Corporate Governance
Last Updated: November 21, 2023

Kawasaki Kisen Kaisha, Ltd.
Yukikazu Myochin, Representative Director, President & CEO
Contact: Masaya Futakuchi, General Manager, General Affairs Group
Tel: 81-3-3595-6568
Securities Code: 9107
https://www.kline.co.jp/en/index.html
The corporate governance of Kawasaki Kisen Kaisha, Ltd. (the “Company”) is described below.

I.

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

1. Basic Views(Basic principle of corporate governance)
Solid corporate governance is essential for a company to fulfill its social responsibility, respond to the commitment
bestowed by stakeholders and achieve sustainable growth.
The Company has been engaged in initiatives to strengthen its framework of corporate governance and to develop andenhance systems for risk management, and continuously strives to increase its corporate value by acting in total
accordance with our business ethics while building an organic and effective mechanism of governance, in conjunction
with the achievement of increasingly robust earnings and a stronger financial standing.
[Reasons for Non-compliance with the Principles of Japan’s Corporate Governance Code] [Updated]
The Company have implemented all the principles of the Corporate Governance Code.
Disclosure Based on the Principles of Japan’s Corporate Governance Code] [Updated]
Please refer to the Company’s Corporate Governance Guidelines (hereinafter, the “Guidelines”), which have beenposted to the Company’s website in their entirety.
https://www.kline.co.jp/en/csr/governance/corporate_governance/main/00/teaserItems1/01/linkList/0/link/guideline.pdf
Details of disclosure based on the principles of Japan’s Corporate Governance code are as follows:
1) [Principle 3.1 (i) Management Principles, Business Strategies and Business Plans]and2) [Principle 1.3 Basic Strategy for Capital Policy]
The Company stipulates in the Charter of Conduct for the “K” LINE Group companies that the “K” Line Group willprotect personal and customer data, properly manage corporate information through timely and appropriate disclosure,widely promoting bi-directional communication with society including shareholders.
In addition to financial information, non-financial information is also published annually in the “‘K” LINE REPORT’and on the Company’s website.
https://www.kline.co.jp/en/ir/library/report.html
Corporate Principle and Vision
In May 2022, having considered the scale and importance of the impact of changes in the business environment on theGroup, the Group reconfirmed our goals and revised our “Corporate Principle”, “Vision” and “Values the “K” LINE
Group prize”
Through this process, we reconfirmed that logistics centered on the shipping business is the Group’s business area. We
clarified the direction of the Group in this business area as working to enhance corporate value through the promotionof low-carbonization and zero-carbonization at our company and in society, concentrating management resources inbusinesses that play leading roles in driving growth to realize that goal, and becoming a company that pursues bothcustomers and growth opportunities that allow us to carry out activities aimed at low-carbonization and zerocarbonization.
Corporate Principle– “K” LINE: trust from all over the world –-1-

As a logistics company rooted in the shipping business, we help make the lives of people more affluent.
VisionAs a partner trusted by all its stakeholders, we aim for sustainable growth and greater corporate value by supporting theinfrastructure of the global community.
Values the “K” LINE Group prizes◆ Providing safe and optimized services that put the customer first.
◆ Tireless attitude toward problem solving◆ Providing the value only “K” LINE can in pursuit of expertise◆ Relentless efforts to achieve innovation◆ Contributing to the global environment and a sustainable society◆ Respecting individuals and ensuring fair business activities by embracing diverse values
Business Strategies and Business Plans
Management Strategy
Amid large changes in the business environment, the Group released our five-year medium-term management plan
covering Fiscal Year 2022 through Fiscal Year 2026. To polish our expert capabilities, the unique strength of theGroup, to promote the low-carbonization and zero-carbonization of our company and society heading toward 2050, andto realize our long-term management vision of balancing these goals with earnings growth, we have clarified thepolicies that we will implement in the coming five years in our medium-term management plan. We are moving
forward with support for the energy infrastructure changeover parallel to the transition to fleets composed of ships using
alternative fuels. Simultaneously, to ensure that we capture these business opportunities and to enhance our profitability
and growth potential, we are working to enhance our corporate value sustainably by concentrating our management
resources and strengthening our partnerships with our customers. To realize these initiatives, we are executing ourbusiness strategies, building our business foundation, and clarifying our capital policy.
We have established the following management indices and goals to quantitatively manage our initiatives to enhance
corporate value.
Management
Targets FY 2026
Index
ROE
10%+
ROIC
6.0% ~ 7.0%
Ordinary income: ¥140 billion(Steady progress is being made with regard to the income target in light of target figuresaccording to the management index, and in light of growth results, the income target will
Incomebe worked on with a view to achieving ordinary income of ¥140 billion, which is the target
in the medium-term management plan, ahead of schedule.)
OptimalBalancing the optimization of our capital efficiency as a group with sound finances that
capitalallow strategic fundraising
structure
Set the cumulative amount of shareholders returns, the scope of which was set from aminimum of ¥400 billion to a maximum of ¥500 billion during the term of the mediumShareholder term management plan, to a minimum of ¥500 billion or more due to an upward swing in
returns
operating cash flow.
policy(Focus on both capital efficiency and financial soundness through cash allocation with anawareness of optimal capital, and enhance corporate value by carrying out proactive
shareholder returns after making investments for growth.)
Medium-Term Management Plan
1. Formulating a long-term management vision for growth leveraging the environment
We have formulated a long-term management vision that we would like to realize through activities aimed atstrengthening portfolio management and low-carbonization and zero-carbonization.
To polish our expert capabilities, the unique strength of the Group, and to balance contributing to the low-carbonizationand zero-carbonization of the Company and society with profit growth, we are concentrating our management resourcesin businesses that play a role in driving growth, aiming for sustainable growth as a company that is highly market resistant-2-with both our pillar businesses and containership business. We will implement investment with a greater awareness ofcapital cost and appropriate capital policy.
2. Concentrating management resources through our business portfolio strategy
Our new business portfolio framework categorizes the roles of the businesses and clarifies the strategic direction of eachbusiness according to its role.
Using the low- and zero-carbon transitions of the Company and society as an opportunity, we will achieve business growththrough the concentrated allocation of management resources in the portfolio of “businesses that play a role of driving
growth.” In the portfolio of “businesses that play a role of supporting a smooth energy source conversion and taking on
new business opportunities,” we will strive to meet the demand for alternative fuels while minimizing business risks. In
the portfolio of “businesses that play a role in contributing byenhancing profitability,” we will pursue synergies with other businesses while promoting the migration to a light-asset
business model by aligning the ship ownership period with the contract period for bulk carriers, working to improve
market resilience and secure stable earnings in each covered business. For these three portfolios, we will continue toconsider strategic replacement of business assets.
In the portfolio of “businesses that play a role of supporting the business as a shareholder and stabilizing the earning base,”
we aim to maximize corporate value through ongoing personnel support and involvement in management governance. In
the “new business domain,” we will pursue Group synergies and expand the business domains in which we can leverage
our strengths.
3. Building a business foundation to realize our business strategy by polishing technologies and expertise unique to theGroup through our functional strategy based on our organizational and personnel plan
We will build a solid business foundation to realize our business strategy. By improving our unique
technology and expertise through investment into the human resources that are the source of the Group’s value
proposition as well as their supporting systems and technologies, we will enhance our organizational strength throughcoordination among our specialized and technological divisions and aim for sustainable growth. Furthermore, regarding
the environmental and technological development and safety and ship quality management that are essential to realizing
future growth, we will further strengthen our response by establishing a support system and organization throughcontinuous initiatives and by strengthening our global locations.
4. Creating optimal capital policy at the Company and improving business management to execute that policy
We will constantly be aware of the optimal capital structure and cash flow, and focus on both capital efficiency andfinancial soundness. We will enhance corporate value by carrying out proactive shareholder returns after making
investments for growth. Furthermore, by working to further improve business management as part of capital policy, we
will strengthen and promote business portfolio management and cash flow management through the introduction ofmanagement indicators by business with an awareness of capital costs.
The management plan including the business strategies is disclosed on the Company’s website below.
https://www.kline.co.jp/en/ir/management/strategy.html
4) [Principle 3.1 (ii) Basic Principle and Basic Policies on Corporate Governance]
To fulfill its corporate social responsibility, to respond to the mandate bestowed by shareholders and other stakeholders,
and to achieve sustainable growth, establishing corporate governance is essential for the Company.
The Company has stipulated in its Guidelines that it engages in initiatives to strengthen its framework of corporate
governance and to develop and enhance systems for risk management, and continuously strives to increase its corporate
value by acting in total accordance with our business ethics while building an organic and effective mechanism ofgovernance, in conjunction with the achievement of increasingly robust earnings and a stronger financial standing.
Moreover, with respect to matters such as protection, proper management and disclosure of information, andcommunication with society, the items listed below have been stipulated in the Charter of Conduct for “K” Line Group
Companies and the “K” Line Implementation Guideline for Charter of Conduct. Meanwhile the Company andcompanies of the Group have been striving to establish effective internal systems in order to achieve such aims.
1. Human rights
2. Compliance
3. Trustworthy company group
4. Proactive environmental efforts
5. Protection, proper management and disclosure of information and communication with society
6. Contribution to society-3-

7. Harmony in the international society
8. No relations with anti-social forces
5) [Supplementary Principle 4.11.1 Principles on the Appropriate Balance Between Knowledge, Experience andCapabilities of the Board of Directors as a Whole, on Diversity and Appropriate Board Size, and Policies andProcedures for Appointing Directors]and6) [Principle 3.1 (iv) Principles and Procedures in the Appointment/Dismissal of the Senior Management and theNomination of Director and Audit & Supervisory Board Member Candidates by the Board of Directors]
To achieve the management plan, the Company’s Board of Directors shall consist of a variety of individuals of different
genders, nationalities, careerswork histories, and ages, including those with experience in managing corporations andother large organizations and those with expertise in the operational, technical, financial, and other aspects of theshipping industry. This is to ensure constructive discussions and supervision based on diverse backgrounds andknowledge. The Company shall consider to such diversity when selecting candidates for Directors and the Audit &Supervisory Board Members and create and disclose a skill matrix for Directors. In addition, with respect to the size of
the Board of Directors, there are currently nine Directors in office, of which four of them are Independent Outside
Directors who satisfy the Company’s criteria.
The skill matrix of directors is described as follows and disclosed in the Notice of the 155th Ordinary General Meetingof Shareholders.
Expertise
Name

Position & Areas of responsibility in the Company
CorporateandManagement
significant concurrent positions& Strategy

Legal & Risk
Management

Yukikazu Myochin

Representative Director, President (CEO)〇Atsuo Asano

Representative Director, Vice
President Executive Officer(Assistant to President & CEO,Responsible for DryBulk Carriers Unit,
in charge of Bulk Carriers)〇

Yukio Toriyama

Representative Director,
Senior Managing Executive Officer(Responsible for CFO Unit
(Corporate Planning, Research, Finance,
Accounting, Taxation),
CFO (Chief Financial Officer))〇

Kazuhiko Harigai

Representative Director, Senior
Managing Executive Officer(Responsible for Energy Transportation
Business Unit)〇

Keiji Yamada

Outside Director
Independent & Lead Outside Director
Remuneration Advisory Committee Chairperson

Ryuhei Uchida

Outside Director

Kozue Shiga

Outside Director
Nomination Advisory Committee Chairperson〇

Koji Kotaka

Outside Director〇

Hiroyuki Maki

Outside Director･

Finance &Accounting

〇

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Human
Resources &Labor

Safety &Quality

Environment& Technology

GlobalSales &
Marketing

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Notice for the General Meeting of Shareholders (page 23)

https://www.kline.co.jp/en/ir/stock/meeting/main/014/teaserItems1/0/linkList/0/link/Notice%20of%20the%20155th%20
Ordinary%20General%20Meeting%20of%20Shareholders.pdf
The Guidelines stipulate the following regarding the qualifications required of officers.
(1) The Company shall appoint to its Directors and Audit & Supervisory Board Members individuals possessing suchbroad and deep experience and knowledge as to be able to contribute to the monitoring of business execution,
superior in personal quality, and highly conscious of complying with laws and regulations and prescriptive social
norms. Also, the Company shall appoint those with expertise in finance, accounting, and legal affairs as Audit &Supervisory Board Members, and of which at least one person shall possess appropriate expertise on corporate
finance and accounting.
(2) The Independent Outside Directors shall be persons capable of performing the following roles and responsibilities,
in addition to the aforementioned.
-4-

Provide advice on business policies and business improvement based on their knowledge and experience with theaim to promote sustainable corporate growth and increase its corporate value over the medium- to long-term;
ii. Evaluate management’s performances as needed and express views, as members of the Nominating Advisory
Committee and the Remuneration Advisory Committee, on management nominations and remunerations;iii. Monitor the management through important decision-making at the Board of Directors;
iv. Monitor conflicts of interest between the Company and its management or controlling shareholders, etc.; andv. Appropriately represent the views of stakeholders at the Board of Directors from a standpoint independent of the
management and controlling shareholders.
(3) The Company shall appoint to its Executive Officers individuals who are familiar with the shipping industry, whohave abundant international sensibility and business acumen, who are highly esteemed inside and outside of theCompany, who are capable of contributing to the implementation of the medium-term management plan as
managers, and who are highly conscious of complying with laws and regulations and prescriptive social norms.
When re-appointing the Executive Officers, the Company shall take into account the performance, etc. of thebusiness units and departments of which they are in charge.
i.

The Guidelines stipulate procedures enlisted by the Board of Directors with respect to appointing and dismissing senior
management, and also with respect to nominating Director and Audit & Supervisory Board Member candidates, as
determined by the Board of Directors. Such procedures are based on the aforementioned nomination policy, and subject
to the fair, transparent and rigorous deliberations and recommendations of the Nominating Advisory Committee, andalso subject to the consent of the Audit & Supervisory Board with respect to the candidates for Audit & Supervisory
Board Member. When making such decisions, the Board of Directors shall respect the recommendations of theNominating Advisory Committee.
The Nominating Advisory Committee shall furnish recommendations and advice to the Board of Directors, upon having
deliberated on the reasonableness of proposals for appointment or dismissal of the Company’s officers, as well as anyother matters subject to inquiry of the Board of Directors concerning appointment or dismissal of the Company’s
officers. The Nominating Advisory Committee shall comprise all Independent Outside Directors, the Chairman, and thePresident & CEO, and its chairperson shall be appointed from among committee members who are Outside Directors.
(Response to Supplementary Principle 4.11.1 with subsection I. 1. 12) )7) [Principle 3.1 (v) Explanations with Respect to Individual Appointments/Dismissals of the Senior Management andNominations of Director and Audit & Supervisory Board Member Candidates by the Board of Directors]
The Company shall disclose reasons for appointment of its currently serving Directors and Audit & Supervisory Board
Members in its Notice for the General Meeting of Shareholders. Moreover, reasons for appointment of the Outside
Directors and Outside Audit & Supervisory Board Members are explained in this Corporate Governance Report, as wellas in the Notice (Refer to section II-1 of this Report).
8) [Supplementary Principle 4.1.1) Scope of Matters Delegated to the Senior Management]
The Company shall stipulate in the Guidelines the following duties, such that are to be carried out by the Board of
Directors which is to consist of a diverse range of Directors who are to be accordingly appointed based on the
aforementioned policy for nomination.
i. Set strategic direction by examining and deciding upon matters relating to the Company’s business policy andstrategy including business principles, corporate vision and medium-term management plan;ii. Conduct multifaceted and close examinations of, and decide upon the matters which are prescribed to be decided
upon by the Board of Directors, from an independent and objective standpoint in light of the Company’s business
policy and business strategy, and receive reports on those matters which are required to be reported to the Board of
Directors;iii. Conduct multifaceted and close examinations of proposals from the Executive Officers based on healthy
entrepreneurship, from an independent and objective standpoint, in order to establish an environment that supports
appropriate risk-taking by the Directors and the Executive Officers, and support the timely and bold decisionmaking by the Directors and the Executive Officers when approved plans are implemented;
iv. (i) Oversee the execution by the Directors and the Executive Officers of their duties from an independent andobjective standpoint, (ii) monitor the progress of the management plan and evaluate the status of achievement; (iii)
analyze the causes if the management plan is not achieved and reflect such analysis on future plans; and (iv)disclose said causes of non-achievement and analysis to the shareholders;v. Develop and improve the risk management system and the corporate governance structure including the internal
control system in order to ensure the rationale of the Company’s decision-making process; andvi. Secure its fiduciary accountability to the shareholders on the Company’s management, and oversee the Directors
in order to ensure that information will be disclosed in a timely and accurate manner.

-5-

As such, the Regulations on Decision-Making Standards shall limit matters to be determined by the Board of Directors
to those listed under items ‘i.’ to ‘vi.’ as follows, and decisions on matters of business execution otherwise shall be
entrusted to the Executive Officers.
i. Matters to be decided upon by the Board of Directors under laws and regulations;ii. Matters relating to the Company’s business policy and strategy including business principles, corporate vision andmedium-term management plan, strategic direction of the Company, and a single-year budget;iii. Important internal rules including Regulations on Decision-Making Standards;
iv. Response guidelines to deal with any serious law violation committed by the Company;
v. Matters relating to significant lawsuits; andvi. Significant matters comparable to any of the matters set forth above.
9) [Principle 4.9 Independence Standards and Qualification for Independent Outside Directors]
In addition to requirements stipulated by the Companies Act, the Company has established specific standards relating to
independence in selecting Outside Directors and Outside Audit & Supervisory Board Members, which are provided
below. Persons for which none of the criteria listed in the below items apply are deemed to be independent.
1. A person who has been a business executor (meaning a business executor as provided for in Article 2, Paragraph(3), Item (6) of the Regulation for Enforcement of the Companies Act; the same shall apply hereinafter) of acorporate group for whom the Company is a major client within the past three years.
“A corporate group for whom the “K” LINE Group is a major client” refers to a corporate group that has received
payment from the Group in each of the years in this three-year period accounting for over 2% of consolidated sales
in each such year for that corporate group.
2. A person who has been a business executor of a corporate group that is a major client of the “K” LINE Group
within the past three years.
“A corporate group that is a major client of the “K” LINE Group” refers to a corporate group who made payment to
the Group in each of the years in the three-year period accounting for over 2% of the Group’s consolidated sales ineach such year.
3. A person who has, within the past three years, been a business executor of a financial institution or another principal
creditor, or its parent company or important subsidiary that plays a critical role in the “K” LINE Group’s financing
to such a degree that it is irreplaceable for the Group.
4. A person who has been paid ¥10 million or more or has received other assets in an amount equivalent thereto otherthan officer’s remuneration from the Group in the past three years; or a person who has, within the past three years,
belonged to an audit firm, tax accounting firm, law firm, consulting firm or other professional advisory firm that has
been paid ¥10 million or more or other assets in an amount equivalent thereto by the Group in each of the years in
the three-year period accounting for over 2% of the total revenues of such juridical person, etc. However, this shallnot apply to a person who belongs to such juridical person in outline but has substantially no conflict of interest
with the Group (a person who does not receive any compensation from such juridical person, for example).
5. A shareholder holding over 10% of the voting rights of the Company. If the shareholder is a juridical person, aperson who has been a business executor of the shareholder or its parent company or subsidiary within the past
three years.
6. Spouses or persons who are a relative of the second or less degree of a person falling under any of the above
criteria.
The Guidelines stipulate that the Board of Directors shall endeavor to select the Independent Outside Director
candidates who can contribute to the Company’s sustainable growth and increase of corporate value over the
medium- to long-term and can be expected to contribute to frank, active and constructive discussions at the Boardof Directors.
10) [Supplementary Principle 4.11.2) Status of Concurrent Positions of Directors and Audit & Supervisory Board
Members with Other Listed Companies’ Officers]
For details regarding Directors and Audit & Supervisory Board Members who are concurrently serving as officers ofother listed companies, please refer to the Company’s Notice of the 155th Ordinary General Meeting of Shareholders,pages 10 to 28 and pages 51 to 52.
https://www.kline.co.jp/en/ir/stock/meeting/main/014/teaserItems1/0/linkList/0/link/Notice%20of%20the%20155th%20
Ordinary%20General%20Meeting%20of%20Shareholders.pdf
11) [Supplementary Principle 4.11.3) Overview of Analysis and Evaluation of Effectiveness of the Board of Directors
as a Whole]With the aim of improving functions of the Board of Directors, the Board of Directors analyzes and evaluates its
effectiveness as a whole, which involves referring to self-evaluation conducted annually by each of the Directors.
-6-An overview of these interviews is disclosed on the Company’s website.
https://www.kline.co.jp/en/news/other/other5593671793322669687/main/0/link/230428EN3.pdf

12) [Supplementary Principle 4.10.1) An Independent Nomination Advisory Committee and Remuneration Advisory
Committee]
As advisory committees to the Board of Directors, the Company has established a Nomination Advisory Committee anda Remuneration Advisory Committee which evaluate and deliberate on important matters such as nomination,
remuneration, and successor plans. Each committee deliberates on inquiries received from the Board of Directors andacts as a recommendation and advisory body to the Board of Directors. Each committee is chaired by an Independent
Outside Director and composed of a majority of Independent Outside Directors, ensuring independence.
Furthermore, the Independent Outside Directors that serve as committee members for the Nomination Advisory
Committee contribute appropriately to deliberations on management candidates from the standpoint of diversity
including gender, as well as skills. (Please refer to subsection I. 1. 5) and 6) )13) [Principle 3.1 (iii) Board of Directors Policies and Procedures in Determining the Remuneration of the Senior
Management and Directors]
The Guidelines provide for the Board of Directors’ policies for determining the remuneration for senior management
and Directors as follows:(1) The remuneration for the Executive Directors and the Executive Officers shall be appropriate, fair and balanced so
as to reflect the Company’s medium- to long-term business performance and the latent risks borne by said
Executive Directors and Executive Officers and to further enhance their willingness and motivation to bring about
the Company’s sustainable growth and maximize its corporate value.
(2) The remuneration for the Outside Directors shall reflect the amount of time devoted to the Company’s business, andthe responsibilities borne by them, and shall not include business performance-linked factors.
(3) The amount of remuneration for each individual Director shall be fair and adequate in consideration of theCompany’s business performance and in light of the levels of remuneration paid by other comparable companies.
The Board of Directors’ procedures for determining remuneration for senior management and Directors are as follows.
(1) The institutional design and level of remuneration for Directors shall be deliberated on, resolved, and recommended
to the Board of Directors by the Remuneration Advisory Committee pursuant to the aforementioned policies.
(2) The Board of Directors shall furnish its approval for the remuneration by position for members of senior
management and Directors within the limit of the maximum yearly remuneration resolved at the General Meeting of
Shareholders, paying heed to recommendations. Meanwhile, the Representative Director and President shallultimately determine amounts of payment for each member of senior management and each Director.
Remuneration for Directors of the Company (limited to Executive Directors) and Executive Officers consists of three
types: fixed remuneration (monetary), short-term performance-based remuneration (monetary), and medium- to longterm performance-based remuneration (stock). The payment for each type of remuneration, etc. is expected to be
100:40:65 in the case that performance targets are achieved. The base amount for each position for short-term
performance-based remuneration varies within the scope of 0 to 1.5 and the base amount for each position for mediumto long-term performance-based remuneration varies within the scope of 0 to 1.8 depending on the level of achievementof targets, and the degree of linkage to performance increases in accordance with management responsibilities. The
Company provides motivation with the optimal balance between short-term performance and medium- to long-term
shareholder value enhancement, providing Directors with incentives to promote sustainable initiatives, aimed at
maximizing corporate value.
The overview of performance-based remuneration is as follows.
 Short-term performance-based remuneration (monetary)
Short-term performance-based remuneration (monetary) is primarily linked to the level of achievement of the targets
for consolidated performance for a single fiscal year to enhance the transparency and objectivity of payment
standards.
The coefficient for multiplying the base amount for each position shall be linked to consolidated performance (total
amount of ordinary income, amount of ordinary income excluding the containership business, and profit attributableto owners of the parent) for single fiscal years as well as individual contributions. The coefficient linked toconsolidated performance varies in value from 0 to 1.5 based on the designated formula according to the level ofachievement of targets. The degree of linkage to performance increases in accordance with management
responsibility.
In addition to this, in the event of a serious marine accident, the Company applies subtraction indicators according to
the extent of the accident and its impact.
-7- Medium- to long-term performance-based remuneration (stock)
The medium- to long-term performance-based remuneration (stock) shall be linked to the total shareholder return(TSR) and other indicators in order to further share value with shareholders and make the incentives for Directors toenhance corporate value over the medium- to long-term function effectively.
Note: The Company’s TSR = The rate of increase of the Company’s shares over a fixed period + The dividend rate over the fixed
period (Total dividend ÷ Initial share price)

For TSR-based indicators, a combination of the ratio of the Company’s TSR to the TOPIX growth rate (hereinafter, the“TSR Ratio”) and the ranking of the Company’s TSR to the TSR of other companies shall be used to determine thecoefficient for multiplying the base amount for each position.
If the TSR Ratio is 50% or less, the coefficient for multiplying the base amount for each position shall be 0 (theminimum value); if the TSR Ratio is 100%, the coefficient shall be 1 (when set targets were achieved); if the TSR Ratio
is 150% or more, the coefficient shall be 1.62 (the maximum value); and if the TSR Ratio is more than 50% but lessthan 150%, the coefficient shall be calculated through a certain formula.
Apart from TSR-based indicators, the Company introduces coefficients based on the level of achievement of the targets
in the medium-term management plan and the ranking of the Company to other companies as ROE indicators, andcoefficients that assess the improvements in CO2 emissions efficiency as ESG indicators.
The degree of linkage to performance is designed to increase in accordance with management responsibility. The
composition ratio for TSR indicators: ROE indicators: ESG indicators (CO2) is set at 90:5:5.
The total values of each coefficient (the minimum value 0, the maximum value 1.8) calculated as detailed above shall be
multiplied by the base amount for each position to calculate the amount of medium- to long-term performance-based
remuneration, which will be converted into points and awarded to Directors each fiscal year. In principle, theCompany’s stock, etc. will be delivered at the time of retirement in proportion to the accumulated number of the points
awarded.
15) [Supplementary Principle 4.14.2) Policy on Training of Directors and Audit & Supervisory Board Members]
The Company’s Guidelines stipulate training policy, as follows, with the aim of facilitating appropriate performance ofthe roles and responsibilities expected of Directors and Audit & Supervisory Board Members who constitute a criticalelement of the governance body.
(1) Within three months from their appointment, the Company’s newly-appointed Directors shall participate in an
outside seminar primarily addressing the issues of legal liability under the Companies Act, the Financial
Instruments and Exchange Act and other relevant acts. In addition, the Company shall provide the newly-appointed
Directors with commentary books on directors’ responsibilities.
(2) Each year, the Company’s Directors and Audit & Supervisory Board Members shall attend a training session oncompliance matters including competition laws, insider trading regulations and anti-bribery.
(3) When Outside Directors and Outside Audit & Supervisory Board Members take office, the Company shall ensure
they gain a full understanding of the Group’s business, corporate finance, organizational status, businessenvironments and management issues by having its departments and officers in charge offer explanations aboutsuch subjects.
(4) The Company’s Directors and Audit & Supervisory Board Members including outside officers shall actively gather
information at any and all times, and shall devote themselves to the studies of the Company’s financial condition,
status of compliance, corporate governance and other relevant matters.
16) [Principle 5.1 Policy for Constructive Dialogue with Shareholders]
From the perspective of achieving sustained growth and increasing corporate value over the medium- to long-term, theCompany engages in constructive dialogue with its shareholders, investors and its Guidelines and IR Policy furthermore
stipulate policy, as follows, on establishing frameworks and engaging in efforts to facilitate such dialogue.
(1) To achieve sustained growth and increased corporate value over the medium- and long-term, “K” LINE considers
and executes measures that promote constructive dialogue with shareholders, investors etc.
(2) The Executive Officer in charge of the Company’s Corporate Sustainability, Environment Management Promotion,
IR and Communication shall be responsible for overseeing constructive dialogue with shareholders, investors, etc.
The relevant departments in corporate such as Corporate Sustainability, Environment Management Promotion, IR
and Communication, Corporate Planning, General Affairs, Finance, Accounting, and Legal shall ensure positive
cooperation with each other and endeavor to enhance measures to promote constructive dialogue.
(3) “K” LINE seeks to enhance promoting our shareholders and investors’ understanding of our financial situation andhaving dialogue with them through proactive disclosure and polite questions and answers in General Meeting of
Shareholders, sessions, facility tours, the Company’ website, Integrated Report, and FACT BOOK, and brochures
issued for shareholders and investors. We also explain our business strategy, business description and financial
results, etc. to institutional investors through quarterly financial results briefings, briefings on our management planand sessions held by security companies, etc. In addition, we seek to enhance dialogue with them through small
meetings for such investors, conferences, and overseas investors’ road show meetings, etc.
-8-(4) As for views and concerns of shareholders, investors etc. which “K” LINE has received through the above
opportunities, we shall compile them according to their respective importance as appropriate and report themcollectively to the Board of Directors, etc.
(5) “K” LINE appropriately controls insider information in accordance with Financial Instruments and Exchange Act
and relevant laws and regulations as well as internal rules.
(6) The Company shall respect the intent and meaning of the Fair Disclosure Rules specified in the Financial
Instruments and Exchange Act and other related laws, and shall furthermore strive to ensure fair information
disclosure in accordance with the Fair Disclosure Policy stipulated in its IR Policy.
Please refer to the Company’s website via the link below to access its entire IR Policy.
https://www.kline.co.jp/en/ir/management/policy.html
17) [Principle 1.4 Cross-Shareholdings]
The Company owns and operates numerous high-cost assets in the form of marine vessels over extended durations oftime. The Company furthermore operates against a backdrop of a business environment epitomized by businessperformance that is highly volatile due to foreign exchange, market conditions and other such factors that are beyond
corporate efforts of individual companies. To achieve long-term and sustainable growth given such a scenario, theCompany maintains cross-shareholdings of partner companies deemed necessary in order to sustain and strengthen the
Company’s transactional and business relationships. Meanwhile, the Board of Directors assesses whether or not theCompany should maintain individual holdings and took steps to reduce the Company’s Cross-Shareholdings, to which
ends it is to meet no less than once per year and take an objective standpoint with respect to specifically scrutinizing the
purposes of maintaining the individual holdings and the medium- to long-term economic rationale of maintaining suchholdings. As of March 31, 2023, the number of stock listings in the Company’s portfolio of cross-shareholdings wasthree. Upon assessing the economic rationale of such holdings, the Company considers the notion of selling shares incases where returns gained through the holdings during the fiscal year fall below our cost of capital.
The Guidelines stipulate that, when exercising the voting rights as to the Cross-Shareholdings, the Board of Directors
shall fully examine whether or not the relevant propositions would contribute to the enhancement of the Company’s
corporate value and the shareholders’ common interests, hold dialogues with issuing entities as needed, and shalldetermine whether it would vote for or against the said propositions.
18) [Principle 1.7 Related Party Transactions]
The Company has established the following procedures with respect to related party transactions, and finds thatmanagement is capable of supervising such transactions based on such procedures.
(1) The Regulations on Decision-Making Standards stipulate that the Company is to refer matters to be addressed byand seek prior approval from the Board of Directors with respect to certain matters irrespective of monetaryamount, such that include: transactions with major shareholders whose holdings account for more than 10% of theCompany’s voting rights or transactions between the Company and its Directors; transactions conducted by a
Director with the Company for a third party; transactions involving conflict of interest; and, debt guarantees of
Directors made by the Company. The Regulations on Decision-Making Standards also stipulate that key
developments must be reported to the Board of Directors subsequent to having carried out a transaction. As such,the Board of Directors supervises appropriateness of transactions.
(2) The Company shall treat all of its shareholders impartially, and accordingly must not make special considerations
for specific shareholders.
(3) The Company shall determine the presence or absence of related party transactions upon submission ofconfirmation documents for all of the Company’s officers each fiscal term, and shall furthermore verify transaction
details in the event that related party transactions have taken place.
19) [Supplementary Principle 2.3.1) Measures to Address Sustainability Issues],20) [Supplementary Principle 4.2.2) The Formulation of a Basic Policy for Sustainability Initiatives]and21) [Supplementary Principle 3.1.3) Disclosure Concerning Sustainability]
Amid globally accelerating changes in value and behavior, as well as increasing awareness of the need to reduce theenvironmental burden caused by global warming, “K” LINE considers sustainability management as a priority issue forenhancing corporate value over the medium to long term and discusses the issue continuously at the Board of Directors’
meetings.
To reinforce management where these issues are key objectives, the Company established the “Corporate Sustainability
Management Committee” and the “GHG Reduction Strategy Committee.” The President & CEO acts as the Chairmanof each committee, which is enhancing corporate value by reviewing and formulating a promotion system for “K” LINE
Group’s sustainability management and a GHG reduction strategy. As organizations responsible for practicalimplementation, the Corporate Sustainability, Environment Management Promotion, IR, and Communication Group,-9-the GHG Reduction Strategy Group, the Carbon-Neutral Promotion Group, the Fuel Strategy & Procurement Group,and the Advanced Technology Group are each accelerating sustainability initiatives through their operations.
The Company reviews the materiality (important sustainability issues) as necessary as a part of the process to identify,
evaluate and manage sustainability-related risks and opportunities. The Company newly identified five areas and 12
items regarding material issues in the review in Fiscal Year 2022.
The 12 newly identified items regarding material issues were categorized and arranged into the five areas of “safety &quality,” “environment & technology,” “promotion of digitalization” and “human resources,” which are the four pillarsof the capabilities strategy that the Company set forth in the medium-term management plan, in addition to the“management foundation,” which is the foundation for the other four areas. The Group has positioned the material
issues as an important issue to be addressed in order to realize the corporate principle and vision based on the mediumterm management plan.
Furthermore, the Company issues its “K” LINE REPORT and Sustainability Booklet, and provides overall information
on sustainability on the sustainability and management plan page of its website, including scenario analysis based on the
Task Force on Climate-Related Disclosures (“TCFD”) recommendations, investments in human capital, reduction ofenvironmental burden, diverse workstyles, and investments in intellectual property to promote technologicaldevelopment and innovation initiatives to support improvement of service quality.
･ Sustainability Website (website providing a comprehensive introduction to the Company’s sustainability initiatives)
https://www.kline.co.jp/en/csr.html･ ESG Data Book (provides ESG-related data)
https://www.kline.co.jp/en/sustainability/esg_data/main/014/teaserItems2/0/link/ESG_DATA_BOOK_2022_(EN)_for_Browsing.pdf･ “K” LINE REPORT (Foundation for Value Creation)
https://www.kline.co.jp/en/ir/library/report.html･ Views and Initiatives on Addressing Climate Change (Response to TCFD)
https://www.kline.co.jp/en/sustainability/environment.html･ “K” LINE Environmental Vision 2050 (Initiatives on Net-Zero GHG Emissions)
https://www.kline.co.jp/en/csr/environment/management/main/010/teaserItems1/01/linkList/0/link/2111v
ision%20minaoshi_EN.pdf･ FY2022 Medium-Term Management Plan (pages 23 to 24 “Investment in Human Resources” and page 28“Environmental Investment”)
https://www.kline.co.jp/en/ir/management/strategy.html
22) [Supplementary Principle 2-4 Ensuring Diversity, Including Active Participation of Women]and23) [Supplementary Principle 2-4.1) Ensuring Diversity When Hiring Core Human Resources]<Human Capital Diversity and Human Resource Policy & Policy on Improvement of Work Environments Inside theCompany>
The Group has formulated the “Charter of Conduct for the “K” LINE Group companies” as standards of behavior forthe entire Group. In the human rights section of the Charter, the Group pledges that the “K” LINE Group willconsistently respect human rights and properly consider the personality, individuality and diversity of its corporate
members and improve work safety and conditions to offer them comfort and affluence.
Furthermore, in the “K” LINE Implementation Guideline for Charter of Conduct, “K” LINE has pledged to eliminate
any discrimination in employment or compensation based on nationality, gender, religion, social class, or other social
status, and to ensure equal opportunity in the implementation of its human resources management, working to ensure
diversity in both managerial posts and among general employees.
The Group has local offices and affiliates in more than 20 countries and is composed of richly diverse employees. At
our Japanese headquarters as well, the Company conducts hiring and appointments regardless of nationality or gender.
In addition to our Human Resource Policy, Policy on improvement of work environments inside the Company, andBasic Human Resource Management Policies, the Company discloses data related to our overall human resources
system and objectives related to female managerial posts on our website. Regarding foreigners and mid-career hires, weare promoting human resources diversity in our hiring and appointment in line with the Group’s business strategies.
<Indicators and Targets>
Aiming to become a company where all employees can work with enthusiasm and feel fulfilled, the Company has set
the following targets in the action plan (period of the plan: April 1, 2022 to March 31, 2025) and works on them to- 10 -

promote the active participation of women and support the training of the next generation of employees in order todevelop an environment for employees where anyone can demonstrate their individual abilities while balancing both
work and home.
(i) Percentage of the Company’s female employees in management positions by the end of the period of the plan of
15%.
(ii) Percentage of leave taken at the Company by male employees for childcare of 20% or more.
<Progress of Targets (results in Fiscal Year 2022)>(i) Percentage of the Company’s female employees in management positions: 7.4%(ii) Percentage of leave taken at the Company by male employees for childcare: 88.5%(*)(*) Includes vacation for the purpose of childcare･ Sustainability Website (website providing a comprehensive introduction to the Company’s sustainability initiatives)
https://www.kline.co.jp/en/csr.html･ “K” LINE REPORT (Human Resources)
https://www.kline.co.jp/en/ir/library/report.html･ Policy on Improvement of Work Environments Inside the Company (“Basic Principle”)
https://www.kline.co.jp/en/sustainability/social/human_rights.html･ Action plan to promote the active participation of womenhttps://www.kline.co.jp/en/sustainability/social/diversity_inclusion/main/01/teaserItems1/0/linkList/0/link/Action%20Pl
an%20to%20Promote%20the%20Active%20Participation%20of%20Women%20and%20Support%20Raising%20of%2
0the%20Next%20Generation%20Children.pdf･ Approach to human resources development(Onshore Workers)
https://www.kline.co.jp/en/csr/social/human_resource/human_resource.html(Marine Technical Personnel) https://www.kline.co.jp/en/csr/social/human_resource/human_resource_sea.html
24) [Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]
The Company has adopted a defined-benefit corporate pension plan, and accordingly strives to ensure safe and efficientmanagement of the plan. To such ends, the Company has established the Pension Asset Management Committee which
is chaired by the General Manager of Finance Group who serves as the pension fund manager, and whose membershipconsists of individuals in charge of pension fund duties in Finance and Human Resources divisions. The Company has
established fundamental policies and asset management guidelines particularly with respect to safely and efficiently
managing pension funds. The Company accordingly engages in efforts involving human resources and administration
serving as the parent entity of the pension plan, with the aim of ensuring that the Pension Asset Management Committee
implements the function of monitoring the entity entrusted with asset management.
Moreover, managing the pension plan involves ensuring that the utmost respect is devoted to interests of those enrolled
in the corporate pension plan.
[ Measures to Realize Management With an Awareness of Capital Costs and Share Price]
By working to further improve business management as part of our capital policy, the Company is strengthening andpromoting business portfolio management and management that emphasizes cash flows through the introduction ofmanagement indicators (ROIC, EVA, etc.) by business with an awareness of capital costs, in order to increase corporate- 11 -

value. For specific details and the progress, please refer to the information posted on the Company’s website at theaddresses below.
・ Financial Highlights Brief Report for Fiscal Year 2022 (C-2 to C-7)
https://www.kline.co.jp/en/ir/library/presentation/main/011111111111/teaserItems1/0/linkList/01/link/2022_4_presentati
on_e.pdf
・ Financial Highlights Brief Report for 2nd Quarter FY2023 (C-4 to C-6)
https://www.kline.co.jp/en/ir/library/presentation/main/011111111115/teaserItems1/0/linkList/01/link/2023_2_presentati
on_e.pdf[Promotion and Disclosure of Dialogue With Shareholders]
The implementation status of dialogue with shareholders and investors is disclosed on the Company’s website at“Sustainability | The “K” LINE Group’s Sustainability Management | Stakeholder Engagement | Results of Investor
Relations (IR) Activities.”
https://www.kline.co.jp/en/sustainability/sustainability_management/stakeholder_engagement.html
The main topics of dialogue are business strategy, the medium-term management plan, financial affairs, shareholder
returns, capital policy, non-financial information including sustainability, and other matters.
For information on the contents of explanations and Q&A sessions during financial results briefings and businessbriefings for investors and shareholders, please refer to the information posted on the Company’s website at theaddresses below.
Investor Relations | IR Library | Financial Reporthttps://www.kline.co.jp/en/ir/library/presentation.html
Investor Relations | IR Library | IR Event
https://www.kline.co.jp/en/ir/library/event.html

2. Capital Structure
Foreign Shareholding Ratio

30 % or more

[Status of Major Shareholders] [Updated]
Name

Number of Shares Owned(Shares)

Shareholding Ratio(%)

ECM MF32,149,200

12.92

The Master Trust Bank of Japan, Ltd. (trust
account)

24,296,300

9.77

GOLDMAN SACHS INTERNATIONAL

17,892,080

7.19

MLI FOR SEGREGATED PB CLIENT

16,954,200

6.81

J.P. MORGAN SECURITIES PLC FOR
AND ON BEHALF OF ITS CLIENTSJPMSP RE CLIENT ASSETS-SEGR ACCT

15,300,000

6.15

CGML PB CLIENT
ACCOUNT/COLLATERAL

14,125,200

5.68

IMABARI SHIPBUILDING CO., LTD.

7,062,120

2.84

Custody Bank of Japan, Ltd. (trust account)

5,937,300

2.38

Mizuho Bank, Ltd.

4,911,640

1.97

Sompo Japan Insurance Inc.

4,405,614

1.77

Controlling Shareholder (except for Parent)―――

Parent (Listed Stock Market)

N/A- 12 -

Supplementary Explanation―――

3. Corporate Attributes
Listed Stock Market and Market Section[Updated]

Tokyo Stock Exchange, Prime Market

Fiscal Year-End

MarchType of Business

Marine transportation

Number of Employees (Consolidated) at Endof the Previous Fiscal Year

1,000 or more

Net Sales (Consolidated) for the Previous
Fiscal Year

From ¥100 billion to less than ¥1 trillion

Number of Consolidated Subsidiaries at Endof the Previous Fiscal Year

From 100 to less than 300

4. Policy for Measures to Protect Minority Shareholders in Conducting Transactions with Controlling
Shareholder―――

5. Special Circumstances Which May Have Material Impact on Corporate Governance [Updated]- 13 -

II. Business Management Organization and Other Corporate Governance Systems Regarding
Decision-making, Execution of Business, and Supervision in Management
1. Organizational Composition and Operation
Organization Form

Company with Audit & Supervisory Board[Directors]
Maximum Number of Directors Stipulated in
Articles of Incorporation

15

Term of Office Stipulated in Articles ofIncorporation

1 yearChairperson of the Board

President

Number of Directors [Updated]

9

Appointment of Outside Directors

Appointed

Number of Outside Directors

5

Number of Independent Officers DesignatedFrom Among Outside Directors

4Outside Directors’ Relationship with the Company (1)NameAttribute

Keiji Yamada

Other

Ryuhei Uchida

From another company

Kozue Shiga

Attorney at law

Koji Kotaka

Attorney at law

Hiroyuki Maki

From another company

Relationship with the Company*
a

b

c

d

e

f

g

h

i

j

k



* 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; and“” when a close relative of the director fell under the category in the pasta. Executive (a person who executes business; hereinafter, the same) of the Company or its subsidiaryb. Non-executive director or executive of the parent of the Company
c. Executive of a fellow subsidiary of the Company
d. Party whose major client or supplier is the Company or an executive thereof
e. Major client or supplier of the Company or an executive thereof
f. Consultant, accounting professional or legal professional who receives a large amount of monetary considerationor other property 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 a
corporation)h. Executive of a client or supplier of the Company (which does not correspond to any of d., e., or f.) (the director
himself/herself only)
i. Executive of a corporation to which outside officers are mutually appointed (the director himself/herself only)
j. Executive of a corporation that receives a donation from the Company (the director himself/herself only)
k. Other- 14 -

Outside Directors’ Relationship with the Company (2) [Updated]

Name

Keiji Yamada

Designation as
Independent
OfficerSupplementary
Explanation of theRelationship

Reasons for Appointment
Mr. Keiji Yamada has experience inprominent positions with central/local
governmental offices such as former
Ministry of Home Affairs, served 4terms (16 years) as Governor of Kyoto
Prefecture, and was appointed as an
Outside Directors of the Company inJune 2019. Mr. Yamada does not haveprior experience of direct involvement
in corporate management aside frombeing an Outside Officer, but his wide
range of experience/personal network
and insight cultivated over many years
as the head of government bodies has
been utilized in the Group’s
management. He has fulfilled his role as
Lead Independent Outside Director bymaking active suggestions at the Boardof Directors meetings and supervising
management and the execution ofbusiness through his activities in his
position as Remuneration Advisory
Committee Chairman and Nominating
Advisory Committee Member.
Accordingly, the Company expects that
he will continue to fulfill those roles andhas appointed him as Outside Director.
As there is no possibility that conflict ofinterest may occur between Mr. Yamada
and general shareholders, the Company
designates him as an Independent
Officer.

–- 15 -

Name

Ryuhei Uchida

Designation as
Independent
Officer

Supplementary
Explanation of theRelationship

Reasons for Appointment

Mr. Ryuhei Uchidasatisfies the requisite for
Outside Director in the
Companies Act;however, due to
conflicts with theshareholder requisite in
the criteria for
independence of Outside
Officers provided by theCompany since heserves as a Director ofEffissimo CapitalManagement Pte Ltd., ashareholder of theCompany, the Company
designates him as a nonindependent Outside
Director.

Mr. Ryuhei Uchida first joined
Mitsubishi Corporation, mainly served
for supporting investments for Japaneseand foreign non-listed companies, thenjoined Innovation Network Corporationof Japan, being in charge of investments
for foreign non-listed companies andsupporting business start-ups forJapanese non-listed companies, as well
as also serving as an Outside Director
for both British and Chilean companies.
Currently he is in charge of managing
investments of Japanese-listedcompanies as a Director of Effissimo
Capital Management Pte Ltd. Mr.
Ryuhei Uchida was appointed as an
Outside Director of the Company inJune 2019, and his abundant experienceand insight in corporate valueenhancement has been utilized in the
Company’s management. The Company
judges that fulfilling his role through his
proactive opinions given as a Director
with the perspective of our shareholder
and his precise supervision on its
management and the execution ofbusiness will benefit generalshareholders and contribute toimproving the Group’s corporate
governance. Accordingly, the Company
expects that he will continues to fulfill
those roles and has appointed him as
Outside Director. There is no special
interest between Mr.Uchida and theCompany.

- 16 -

Name

Kozue Shiga

Koji Kotaka

Designation as
Independent
OfficerSupplementary
Explanation of theRelationship

Reasons for Appointment–

Ms. Kozue Shiga has expert knowledge
and experience as a lawyer, and she
became an Outside Audit & Supervisory
Board Member of the Company in June
2016 after having served as an outside
director and auditor of several listedcompanies. Though she does not haveprior experience of direct involvement
in corporate management by methods
other than serving as an outside board
member, based on her abundant
experience and from a broad
perspective, she is appropriately
fulfilling her role of making active
suggestions at the Board of Directors
meetings and supervising management
and the execution of business throughher activities in her position as
Nominating Advisory Committee
Chairperson and Remuneration
Advisory Committee
Member. Accordingly, the Company
expects that he will continues to fulfill
those roles and has appointed her as
Outside Director. As there is no
possibility that conflict of interest may
occur between Ms. Shiga and generalshareholders, the Company designates
her as an Independent Officer.

－

Mr. Koji Kotaka, in addition to being alawyer, has experience in roles such as acompany director in a broad range ofindustries including real estate,securities, investment banking and IT.
The Company has appointed him as
Outside Director to contribute to theCompany’s management by utilizing his
expertise in law, particularly hisabundant insight into the investmentarea and expects that he will draw on
his abundant experience in law, financeand accounting and broad insight, which
also includes investment and IR, toappropriately fulfill his role of making
suggestions at the Board of Directors
meetings and supervising the executionof business. There is no special interest
between Mr. Kotaka and the Company.
As there is no possibility that conflict ofinterest may occur between Mr. Kotaka
and general shareholders, the Company
designates him as an Independent
Officer.

- 17 -

Name

Designation as
Independent
Officer

Hiroyuki Maki

Supplementary
Explanation of theRelationship〇

Reasons for Appointment
Mr. Hiroyuki Maki is the President andCEO of Melco Holdings Inc., mainly
engaged in IT related business and foodbusiness, and President and Director ofits subsidiary companies. The Company
has appointed him as Outside Director
to contribute to the Company’s
management by utilizing his abundant
experience and insight in Groupbusiness administration and expects that
he will draw on his abundant experience
as a corporate manager and broad
insight in the IT and digital realm toappropriately fulfill his role of making
suggestions at the Board of Directors
meetings and supervising the executionof business. There is no special interest
between Mr. Maki and the Company. As
there is no possibility that conflict ofinterest may occur between Mr. Makiand general shareholders, the Company
designates him as an Independent
Officer.

―[Voluntary Committees]
Voluntary Establishment of Committee(s)Equivalent to Nominating Committee orRemuneration Committee

Established

Committee’s Name, Composition, and Chairperson’s Attributes
Committee Equivalent toNominating Committee
Committee’s Name

Nominating Advisory Committee

Committee Equivalent toRemuneration Committee
Remuneration Advisory Committee

Total Committee Members

55

Full-Time Members

00Inside Directors

11Outside Directors

44Outside Experts

0

0

Other

0

0

Chairperson

Outside Director

Outside Director

Supplementary Explanation [Updated]
Article 21 of the Guidelines stipulates details regarding the Nominating Advisory Committee and the Remuneration
Advisory Committee.
(Start of excerpt)
Article 21
1. The Company shall put and keep in place the Nominating Advisory Committee and the Remuneration Advisory
Committee as advisory committees to the Board of Directors in the manner described below.
- 18 -

2. The Nominating Advisory Committee and the Remuneration Advisory Committee shall be comprised of all of the
Independent Outside Directors, the Director and Chairman, and the President & CEO. (The Outside Directors shallappoint the chairperson of each Committee from among themselves.)
3. In response to inquiries from the Board of Directors, the Nominating Advisory Committee shall deliberate on:i. Reasonableness of proposals for appointment or dismissal of the Company’s officers; andii. Any other matters inquired from the Board of Directors concerning appointment or dismissal of theCompany’s officers.
4. In response to inquiries from the Board of Directors, the Remuneration Advisory Committee shall deliberate on:i. Institutional design of officers’ remunerations;ii. Level of officers’ remuneration; andiii. Any other matters inquired from the Board of Directors concerning officers’ remunerations.
5. Each set of rules on operation of the Nominating Advisory Committee and the Remuneration Advisory Committee
shall be separately prescribed.
(End of excerpt)
The attendance in the fiscal year ended March 31, 2022 is as follows:
Nominating Advisory Committee
Kozue Shiga(Attended 13/14 meetings) *Chairperson
Keiji Yamada(Attended 14/14 meetings)
Yukikazu Myochin(Attended 14/14 meetings)
Tsuyoshi Kameoka (Attended 14/14 meetings)
Remuneration Advisory Committee
Keiji Yamada(Attended 9/9 meetings) *Chairperson
Kozue Shiga(Attended 8/9 meetings)
Yukikazu Myochin(Attended 9/9 meetings)
Tsuyoshi Kameoka (Attended 9/9 meetings)
Status of establishment of secretariats, etc.
The Executive Officer in charge of General Affairs is in charge of secretariats which have been established with respect
to each of the committees.
[Audit & Supervisory Board Members]
Establishment of Audit & Supervisory Board

Established

Maximum Number of Audit & Supervisory
Board Members Stipulated in Articles ofIncorporation

5

Number of Audit & Supervisory Board Members

4

Cooperation Among Audit & Supervisory Board Members, Financial Auditor and Internal Audit Department
The Audit & Supervisory Board Members receive reports from the Accounting Auditor regarding audit plans and audit
results on a regular basis, and otherwise maintains close cooperation with the Accounting Auditor by exchanging
information and opinions as necessary.
The Audit & Supervisory Board Members hold meetings with the Internal Audit Group on a regular basis, and also
receive explanations from the Internal Audit Group regarding audit plans and progress thereof. Monthly reports ofmatters that the Internal Audit Group reports to the Representative Directors are also circulated to the Audit &Supervisory Board Members. Meanwhile, the Company strives to ensure information sharing which also involves
distributing reports on operational audits conducted by the Audit & Supervisory Board Members to the Internal Audit
Group. In addition, when the Audit & Supervisory Board Members conduct on-site audits of subsidiaries and affiliatedcompanies, they engage in mutual coordination and cooperation in a manner that involves cooperating with the
Accounting Auditor and the Internal Audit Group as necessary.
Appointment of Outside Audit & Supervisory
Board Member

Appointed- 19 -

Number of Outside Audit & Supervisory Board
Members2

Number of Independent Officers DesignatedFrom Among Outside Audit & Supervisory
Board Members

2

Outside Audit & Supervisory Board Members’ Relationship With the Company (1)NameAttribute

Atsumi Harasawa

Attorney at law

Shinsuke Kubo

Certified Public
Accountant

Relationship with the Company*
a

b

c

d

e

f

g

h

i

j

k

l

m

* Categories for “Relationship with the Company”* “” when the Audit & Supervisory Board Member presently falls or has recently fallen under the category;“” when the Audit & Supervisory Board Member fell under the category in the past;* “” when a close relative of the Audit & Supervisory Board Member presently falls or has recently fallen under the
category; and“” when a close relative of the Audit & Supervisory Board Member fell under the category in the pasta. Executive (a person who executes business; hereinafter, the same) of the Company or its subsidiaryb. Non-executive director or accounting advisor of the Company or its subsidiaryc. Non-executive director or executive of the parent of the Company
d. Audit & Supervisory Board Member of the parent of the Company
e. Executive of a fellow subsidiary of the Company
f. 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, accounting professional or legal professional who receives a large amount of monetary considerationor other property from the Company besides compensation as an Audit & Supervisory Board Member
i. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a
corporation)
j. Executive of a client or supplier 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 corporation to which outside officers are mutually appointed (the Audit & Supervisory Board
Member himself/herself only)
l. Executive of a corporation that receives a donation from the Company (the Audit & Supervisory Board Member
himself/herself only)
m. Other- 20 -

Outside Audit & Supervisory Board Members’ Relationship With the Company (2)Name

Atsumi Harasawa

Shinsuke Kubo

Designation as
Independent
OfficerSupplementary
Explanation of theRelationship–

Ms. Atsumi Harasawa, admitted topractice as a lawyer in Japan, possesses
extensive expert knowledge andexperience in the field of corporate law,labor law and patent rights, gained
through working at a law firm, and also
has knowledge and experience in thetransportation sector by contributing on
safety from the technical side beingcertified as a first class aircraft
maintenance technician at Japan Airlines
Co., Ltd. Ms. Harasawa does not haveprior experience of direct involvement incorporate management by methods otherthan serving as an outside
director/auditor. However, in light of her
performance in the effective auditingfrom an outside independent standpoint
since being appointed as an Outside
Audit & Supervisory Board Member of
the Company in June 2019, theCompany expects that she will continue
to appropriately fulfill this role. There isno special interest between Ms.
Harasawa and the Company. As there isno possibility that conflict of interest
may occur between Ms. Harasawa andgeneral shareholders, the Company
designates her as an Independent Officer.

–

Mr. Shinsuke Kubo, a CPA in Japan, hasa variety of achievements andexperiences through his work with both
Japanese and foreign audit firms, in thefields of auditing, IPO support, corporate
revitalization and M&A. Mr. Kubo also
has abundant experience in founding andmanaging venture businesses andcompanies that support reactivation ofother businesses, the Company judgesthat he will perform effective auditingfrom an outside independent standpoint
as an Outside Audit & Supervisory
Board Member. Accordingly, theCompany has appointed him as Outside
Audit & Supervisory Board Member.
As there is no possibility that conflict ofinterest may occur between Mr. Kubo
and general shareholders, the Company
designates him as an Independent
Officer.

[Independent Officers]
Number of Independent Officers

Reasons for Appointment

6- 21 -

Matters Relating to Independent Officers
The Company has registered all officers who satisfy the Independent Officer criteria as Independent Officers.
Please refer to subsection I. 1. 8) [Principle 4.9 Independence Standards and Qualification for Independent Outside
Directors], previously in this document, for details on the “Criteria for the Independence of Outside Officers.”[Incentives]
Implementation of Measures to Provide
Incentives to Directors

Performance-based remuneration

Supplementary Explanation [Updated]
The Company has introduced the following indicators for short-term performance-based remuneration and medium- tolong-term performance-based remuneration to maximize corporate value.
Short-term performance-based remuneration:
Short-term performance-based remuneration is primarily linked to the level of achievement of the targets forconsolidated performance for a single fiscal year. The Company introduced coefficients linked to the level ofachievement of the targets for consolidated performance (total amount of ordinary income, amount of ordinary income
excluding the containership business, and profit attributable to owners of the parent) for single fiscal years andcoefficients that depend on individual contribution in addition to ESG (safety) indicators that subtract remuneration in
the event of a serious marine accident.
Medium- to long-term performance-based remuneration:
Medium- to long-term performance-based remuneration (stock) is primarily linked to the total shareholder return (TSR)
over the past three years in order to further share value with shareholders and increase the incentives for Directors toenhance corporate value over the medium- to long-term. In addition, the Company has adopted indicators linked toreturn on equity (ROE) for the past three years and indicators linked to the level of improvement of CO2 emissions
efficiency in the previous year. The composition ratio for TSR indicators: ROE indicators: ESG indicators (CO2) has
been set at 90:5:5.
Please refer to pages 52 to 53 of the Company’s155th Annual Securities Report (Japanese only) for details on the
Company’s policy for determining proportions of remuneration in the form of performance-based remuneration andremuneration other than performance-based remuneration, benchmarks pertaining to performance-based remuneration,
methods of determining amounts of such performance-based remuneration, and reasons for having selected suchbenchmarks.
https://data.swcms.net/file/kline-corp/dam/jcr:bb55a022-47f6-4865-8abd-f835fb6ecc46/S100QZPH.pdf(Japanese only)
Recipients of Share Options
Supplementary Explanation―――[Director Remuneration]
Disclosure of Individual Directors’ Remuneration

No individual disclosure

Supplementary Explanation [Updated]
The Company paid ¥906 million to 10 Directors and ¥80 million to four Audit & Supervisory Board Members as
officer’s remuneration pertaining to the fiscal year ended March 31, 2023. The above includes remuneration for one
Director and one Audit & Supervisory Board Member who retired from their positions upon the conclusion of the 154th
Ordinary General Meeting of Shareholders held on June 23, 2022.
The above includes short-term performance-based remuneration of ¥201 million and ¥407 million of medium-to longterm performance-based remuneration.

- 22 -

< Directors whose total amount of remuneration, etc is more than ¥100 million>(Million Yen)

Name

Fixed
remuneration

Short-term
performance-based
remuneration(monetary)

Medium- to longterm
performance-based
remuneration(stock)Yukikazu Myochin

72

64

172

309

Atsuo Asano

49

37

76

163

Yukio Toriyama

43

32

51

127

Kazuhiko Hariga

43

32

51

127

Yasunari Sonobe

41

30

49

121

Policy for Determining Remuneration Amounts
or Calculation Methods Thereof

Total amount

Established

Disclosure of Policy for Determining Remuneration Amounts or Calculation Methods Thereof
For Board of Directors policies in determining the remuneration of Directors, please refer to above I 1. 13) [Principle
3.1 (iii) Board of Directors Policies and Procedures in Determining the Remuneration of the Senior Management andDirectors].
The remuneration, etc. for Audit & Supervisory Board Members shall solely comprise monthly remuneration. Monthly
remuneration for each Audit & Supervisory Board Member is determined after deliberations by Audit & Supervisory
Board Members, within the limit of the maximum amount of monthly remuneration for Audit & Supervisory Board
Members resolved at the General Meeting of Shareholders.
The retirement benefits plan for Directors and Audit & Supervisory Board Members was terminated in June 2006.
[Supporting System for Outside Directors and/or Audit & Supervisory Board Members]
The Company shall support the smooth execution of duties of its Outside Directors by having the Corporate PlanningGroup provide them with briefings and information necessary prior to meetings of the Board of Directors and by
furnishing them with reports on important matters of business execution.
Moreover, the Company shall establish a framework for assisting the Audit & Supervisory Board Members byappointing employees to assist them and by establishing regulations regarding such appointments. The Company shallensure that the employees assisting Audit & Supervisory Board Members maintain independence from the Directors byprohibiting such employees from concurrently performing other duties related to business execution, and having the
Audit & Supervisory Board Members themselves subject the employees assisting Audit & Supervisory Board Members
to examinations.
[Status of Persons Who Have Retired from a Position Such as Representative Director and President]
Retired Representative Director and Presidents, etc. Holding Advisory or Any Other Position in the Company[Updated]

Name

Eizo
Murakami

Title/
Position

Responsibilities

SpecialExecutive
AdvisorEngages in theexternal activities
of industry
associations andeconomicorganizations

Working Form and Conditions(Full-time/Part-time,
Paid/Unpaid, etc.)

Part-time/Paid- 23 -

Date of
Retirementfrom Position
Such asPresident

March 31,2019

Term of
OfficeSubject toupper age
limit ofinternal
rulesTotal Number of Retired Representative Director and Presidents, etc. Holding
Advisory or Any Other Position in the Company [Updated]

1

Other Matters [Updated]
There is no senior advisor position at the Company because it was terminated in November 2017.
The Special Executive Advisor uses his experience and knowledge in the shipping industry and management to takepart in the external activities of industry associations and economic organizations but is not involved in management.

2. Matters on Functions of Business Execution, Audit and Supervision, Nomination and Remuneration
Decisions (Overview of Current Corporate Governance System) [Updated](Status of business execution)
The Company’s Board of Directors is comprised of nine Directors, including four Outside Directors. It determines
matters required by laws and regulations, the fundamental management policies, and other important matters regarding
the management of businesses, while supervising business execution by the Directors. A meeting of the Board of
Directors has been held once or more a month. The Company also adopts a system of making resolutions in writing andholding meetings online for the Board of Directors, which enables the flexible operation of the board.
Apart from the Board of Directors, the Company hosts a Management Conference that requires the attendance of the
Director and Chairman, Executive Officers equivalent to or higher than Senior Executive Officer, Unit Supervising
Executive Officers, Executive Officers in charge of Corporate Planning, Finance and Accounting as well as Audit &Supervisory Board Members once a week in principle. By doing so, the Company establishes a system that facilitatesdeliberations to decide important matters relating to business execution and that allows open discussions that contributeto decision-making by the President & CEO or the delegate.
The attendance at the Board meetings in the fiscal year ended March 31, 2022 is as follows:
Yukikazu Myochin, Director(Attended 19/19 meetings)
Atsuo Asano, Director(Attended 19/19 meetings)
Yukio Toriyama, Director(Attended 19/19 meetings)
Kazuhiko Harigai, Director(Attended 19/19 meetings)
Yasunari Sonobe, Director(Attended 19/19 meetings)
Keiji Yamada, Director(Attended 19/19 meetings)
Ryuhei Uchida, Director(Attended 19/19 meetings)
Kozue Shiga, Director(Attended 19/19 meetings)
Tsuyoshi Kameoka(Attended 18/19 meetings)
Makoto Arai
(Attended 6/6 meetings) *Retired from office on June 23, 2022
Kunihiko Arai, Audit & Supervisory Board Member(Attended 19/19 meetings)
Yutaka Akutagawa, Audit & Supervisory Board Member (Attended 19/19 meetings)
Atsumi Harasawa, Audit & Supervisory Board Member(Attended 19/19 meetings)
Shinsuke Kubo, Audit & Supervisory Board Member(Attended 18/19 meetings)(Reasons for adopting the system of a company with Audit & Supervisory Board)
The Company has four Audit & Supervisory Board Members as of June 23, 2023. The Company has adopted thissystem upon having deemed it to be effective with respect to corporate governance amid a scenario where legal
revisions in recent years have strengthened the authority and independence of Audit & Supervisory Board Members.
Meanwhile, the Company recognizes that its corporate governance is functioning appropriately under the system which
encompasses the Board of Directors, Audit & Supervisory Board, Management Conference and other such bodies, giventhat procedures being carried out in a manner sufficiently aligned with legal code.
(Status of accounting audit)
The Company has entered into an audit contract with an auditing firm (Ernst & Young ShinNihon LLC) which performs
audits from a standpoint of fairness and impartiality.
Name of the certified public accountants/
Affiliated auditing firm
who executed the audit duties
Satoshi Uchida/ Ernst & Young ShinNihon LLC
Yuichiro Sagae/ Ernst & Young ShinNihon LLC
Masashi Kobayashi/ Ernst & Young ShinNihon LLC
Audit operations assistants
Certified Public Accountant

19- 24 -

Other assistants

30(Status of nomination of candidates for the Directors and the Audit & Supervisory Board Members)
In accordance with the qualifications stipulated in the Guidelines, the Board of Directors shall select candidates for the
Directors and the Audit & Supervisory Board Members upon the fair, transparent and rigorous deliberations andrecommendations of the Nominating Advisory Committee and also subject to the consent of the Audit & Supervisory
Board as to candidates for the Audit & Supervisory Board Member.
(Status of determination of remuneration for the Senior Management and the Directors)
Remuneration is decided by the Board of Directors following fair deliberation and reporting by the Remuneration
Advisory Committee.
(Status regarding limited liability contract)
The Company’s Articles of Incorporation stipulate that, pursuant to the provisions of Article 427, Paragraph (1) of theCompanies Act, the Company may conclude limited liability contracts as prescribed in Article 423, Paragraph (1) of thesaid Act with Directors (excluding Executive Directors) and Audit & Supervisory Board Members. Based on theprovisions, the Company has concluded limited liability contracts with Non-Executive Directors Keiji Yamada, Ryuhei
Uchida, Kozue Shiga, Koji Kotaka and Hiroyuki Maki, as well as all Audit & Supervisory Board Members. When
acting in good faith and in the absence of any serious negligence, the limit of liability on the basis of any such contract
will amount to either ¥10 million or an amount stipulated by laws and regulations, whichever amount may be higher.

3. Reasons for Adoption of Current Corporate Governance System [Updated]
The Company strives to streamline business execution by strengthening the supervisory function and delegating
authority to Unit Supervising Executive Officers, which has involved adopting a Board of Directors and a Unit
Supervisory System encompassing Outside Directors. The Company has adopted its current system under which it
strives to maintain and improve the effectiveness of its audits by coordinating efforts of the Audit & Supervisory Board
Members and the Internal Audit Group, premised on the notion that such a system enables the Company to respond toits commitment bestowed on it by its shareholders and other stakeholders.
The Company adopted the Unit Supervisory System in April 2016 with the aim of taking appropriate risk andidentifying business execution responsibility upon having appointed Unit Supervising Executive Officers to oversee
multiple divisions positioned under the President & CEO who spearheads execution. For details, please refer to theCompany’s website.
https://www.kline.co.jp/en/csr/governance/corporate_governance.html
Moreover, the Outside Directors monitor management and business execution from an independent and objective
standpoint, drawing on their diverse experience and knowledge.

- 25 -

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Energize General Meeting of Shareholders and Smooth Exercise of Voting Rights [Updated]
Supplementary Explanations
Early Notification of General
Meeting of Shareholders

The Company sends the notification out approximately three weeks before
the General Meeting of Shareholders.

Scheduling AGMs Avoiding
the Peak Day

The General Meetings of Shareholders have been scheduled on non-peakdays.

Allowing Electronic or
Magnetic Exercise of Voting
RightsIn 2006, the Company adopted a system that enables shareholders to
exercise their voting rights online via the Internet and through other suchmeans.

Participation in Electronic
Voting Platform and Other
Efforts to Enhance the Voting
Environment for Institutional
Investors

The Company participates in the Electronic Voting Platform and otherwise
considers options for offering greater convenience to institutional investors
with respect to exercising their voting rights.

Providing Convocation Noticein English (Translated Fully or
Partially)

The Company prepares full English-language versions of its Convocation
Notices (including Business Reports) and posts them to the Tokyo Stock
Exchange and to its corporate website.

Other

The Company posts its Convocation Notices (containing the Business
Report) of its General Meetings of Shareholders to the Tokyo Stock
Exchange and to its corporate website. The Convocation Notice for the 2023
meeting was posted seven days prior to being sent out.
After the conclusion of the General Meetings of Shareholders, notificationsof resolutions and video of the meetings are posted on the Company’s
website.
From 2022, the Company introduced virtual General Meetings ofShareholders (participatory) and began live-streaming of General Meetingsof Shareholders.

2. IR Activities [Updated]
Supplementary Explanations

Preparation and Publication ofDisclosure Policy

Specifics of the Disclosure Policy are disclosed in
the Guidelines(https://www.kline.co.jp/en/csr/governance/corporate_governance/main/00/teaserItems1/01/linkList/0/link/corporategovernanceguidelines.pdf) and the IR
Policy(https://www.kline.co.jp/en/ir/management/policy.html) via the corporate website. Furthermore, byadding the Fair Disclosure Policy to the IR Policy,
the Company has clearly stated its response to the
Fair Disclosure Rules specified in the Financial
Instruments and Exchange Act and other related lawsthat came into force on April 1, 2018.

Regular Investor Briefings for
Individual Investors

The Company participates in briefing sessionsorganized by securities companies and other such
entities, holds online investor briefings via theInternet, and otherwise conveys information throughits corporate website.

- 26 -

Explanation byRepresentative

EstablishedSupplementary Explanations
Regular Investor Briefings forAnalysts and Institutional
Investors
Regular Investor Briefings forOverseas Investors

Explanation byRepresentative

The Company holds financial results briefings on aquarterly basis and organizes individual interviewson a regular basis for analysts and institutional
investors in Japan. In addition, the Company holds
small meetings, business briefings, and facility tours.

Established

The Company’s dialogue with overseas institutional
investors involves individual interviews regularly via
visiting, online, and other means with investors in
Europe, the U.S., and Asia, etc., participation in
conferences organized by securities companies, andsmall meetings. The Company distributes investor
briefing session materials, audio content, Financial
Reports (summary and Q&A) and other suchinformation in English upon release of its quarterly
financial results.
(https://www.kline.co.jp/en/ir/library/presentation.ht
ml)Established

Posting of IR Materials on
WebsiteThe Shareholder and Investor Relations page of theCompany’s website(https://www.kline.co.jp/en/ir.html) contains IR
News, Financial Highlights, Financial Reports(summary and Q&A) and audio recordings (Japaneseonly), “K” LINE REPORT, the FACTBOOK,
brochures issued for shareholders and investors(Japanese only), Annual Securities Reports (Japaneseonly) and Quarterly Reports (Japanese only),business briefing materials, online briefing movies
for individual investors, and Financial and
Performance Information including Shipping Market
Information. It also contains Japanese and English
language versions of materials and information thatfacilitate understanding of the Company, including a
profile of the Company and an overview of its
strengths.

Establishment of Department
and/or Manager in Charge ofIR

The Company has established the IR and ESG
Promotion Team of the Corporate Sustainability,
Environment Management Promotion, and IR andCommunication Group as the department in chargeof investor relations, and investor relations activities
are carried out by the President, Chief Financial
Officer (CFO), Executive Officer in charge ofCorporate Sustainability, Environment Management
Promotion, IR and Communication.

- 27 -

3. Measures to Ensure Due Respect for Stakeholders [Updated]
Supplementary Explanations

Provisions to Ensure Due
Respect for Stakeholders inInternal Rules, etc.

 The Company has established the Charter of Conduct for “K” Line Group
Companies and the “K” Line Implementation Guideline for Charter ofConduct. The Charter of Conduct for “K” Line Group Companies isintended to clearly state principles of behavior for Group companies.
Accordingly, it declares that companies of the “K” LINE Group are to act
in accordance with principles of the Charter of Conduct, thereby
remaining aware that growth or Group companies must be in harmony
with society, premised on the fundamental notion that business activities
are to respect human rights and comply with applicable laws, regulations
and other norms of behavior. In addition, the “K” Line Implementation
Guideline for Charter of Conduct encompasses the Company’s
relationships with its respective stakeholders in stipulating specificguidelines for executing the Charter of Conduct for “K” Line Group
Companies.
 As more specific guidelines related to “Respect for Human Rights”
established in the above Charter of Conduct for “K” Line Group
Companies, the Company has established the “‘K’ LINE Group Basic
Policy on Human Rights,” and in addition to respecting and complying
with international standards related to respect for human rights, the policy
calls for the implementation of “human rights due diligence.” The Company has established the Sustainability Management Promotion
Committee in order to promote sustainability management of “K” LINE
Group and to improve its corporate value. It consists of the Executive
Officers responsible for relevant units and is chaired by the President.

Implementation ofEnvironmental Activities, CSR
Activities, etc.


 The Company have clarified the divisions in charge of each materiality
item and strengthened progress management of initiatives in order toresolve important sustainability issues identified through dialogue withstakeholders.
 Fourteen companies of the Group have obtained ISO 14001 certificationand have established environmental management systems encompassing
vessel operations. The Company has also built and is operating the“Drive Green Network” as a system to promote environment
management throughout the Group.
 Through our unique knowhow, we are working to improve our worldclass safe operational system and to link this system to environmental
preservation.
 In our relationships with our stakeholders, we are conducting thefollowing activities.

Customers and business partners:* Cooperation in conserving the environment andcontributing to society* Fair business transactions without discrimination

Shareholders and investors:* Providing information related to ESG and facilitating
dialogueFinancial institutions:* Sustainable finance including transition loans andtransition-linked loans

Employees:* Equal opportunity in hiring and treatment* Stratified training suited to improving professional
competency* Ensuring health and safety of the workplaceSociety:* Social action programs including those that entail
exchange with local communities in Japan and abroad,disaster relief, and support for environmental projects- 28 -

Supplementary Explanations

Formulation of Policies for
Information Provision to
Stakeholders

The Company complies with laws, rules, regulations, etc., relating todisclosure of Company information such as the Companies Act, theFinancial Instruments and Exchange Act, the Rules and Regulations of thestock exchanges where the Company’s stock is listed, the Unfair
Competition Prevention Act, and the Act on the Protection of Personal
Information, and furthermore provides information to each of its
stakeholders in a timely and impartial manner. The Company establishes“IR Policy” in which standards and methods of disclosure with regard to
information to be disclosed to shareholders and investors are stipulated, andalso establishes “Fair Disclosure Policy” which is the basic principle for fair
information disclosure. Both Policies are posted on the Company’s website:
https://www.kline.co.jp/en/ir/management/policy.html- 29 -

IV. Matters Related to Internal Control System
1. Basic Views on Internal Control System and Progress of System Development [Updated]
The Board of Directors passed a resolution with respect to the Company’s internal control system in May 2006, and theCompany subsequently made a series of revisions. The Company is currently expanding the internal control system
across the Group, established as follows.
I. Basic framework regarding internal control
The Company continues its efforts to establish a system to ensure the execution of duties by its Directors in compliancewith laws and regulations and the Articles of Incorporation, as well as a system to ensure the appropriateness ofbusinesses of the corporate group comprised of the Company and its subsidiaries (hereinafter, the “Group”) specified bylaws and regulations.
To be precise, the Company’s Board of Directors assumes responsibility for establishing an internal control system,
evaluating its effectiveness and ensuring its functions.
Currently, the Company establishes the following systems and will strive to review and improve them on a continuous
basis and as necessary in order to enhance the effectiveness of its internal control.
II. Internal control system
1. System to ensure the execution of duties by the Company’s Directors, Executive Officers and employees incompliance with laws and regulations as well as the Articles of Incorporation
The Company has established the Charter of Conduct for “K” Line Group Companies and the “K” Line Implementation
Guideline for Charter of Conduct, in which the compliance of the Group with laws and regulations as well as businessethics is specified as one of the principles of the conduct. The Directors are required to ensure thorough implementationof compliance and establish an effective internal system in order to achieve it. To that end, the Company constantly
implements the following measures:(1) The Company promotes the appropriate management of the Board of Directors in accordance with the Rules for the
Board of Directors, in order to ensure the executions of duties by the Directors in compliance with laws andregulations as well as the Articles of Incorporation.
(2) The Company establishes the Rules for Executive Officers, which specify matters to be complied with by the
Executive Officers in order to ensure that the execution of duties by the Executive Officers appointed by the Boardof Directors is in compliance with laws and regulations as well as the Articles of Incorporation, and promotes theactive and faithful execution of the business delegated to them.
(3) The Company establishes internal rules such as the Rules for Employees in order to ensure the execution of duties
by the employees in compliance with laws and regulations as well as the Articles of Incorporation.
(4) The Internal Audit Group supports the performance of responsibilities by the Board of Directors regarding theestablishment, maintenance and improvement of the internal control system through the supervision and verificationof the system.
(5) The Company establishes the Compliance Committee chaired by the President & CEO and strives to develop andmaintain its compliance system.
(6) The Company establishes a whistle-blowing system called the Hotline System in order to identify and appropriately
handle legal violations and other compliance issues at an early stage. The Group specifies some internal contacts aswell as a law firm as an external contact for whistle-blowers. This system is managed under the Rules for the
Hotline System.
2. System for retaining and managing information pertaining to the execution of duties by the Company’s Directors
The Company appropriately retains and manages information regarding the execution of duties by its Directors in theform of fully searchable data that ensures the availability of perusal at any time, in accordance with the Rules for the
Board of Directors and the Regulations for Documentation during the period specified by such rules and regulations.
3. Rules and systems for the Company to manage risks of loss
The Company remains aware of the risks, as listed below, inherent in the course of conducting business. Accordingly,
we develop systems for identifying and managing the risks as well as addressing the respective risks.
(1) Risks related to safe operation of vessels (including incidents involving seawater contamination)(2) Risks related to major disasters(3) Risks related to compliance(4) Other management risks
The Company establishes crisis and risk management systems which has involved drawing up its Crisis Management
Regulations to ensure the Company fulfills its social responsibility as a corporation in the event of a crisis whereby arisk materializes. The Company has established committees to address each of the aforementioned risks, and has
accordingly established the Crisis Management Committee as a body that unifies the four committees and otherwise
controls and facilitates overall crisis and risk management initiatives.
Committee’s Name
Function- 30 -

Crisis Management Committee
Ship Safety Promotion Committee

Disaster Response Committee
Compliance Committee
Management Risk Committee

Supervision of overall crisis and risk management initiatives
Implementation of measures to ensure safety of the Company’s vessels
in operation, prevention of vessel accidents (including incidents
involving seawater contamination), and response in the event of an
accident
Natural disasters and Infectious disease preparation during normal times
and responding to outbreaks
Responding to compliance-related issues
Responding to economic fluctuations,geopolitical risks and othermanagement-related risks

4. System to ensure that Directors of the Company execute their duties efficiently
The Company adopts the executive officer system and promotes smooth decision-making on the execution of duties.
[Board of Directors] The Board of Directors determines the fundamental management policies, matters required by laws
and regulations, and other important matters regarding the management of businesses, while supervising the executionof duties by the Directors and Executive Officers. A meeting of the Board of Directors should be held at least once amonth.
The Company adopts a system of making resolutions in writing and remote hosting for the Board of Directors, whichenables the flexible operation of the board.
[Management Conference] The Company hosts a Management Conference that requires the attendance of the Director
and Chairman, Executive Officers equivalent to or higher than Senior Executive Officer, Unit Supervising Executive
Officers, Executive Officers in charge of Corporate Planning, Finance and Accounting as well as Audit & Supervisory
Board Members once a week in principle. By doing so, the Company establishes a system that facilitates deliberations
to decide important matters relating to business execution and that allows open discussions that contribute to decisionmaking by the President & CEO or the delegate.
[Executive Officers’ Meeting] Executive Officers’ Meetings are held once a month in principle, attended by Executive
Officers including those concurrently serving as Directors, and Audit & Supervisory Board Members. It acts as a forum
for reporting and discussion regarding matters that include business execution encompassing monthly income andexpenditure of operating organizations and decision-matters.
5. Systems to ensure proper business operations of the corporate group comprised of the Company and its subsidiaries
The Company establishes the Charter of Conduct for “K” Line Group Companies as the code of conduct applicable tothe entire Group, in order to ensure the appropriate operations of its subsidiaries (hereinafter, the “Group companies”).
Each Group company establishes internal rules and regulations based on the charter. In addition, the Company
establishes the Regulations for Business Operations by Subsidiaries in order to ensure the appropriate operations by its
Group companies by supporting and managing the establishment and effective operation of their internal control
systems while respecting the independence of these Group companies.
(1) System for reporting matters regarding the execution of duties by Directors, etc. of the Group companies to theCompany
The Company establishes the Regulations for Business Operations by Subsidiaries and requires its Group
companies to report important matters to the relevant departments of the Company. In addition, the Company
provides its hotline contact as well as hotline systems of each Group company for whistle-blowers who identify any
legal violations and other compliance issues in each respective office. The Company also hosts the GroupManagement Meeting to facilitate information exchange among the Company and the Group companies.
(2) Rules and systems for managing risk of loss of the Group companies
The Group companies establish their own crisis management system independently according to their business scaleand characteristics. The Company establishes the Regulations for Business Operations by Subsidiaries and requires
the Group companies to report risks in executing their respective business operations according to thecharacteristics of their businesses to the Company, which will be handled by the Crisis Management Committee andother organizations.
(3) System to ensure that Directors, etc. of the Group companies execute their duties efficiently
The Group companies independently manage their respective businesses in principle. The Company establishes theRegulations for Business Operations by Subsidiaries and specifies that certain important matters of the Group
companies require approval of, discussion with, or reporting to the Company.
(4) System to ensure that Directors, etc. and employees of the Group companies execute their duties in compliance with
relevant laws and regulations and the Articles of Incorporation
The Company establishes the Charter of Conduct for “K” Line Group Companies and requires the Group companies
to comply with the charter. In addition, the Company requires each Group company to establish its Implementation- 31 -

Guideline for Charter of Conduct according to the characteristics of their businesses and verifies the content of suchguidelines.
Furthermore, the Company monitors via the Internal Audit Group, etc. the status of compliance and implementationof the internal control system by the Group companies.
6. Matters concerning the employees who are to assist Audit & Supervisory Board Members in their duties
The Company establishes the Rules Concerning Employees Tasked With the Assisting Audit & Supervisory Board
Members, and appoints employees who are required to assist the duties of Audit & Supervisory Board Members(“employees assisting Audit & Supervisory Board Members”) under the supervision of the Audit & Supervisory Board.
7. Matters concerning the independence of the employees assisting Audit & Supervisory Board Members from the
Directors of the Company
The Company establishes the Rules Concerning Employees Tasked With the Assisting Audit & Supervisory Board
Members, and specifies that it shall not order the employees assisting Audit & Supervisory Board Members to assume
other duties concurrently in principle. If it needs to do so due to unavoidable reasons, prior approval should be obtained
from the Audit & Supervisory Board. The Audit & Supervisory Board Members evaluate the performance of theemployees assisting Audit & Supervisory Board Members. The appointment and transfer of the employees assisting
Audit & Supervisory Board Members require prior approval from the Audit & Supervisory Board.
8. Matters to ensure the effectiveness of instructions by the Audit & Supervisory Board Members of the Company
given to the employees assisting them
When the employees assisting Audit & Supervisory Board Members request the Company for any information materials
and/or reporting, the Company will promptly provide such materials and/or reporting.
9. System for reporting to the Audit & Supervisory Board Members of the Company by the Directors, Executive
Officers and employees of the Company; the Directors, the Audit & Supervisory Board Members, and employees of
the Group companies; or a person who received a report from the above persons; and other systems for reporting to
Audit & Supervisory Board Members of the Company
The Directors, Executive Officers and employees of the Company are required to report important matters regarding themanagement and operations of the Company’s businesses and the status of executing its business in charge to the Audit& Supervisory Board Members as needed at a meeting of the Board of Directors or other important meetings, as well as
to promptly report any compliance issues and other matters that may cause serious damage to the Company, if
identified, to the Audit & Supervisory Board in accordance with the Rules for Systems of Reporting to Audit &Supervisory Board Members, Etc. The Directors are required to promptly report matters regarding the execution ofduties in an appropriate manner to the Audit & Supervisory Board or its Members when being requested to do so. The
Internal Audit Group is required to report the progress of its audits to the Audit & Supervisory Board as necessary andconduct additional audits if being requested to do so by the board.
The Directors, Audit & Supervisory Board Members and employees of the Group companies are required to reportcompliance issues and other important matters specified to the relevant department of the Company, and the relevant
department is required to report the matter to the Audit & Supervisory Board Members of the Company as necessary inaccordance with the Regulations for Business Operations by Subsidiaries. The Company hosts a Group Companies’
Audit & Supervisory Board Communication Meeting, in order to share information among the Company, its Group
companies and subsidiaries.
10. System to ensure the non-unfair treatment of persons who made reporting as described in the above
The Company prohibits the Company or its Group companies, under the Rules for Systems of Reporting to Audit &Supervisory Board Members, Etc. and the Regulations for Business Operations by Subsidiaries, from unfairly treating
the Directors, Audit & Supervisory Board Members, Executive Officers and employees of the Company and its Group
companies who conducted whistle-blowing to the Audit & Supervisory Board Members of the Company due to the actof such whistle-blowing.
11. Matters concerning policies on the advance payments and reimbursements of expenditures and other procedures forsettlements of expenditures and/or liabilities incurred from the execution of duties by the Audit & Supervisory
Board Members of the Company
The Company establishes policies on the advance payments and reimbursements of expenditures and procedures forsettlements of liabilities incurred from the execution of duties by the Audit & Supervisory Board Members, andconducts such advance payments, reimbursements and settlements based on the policies.
12. Other systems to ensure performance of effective audits by Audit & Supervisory Board Members of the Company
The Company cooperates in developing an environment ensuring effective audits by the Audit & Supervisory Board
Members by coordinating regular meetings with the Audit & Supervisory Board Members and the Representative- 32 -

Directors, arranging collaboration of the Audit & Supervisory Board Members with the Internal Audit Group, and othersuch means.
13. System to ensure the reliability of financial reports
To ensure the reliability of the Group’s financial reports, the Company engages in ongoing efforts to evaluate andimprove the effectiveness of internal control systems pertaining to financial reporting, on the basis of Japan’s Financial
Instruments and Exchange Act, and other relevant laws and regulations.
14. Fundamental policy toward anti-social forces and status of policy implementation
The Charter of Conduct for “K” Line Group Companies vows that “the “K” LINE Group will resolutely confront any
anti-social force or organization which may threaten social order and public safety.”
Accordingly, the Company enables the swift and appropriate handling of matters relating to anti-social forces occurring
within the Group, by appointing a department in charge of handling matters relating to anti-social forces and working
with law enforcement officials, expert corporate legal counsel and other external organizations on a normal basis, withthe aim of precluding all involvement of anti-social forces and severing any ties that could emerge.

2. Fundamental Policy Toward Anti-social Forces and Status of Policy Implementation
As stated in 1. II 14. Fundamental policy toward anti-social forces and status of policy implementation.

- 33 -

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

Not adopted

Supplementary Explanation―――

2. Other Matters Concerning Corporate Governance System [Updated] The Internal Audit Group engages in evaluation and supervision from an independent standpoint as the Group
proceeds with respect to building and establishing its internal control system in response to internal control
evaluation and reporting systems that ensure reliability of financial reporting based on the Financial Instruments andExchange Act. Please refer to Attachment No.1 regarding the corporate governance structure including theCompany’s overview of the internal control system.
 Status of internal system for timely disclosure of Company information is as follows.
1. Department in charge in relation to timely disclosure and mechanisms of execution thereof(1) Department in charge of filings with stock exchanges
Matters subject to timely disclosure are channeled to the General Affairs Group, and filings with stock
exchanges are made by the General Manager of the General Affairs Group upon having gained approval fromthe Executive Officer in charge of General Affairs.
However, the General Manager of Accounting Group is to gain approval of the Executive Officer in charge of
Accounting with respect to filings of information on financial results.
(2) In-house integration of information and preparation of disclosure documents
General Managers of each group overseeing respective matters handle in-house filings (channeling information
to the General Affairs Group) and preparation of disclosure documents with respect to matters subject to timely
disclosure.
2. Assessment and management of information requiring timely disclosure(1) General methods
1) The General Managers of groups overseeing matters relating to the Company assess such matters and filethem with the General Manager of the General Affairs Group.
2) The General Managers of each group overseeing matters relating to subsidiaries assess such matterspursuant to the Regulations for Business Operations by Subsidiaries and other such guidelines. Such
General Managers subsequently channel such matters to the General Manager of Logistics, Port andAffiliated Business Group supervising and managing subsidiaries who then files them with the General
Manager of General Affairs Group.
(2) Secondary methods (supervisory system)
The three parties listed below engage in supervision over proposals and reporting matters for meetings of theBoard of Directors and the Executive Officers’ Meeting, from the perspective of whether or not such mattersshould be subject to timely disclosure.
1) General Manager of Corporate Planning Group (Serves as the Secretariats of both the Board of Directors
and the Executive Officers’ Meeting, which involves compiling agenda topics and examining formalities
with respect to issues for deliberation)2) General Manager of General Affairs Group (Serves as the person in charge of filings with stock exchanges)
3) Executive Officer in charge of General Affairs
In addition, the officers and employees concurrently serving as officers of subsidiaries assess developments with respect
to the situation at the dispatch destination from the perspective of timely disclosure. They then furnish advice to those incharge at subsidiaries when applicable and notify the General Manager of Logistics, Port and Affiliated Business Groupin that regard.
3. Flow of timely disclosure
The separate Attachment illustrates the aforementioned system of timely disclosure. (Attachment No.2)- 34 -

4. Management of internal information
When it comes to controls placed on internal information until performance of timely disclosure, the Company strives toproperly manage such information and prevent insider trading pursuant to its Rules on Management of Internal
Information and Insider Trading Restrictions.
(Attachment No.1) Skill Matrix- 35 -

(Attachment No.1)Mechanisms Underpinning Systems of Business Execution, Management Supervision, and Internal
Controls

General Meeting of Shareholders

Appointment/
Dismissal

Remuneration Advisory
Committee

Recommendation

Supervision

Audit

Senior Managing
Executive Officers
and above, etc.

Management
Conference

President &CEO

Unit Supervising
Executive
Officers

Meeting

Executive Officers'
Meeting

Audit

Sustainability Sub-Committee

Investigation
results
reportCompliance Committee

toinvestigate

Disaster Response Committee

Instruction

Corporate
Legal Risk&
Compliance
Group

Supervision/
Approval

Sustainability
M anagement
Promotion
Committee

Environmental Sub-Committee

Crisis Management
Committee
Investigation

Discussion/
ReportReportShip Safety Promotion Committee

Audit

Executive Officers
and Audit &Supervisory Board
M embers

Executive
Officers

Executive
Officers

Business Execution DivisionInternal Audit Group

Cooperation

Group Management

Direction

Investment Committee

Direction

Commitment

AdviceCommittee(Board of Directors)

Direction

Accounting
Audit

Nominating Advisory

Inquiry

Directors

Management Risk Committee

ReportAppointment/
Dismissal

Audit & Supervisory Board
Members (Audit & Supervisory

Accounting Auditor

Appointment/
Dismissal

Groupcompanies

Investigation

AdviceOutside experts including attorney-at-law- 36 -Audit

(Attachment No.2)＝ Mechanisms of Business Execution Related to Timely Disclosure ＝General process of
information assessment

Secondary process of informationassessment (monitoring for omissions)Executive Officer in charge ofGeneral Affairs(Executive Officer in charge of
Accounting)Information on decisions

New information

Information on financial
results

Supervise
Filed byGeneralManager oftherespective
group
overseeing
the matter

Department incharge of timely
disclosure

General Manager ofGeneral Affairs Group(General Manager of
Accounting Group)

Pinpoint
issuessubject totimelydisclosure
Assessissues fordeliberation

General Manager of Logistics, Portand Affiliated Business Group

NotifyBoard of Directors
Management Conference

General Manager ofCorporate Planning Group

Secretariat of the Board of Directors
and Management Conference

Supervise andmanage subsidiaries
NotifyInformation on subsidiaries(Deliberation and decision
on significant matters)

NotifyNotifyPrior approval,
discussion andreportingregardingsignificant mattersby officers andemployees incharge at
subsidiaries

Division in charge of
disclosure

Furnish notification of timely disclosure matter per
assessment at subsidiary’s key meeting or other such forum

General Manager ofgroup overseeing
respective subsidiaries

Officers and employees
concurrently serving as
officers of subsidiaries- 37 -

General Affairs
Group,
General Affairs
Team

Timelydisclosure