gender identity.
The Diversity Promotion Office of the Human Resources Development
Division plays a central role in taking more effective and systematic
initiatives.

- 21 -

IV. Matters Related to the Internal Control System
1. Basic Views on Internal Control System and the Progress of System Development
The Group's basic corporate philosophy is "cultivating technological capabilities, seeking affluence andcontributing to society," and every Director and employee of the Group will practice corporate managementwith integrity and transparency to realize this.
The Group's basic policy on systems to ensure that business is conducted appropriately, as resolved by theCompany's Board of Directors, is as follows.
(1) System to Ensure that Execution of Duties by Directors and Employees Conform to Laws, Regulations,and the Articles of Incorporation
 The Group considers compliance with laws and regulations, social norms and corporate ethics amanagement priority and establishes a compliance program as a framework for strengthening compliance,
and Directors put the compliance program into practice themselves and also raise awareness aboutcompliance among employees. Employees execute business with integrity in accordance with said program.
 The Company also establishes a whistleblowing system to prevent or quickly resolve any issues related tocompliance.
 The Group takes a resolute attitude against antisocial forces and other groups which potentially pose a threat
to social order and safety, dealing with them as an organization in cooperation with lawyers, the police andother specialist external organizations.
(2) System Regarding Storage and Management of Information on Directors’ Execution of Duties
 Information on Directors' execution of duties is stored and managed appropriately in accordance with theRules Concerning the Management of Documents and Recordings.
 Persons responsible for managing documents stipulated in said rules promptly submit such information for
Audit & Supervisory Board Members to view upon request.
(3) Rules Concerning the Management of Risk of Loss and Other Systems
 The Group has in place a risk management system overseen by the President and seeks to enhance thesystem in accordance with the Rules Concerning Risk Management.
 Risk management business units assess the identification and evaluation of risks and measures taken toaddress them by each business unit and seeks to promote risk management.
 Internal audit business units conduct audits from an independent standpoint.
(4) System to Ensure the Efficient Performance of Duties by Directors
 The President sets groupwide targets shared by Directors and employees and seeks to raise awareness about
them, and each business unit formulates specific measures they must implement to achieve the targets andobtains the approval of the Board of Directors.
 Directors, including the President, also use all organized gatherings as an opportunity to exchange
information and provide instructions and support to facilitate business execution.
 With regard to the performance of duties, internal systems are used to manage the progress of business plans
and the Board of Directors conducts regular reviews.
(5) System to Ensure Appropriateness of Operations in the Group Consisting of the Company and Its
Subsidiaries
 The Company ensures the reliability and appropriateness of financial reporting by Group entities throughthe development of system for reporting in an appropriate manner and mechanisms for assessing
performance on a regular and ongoing basis in accordance with the Group's basic policy for internal controls
over financial reporting.
 Under the Company's Rules on Subsidiaries' Operations, Group entities must report their operating results,financial position and other important management information to the Company and obtain the Company's
approval.
 The Company formulates Risk Management Rules for groupwide risk management and manages Grouprisk in a comprehensive and integrated manner.
 The Company establishes the Group Compliance Risk Control Standard and develops systems, businessprocesses, etc. as the bases that enable each Group company to engage in compliance promotion activities
more surely under unified rules which fulfill standards required by society.

- 22 -

 To ensusre the efficient performance of duties by the Directors of Group entities, the Company formulates
a Group Medium-Term Management Plan and establishes business units to oversee Group business and it
also strives to ensure smooth business operations through Group President meetings and other means.
 The Company prepares a Group Compliance Manual to raise compliance awareness among all Directors,
Audit & Supervisory Board Members and employees of Group entities.
 The Company seeks to instill compliance awareness by providing compliance training every year for the
Directors, Audit & Supervisory Board Members and employees of Group entities.
 The Company's internal audit business units conduct audits of the effectiveness and appropriateness ofbusiness at each group entity.
(6) Matters Concerning Employees When an Audit and Supervisory Board Member Requests That Employees
Assist with His/Her Duties
 Upon a request from Audit & Supervisory Board Members for the appointment of employees to assist themin their duties, the Company establishes an organization which is independent from business execution andbelongs exclusively to Audit & Supervisory Board Members.
(7) Matters Concerning the Independence of the Employees Specified in (6) from Directors, and Matters
Intended to Ensure the Effectiveness of Instructions Given to Such Employees The Company shall obtain the approval of the Audit & Supervisory Board for any personnel change,
personnel evaluation or disciplinary action involving employees who assist Audit & Supervisory Board
Members and such employees shall not hold concurrent positions in other business units and shall be subject
to the sole command of Audit & Supervisory Board Members.
(8) Systems of Reporting to Audit & Supervisory Board Members by Directors and Employees and Other
Systems Regarding Reporting to Audit & Supervisory Board Members
 Directors and employees report to the Audit & Supervisory Board in a timely and appropriate manner inaccordance with the Audit & Supervisory Board Reporting Rules.
(9) System for Reporting to the Company's Audit & Supervisory Board Members by Directors, Audit &Supervisory Board Members and employees of Subsidiaries, and People who Have Received Reports fromThem
 When a Director, Audit & Supervisory Board Member or an employee of a Group entity is asked to report
matters concerning their execution of business by Audit & Supervisory Board Members of the Company,
they shall make a report promptly and appropriately.
 The Company's risk management business units hold report meetings to report to the Company's Audit &Supervisory Board Members on a regular basis and report on the current status of compliance, risk
management and other matters within the Group.
(10) System for Ensuring That Personnel Who Make a Report Under Paragraph (9) Do Not Receive
Unfavorable Treatment Due To Such Report The Company prohibits the disadvantageous treatment of Group's Directors, Audit & Supervisory Board
Members or employees who make a report to the Company's Audit & Supervisory Board Members on thebasis that they made such a report.
(11) Policies concerning the procedure for advance payment or reimbursement of expenses that arise withregard to the execution of duties of an Audit & Supervisory Board Member or any other processing ofexpenses or obligations that arise with regard to the execution of duties
 When Audit & Supervisory Board Members ask the Company to process expenses or obligations deemednecessary for the performance of their duties, the Company promptly pays such expenses or processes suchobligations.
(12) Other Systems for Ensuring the Effective Audit by Corporate Auditors
 The Company guarantees Audit & Supervisory Board Members the opportunity to conduct interviews with
Directors and employees and Audit & Supervisory Members also conduct regular meetings with the
President and audit corporation to exchange opinions.

- 23 -

2. Basic Views on Eliminating Anti-Social Forces
The Company takes a resolute attitude against antisocial forces and other groups which potentially pose athreat to social order and safety, dealing with them as an organization in cooperation with lawyers, the policeand other specialist external organizations.

- 24 -

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

Not Adopted

Supplementary Explanation-

2. Other Matters Concerning to Corporate Governance System
Overview of Timely Disclosure System
The Group discloses important decisions and financial information in an appropriate manner at the time theresolution or decision is made by the Board of Directors or other decision maker. The Company also discloses
information about material emerging facts promptly upon recognition of their emergence.
In addition, the Company actively discloses information judged to affect investors' investment decisions andstrives to increase management transparency.
The Company's information disclosure procedures were registered with the TSE's Timely Disclosure network(TDnet) and then also posted on the Company's website.

- 25 -

- 26 -