Corporate GovernanceSinanen Holdings Co., Ltd.

CORPORATE GOVERNANCE

Last update: June 26, 2024

Sinanen Holdings Co., Ltd.
Taro Nakagome, President and CEO
Contact: IR/SR Team, Finance and IR Department (Tel: +81-3-6478-7807)
Securities Code: 8132
https://sinanengroup.co.jp/en/

Information on our corporate governance is provided below.

I Basic approach on corporate governance, capital structure, corporate attributes and other basic information
1. Basic approach
Sinanen and our group companies recognize that continuously increasing corporate value by ensuring the transparency and soundness ofmanagement and promoting swift decision-making and execution is the basis of corporate governance and see this as an importantmanagement issue.

[Reasons for not implementing the principles of the Corporate Governance Code]
The Company respects the purpose of the Corporate Governance Code, and implements all items of the code.

[Disclosure based on the principles of the Corporate Governance Code]Update(Principle 1.4) Cross-Shareholdings
The Company holds cross-shareholdings for the purpose of strengthening and facilitating business relationships and alliances. Every year,
the Board of Directors reviews the economic rationale of major cross-shareholdings of this type from a medium- to long-term perspective todetermine whether or not to keep them.
Additionally, exercising of voting rights with respect to cross-shareholdings is carried out based on a comprehensive consideration ofwhether the matter will contribute to improving our corporate value and the common benefit of the investee’s shareholders.
(Principle 1.7) Transactions between Related Parties
The Company executes all transactions, including those between related parties, in accordance with internal rules, after review byspecialized departments such as accounting, taxation, and legal affairs, depending on the size and importance of the transaction, and after
obtaining the necessary approval. The Audit/Supervisory Committee has access to the details of the approvals at all times.
Collaborative transactions and transactions with conflicts of interest by Directors shall be submitted to the Board of Directors for approval inadvance, in accordance with laws, regulations and internal rules. In particular, transactions involving conflicts of interest by Directors are
subject to prior approval by the Audit/Supervisory Committee. In addition, the Company requires Directors to fill out an annual questionnaire
on Information on Transactions with Related Parties to gain an understanding of transactions with related parties, and discloses the resultsin the annual securities report. etc.
(Supplementary Principle 2.4.1) [Ensuring diversity within the company]
The Group is approaching its 100th anniversary in 2027. In order to realize our vision of “Evolution into a comprehensive energy life creationgroup that contributes to achieving a decarbonized society,” it is necessary to mobilize the power of the entire organization, and investment in
human resources, the foundation of management, is essential. In 2020, the voluntary actions of our employees have launched corporate culture
reforms toward becoming people and organizations that continue to be the choice of customers. Here, we have set forth our organizational vision
for the centenary since our founding as “Spiral Up Company—a virtuous cycle of passion and exciting energy.” Based on the belief that theessence of culture reform is diversity and inclusion, we are working to build a culture in which employees with diverse values, regardless ofnationality, gender, or age, respect and recognize each other and utilize each other’s strengths.
■ Appointing female managers
Based on the idea that corporate value is the sum of the market value of employees, we have declared a non-financial goal of “Increase theMarket Value of Employees,” in our 3rd Medium-Term Management Plan, and within this goal, one of the three targets of particular importance for
us is to increase the ratio of women in management positions to 20% by 2027. In order to accelerate the appointment of women to management
positions throughout the Group, we are identifying necessary actions to build a pipeline of female managers through understanding the current
situation and analyzing issues. We will enhance training opportunities, including individual development, for employees who will assume
management positions in the future.
■ Appointment of foreign managers
Although the number of eligible employees is small, we will hire and promote employees according to their aptitude regardless of nationality.
■ Appointment of mid-career hires to management positions
We will promote both new graduates and mid-career hires based on their abilities and aptitude.
Our mid-career hiring is focused on specialized human resources. Going forward, we will continue to hire the necessary human resources.
We believe that in order to create new value, it is necessary to have flexible ideas that are not bound by conventional values and to incorporate
various values held by a diverse range of human resources. We expect that employees with diverse backgrounds working together will haveopportunities to create new and unique ideas, and we will strengthen our Group-wide diversity promotion system to create an environment where
everyone can work vigorously and in a way suited to each individual.
(Principle 2.6) Roles of Corporate Pension Funds as Asset Owners
The Company has introduced a corporate defined contribution pension plan for the stable asset formation of its employees, and does not fallunder the category of asset owner of a corporate pension plan, as it has not adopted a corporate pension plan.
(Principle 3.1) Full Disclosure(i) Company objectives (e.g., business principles), business strategies and business plans are disclosed on the Company’s website.
Management policy: https://sinanengroup.co.jp/en/company/management/
Corporate philosophy:https://sinanengroup.co.jp/en/company/management/philosophy.html

Medium-term vision: https://sinanengroup.co.jp/en/company/management/vision.html(ii) Basic approach and policy on corporate governance“2. Matters related to the functions of business execution, audit and supervision, nomination, and determination of remuneration, etc. (overview of
the current corporate governance system)” in Section II of this report and “Corporate Governance” on our website(https://sinanengroup.co.jp/en/sustainability/governance/corporate-governance.html).
(iii) Board policies and procedures for the Board of Directors to determine the remuneration of the senior management and directors
The Company’s internal rules stipulate the remuneration for Directors other than Audit/Supervisory Committee Members, and the remunerationconsists of a basic portion, a performance-linked portion, and a stock-based remuneration portion. The Board of Directors resolves each year to
pay remuneration in accordance with the regulations, based on the content discussed by the Nominating and Compensation Committee, which isvoluntary and not governed by the Companies Act. Remuneration for Audit/Supervisory Committee Members is determined through discussions
by the Audit/Supervisory Committee. The remuneration for Audit/Supervisory Committee Members does not include the performance-linked
portion or the stock-based remuneration portion.
(iv) Board policies and procedures for the Board of Directors to appoint/dismiss the senior management and nominate Director candidates
The basic policy for the selection of candidates for Directors other than Audit/Supervisory Committee Members is to appoint Directors who are
personally familiar with the Group’s business and are capable of properly carrying out group management, exhibiting the mentality of our
foundational principles: “Shingi,” “Shinshu,” and “Rakugyo” (keeping our promises, making progress, and feeling joy in our work). The balance ofknowledge, experiences and capabilities within the Board of Directors as a whole is taken into account. Our basic policy for selecting candidates
for members of the Audit/Supervisory Committee is that they possess the extensive experience and deep knowledge required of Outside Directors
or exceptional knowledge in the fields of law and corporate accounting as well as the ability to express fair and objective opinions from an
independent standpoint in order to improve our corporate governance.
The voluntary Nominating and Compensation Committee will receive each Director’s recommendation concerning the procedures and discuss thematter, then propose the details of their decision to the Board of Directors, who will make a decision about the procedures. In addition, theCompany obtains the consent of the Audit/Supervisory Committee for the selection and dismissal of Audit/Supervisory Committee Members.
In addition, the voluntary Nominating and Compensation Committee deliberates on the selection and dismissal of Directors and Auditors of theCompany and its group companies, and makes proposals to the Board of Directors. In this way, we believe we increase the transparency andobjectivity of procedures and contribute to enhancement of corporate governance functions and healthy growth of the Group as a whole.
(v) Explanation of individual selection, dismissal, and nomination when the Board of Directors appoints and dismisses senior management andnominates Directors based on (iv) above
The selection and nomination of candidates for Directors are explained in the “Reference Materials for the General Meeting of Shareholders” inthe notice of the convocation of the General Meeting of Shareholders each time. In addition, the convocation notice is posted on the Company’s
website.
(Supplementary Principle 3.1.3) [Initiatives for sustainability](i) Our company’s initiatives for sustainability
The Group recognizes that addressing issues related to sustainability is an important element of its management strategy. In May 2022, theGroup formulated a Basic Policy on Sustainability based on its management policies, and established a Sustainability Promotion Committee.
Furthermore, in setting our non-financial targets for the 3rd Medium-Term Management Plan that began in April 2023, we have made acomprehensive list of social issues that we consider important for the Group and our stakeholders, referring to international guidelines. Afterverifying the issues on this list in terms of both their importance and urgency based on the Group’s mission and values, and after discussions by
the management team and a resolution by the Board of Directors, we formulated two non-financial targets for the 3rd Medium-Term Management
Plan and these are 1. “Transformation to Business Structure Appropriate to Decarbonized Society” to respond to climate change and 2. “Increase
the Market Value of Employees” as part of human capital management. In addition, the same details were declared for the Group’s materiality(important issues) as initiatives for sustainability.
For more information on our sustainability initiatives, please refer to the “Sustainability” section of our website(https://sinanengroup.co.jp/en/sustainability/).
(ii) Investment in human capital, etc.
In order to realize our organizational vision for the centenary of our founding as “Spiral Up Company—a virtuous cycle of passion and excitingenergy,” we are promoting culture reform, an activity to promote reform in terms of awareness, behavior, and communication, as well as work
style reform, an activity to ensure we continue to be the choice of diverse human resources, in order to achieve autonomous growth of each
employee. Based on the idea that corporate value is the sum of the market value of employees, we are advancing initiatives to increase themarket value of employees.
One of the measures to accelerate the shift to a stronger management foundation is promoting human resource development and achieving
appropriate allocation of human resources.
We regard human resources as one of our most important assets, and believe that the growth of individual employees leads to the growth of thecompany, i.e., greater employee market value leads to greater corporate value, and we regard employee training as an investment and provide
educational opportunities accordingly.
In rolling out specific measures, we have established our Human Resources Development Policy, composed of the following four elements.
(i) Shift from conventional level-specific education to focus on open enrollment education to provide more motivated employees with opportunities
for learning(ii) Develop basic skills as essential education for the Sinanen Holdings Group(iii) Establish a career support system (CDP* for young employees, internal open enrollment system, etc.)(iv) Strengthen human resource development through use of pipelines for the stable generation of management human resources*CDP: Career Development Program
In accordance with this policy, in addition to level-specific education, we offer career support systems, enhanced basic education, and open
enrollment education programs.
In addition, as part of work style reform efforts to ensure we continue to be the choice of diverse human resources, we are establishing andexpanding necessary systems each year. We will continue to develop systems that will lead to support for autonomous career development by
employees.
In business execution, as we continue to make our work easier by enhancing operational efficiency and promoting digitization, we improve job
satisfaction by having employees reflect on their own lives and the way they work.
(iii) Investment in intellectual property, including technology, data, and digital applications
We are actively promoting IT-related investments for DX as part of “Improving productivity through measures such as the streamlining andstandardization of operations” and “Strengthening the Group management framework” as defined in the overall Group strategy in the 3rd MediumTerm Management Plan. For details of specific initiatives, please refer to the “DX Promotion” page of our website(https://sinanengroup.co.jp/en/company/management/dx-promotion/).
(iv) Impact of climate change-related risks and opportunities on the Company’s business activities and earnings

In regard to the impact of climate change-related risks and opportunities on the Company’s business activities and earnings, we haveendorsed and signed the TCFD recommendations and are working to enhance information disclosures in accordance with therecommendations. For more information on our disclosures, please refer to the “Sustainability” section of our website(https://sinanengroup.co.jp/en/sustainability/).
(Supplementary Principle 4.1.1) [Scope of delegation to management]
The Board of Directors makes decisions on matters stipulated by laws and regulations, the Articles of Incorporation, and the Regulations of theBoard of Directors, as well as matters equivalent thereto, and delegates other matters to the management team in accordance with the resolutionsof the Board of Directors and internal rules, thereby clarifying the authority and responsibility of each person.
(Principle 4.9) Criteria for Determining the Independence and Qualifications of Independent Outside Directors
In appointing Independent Outside Directors, the Company considers that they do not have sufficient independence for the Company if they fallunder any of the following items in addition to the independence standards set forth by the financial instruments exchanges.
1. A person from the Company and its consolidated subsidiaries (below, the “Group”)
2. Major shareholder of the Company (Note 1)
3. Business executors of companies that fall under any of the following• Major business partners of the Group (Note 2)• Major lenders to the Group (Note 3)• Companies, etc. in which the Group owns 10% or more of the shares on a voting right basis
4. Certified public accountants belonging to the auditing firm which is the Accounting Auditor of the Group5. Consultants, accountants, tax accountants, attorneys at law, judicial scriveners, patent attorneys, and other professionals who receive a large
amount (Note 4) of money or other assets from the Group
6. Business executors of other companies with which the outside officers have a mutual relationship of appointment (Note 5)
7. Notwithstanding the provisions of the preceding paragraph, any other person who is deemed to have special reasons that may cause a conflictof interest with the Company(Note 1) A major shareholder is a shareholder who owns 5% or more of the Company’s voting rights as of the end of the fiscal year under his or
her own name or that of another person. If the major shareholder is a corporation, partnership, or other organization, the person in charge of
operations belonging to the organization.
(Note 2) Major business partner means a customer or supplier of the Group’s products, etc., whose annual transaction amount exceeds 2% of theCompany’s consolidated net sales or the consolidated net sales of the counterparty.
(Note 3) Major lender means a financial institution from which the Group borrows and whose balance of borrowings exceeds 2% of the total
consolidated assets of the Company or the total consolidated assets of the relevant financial institution at the end of the fiscal year.
(Note 4) Large amount is defined as follows, depending on the involvement of the relevant expert in the provision of services.
• In the case that the relevant expert provides services to the Group as an individual, the amount of consideration received from the Group(excluding Officer compensation) exceeding 10 million yen per year is considered a large amount.
• In the case that a corporation, partnership, or other organization to which the expert belongs provides services to our group, the total amount ofconsideration received by the organization from the Group shall be considered a large amount if it exceeds 2% of the annual gross income of theorganization. However, even if the amount does not exceed 2%, it shall be considered a large amount if the total amount of consideration received
by the organization for the services directly provided by the expert exceeds 10 million yen per year.
(Note 5) Relationship means a relationship in which a business executor of the Group is an external officer of another company and an executive
officer of that other company is an external officer of the Company.
(Supplementary Principle 4.10.1) [Nominating Committee and Compensation Committee]
The Company shall establish a voluntary Nominating and Compensation Committee (referred to as “the Nominating and Compensation
Committee” in this paragraph) not based on the Companies Act that discusses appointment and dismissal of Directors (including Directors who
are Audit/Supervisory Committee Members) of the Company and Directors and Auditors of Group companies, and also deliberates oncompensation for officers.
The Nominating and Compensation Committee consists of the President and CEO and Independent Outside Directors. The Nominating andCompensation Committee shall have at least three members, and the majority of these members will be Independent Outside Directors. There are
currently six members: the President and CEO along with five Independent Outside Directors. The chairperson shall be selected through a mutual
vote by the Independent Outside Directors. When selecting a new member, the Nominating and Compensation Committee shall recommend acandidate, and the Board of Directors shall make a decision on whether the member is selected. The term of office of committee members shallbe one year for the President and CEO, and two years for Independent Outside Directors. Note that this rule does not stop reappointments.
Furthermore, when a committee member retires from the position of Director, they shall also retire as a committee member even if it is during theirterm of office.
The Nominating and Compensation Committee can resolve to appoint advisors on nomination and compensation based on resolutions whennecessary.
The voluntary Nominating and Compensation Committee will receive each Director’s recommendation concerning candidates for Directors(including Directors who are Audit/Supervisory Committee Members) of the Company and Directors and Auditors of Group companies, discuss
the matter, then propose the details of their decision to the Board of Directors, who will make a decision about the candidates. Note that theconsent of the Audit/Supervisory Committee shall be obtained for nominations of candidates for Directors who are Audit/Supervisory Committee
Members.
With regard to the remuneration of Directors and Auditors of the Company and its Group companies, based on internal rules, the Nominating andCompensation Committee decides the compensation for Directors who are not Audit/Supervisory Committee Members, and the remuneration of
Directors who are Audit/Supervisory Committee Members is proposed by the Nominating and Compensation Committee and decided by the
Audit/Supervisory Committee. This enhances the transparency and objectivity of the procedures regarding the nomination of officers and thedetermination of individual officers’ compensation, leading to further enhancement of the corporate governance function. We will continue tostrengthen the independence, objectivity and accountability of the Board of Directors and enhance its corporate governance system.
(Supplementary Principle 4.11.1) [Approach to the balance of knowledge, experience and ability, diversity and size of the Board of Directors]
The Company believes that the Board of Directors must be composed of personnel with diverse knowledge, diverse experience, and diverse andadvanced capabilities in order to supervise business execution and make important decisions, and appoints directors after discussing the balanceof knowledge, experience, and capabilities, diversity, and the appropriate number of Directors.
The current Board of Directors consists of nine members who have a wealth of knowledge and experience in corporate management, including
five Independent Outside Directors.
The Company discloses a list of the knowledge, experience, abilities, etc. of Directors using a skills matrix in the agenda item for the election of
Directors at the Ordinary General Meeting of Shareholders.
(Supplementary Principle 4.11.2) [Status of concurrent positions of Directors]
The status of important concurrent positions held by Directors (including candidates) is disclosed annually in the notice of convocation of theGeneral Meeting of Shareholders and in the annual securities report.
(Supplementary Principle 4.11.3) [Analysis and evaluation of the effectiveness of the Board of Directors]
The Secretariat of the Board of Directors periodically conducts written questionnaires on the effectiveness of the Board of Directors, which arereported to the Board of Directors and improvements are made as necessary. An outline of the results of the evaluation of the effectiveness of theBoard of Directors is disclosed in the “Corporate Governance” section of the Company’s website.
(Supplementary Principle 4.14.2) [Training policy for Directors]
For director training, we have established an environment that allows active participation in external seminars and training to promote acquisitionof the necessary knowledge and understanding of roles and responsibilities.
In addition, for newly elected Directors who are not members of the Audit/Supervisory Committee, we carry out training utilizing internal andexternal training programs.
(Principle 5.1) Policy for Constructive Dialogue with Shareholders
The Company believes that constructive dialogue with its shareholders and investors contributes to its sustainable growth and improves its
corporate value in the medium to long term.
1. To facilitate constructive dialogue with shareholders and investors, the officer in charge of the Finance and IR Department, and the Finance and
IR Department have formed a point of contact under the supervision of the President and CEO to respond appropriately to inquiries. The Financeand IR Department is in charge of the planning and execution of specific matters related to dialogue with shareholders and investors and works
closely with each division of the Company, including the Corporate Planning Department, the Growth Strategy Department, and operatingcompanies. For information on the status of our IR activities, please refer to “III. 2. IR Activities.”
2. In regard to dialogue and interviews with shareholders and investors, basically either the President and CEO or members of senior
management (primarily the officer in charge of the Finance and IR Department) participate in interviews directly. This is to fulfill our accountability
as a listed company and to faithfully reflect the knowledge and ideas gained through constructive dialog with shareholders and investors in future
management decisions. When engaging in such dialog with shareholders and investors, we do not communicate insider information (material
facts that have not been made public) to specific individual on a selective basis.
3. We actively disclose IR information on our website to shareholders and investors to promote a deeper understanding of the Group’s
management policies, basic strategies, financial situation, etc. and will continue working on enhancing that information.
Response to Achieve Management That Is Aware of the Capital Cost and Stock PriceOur response to achieve management that is aware of the capital cost and stock price was disclosed in the 3rd Medium-Term Management Plan
Explanatory Document announced in May 2023. The Company uses ROE as an important KPI indicator for this management plan, and is
implementing a growth strategy to improve profitability while also generating ROE in a stable manner above the cost of shareholders’ equity withthe aim of achieving a constant PBR of 1x or higher. For details, please refer to our 3rd Medium-Term Management Plan: Explanatory Document(https://sinanengroup.co.jp/company/upload/Medium-term_management_plan_3rd.pdf).

2. Capital structure
Percentage of shares held by foreigners[Largest shareholders]

Less than 10%

UpdateName or designation

Number of shares

Percentage (%)

UHPartners2 Co., Ltd.

1,067,900

9.81

UHPartners3 Co., Ltd.

818,200

7.52

SIL, Inc.

815,100

7.49

Hikari Tsushin K.K.

811,900

7.46

Cosmo Oil Marketing Co., Ltd.

789,105

7.25

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

681,200

6.26

Meiji Yasuda Life Insurance Company

672,000

6.17

Sinanen Group Customer Stock Ownership Plan

449,116

4.12

Idemitsu Kosan Co., Ltd.

379,128

3.48

Rinnai Corporation

374,419

3.44

Controlling shareholders(excluding the parent company)―――

Parent company

No

Supplementary descriptions―――

3. Company attributes
Stock exchange listing and market
classification

Tokyo Stock Exchange, Prime Market

Fiscal year end

March

Industry

Wholesale business

Number of (consolidated) employees
at the end of the previous fiscal year

1,000 or more

Consolidated net sales for the mostrecent fiscal year

100 billion yen or more but less than 1 trillion yen

Number of consolidated subsidiaries atthe end of the previous fiscal year

10 companies or more but less than 50 companies

4. Guidelines on measures to protect minority shareholders in transactions with controlling shareholders―――

5. Other special circumstances that may have a significant impact on corporate governance―――

Ⅱ Status of management control organization and other corporate governance systems related to
management decision-making, execution and supervision
1. Matters related to institutional structure and organizational management, etc.
Form of organization

Company with Audit/Supervisory Committee[Directors]
Number of Directors as set forth inarticles of incorporation

12

Term of office of Directors as set
forth in articles of incorporation

1 yearChair of Board of Directors

President

Number of Directors Update

11

Status of appointment of Outside
Directors

Appointed

Number of Outside Directors Update

7

Number of Outside Directors
designated as Independent
Officers Update

6

Relationship with the Company (1) Update
Name

Attributes

Hiroyuki Ohashi

People from other companies

Yuichiro Munakata

People from other companies

Ren Shino

Attorney at law

Nobutaka Murao

ScholarHiroyuki Mitani

People from other companies

Motoshi Muraoka

People from other companies

Yoshishige Takenaka

Attorney at lawaRelationship with the Company (*)
b c d e f
g h
i
j

k

〇
△

* Selections regarding the relationship with the company* If the person is applicable to each item in the present and recent, “〇;” if the person is applicable to each item in the past, “△.”* If a close relative is applicable to each item in the present and recent, “●;” if a close relative is applicable to each item in the past, “▲.”a A person who is a business executor of the listed company or its subsidiaryb A business executor or non-executive director of the parent company of the listed companyc A business executor of a sister company of the listed company
d A person who has the listed company as a major business partner or a business executor of such a person
e A major business partner of the listed company or a business executor of such a business partnerf A consultant, accounting professional, or legal professional who receives a large amount of money or other assets from the listedcompany in addition to compensation as an officerg A major shareholder of the listed company (if the major shareholder is a corporation, the business executor of the corporation)h A business executor (the individual only) of a business partner of the listed company (not falling under any of d, e and f)
i A business executor of an entity with which the listed company has a relationship of mutual appointment of outside officers (theindividual only)
j A business executor of a company to which the listed company has made a donation (the individual only)
k OtherRelationship with the Company (2)NameUpdateMember of
Independent Supplemental explanation on
Audit/Supervisory
Officercompliance items
Committee―――

Hiroyuki Ohashi

Yuichiro Munakata〇〇

Although Mr. Munakata wasformerly a business executor ofErnst & Young ShinNihon LLC,
the Company’s Accounting
Auditor, he has since retired
from the role.

Ren Shino

〇

〇

―――

Nobutaka Murao

〇

〇

―――

Hiroyuki Mitani

〇

〇

―――

Motoshi Muraoka

〇

〇

―――

Yoshishige Takenaka

〇

〇

―――

Reason for election
We elected Mr. Ohashi because wedetermined that his extensive experiencein corporate management and broad
knowledge with regard to finance can beutilized to improve the Company’s
corporate governance.
We elected Mr. Munakata because wedetermined that his professional
knowledge and abundant experience inaccounting and auditing as a certified
public accountant as well as his
international experience and international
perspective through overseas
assignments can be utilized to increase
our corporate value and the Company’s
corporate governance.
We elected Ms. Shino because wedetermined that his extensive experienceand broad knowledge as a lawyer can beutilized to improve the Company’s
corporate governance.
We elected Mr. Murao, based on the
judgment that he can utilize his richexperience and wide range of insight as afinancial bureaucrat, news program anchor,
and university professor to improve theCompany’s corporate governance.
We elected Mr. Mitani because wedetermined that his broad knowledge basedon his extensive experience in corporate
management and experience in humanresources development acquired as auniversity and business school professor
can be utilized to improve the Company’s
corporate governance.
We elected Mr. Muraoka because wedetermined that his extensive experienceand broad knowledge of environmental
management strategies, decarbonization
consulting, and supporting the overseas
expansion of infrastructure projects can beutilized to improve the Company’s
corporate governance.
We elected Mr. Takenaka because wedetermined that his extensive experience
as a lawyer, as well as his broad insights
and experience as an outside director andother roles in other listed companies, canbe utilized to improve the Company’s
corporate governance.

[Audit/Supervisory Committee]
Composition of committee members and attributes of the chairman
All members(persons)
Audit/Supervisory
Committee

UpdateFull-time members(persons)

Inside Directors(persons)

Outside Directors(persons)

Chairman(chairperson)

1

0

6

Outside Director

6

Directors and employees to assist the
Audit/Supervisory Committee in its duties

Yes

Matters concerning the independence of such Directors and employees from the Executive Directors• We have established the Audit/Supervisory Committee Office as the Secretariat of the Audit/Supervisory Committee, and an individual
associated with the Internal Auditing Department will also serve to assist the duties performed by the Audit/Supervisory Committee.
• Work concerning the assistance of duties performed by the Audit/Supervisory Committee are not subject to the direction and orders of Executive
Directors.

Cooperation between the Audit/Supervisory Committee, Accounting Auditor, and Internal Auditing Department• The Audit/Supervisory Committee and the Internal Auditing Department hold regular meetings to work closely on such matters as
exchanging opinions and investigating the development and operation of the internal control system.
• The Internal Auditing Department sends the internal audit plan and audit results to members of the Audit/Supervisory Committee and the
Accounting Auditor, so that information is shared on a regular basis.
• Full-time members of the Audit/Supervisory Committee and the Internal Auditing Department attend the Accounting Auditor’s audit planand quarterly review, and the audit result report meeting to receive regular reports from the Accounting Auditor and exchange opinions.

[Voluntary committees]
Voluntary committees equivalent to the Nominating
Committee or the Compensation Committee

Yes

Status of establishment of voluntary committees, composition of members, and attributes of the chairman (chairperson)
Name of thecommittee
Voluntary committees
equivalent to theNominating Committee
Voluntary committees
equivalent to theCompensation
Committee

Full-time
All members
members(persons)(persons)

InsideDirectors(persons)

OutsideDirectors(persons)

External
experts(persons)

Other(persons)

Chairman(chairperson)

Nominating andCompensation
Committee

7

0

1

6

0

0

OutsideDirector

Nominating andCompensation
Committee

7

0

1

6

0

0

OutsideDirector

Supplementary descriptions

UpdateUpdate• The Nominating and Compensation Committee performs the functions of both the Nominating Committee and the Compensation Committee.
• The committee consists of seven members, including the President and CEO and six Independent Outside Directors, and is chaired by an
Outside Director selected by mutual vote.
• The Committee deliberates and makes proposals on the selection and dismissal of the Company’s Directors and the Directors and Auditors ofGroup companies.
• The Committee deliberates on and determines the remuneration of the Company’s Directors other than Audit/Supervisory Committee Members
and Directors and Auditors of Group companies.
• The secretariat of the committee is located in the Human Resources and General Affairs Department.

[Independent officers]
Number of independent officers

Update6

Other matters concerning independent officers
All six Company Directors who are Audit/Supervisory Committee Members meet the qualifications for independent officers, and all of the Directors
who are Audit/Supervisory Committee Members have been designated as independent officers.

[Incentives]
Status of implementation of measures
to provide incentives to Directors

Introduction of performance-linked compensation system, etc.

Supplementary descriptions of applicable items
The Company has introduced the following compensation system for Business Executive Directors other than Audit/Supervisory Committee
Members.
• Performance-linked compensation system: In order to raise awareness of the need to improve the Company’s performance in each fiscal year,
the Company has set consolidated ordinary income as the target performance indicator for a single fiscal year, and the amount calculated inaccordance with the degree of achievement of the target value is multiplied by the coefficient that corresponds to the contribution to medium- tolong-term performance and then paid every month as performance-linked compensation in addition to the fixed compensation. The reason for
selecting consolidated ordinary income as the performance indicator is that the Company believes it is important to improve overall profitability,
including not only operating activities but also financial activities.
• Stock based compensation (post-delivery performance-linked share-based compensation) system: The Company has introduced this system toprovide incentives for the sustainable enhancement of the Group’s corporate value and to promote further value sharing with our shareholders.

Persons to whom stock options are
grantedSupplementary descriptions of applicable items―――[Remuneration for Directors]
Status of disclosure (of individual
Director remuneration)

Individual remuneration is not disclosed

Supplementary descriptions of applicable items
The total amount is disclosed separately for Inside Directors and Outside Directors.

Policy for determining the amount of
remuneration or its calculation
method Update

Yes

Details of disclosure of policy for determining the amount of remuneration or its calculation method
The Company resolved at the meetings of the Board of Directors held on March 31, 2021 and May 24, 2021 to revise and enact rules andregulations concerning officer compensation, including a policy for determining the details of remuneration, etc. for individual Directors(below, the “decision policy”). The individual remuneration of Directors who are members of the Audit/Supervisory Committee will be
determined through consultation with the Audit/Supervisory Committee.
(Outline of the details of the decision policy)A) The basic remuneration for the President shall be determined at a competitive level, taking into consideration the levels of other companies inthe same industry and public.
B) The basic remuneration for full-time officers shall be determined by multiplying the base amount by a coefficient determined for each position,with the base amount for the President as the base amount. The determination of the base amount and the coefficients for each position shallbe left to the discretion of the Nominating and Compensation Committee.
C) Remuneration for part-time Directors (excluding Directors who are members of the Audit/Supervisory Committee) shall be determined
separately.
D) The ratio of performance-linked compensation to the total amount of compensation for officers shall be approximately 15%.
E) The performance-linked compensation for the President shall be determined by calculating the consolidated ordinary income, etc., and thisshall be the performance-based amount. The performance-linked compensation for other full-time officers shall be determined by multiplying
the performance-based amount by a coefficient determined for each position. The total amount of performance-linked compensation shall not
exceed a certain percentage of consolidated ordinary income, etc. The performance-linked compensation for each individual, including thePresident, will be finally determined by taking into account the contribution to medium- to long-term performance. The determination of theperformance-based amount, coefficients for each position, and medium to long-term evaluation shall be left to the discretion of the Nominating
and Compensation Committee.
F) Post-delivery performance-linked share-based compensation is a system that grants the number of the Company’s common stock calculated
in accordance with the ratio of achievement of the target value of evaluation indicators related to performance during the period determined by
the Board of Directors of the Company (two fiscal years beginning April 1, 2024 and ending March 31, 2026) to Directors other than those who
are Audit/Supervisory Committee Members as compensation for eligible Directors. Because the evaluation period is still in progress, whether
or not to grant shares of common stock of the Company to each eligible Director and the amount of the number of shares to be granted havenot been determined.

[Support system for Outside Directors]
We have established the Audit/Supervisory Committee Office to support the Audit/Supervisory Committee Members.
Outside Directors are invited to Board of Director meetings without exception, receive documents in advance, and are provided with explanations
and such in advance from the departments submitting proposals, separate to other Directors, concerning particularly important proposals.
For important matters concerning management as well as risk management to be reported and discussed by the Board of Directors, Outside
Directors receive explanations in advance on a monthly or quarterly basis from the Corporate Planning Department, Internal Control Department
and Internal Auditing Department at the Audit/Supervisory Committee, etc.

In addition, full-time Audit/Supervisory Committee Members participate in important meetings, including the Management Meetings, and haveaccess to important management information and are able to express their opinions.

2. Matters related to the functions of business execution, audit and supervision, nomination, and determination of
remuneration, etc. (overview of the current corporate governance system)
Business execution is carried out in accordance with laws and regulations, the Articles of Incorporation, as well as the Regulations of theBoard of Directors and the Approval Regulations, depending on the importance of the business. The Company has established theManagement Meeting as an organization to assist the President and CEO in the execution of business. The Management Meeting consistsof Directors who execute business, full-time Audit/Supervisory Committee Members, officers in charge, and persons designated by the
President, and discusses management policies and important management matters.
Nominations of candidates for Directors are made by the Board of Directors based on the recommendations of the Representative Director,
which are deliberated and proposed by the voluntary Nominating and Compensation Committee. Note that the consent of the
Audit/Supervisory Committee is obtained for nominations of candidates for Audit/Supervisory Committee Members.
Officer compensation is determined in accordance with internal rules, compensation for Directors other than Audit/Supervisory Committee
Members is determined by the Board of Directors and the voluntary Nominating and Compensation Committee, and compensation for
Audit/Supervisory Committee Members is proposed by the voluntary Nominating and Compensation Committee and determined throughconsultation with the Audit/Supervisory Committee. As a matter of course, the amounts are within the ranges set forth by resolution of theGeneral Meeting of Shareholders.

3. Reasons for selecting the current corporate governance system
In order to respond to changes in the business environment surrounding the Company, the Company has adopted a holding company
structure in order to (1) clarify the delegation of authority and responsibility in each business, (2) expedite management decisions, and (3)establish a group management system that enables flexible and agile management.
In addition, the Company has selected a company with an Audit/Supervisory Committee as its organizational design in order to realize
strengthening of auditing and supervisory functions and speeding up of decision making, and we believe that these objectives are consistent
with the purpose of adopting the holding company system.
In addition to the above, the Company has established a voluntary Nominating and Compensation Committee to enhance the independence
and objectivity of the Board of Directors and to further enhance the corporate governance function.

Ⅲ Status of implementation of measures concerning shareholders and other interested parties
1. Efforts to promote meaningful General Meetings of Shareholders and facilitate the exercise of voting rights
Supplementary descriptions
Early notice of convening of General
Meetings of Shareholders

We make an effort to send out notices of General Meeting of Shareholders before the legallyrequired date to the meetings to facilitate the exercise of voting rights.

Avoidance of days on which many
companies hold shareholders meetings

We make an effort to avoid days on which many companies hold shareholders meetings whensetting the date for ours.

Electronic exercise of voting rights

We have made it possible to exercise voting rights electronically.

Participation in platform for exercising
voting rights electronically and otherefforts to improve environment for
institutional investors to exercise voting
rightsWe have adopted a platform for institutional investors to exercise voting rights operated by
ICJ, Inc.

Provision of notices of convocation(summaries) in English

The Company posts an English version of the convocation notice on the Tokyo Stock
Exchange, the Electronic Proxy Voting Platform (ICJ), and the Company’s website on
the same day as the Japanese convocation notice.

2. IR activities

UpdateSupplementary descriptions

Explanations
byrepresentative

Disclosure Policy creation andpublishing

The Disclosure Policy has been published on the Group’s website.
Disclosure Policy: https://sinanengroup.co.jp/en/disclosure-policy/
x.htmlRegular IR conferences forindividual investors

The Company holds company briefings for individual investors multiple
times a year. In addition, we record and distribute financial results briefings
held for analysts and institutional investors, and try to ensure fairness in thedissemination of information by providing individual investors with anenvironment in which they can also watch.

No

Regular IR conferences foranalysts and institutional investors

The Company holds financial results briefings for analysts and institutional
investors. We also make efforts to communicate with analysts andinstitutional investors by disclosing financial results presentation materials
on the Company’s website for quarterly financial results, as well as byvisiting institutional investors and responding to individual interviews.

Yes

Publishing of IR material on website

We have established an IR site on our website, where we post not only
financial results and financial information, but also explanatory materials forfinancial results, timely disclosure materials, shareholder newsletters, andvarious notices. Some of the above material is also provided in English.

Establishment of IR department(persons in charge)

We have established an IR/SR team within the Finance and IR Department.

Other

In order to deepen the understanding of our company, we focus onproviding information via the Internet, and actively disseminate the detailsof our initiatives through Group Topics on our website and various SNS.

3. Efforts related to respect for the stakeholder’s perspective

UpdateSupplementary descriptions
Provision on respect for stakeholder’s
perspective within internal rules

Implementation of environmental
conservation and CSR activities

The Sinanen Holdings Group Charter of Corporate Conduct stipulates the fulfillment ofour corporate social responsibility, which is based on the concept of faith to fulfill ourduties in response to the trust of a wide range of people, including stakeholders, as thefoundation of our management.
The Sinanen Holdings Group Charter of Corporate Conduct recognizes the importanceof the global environment and stipulates that we will actively work to addressenvironmental problems. In addition to addressing environmental issues through ourbusiness activities, such as our renewable energy business, in 2020, Sinanen Co., Ltd.
launched the “Sinanen Akari-no-Mori Project” for protecting bountiful forests throughthe use of clean energy. Through the project, we collaborate with municipalities andnon-profit organizations on tree planting and forest protection activities in the aim ofcreating bountiful forests and preventing global warming. At the Group’s headquarters
office, we are engaged in energy conservation activities, including thorough air
conditioning temperature control.
Achievements in other CSR activities[Support for cultivation of the next generation]• Conducting an environmental education program for junior high school students on thetheme of energy mix• Giving lessons on antibacterial practices at elementary schools• Holding the "Itsumo Arigato (Thank You) Essay Competition" for elementary school
students nationwide[Social/international contribution]• Support for agriculture-welfare collaboration activities which aim to support theemployment of people with disabilities through agriculture• Donating naturally grown rice harvested through agriculture-welfare collaboration
activities to organizations working to reduce child poverty• Participation in the "Kids Earth Fund" for children around the world in need of assistancedue to illness, conflict, or disaster• Participation in the smile for people project that supports independence of people withdisabilities and domestic resource recycling[Regional promotion/environmental conservation]• Support for the forest maintenance project of the C.W. Nicol Afan Woodland Trust,which aims to conserve the environment and protect biodiversity• Promotion of the SINANEN Akari no Mori Project, through which we sell 100%
renewable energy electricity and donate a proportion of the electricity charges toenvironmental conservation activities• Holding a youth soccer tournament to contribute to the future of children and their local
communities• Running a community clean-up walk for the beautification of the community
Other specific activities are stated in the Social Contribution Activities section of our
website.

Establishment of policy on providing
information to stakeholders

The Sinanen Holdings Group Charter of Corporate Conduct stipulates the appropriate
disclosure of corporate information.

Ⅳ Matters related to internal control systems, etc.
1. Basic policy on internal control system and status of its development

Update1. System to ensure that the execution of duties by directors and employees complies with laws and regulations and the Articles of Incorporation(1) The Company shall establish the Group Charter of Corporate Conduct and Compliance Rules, and make compliance with laws and regulations
a prerequisite for all corporate activities of the Group.
(2) The Company shall establish the Risk Management and Compliance Committee, chaired by the Chief Compliance Officer, to establish theGroup’s compliance system.
(3) The Chief Compliance Officer shall develop the compliance system, identify problems, give instructions on measures to prevent the recurrenceof compliance violations, and conduct training. Particularly important issues shall be discussed by the Risk Management and Compliance
Committee and reported to the Board of Directors and the Audit/Supervisory Committee.
(4) The Company shall establish an internal consultation service and an external lawyer consultation service as an internal reporting system, andendeavor to secure information related to compliance.
(5) The Company recognizes that having relationships with antisocial forces is a violation of compliance and have implemented measures to firmly
refuse such dealings as an ongoing priority.
2. System for the storage and management of information related to the execution of duties by Directors(1) The Company shall stipulate the basic matters for document management in its internal rules and appropriately store and manage important
information related to the execution of duties by Directors.
(2) Directors may access the information in the preceding item at any time.
3. Rules and other systems for managing the risk of loss
(1) The Company shall establish internal rules for risk management, clarify the risks involved in the execution of business, and conduct
appropriate management in accordance with the risks.
(2) In accordance with the organizational rules, each position and organization shall manage risks that arise or are encountered in the course of

operating the company in accordance with the authority and responsibility assigned to them.
(3) In accordance with the Internal Audit Regulations, the Audit Department shall conduct internal audits based on the risk-based audit plan
approved by the Board of Directors, and the audit results shall be reported directly to the Board of Directors.
(4) The Company shall conduct an inventory of the risks and risk management status of the Company and its group companies at the Risk
Management and Compliance Committee, and propose methods to improve risk management and reduce risks to the President as necessary.
4. System to ensure the efficient execution of duties by Directors(1) The Board of Directors shall formulate a Medium-Term Management Plan, set priority management targets and budgets for each fiscal year,
review monthly business results, and implement improvement measures.
(2) The Board of Directors shall formulate a Medium-Term Management Plan in internal rules and set priority management targets and budgets foreach fiscal year.
(3) The Company shall establish a Management Meeting to assist the President in decision-making. The Company shall also establish the GroupManagement Meeting and other bodies to address management issues of the Group.
(4) The Company shall establish a voluntary Nominating and Compensation Committee to enhance the objectivity and transparency of theprocedures for determining the nomination and compensation of directors (including officers of Group companies).
5. System to ensure the appropriateness of business operations of the corporate group consisting of the relevant stock company and its
subsidiaries(1) The Company shall establish rules for the management of operating companies, which require reporting to the Company of important
information on Group companies, and shall dispatch Directors to each Group company for appropriate management and supervision.
(2) The Company shall establish common risk management rules and compliance rules for the Group, and the Risk Management and Compliance
Committee shall comprehensively manage the risks and compliance of the Group companies.
(3) All officers and employees of the Group companies shall be able to use the internal consultation service and the external lawyer consultation
service established by the Company for internal reporting, etc., and shall strive for early detection of compliance violations.
(4) The Company shall prohibit the disadvantageous treatment of any person who has made a report as described in the preceding item on the
grounds that such report was made.
(5) The Audit Department shall conduct internal audits to check the appropriateness of operations at the Group companies.
(6) Auditors of Group companies shall share audit results with the Audit Department, and the Audit Department shall report the internal audit
results of Group companies to the Audit/Supervisory Committee.
(7) The Company shall improve the operational and financial efficiency of the entire Group by introducing a common accounting management
system and cash management system for the Group.
6. Matters related to employees who are requested by the Audit/Supervisory Committee to assist in theperformance of their duties
Employees to assist the Audit/Supervisory Committee Members in their duties shall be assigned to the
Audit/Supervisory Committee Office and shall perform their duties under the direction of the
Audit/Supervisory Committee Members.
7. Matters concerning the independence of the employees set forth in the preceding paragraph from Directors other than the Audit/Supervisory
Committee Members and ensuring the effectiveness of the Audit/Supervisory Committee’s instructions(1) Internal audits conducted by the Audit Department in consultation with the Audit/Supervisory Committee are not subject to the direction andorders of directors other than the Audit/Supervisory Committee Members.
8. System for reporting to the Audit/Supervisory Committee by Directors and employees other than Audit/Supervisory Committee Members, andofficers and employees of subsidiaries(1) Directors other than Audit/Supervisory Committee Members and employees shall report the following matters to the Audit/Supervisory
Committee.
1) Important matters concerning the monthly management status
2) Important matters concerning risk management
3) Status of internal audits4) Important matters concerning the assessment of the appropriateness of financial
information
5) Status and details of reporting under the whistleblowing system
6) Matters that may cause significant damage to the Group7) Serious violations of laws, regulations, or the Articles of Incorporation
8) Other important compliance matters(2) All officers and employees of Group companies may report directly to the Audit/Supervisory Committee if they have a serious concern or
discover any material fact related to the above.
(3) The Company shall prohibit the disadvantageous treatment of any person who has made a report as described in the preceding item on the
grounds that such report was made.
9. Other systems to ensure that audits by the Audit/Supervisory Committee are conducted effectively(1) The Audit/Supervisory Committee shall regularly exchange opinions with the President, the Chairman of the Risk Management andCompliance Committee, and the Accounting Auditor.
(2) In the event that an Audit/Supervisory Committee Member makes a request for advance payment or reimbursement of expenses incurred in
the performance of his or her duties, the Audit/Supervisory Committee shall comply with such request, unless the expenses incurred are deemed
to be unnecessary for the execution of the Audit/Supervisory Committee Member’s duties.
10. System to ensure the appropriateness of financial reporting(1) The Company and its Group companies shall establish accounting rules and other internal rules, and comply with accounting standards andother relevant laws and regulations.
(2) The internal control departments of the Group companies shall share the results of their assessment of the appropriateness of internal control
concerning financial reporting with the Audit Department, which shall report the assessment of the Group companies to the President and CEO,the officer in charge of Finance, and the Audit/Supervisory Committee.

2. Basic policy for elimination of antisocial forces and status of its development

UpdateThe Company recognizes that having a relationship with antisocial forces is a violation of compliance, and has placed an ongoing priority
on implementing measures to prevent any relationship with antisocial forces.
1. The basic matters concerning the response to antisocial forces are stipulated in the Sinanen Holdings Group’s Charter of Corporate
Conduct and the Regulations for Handling Antisocial Forces, which clearly stipulate the severance of relations with antisocial forces andestablish a system to respond as an organization to unreasonable demands by antisocial forces.
2. We have placed the Legal Affairs Office in charge of our response to unreasonable demands by antisocial forces, etc., and shallendeavor to build cooperative relationships with specialist external organizations such as the police, Tokyo Center for Removal of Criminal
Organizations, and attorneys.
3. We have joined a specialized external group and work to gather information about antisocial forces while putting together a system fortaking inquiries and receiving guidance in the event of an incident.
4. Contracts and other agreements entered into by the Group shall stipulate clauses that exclude antisocial forces.

V Others
1. Introduction of anti-takeover measures
Introduction of anti-takeover measures

No

Supplementary descriptions of applicable items―――

2. Other matters related to corporate governance system, etc.

UpdateThe status of the Company’s internal system for timely disclosure of corporate information is as follows.
1. Basic policy on timely disclosure of corporate information
The Company’s basic policy is to proactively disclose corporate and financial information from the perspective of timeliness, fairness and accuracy
in order to deepen understanding of the Group among shareholders, investors and all other stakeholders, and to disclose information inaccordance with laws and regulations and the timely disclosure rules stipulated by the Tokyo Stock Exchange.
2. Internal system for timely disclosure of corporate information
The Company has registered the officer in charge of the Finance and IR Department as the “Information Handling Manager” with the Tokyo Stock
Exchange as the person responsible for the management of corporate information and timely disclosure as stipulated in the Timely Disclosure
Rules, has designated the Finance and IR Department as the department in charge of timely disclosure, and has established an information
control system to consolidate and scrutinize information from the Corporate Planning Department and related departments.
3. Disclosure method
Information that falls under the Timely Disclosure Rules stipulated by the Tokyo Stock Exchange is disclosed through the Timely Disclosure
Network (TDnet) provided by the Tokyo Stock Exchange, and the disclosed information is promptly posted on the Company’s website to inform
shareholders and investors. Information that does not fall under the scope of the Timely Disclosure Rules will also be disclosed by posting it on
the Company’s website, etc., based on the purpose of the Timely Disclosure Rules, if it has an impact on investment decisions.
4. Group Rules on Timely Disclosure
The Company has established “Internal Information Management Rules” to ensure thoroughness of the prohibition of insider trading and to takeall possible measures for information management. In addition, the Company strives to ensure that all employees are familiarized with the relevant
regulations through training at personnel orientation upon joining the Company and regular announcements by the department in charge of stock
administration.

Outline of Timely Disclosure System Schematic Diagram