Corporate Governance Report
Last Update: June 28, 2024

KOITO MANUFACTURING CO., LTD.
Michiaki Kato
Representative Director, President
Contact: +81-3-3443-7111
Securities Code: 7276
https://www.koito.co.jp/english/
The corporate governance of KOITO MANUFACTURING CO., LTD. (“the Company”) is described below.

I.

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

1. Basic Views
The Company’s basic approach to corporate governance is to recognize the importance of ethical standards
and sound management in order to retain the trust of all its stakeholders. Based on this approach, theCompany is making efforts to enhance corporate governance and strengthen compliance.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]
The Company has implemented each principle of the Corporate Governance Code.

[Disclosure Based on the Principles of the Corporate Governance Code][Principle 1.4 Cross-Shareholdings]
Based on the management strategies and plans, the Company believes that it is necessary to strengthenbusiness relationships with other companies in order to expand business and to achieve sustainable growth.
From this perspective, in a comprehensive manner, the Company holds shares that are not purposed for net
investments and discloses them in the securities report together with the purpose of the cross-shareholdings.
In addition, the Company periodically reviews and examines whether cross-shareholdings arecommensurate with dividend yields and capital costs, and determines the appropriateness of shareholdings.
As for voting, the Company does not exercise votes based on uniform criteria but based on the perspectiveof whether or not such votes lead to the sustainable growth of the Company and to improvements in corporate
value over the mid- to long- term.
[Principle 1.7 Related Party Transactions]
As for transactions with Directors, the Company is required to deliberate and resolve the details at the Boardof Directors. The conditions and other matters with regard to transactions are to be disclosed in the notice tothe general meeting of shareholders or in the financial report.
Transactions with major shareholders are determined under the same manner as general transaction conditions
and take market prices, total costs and other factors into account.
[Principle 2.4.1 Ensuring Diversity, Including Active Participation of Women]
The Company defines in the KOITO Group Corporate Behavior Charter that “We will respect the personality,
diversity and character of each of our employees, regardless of their nationality or gender. We will also strive
to provide a healthy and safe workplace environment in which all employees can make the best use of theircapabilities and fulfill their potential.”-1-

We have also identified “workstyle reform” and “respect for human rights” as part of our material issues(materiality) which must be solved through our business activities to promote diversity and active roles
performed by various human resources, such as women, foreign nationals, and mid-career hires.
Regarding our targets to ensure diversity, refer to the “Human Resource Management” of our website
below.
(https://www.koito.co.jp/english/sustainability/social/humanresourse/)[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]
The Company operates the corporate pension fund through KOITO MANUFACTURING Corporate Pension
Fund.
Asset management is entrusted to asst management institutions with sufficient investment performance.
Regarding the fact that the operation of corporate pension funds not only affects employees' stable asset
formation but also their financial condition, and that there should be appropriate management of possible
conflicts of interest between the beneficiaries of the Corporate Pension and the Company, management
committees composed of representatives from Corporate Planning, Finance, Accounting and Personnel
Department and the management companies meets four times a year to monitor the investment status.
The Corporate Pension Fund has a Diet Members’ Council, which meets twice a year, in principle.
Members of the Diet consist of representatives of the Company and an executive officer of the labor union.
They resolve the budget, business plan, business report and financial report for each fiscal year.
In addition, the Company ensures that conflicts of interest which could arise between the pension fundbeneficiaries and companies are appropriately managed, and gives consideration not to harm the benefits ofbeneficiaries, by leaving decisions entirely to asst management institutions in the case where the Corporate
Pension Fund exercises its voting rights of shares of the companies which the Corporate Pension Fund invests
in, and other cases.
[Principle 3.1 Full Disclosure]
1. Corporate Principles, Management Strategies, and Plans
The corporate principles of the Company consist of the following statements: “We will contribute to social
development through lighting,” “We will step forward to realize our employees’ dreams,” and “We will
support a sustainable society as one of its members”.
To realize these principles, the Company conducts business activities through its group companies, basedon the following four strategies and plans:(1) To address the automobile industry’s expansion of globally optimal production systems, the KOITO
Group will work to enhance its system to respond to the five major regions of the world (Japan, Americas,
Europe, China and Asia). To this end, the Group will further reinforce product development,
manufacturing, and the sales functions of its overseas bases, among other measures.
(2) The KOITO Group will respond to future changes in mobility, such as connectivity, autonomous driving,
sharing, and electric vehicles. The Group will also develop cutting-edge technologies that stay ahead ofcustomer and market needs and commercialize products at the earliest opportunity. Moreover, we willbring attractive products to market in a timely manner.
(3) The KOITO Group aims to pursue the highest quality and safety standards, while advancing the protectionof the environment and strengthening compliance.
(4) The KOITO Group plans to further reinforce its profit structure and operations by securing and effectively
allocating resources.
In the automotive industry, where globalization and further competition is expected to intensify, as a“Global No. 1 Supplier,” the Company will continue to develop its business with three key phrases:
1) World-leading Technology and Advancement, 2) Sustainable Growth, and 3) A Trustworthy Company.
2. Basic Philosophy and Policy on Corporate GovernanceTo realize corporate principles, management strategies and plans, the Company recognizes the importance of
ethical standards and sound management in order to retain the trust of all stakeholders. Based on thisapproach, the Company is making efforts to enhance corporate governance and strengthen compliance.
As for the corporate governance structure, the Board of Directors manages decision-making and exercises
supervision in accordance with Company regulations, Directors and Executive Officers execute the businessof the Company, and Audit and Supervisory Board Members audit the execution. The Board of Directors,
which comprises 10 Directors (including 4 Outside Directors), in principle, meets once per month, andDirectors and Audit and Supervisory Board Members attend such meetings. The Board reports on the progressof business execution and makes decisions on important matters.
-2-

The Managing Committee comprises the full-time Directors and Corporate Officers as a body that assists
the Board of Directors. The committee meets, in principle, 3 times per month, determines business execution,
reports on progress, and follows up on business execution.
The Audit and Supervisory Board comprises four Audit and Supervisory Board Members (including 2
outside Audit and Supervisory Board Members). Each Audit and Supervisory Board Member audits theperformance of Directors in line with the auditing policies through participation in meetings of the Board of
Directors and surveys the Company’s operations and financial condition. Moreover, standing Audit andSupervisory Board Members attend the Managing Committee and other important meetings or committees toaudit business execution by Directors.
3. Remuneration of Directors
It was approved at the 119th Ordinary General Meeting of Shareholders held on June 27, 2019 that theamount of remuneration, etc. for the Company’s Directors shall be no more than ¥1.5 billion a year. In
addition, it was approved at the 115th Ordinary General Meeting of Shareholders held on June 26, 2015, that,apart from the amount of remuneration, etc., for Directors described above, the amount of remuneration, etc.,
related to subscription rights as stock compensation-type stock options for Directors shall be no more than¥200 million a year.
The Directors’ remuneration system consists of fixed remuneration, paid monthly, and performance-linked
remuneration. Based on the Company’s internal standards on Director’s remuneration, the Company
comprehensively determines the amount of remuneration by taking several factors into account: corporate
performance, remuneration amount of other companies, the amount of employees’ salaries, as well as the
Director’s management capabilities, achievements, and their contributions.
The fixed remuneration amount is calculated by setting a basic amount in based on the size of the role ofeach Director and their position, then setting the upper and lower limit amount for each position, the status
difference by position, and the difference by the number of years in the position.
Performance-linked remuneration is evaluated and decided based on the belief that it is important tocomprehensively consider the goals and achievements of each fiscal year’s performance (net sales, profits,etc.) and each Director’s contribution.
The goal of stock compensation-type stock options is to motivate company managers to contribute toimproving business performance and corporate value in the med- to long-term by sharing the benefit of risingstock prices and the risk of falling stock prices with shareholders. The number of stock options granted isbased on each Director’s status of business execution and level of contribution, etc., and Directors are able toexercise their options once they have lost their position as Director.
The Board of Directors consults with the Remuneration Committee regarding the policy to determine theremuneration and the policy, etc. to determine the renumeration of each Director.
The remuneration of each Director is determined at the Board of Directors.
To ensure objectivity and transparency of the Director’s remuneration determination procedure andothers, the Remuneration Committee, an advisory body to the Board of Directors, consists of 2 Inside
Directors and 4 Independent Outside Directors.
For Outside Directors, only fixed remuneration is paid, and no performance-linked remuneration is paid.
4. Election and Dismissal of Directors and Audit and Supervisory Board Member Candidates
The Company's policy is to nominate Director candidates who respond to the delegation of management byshareholders, possesses a wealth of experience and insight into management, and who can fulfill directors’
duties and responsibilities.
Based on this policy, the Nomination Committee shall be deliberate and resolve a draft of Director
candidates, and then the Director candidates are determined by the Board of Directors.
To ensure objectivity and transparency of the nominations of the Director candidates, the Nomination
Committee, and advisory body to the Board of Directors, consist of 2 Inside Directors and 4 Independent
Outside Directors.
With regard to Audit and Supervisory Board Members, the Company’s policy is to select candidates who
have good personalities, insight, and high ethical standards that enable them to properly, fairly, and efficiently
execute audits of the execution of director's duties. Based on this policy, Audit and Supervisory Board
Member candidates are elected by the Board of Directors with the consent of the Audit and Supervisory
Board.

-3-

In the event of a situation that deviates from the above-mentioned policy, the Board of Directors shalldecide on dismissal after a resolution at a General Meeting of Shareholders.
Corporate Officer Regulations stipulate that the appointment and dismissal of corporate officers shall be
subject to a resolution of the Board of Directors.
5. Election and Dismissal of Individual Candidate
For Director candidates, the Board of Directors appoints a person who occupies an important position in eachdivision, has a thorough knowledge of the duties and of the Company’s operations, and has made a significant
contribution to the Company's performance and corporate value. The candidates are to be elected at theGeneral Meeting of Shareholders.
As for Outside Director and Audit and Supervisory Board Member candidates, the Board of Directors
appoints a person with extensive knowledge and experience in corporate management or with expertise inlegal and financial matters. Outside Directors and Audit and Supervisory Board Member are also elected at
the General Meeting of shareholders.
The reasons for the election of Director and Audit and Supervisory Board Member candidates aredescribed in the reference document of the Notice of the General Meeting of Shareholders. In the event of
dismissal, the reason for such dismissal shall be stated in the reference document of the Notice of the General
Meeting of Shareholders.
The election and dismissal of each corporate officer has been decided by the Board of Directors.
[Principle 3.1.3 Initiatives on Sustainability]
To contribute to materialize a sustainable society through our business activities, the Company has established“the KOITO Group Corporate Behavior Charter” through a resolution of the Board of Directors and carriedout to the whole company.
Moreover, to promote business activities that contribute to materialize a sustainable society, the Board of
Directors has identified material issues (materiality) which must be solved through the company businessactivities, based on the United Nations “Sustainable Development Goals” (SDGs) which are mid- tolong-term social issues.
Particularly, the climate change is one of the essential issues in our environmental activities therefore, weestablished the “prevention of global warming” as one materiality (priority) to promote such activities.
In December 2021, the company announced its support for the “Task Force on Climate-related Financial
Disclosures (TCFD).” Risks and opportunities related to climate change are disclosed in the Annual
Securities Report and other documents.
Details of our sustainability initiatives are disclosed on our website under “Integrated Report”, etc.
(https://www.koito.co.jp/english/sustainability/integrated/)[Supplementary Principle 4.1.1 Roles and Responsibilities of the Board]
The Company’s Board of Directors discusses, reports, and makes decisions on matters stipulated in the Boardof Directors’ Regulations, including those stipulated by laws, regulations and the Articles of Incorporation.
Other matters are determined in accordance with the rules of the Managing Committee Regulations and theDecision-Making Regulations, depending on the scale and agenda.
[Principle 4.9 Independence Standards and Qualification for Independent Directors]
The Company's policy is to appoint an Outside Director with effective independence in accordance with theindependence requirements set forth in the Corporation Act and the independence standards set forth in the
Independent Directors/Auditors System of the Tokyo Stock Exchange.

[Principle 4.10.1 Use of voluntary system]
The Company has established the Nomination committee and the Remuneration committee comprised ofa majority of independent Outside Directors as advisory bodies. The Nomination committee and theRemuneration committee shall be deliberate and resolve drafts and policies regarding Director
candidates and remuneration of Directors, thus the company ensures objectivity and transparency inthese procedures.
[Supplementary Principle 4.11.1 Preconditions for Board and Audit and Supervisory Board Effectiveness]
The Company has introduced a corporate officer system to distinguish between the management
decision-making and supervisory functions and the business execution functions. Currently, the Company has-4-10 Director members, and we believe that this is an appropriate scale for prompt and appropriate
decision-making.
Each Director has thorough knowledge of the management of each business. Including Outside Directors,
Directors are structured in a way that balances expertise, experience, and capabilities. Regarding the skill
matrix of the Directors, refer to the “Corporate Governance” of our website below.
(https://www.koito.co.jp/english/sustainability/governance/corporate-governance/)
When selecting Directors, the Nomination Committee deliberates and resolves a draft of Director
candidates, and then the Director candidates are determined by the Board of Directors.
[Supplementary Principle 4.11.2 Preconditions for Board and Audit and Supervisory Board
Effectiveness]
In the event that the Company’s Director or Audit and Supervisory Board Member concurrently serves as an
executive of another listed company, the Company endeavors to limit the appointment to the extent
reasonable.
Additionally, Directors’ important concurrent posts are stated in the Notice of the Ordinary General
Meeting of Shareholders every year.
[Supplementary Principle 4.11.3 Preconditions for Board and Audit and Supervisory Board
Effectiveness]
The results of self-analyses and evaluations of the effectiveness of the Board of Directors are summarized asshown below.
(1) In principle, the Board of Directors meets once a month to discuss important issues in a timely andappropriate manner in accordance with the Board of Directors’ regulations.
(2) Prior to the beginning of the fiscal year, the annual meeting schedules are announced to Directors andAudit and Supervisory Board Members, including its outside members, making it easier for them toattend the meetings. To facilitate discussion on management issues of the Board of Directors, the mattersto be deliberated and reported at the meeting and the content of the materials are discussed in advance.
(3) In addition to Directors, who have experience in the various business divisions such as management,
sales, technical, production and others, the Board of Directors also receives advice and proposals fromoutside Directors with extensive knowledge and experience of corporate management, or with expertisein legal and financial matters. The Board of Directors ensures sufficient time and discusses management
issues from a variety of perspectives.
In the future, the Company will further strengthen its functions as the highest decision-making
organization for management and improve the speed of management decision-making in order to enhance theeffectiveness of the Board of Directors.
[Supplementary Principle 4.14.2 Director and Audit and Supervisory Board Member Training]
The Company provides training for Directors and Corporate Officers to promote knowledge acquisition andan understanding of their roles and responsibilities as necessary.
[Principle 5.1 Policy for Constructive Dialogue with Shareholders]
The Company defines “With the purpose of enhancing our corporate value, we will disclose corporate
information in an appropriate, effective, and fair manner and engage in constructive dialogue with a wide
range of stakeholders, including shareholders, business partners and local residents” in “4. Fair information
disclosure and constructive dialogue” of the KOITO Group Corporate Behavior Charter. In order to achievesustainable growth and increase corporate value over the mid- to long-term, we have been conducting
constructive dialogue while providing accurate information to shareholders and investors in a fair manner.
(1) The Company assigns the General Affairs Department and the Public Relations Department to administer
dialogues with shareholders and investors, managers and persons in charge of gathering and disclosing
information are assigned to the Department. In cooperation with related departments, the responsible
Departments disclose information in a timely, fair, and appropriate manner.
(2) The Company strives to promote investing opportunities and disclose information by holding semiannual
earnings release conferences and publishing fact books and integrated reports.
(3) In order to reflect shareholders’ opinions into corporate management, any matter that is objectively
important for a review is reported to the management and the Board of Directors.
(4) In order to prevent unauthorized disclosure of financial statements and ensure fairness, the Company has
set a quiet period and refrains from discussing financial results during that period. The Company also
strives to control insider information in accordance with our Insider Trading Regulations.
-5-[Actions to ensure management that is conscious of cost of capital and stock price)]
The Company has aimed to achieve the targets of ROIC and ROE, which are indicators of return on capital in
the 1st Medium-Term Management Plan (FY2027 Targets: ROIC of 9% or more, ROE of 9% or more).
The Company has also established a capital allocation policy to practice management that is conscious of
capital costs and stock price, such as improving capital efficiency.
For details, please refer to the documents on our website from the link below.
(1st Medium-Term Management Plan: https://www.koito.co.jp/english/news/2024/03/28/004315.html )2. Capital Structure
Foreign Shareholding Ratio

More than 30%[Status of Major Shareholders]Number of
Shares Owned

Name / Company Name

Percentage(%)

TOYOTA MOTOR CORPORATION

64,316,466

20.89

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

33,712,500

10.95

Custody Bank of Japan, Ltd. (Trust account)

10,643,300

3.45

Nippon Life Insurance Company

9,688,100

3.14

Sumitomo Mitsui Banking Corporation

8,164,048

2.65

The Dai-ichi Life Insurance Company, Limited

8,001,656

2.59

MUFG Bank, Ltd.

7,731,350

2.51

CEP LUX-ORBIS SICAV

6,597,051

2.14

SUMITOMO LIFE INSURANCE COMPANY

4,794,000

1.55

JPMorgan Securities Japan Co., Ltd.

4,060,481

1.31

Controlling Shareholder(except for Parent Company)
Parent Company―
None

Supplementary Explanation
The status of the above major shareholders is as of March 31, 2024.
The percentage of shares owned is calculated by deducting treasury stock (58,653 shares).
As of November 30, 2023, Massachusetts Financial Services Company and another 1 joint holder have beenreported to have held 13,146 thousand shares (percentage of shares: 4.3%) in the “Report on the charge of theReport on Large Volume Holdings” published by Massachusetts Financial Services Company on December 7,
2023. However, the actual number of shares held by Massachusetts Financial Services Company and other 1
joint holder has not been confirmed by the Company.
As of February 12, 2024, Mitsubishi UFJ Financial Group, Inc. and another 3 joint holders have been reported
to have held 14,687 thousand shares (percentage of shares: 4.8%) in the “Report on the charge of the Reporton Large Volume Holdings” published by Mitsubishi UFJ Financial Group, Inc. on February 19, 2024.
However, the actual number of shares held by MUFG Bank, Ltd. and another 3 joint holders has not been
confirmed by the Company.
As of March 15, 2024, Sumitomo Mitsui DS Asset Management Company, Ltd. and another 2 joint holders
have been reported to have held 13,416 thousand shares (percentage of shares: 4.4%) in the “Report on the
charge of the Report on Large Volume Holdings” published by Sumitomo Mitsui DS Asset Management
Company, Ltd. on March 25, 2024. However, the actual number of shares held by Sumitomo Mitsui DS AssetManagement Company, Ltd. and other 1 joint holder has not been confirmed by the Company.
-6-3. Corporate Attributes

Fiscal Year-End

Tokyo Stock Exchange
Prime Section
MarchType of BusinessElectric Appliances

Number of Employees (consolidated) as of the End of
the Previous Fiscal Year

More than 1,000

Sales (consolidated) as of the End of the Previous Fiscal Year

From ¥100 billion to less than ¥1 trillion

Number of Consolidated Subsidiaries as of the End of thePrevious Fiscal Year

From 10 to less than 50

Listed Stock Market and Market Section

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

5. Other Special Circumstances which may have Material Impact on Corporate GovernanceToyota Motor Corporation (“Toyota”) is the “other affiliated company” that has 21% voting rights of theCompany.
Toyota owns 21% of KOITO’s voting rights, but there are no restrictions on the KOITO's business activities,
such as approvals.
There are no business restrictions from Toyota, and no concurrent directorships on the Board of Directors or
the Board of Corporate Auditors. Therefore, the Company conducts its own business which allows it to be ofcertain independency.
Regarding the fact that sales to Toyota for 14% into account, trends in automobile sales of Toyota may affect
the Company’s operating results.

-7-II. Business Management Organization and Other Corporate Governance Systems regarding
Decision-making, Execution of Business, and Oversight in Management
1. Organizational Composition and Operation
Organization Form

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

15

Term of Office Stipulated in Articles of Incorporation

1 yearChairperson of the Board

President

Number of Directors

10

Number of Outside Directors

4

Number of Independent Directors

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

Haruya Uehara

From another company

Kingo Sakurai

CPA

Chika Igarashi

Attorney

Relationship with the Company*
a

b c

d e

f

g h

i

j

k

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

Designationas
Independent
Director

Supplementary Explanation of
the RelationshipHaruya Uehara○

Mitsubishi UFJ Trust andBanking Corporation, senioradvisor

Kingo Sakurai○

CPA

Chika Igarashi○

Attorney
Nishimura & Asahi, partner-9-

Reasons of Appointment
Mr. Uehara is a senior advisor at
Mitsubishi UFJ Trust and Banking
Corporation and has been selected as an
Outside Director to reflect his expertiseand experience in the Company’s
management, in order to achieve asupervisory function from such a pointof view.
The Company recognizes him as ahighly independent Outside Director
because he is not from the parent
company, affiliated company, major
shareholders, or major business partners,
and others.
Because of his independence and fullknowledge, the Company judged that he
was qualified as an independent Directorof the Company and appointed him an
independent Director.
The Company does not owe any debts orloans to Mitsubishi UFJ Trust andBanking Corporation.
As a CPA, Mr. Sakurai was appointed an
Outside Director to reflect his financial
andaccounting
knowledge
andexperience in to the Company’s
management, in order to achieve asupervisory function from such a pointof view.
The Company recognizes him as ahighly independent Outside Director,
because he is not from the parent
company, affiliated company, major
shareholders, or major business partners,
and others.
Because of his independence and fullknowledge, the Company judged that he
was qualified as an independent Directorof the Company and appointed him an
independent Director.
Ms. Igarashi, an attorney engaged incorporate legal affairs in Japan andoverseas for many years, was appointed
an Outside Director to reflect a highdegreeoflegalexpertiseandinternational perspective in corporate
legal affairs in the Company’s
management, in order to achieve asupervisory function from such a pointof view.

Risa Tanaka○

President, The Graduate Schoolof Project Design, Advanced
Academic Agency

The Company recognizes her as a highly
independent Outside Director, because
she is not from the parent company,
affiliated company, major shareholders,or major business partners, and others.
Because of her independence and fullknowledge, the Company judged that
she was qualified as an independent
Director of the Company and appointed
her an independent Director.
The Company has a business
relationship with Nishimura & Asahi,
where Ms. Igarashi is a partner, but theCompany is aware that the relationshipis highly independent because theCompany does not have a corporate
attorney contract with Nishimura &Asahi.
Ms. Risa Tanaka previously served as
Director, Vice President, and Head of the
Editorial Office of Sendenkaigi Co.,
Ltd., a publisher of public relations,advertising, and marketing magazines.
Her current positions include Presidentof the Graduate School of Project Design
at the Advanced Academic Agency,
Executive Director and Executive Vice
President of Mie University, and amember of various councils atgovernment ministries, including the
Ministry of Land, Infrastructure,
Transport and Tourism and the Ministryof Internal Affairs and Communications.
The Company elected her election as an
Outside Director so that her knowledge
and experience may be reflected in the
Company’s management and that she
may fulfill a supervisory function fromthisperspective.
The Company recognizes her as a highly
independent Outside Director, because
she is not from the parent company,
affiliated company, major shareholders,or major business partners, and others.
Because of her independence and fullknowledge, the Company judged that
she was qualified as an independent
Director of the Company and appointed
her an independent Director.

Voluntary Establishment of Committee(s)Corresponding to Nomination Committee orRemuneration Committee

Established- 10 -

Committee’s Name, Composition, and Attributes of Chairperson

Committee’s Name

Committee Corresponding toNomination Committee
Nomination Committee

Committee Corresponding to
Remuneration Committee
Remuneration Committee

All Committee Members

66

Full-time Members

00Inside Directors

22

Outside Directors

44Outside Experts

0

0

Other

0

0

Chairperson

Inside Director

Inside Director

Supplementary Explanation
For the purpose of enhancing the independence, objectivity and accountability of the functions of the Board of
Directors related to the nomination and the remuneration of Directors, the Company established a Nomination
Committee and a Remuneration Committee comprised of 6 Directors, including Masahiro Otake (Chairman
and CEO, Chairperson), Michiaki Kato (President and COO) and 4 Independent Outside Directors (Haruya
Uehara, Kingo Sakurai, Chika Igarashi and Risa Tanaka).
The Nomination Committee holds deliberations according to the consultations of the Board of
Directors on matters related to the nomination of Directors, and determines draft proposals and policies.
The Remuneration Committee holds deliberations according to the consultations of the Board of Directors
on matters related to the remuneration of Directors, and determines draft proposals and policies.

- 11 -

[Audit and Supervisory Board]
Establishment of Audit and Supervisory Board

Established

Maximum Number of Audit and Supervisory Board Member Stipulated in Articles of

5

Incorporation

4

Number of Audit and Supervisory Board Member

Cooperation among Audit and Supervisory Board Member, Accounting Auditors and Internal Audit
Departments
The Company's Internal Audit Department, an independent organization, performs internal audits of theoperations, finance, compliance, and other areas based on annual audit plans. The results are reported to the
Directors and Audit and Supervisory Board Members.
The Audit and Supervisory Board comprises 2 standing Audit and Supervisory Board Members and 2
outside Audit and Supervisory Board Members. The Audit and Supervisory Board Members participate in the
Board of Directors and other important meetings and committees, review significant authorization documents,
and audit the performance of Directors. In addition, the Audit and Supervisory Board Member monitors the
structure and operation of the internal control system by site visiting plants and branches, interviewing theadministrative divisions, and auditing domestic and overseas subsidiaries. Moreover, the Audit andSupervisory Board Members attend the audits performed by the independent auditors and the Internal Audit
Department, along with working to promote collaboration by exchanging information through regularmeetings with the independent auditors, the in-house Compliance Department, and the Internal Audit
Department.

Appointment of Outside Audit and Supervisory Board Member

Appointed

Number of Outside Audit and Supervisory Board Member2

Number of Independent Audit and Supervisory Board Member

2

Outside Audit and Supervisory Board’s Relationship with the Company (1)NameAttribute

Relationship with the Company*
a

b

c

d

e

f

g

h

i

j

k

l

m

Hiroshi Kimeda
Attorney
Hidemi Yamaguchi
Tax Accountant*
Categories for “Relationship with the Company”* “○” when the director presently falls or has recently fallen under the category;“△” when the director fell under the category in the past
* “●” when a close relative of the director presently falls or has recently fallen under the category;“▲”when a close relative of the director fell under the category in the pasta. Executive of the Company or its subsidiaryb. Non-executive director or accounting advisor of the Company or its subsidiaries
c. Non-executive director or executive of a parent company of the Company
d. Audit and Supervisory Board Member of a parent company of the Company
e. Executive of a fellow subsidiary company of the Company
f. A party whose major client or supplier is the Company or an executive thereof
g. Major client or supplier of the Company or an executive thereofh. Consultant, accountant or legal professional who receives a large amount of monetary consideration orother property from the Company besides compensation as an Audit and Supervisory Board Member- 12 -

i. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is alegal entity)
j. Executive of a client or supplier company of the Company (which does not correspond to any of f, g, or h)(the Audit and Supervisory Board Member himself/herself only)
k. Executive of a company, between which and the Company outside directors/ Audit and Supervisory
Board Member are mutually appointed (the Audit and Supervisory Board Member himself/herself only)
l. Executive of a company or organization that receives a donation from the Company (the Audit andSupervisory Board Member himself/herself only)
m. Others
Outside Audit and Supervisory Board Member’s Relationship with the Company (2)Name

Designation as
Independent
Audit andSupervisory
Board Member

Supplementary
Explanation of
the Relationship

Hiroshi Kimeda○

Attorney
Nishimura & Asahi,
partner

Hidemi Yamaguchi○

Tax Accountant- 13 -

Reasons of Appointment
Mr. Kimeda, an attorney with thoroughknowledge of corporate legal affairs, wasappointed an outside Audit and Supervisory
Board Member to reflect his knowledge andexperiences in the enhancement of theCompany’s auditing system. The Company
has a business relationship with Nishimura& Asahi, where Mr. Kimeda is a partner, but
the Company is aware that the relationshipis highly independent because the Company
does not have a corporate attorney contract
with Nishimura & Asahi.
As a tax accountant, Mr. Suzuki was
appointed an Outside Director to reflect his
financial and accounting knowledge andexperience in the Company’s auditing
system.
The Company recognizes him as a highly
independent outside Audit and Supervisory
Board Member because he is not from theparent company, affiliated company, major
shareholders, or major business partners,
and others.
Because of his high independence and fullknowledge, the Company judged that he
was qualified as an independent Audit andSupervisory Board Member of the Company
and appointed him an independent Audit
and Supervisory Board Member.

[Independent Directors/ Audit and Supervisory Board Member]
Number of Independent Directors/Audit and Supervisory Board Member

6

Matters relating to Independent Directors/ Audit and Supervisory Board Member
All Outside Members of the Board of Directors / Audit & Supervisory Board Members that qualify as
Independent Members of the Board of Directors / Audit & Supervisory Board Members have been designatedas Independent Members of the Board of Directors / Audit & Supervisory Board Members.
[Incentives]
Incentive Policies for Directors

Stock Options / Other

Supplementary Explanation
Under the recognition that the corporate performance and stock value closely relates or correlates,
shareholders and corporate managers share the benefits and risks caused by stock price fluctuations. For the
purpose of raising corporate managers' willingness to contribute to the improvement of business performanceand corporate value over the mid- to long- term, the Company has introduced stock compensation-type stock
options (stock subscription rights granted). The number of stock options granted is based on each Director’s
status of business execution and level of contribution, etc., and Directors are able to exercise their options
once they have lost their position as Director.

Recipients of Stock Options

Inside Directors

Supplementary Explanation
The Company's Directors (excluding external Directors) are granted stock options no more than ¥200 million
a year. Stock compensation-type stock options are also granted to the Company’s corporate officers under thesame conditions.

- 14 -

[Director Remuneration]
Disclosure of Individual Directors’ Remuneration

Selected Directors

Supplementary Explanation
In the securities report, the Company discloses the total remuneration, the amount by different types of
remuneration, and the number of Directors or Corporate Officers eligible for such remuneration, andindividually discloses the Directors with remuneration of ¥100 million or more.
Policy on Determining Remuneration Amounts
and Calculation Methods

Established

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods
It was approved at the 119th Ordinary General Meeting of Shareholders held on June 27, 2019 that theamount of remuneration, etc. for the Company’s Directors shall be no more than ¥1.5 billion a year. It wasapproved at the 115th Ordinary General Meeting of Shareholders held on June 26, 2015, that, apart from theamount of remuneration, etc., for Directors described above, the amount of remuneration, etc., related tosubscription rights as stock compensation-type stock options for Directors shall be no more than ¥200 million
a year.
The Directors’ remuneration system consists of fixed remuneration, paid monthly, and performance-linked
remuneration. Based on the Company’s internal standards on Director’s remuneration, the Company
comprehensively determines the amount of remuneration by taking several factors into account: corporate
performance, remuneration amount of other companies, the amount of employees’ salaries, as well as the
Director’s management capabilities, achievements, and their contributions.
The fixed remuneration amount is calculated by setting a basic amount in based on the size of the role ofeach Director and their position, then setting the upper and lower limit amount for each position, the status
difference by position, and the difference by the number of years in the position.
Performance-linked remuneration is evaluated and decided based on the belief that it is important tocomprehensively consider the goals and achievements of each fiscal year’s performance (net sales, profits,etc.) and each Director’s contribution.
The goal of stock compensation-type stock options is to motivate company managers to contribute toimproving business performance and corporate value in the med- to long-term by sharing the benefit of risingstock prices and the risk of falling stock prices with shareholders. The number of stock options granted isbased on each Director’s status of business execution and level of contribution, etc., and Directors are able toexercise their options once they have lost their position as Director.
The Board of Directors consults with the Remuneration Committee regarding the policy to determine theremuneration, etc., and the policy, etc. to determine the remuneration of each Director.
The remuneration of each Director shall be determined by the Board of Directors.
As a consultative body of the Board of Directors, the Remuneration Committee consists of 2 Inside
Directors and 4 Independent Outside Directors, in order to ensure objectivity and transparency of the
remuneration determination procedure, etc. of the directors, etc.
For Outside Directors, only fixed remuneration is paid, and no performance-linked remuneration is paid.

[Supporting System for Outside Directors and/or Audit and Supervisory Board Members]
Outside Directors are supported by the General Affairs Department, and outside Audit and Supervisory Board
members are supported by Audit and Supervisory Board member office personnel.

- 15 -

2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration
Decisions (Overview of Current Corporate Governance System)[Board of Directors]
The Board of Directors is chaired by the President, and comprises 10 Directors (including 4 Outside
Directors). In principle, the Board of Directors meets once per month.
Almost all directors attended all meetings of the Board of Directors in the fiscal year ended March 31,
2024, and for some directors, attended almost all meetings of the Board of Directors.
The Company’s Board of Directors discusses, reports, and makes decisions on matters stipulated in the
Board of Directors’ Regulations, including those stipulated by laws, regulations, and the Articles ofIncorporation, and supervises the execution of director’s business execution. In addition, all Audit andSupervisory Board Members attend the Board of Directors to monitor Director's business operations.
The Managing Committee comprises full-time Directors and a Corporate Officer as a body to aid theBoard of Directors. The committee meets, in principle, 3 times per month, determines business execution,
reports on progress and follows up on business execution.
The governance is being reinforced, such as that a new activity requires the approval of the Managing
Committee and then the Board of Directors before starting.
[Audit and Supervisory Board]
The Audit and Supervisory Board comprises 4 Audit and Supervisory Board Members (2 standing Audit andSupervisory Board Members and 2 outside Audit and Supervisory Board Members) and the meetings are held
regularly.
Other than the Board of Directors, the standing Audit and Supervisory Board Members attend theManaging Committee and other important meetings or committees to express their opinions as needed. This
structure enables Audit and Supervisory Board Members to constantly monitor the Director's businessexecutions. The Company also strives to improve its auditing functions through close collaboration between
Audit and Supervisory Board Members, Internal Audit Department and independent auditors, by allowing
them to exchange information and opinions as needed, and to hold regular meetings.
[Nomination Committee]
For the purpose of enhancing the independency, objectivity and accountability of the functions of the Board of
Directors related to the nomination of Directors, the company established a Nomination Committee
comprised of 6 Directors, including Masahiro Otake (Chairman and CEO, Chairperson), Michiaki Kato
(President and COO), and 4 Independent Outside Directors (Haruya Uehara, Kingo Sakurai, Chika Igarashi
and Risa Tanaka).
In the fiscal year ended March 31, 2024, the Nominating Committee held a total of two meetings, all ofwhich was attended by all members.
The Nomination Committee holds deliberations according to the consultations of the Board of Directors
on matters related to the nomination of Directors, and determines draft proposals and policies.
[Remuneration Committee]
For the purpose of enhancing the independency, objectivity and accountability of the functions of the Board of
Directors related to the remuneration of Directors, the company established a Remuneration Committee
comprised of 6 Directors, including Masahiro Otake (Chairman and CEO, Chairperson), Michiaki Kato
(President and COO), and 4 Independent Outside Directors (Haruya Uehara, Kingo Sakurai, Chika Igarashi
and Risa Tanaka).
In the fiscal year ended March 31, 2024, the Remuneration Committee held a total of two meetings, all ofwhich was attended by all members.
The Remuneration Committee holds deliberations according to the consultations of the Board of Directors
on matters related to the remuneration of Directors, and determines draft proposals and policies.
[Status of Audits]① Status of Audits by Audit and Supervisory Board(1) Organization, personnel, procedures, etc.
The Company has the Audit and Supervisory Board, which consists of two full-time Audit & Supervisory
Board members and two outside Audit & Supervisory Board members, for a total of four Audit & Supervisory
Board members.
At the first meeting of the Audit and Supervisory Board after the annual general meeting of shareholders
each year, the Audit and Supervisory Board discusses and establishes the annual activity policy, the- 16 -

responsibilities of each corporate auditor, and an annual audit plan. The audit is conducted based on the plan.
Other than attending and expressing opinions at the Board of Directors, Audit and Supervisory Board
Members audit the execution of Directors’ duties, legality and appropriateness of the Company’s
decision-making based on their knowledge and experience in each specialized field. In addition to Audit andSupervisory Board Members’ on-site audits and interviews with administrative divisions, Audit andSupervisory Board Members attend the audits performed by the independent auditors and the Internal Audit
Department. Audit and Supervisory Board Members strive to improve the effectiveness of audit bymaintaining collaboration with relevant parties, including outside Directors by exchanging information asneeded.
Full-time auditors also share the contents and results of routine audits with Outside Auditors as required.
Outside Audit and Supervisory Board Members contribute to the Company’s management strategies
planning and the enhancement of corporate governance. This is achieved through inquiries and comments
made at liaison meetings with the Board of Directors, Audit and Supervisory Board, independent auditors andoutside Directors, based on their knowledge in each specialized field as well as information from Audit andSupervisory Board Members.
In addition, the Company has established an Audit and Supervisory Board Member’s Office so thatindependent staffs can assist Audit and Supervisory Board Members with their duties.
(2) Outline of Audit
Outline of audit by Audit and Supervisory Board is as follows:- 1. Audit of corporate decision-making process and content
Attending important meetings such as board of directors meetings and managing directors meetings,
expressing opinions, checking important documents, hearing reports, etc.
- 2. On-site, physical, and fact-based audits
Attending meetings of key functions, stating opinions, hearing reports on internal control systems, visiting
business sites and subsidiaries, etc.
- 3. Accounting audits and cooperation with accounting auditors
Cooperation with accounting auditors by attending their audits and exchanging opinions, etc., discussions
with related parties in the process of selecting major audit issues to be considered, hearing on audit
procedures, etc., sharing information on internal control concerns, reviewing the quality control status of theaccounting auditor's performance of duties, etc.
- 4. Cooperation with the Internal Audit Department
Attending audits by the internal audit division and sharing opinions on a regular and timely basis, etc.
-5. Cooperation with Compliance Promotion Office
Sharing of information on a regular and timely basis regarding the maintenance and enhancement of thecompliance system, hearing reports on internal ethics consultation cases, etc., and utilizing such reports, etc.
(3) Status of Audit and Supervisory Board
In fiscal 2024 (from April 31, 2023 to March 31, 2024), a total of 8 Audit and Supervisory Board were
held, and all Audit and Supervisory Board Members, including outside Audit and Supervisory Board
Members, have attended to all meetings.
The matters discussed in the Audit and Supervisory Board are evaluation, reappointment, and remunerationagreement with the independent auditors, legality or appropriateness of matters discussed in the Ordinary
General Meeting of Shareholders, the deliberation and preparation of Audit Report, and preparation of Audit
Plan.
Major items reported include the status of accounting audits, the selection of major audit considerations andthe status of audits, monthly audit results by full-time corporate auditors, and the details of consultations andreports to the Corporate Ethics Consulting Desks.
② Outline of Internal Audit
Based on the annual audit plans, the Company’s Internal Audit Department, an independent organization,
conducts audits of the operations of internal control over financial reporting, as well as audits of the legality
and appropriateness of operations against company-wide departments and the Company’s subsidiaries. The
departments and subsidiaries implement the necessary improvements to improve internal control. In addition,
the Internal Audit Department ensures the effectiveness of internal audits by ensuring reporting procedures todirectors and corporate auditors, and exchanges information with corporate auditors and accounting auditors
regarding the status of audits, thereby promoting mutual cooperation.
- 17 -

③Outline of Accounting Audit
The Company’s accounting audit has been ARK LLC. since June 2009. The accounting audit is performed bycertified public accountants, Yoshio Hinazuru and Kenji Okada. Furthermore, certified public accountants andpersons who passed the certified public accountant examination who belong to ARK LLC. assist theaccounting audit.
The company establishes a policy on selecting audit corporations; appropriate size as an audit corporation,
the expertise and independence required to accounting auditors, and a system to ensure the appropriateness ofaccounting audits.
[Outline of Contents of Limited Liability Agreement]
In accordance with Article 427, Paragraph 1 of the Corporation Act, the Company, its Outside Directors, andits outside Audit and Supervisory Board Members have concluded contracts to limit liability for damages as
set forth in Article 423, Paragraph 1 of the law. The maximum amount of liability under such contracts is thesame as the minimum amount of liability prescribed by laws and regulations.

3. Reasons for Adoption of Current Corporate Governance System
Regarding corporate governance, the Company believes that objective and neutral external monitoring
function is essential for the Board of Directors, which has the functions of management decision-making andsupervising business executions. Along with the policy, 4 Outside Directors monitor, advise, and provide
guidance, and audits are conducted by 2 outside Audit and Supervisory Board Members.

- 18 -

II. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting Rights

Early Notification of General
Shareholder Meeting
Allowing Electronic Exerciseof Voting Rights
Participation in Electronic
Voting Platform
Providing Convocation Noticein English
Other

Supplementary Explanations
For the Ordinary General Meeting of Shareholders, the "NOTICE OF THE
ORDINARY GENERAL MEETING OF SHAREHOLDERS" is sent out
early before the date of the meeting and is posted on the Tokyo Stock
Exchange website and the Company's website prior to the date of dispatch.
Voting rights can be exercised via the Internet.
The Company participates in the voting platform for institutional investors
operated by ICJ, Inc.
Notices of the general meetings of shareholders in English have been
prepared and posted on the Tokyo Stock Exchange website, the voting
platform for institutional investors, and the Company’s website.
At general meetings of shareholders, the Company will respond to questions
from shareholders in good faith.

2. IR Activities
Supplementary Explanations
Regular Investor Briefings forAnalysts and Institutional
Investors
Posting of IR Materials on
WebsiteEstablishment of Department
and/or Manager in Charge ofIR

After the announcement of financial results, financial results briefings areheld for analysts and institutional investors (four times a year).
Notices of general meetings of shareholders (Japanese and English),earnings report (Japanese and English), materials for earnings release
conferences (Japanese and English), various press releases, financial reports,
quarterly reports, fact books (annually and interim), and integrated report(English and Japanese) are posted on the website.
(URL: https://www.koito.co.jp/english/ir/)
Department in charge of IR: Public Relations Department
Person in charge of IR: Takahito Otake, Senior Managing Corporate Officer,
Public Relations Department

3. Measures to Ensure Due Respect for Stakeholders

Stipulation of Internal Rules
for Respecting the Position of
Stakeholders
Implementation ofEnvironmental Activities,
CSR Activities etc.

Supplementary Explanations
The KOITO Group’s basic management policy is to create customer needs
and contribute to the progress of society, while fostering mutually beneficial
relationships with all stakeholders, including shareholders, customers,
employees, and business partners, under the theme “Light”. The Company
defines its policies in the KOITO Group Corporate Behavior Charter.
The environmental report and other information regarding CSR activities
are available on the Company’s website.
(https://www.koito.co.jp/english/sustainability/ )(Note) The environmental report is published in Japanese only.

- 19 -

IV. Matters Related to the Internal Control System
1. Basic Views on Internal Control System and the Progress of System Development
At the Board of Directors held on May 26, 2006, the Basic Policy on Internal Control System was resolved.
The Company revised the policy at the Board of Directors meeting held on April 24, 2015, and establishesinternal control systems based on the following basic policies.
1. System ensuring that Directors and employees execute their business duties in compliance with laws andregulations and the Company’s Articles of Incorporation
The Compliance Committee, Compliance Department, Internal Audit Department, whistle-blower internalreporting system, and other organizations and systems, as well as the Code of Corporate Ethics and otherrelevant regulations, will be developed and enhanced based on the KOITO Group Corporate Behavior
Charter.
At the same time, KOITO’s Directors, Corporate Officers and employees will receive education
familiarizing them with organizations, systems, and regulations.
2. System for the preservation and administration of information on Directors executing their business duties
Regulations will be developed and enhanced to appropriately preserve and administer minutes to the General
Meeting of Shareholders, the Board of Directors, Managing Committee, and other information on Directors
executing their business duties.
3. Regulations and other systems for managing the risk of loss
Risk Management Regulations and other regulations and systems for managing risk will be developed to
avoid and eliminate material risks that could threaten the Company’s survival, and minimize the impact when
they arise. At the same time, KOITO’s directors, corporate officers, and employees will receive education andtraining on risk management.
4. System for ensuring the efficient execution of business duties by directors
The Board of Directors and Managing Committee meetings will be held regularly. Meanwhile, Board of
Directors Regulations, Managing Committee Regulations and other regulations pertaining to the execution ofbusiness duties by directors, as well as the corporate officer system and other organizations and systems, will
be developed and enhanced to ensure the efficient execution of business duties by directors.
At the same time, business duties will be executed according to specific plans the divisions develop eachyear based on the president’s policy.
5. System for ensuring appropriate business execution by the corporate group comprising KOITO and its
subsidiaries
KOITO and its Group companies will subscribe together to the KOITO Group Corporate Behavior Charterand develop a system for ensuring and administering the appropriate execution of business duties.
ⅰ. Based on the Affiliates Management Regulations etc., KOITO will specify matters to be reported byaffiliates, enhance the Group’s reporting system, and ensure that Group companies file periodic reports
with KOITO.
ⅱ. Based on the Affiliates Management Regulations etc., KOITO will monitor the risks to the Group as awhole in a comprehensive and centralized manner. Whenever it finds insufficiency in a Group company’s
action, KOITO will give guidance or implement other collective measures.
ⅲ. KOITO will ensure that Group companies prepare and keep their regulations, organizations, and systems
to ensure periodic Board of Directors’ and directors’ fulfillment of their duties. For important affiliates,
directors of KOITO may concurrently hold offices of directors of such affiliates.
ⅳ. Based on the KOITO Group Corporate Behavior Charter, KOITO will ensure that Group companies
achieve compliance (with laws and ordinances) and KOITO’s Administrative and Internal Audit
Departments audit affiliates’ operations and accounting. Further, based on the Affiliates Management
Regulations KOITO will specify matters subject to KOITO’s approval, and ensure that Group companies
first obtain KOITO’s approval before carrying out such matters.
6. Matters pertaining to the status of certain employees, independence from directors, and the viability of
instruction in the event corporate auditors request such employees to assist in the execution of their duties- 20 -An Audit and Supervisory Board Member’s Office will be established to help the Audit and Supervisory
Board Members execute their duties under the instructions and orders of the Audit and Supervisory Board
Members and the Audit and Supervisory Board. Moreover, assignment of personnel to the Audit andSupervisory Board Members’ office shall be decided upon approval by the Audit and Supervisory Board toensure independence from directors.
7. System for directors and employees of KOITO and its subsidiaries to report to Audit and Supervisory
Board Members and for preventing unfair treatment of the directors and employees for reporting to the Audit
and Supervisory Board Members
Directors, corporate officers, and employees of KOITO and its Group companies shall report to the Audit andSupervisory Board Members when they learn of matters of material impact on the Company; serious
violations of laws, regulations, and the Company’s Articles of Incorporation; and other issues of compliance.
Moreover, each Audit and Supervisory Board Members shall exercise their own discretion in reporting thefindings from such reports to the Audit and Supervisory Board.
Meanwhile, the Company’s organization and systems will be developed and enhanced to rigorously
prevent the unfair treatment of directors, corporate officers, and employees for reporting to the Audit andSupervisory Board Members.
8. Policy on expenses arising from the Audit and Supervisory Board Members of KOITO executing theirduties and system for enabling the Audit and Supervisory Board Members to conduct effective audits
The Company shall pay all necessary expenses involved in the Audit and Supervisory Board Member
executing their duties.
The Audit and Supervisory Board Member shall monitor and audit the execution of business duties at theCompany by means that include attending the Board of Directors, Managing Committee, Compliance
Committees, and other relevant conferences and committees and examining important documents.
The Audit and Supervisory Board Member shall exchange opinions periodically, or as need be withdirectors, corporate officers, independent auditors, and the Internal Audit Department, among others.

2. Basic Views on Eliminating Anti-Social Forces
The Company stipulates that “antisocial forces that threaten the order and safety of civil society shall befirmly intercepted and resolutely dealt with” in the KOITO Group Corporate Behavior Charter. The General
Affairs Department serves as its management department and regularly works with outside specializedorganizations to collect and manage information on antisocial forces. The Company will continue efforts to
educate its employees and strengthen the system.

- 21 -

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

Not Adopted

Supplementary Explanation
The Company believes that those who control the decision-making of the financial and business policies of
the Company must have a good understanding of its financial and business content and the source ofcorporate value. The Company also thinks that they must be able to continuously and sustainably secure andimprove the corporate value and the common interests of its shareholders.
As a company listed on the stock exchange, the Company respects the free trading of its shares in themarket. We do not generally deny a large-scale purchase of the Company’s shares by a particular person, as
long as it contributes to securing and improving the Group’s corporate value and the common interests ofshareholders. In addition, the Company believes that whether or not the Company will ultimately accept alarge-scale purchase of shares should be left to the decision of all shareholders.
However, some large-scale stock purchasing proposals may risk our corporate value or the common
interests of shareholders, which may be able to maintain good relationships with stakeholders. Moreover,some proposals may not adequately reflect the Company’s corporate value or the common interests ofshareholders, and it may be possible that sufficient information was not provided to shareholders to makefinal decisions.
In response to such proposals, entrusted by shareholders, the Company’s Board of Directors believes that
it is imperative to secure necessary time and information, and to negotiate such large-scale stock purchasing
proposals.

2. Other Matters Concerning to Corporate Governance System[Basic approach and Management Structure on Compliance]
The Company aims to continue being a company that is trusted by all stakeholders and declares in the KOITO
Group Corporate Behavior Charter that “we will comply with all applicable laws and regulations and will
engage in fair, transparent, and free market competition, as well as proper trade, and responsible
procurement,” and “in our global corporate activities, we will also comply with international rules and local
laws, respect local culture and customs, and maintain sound relationships with government and government
agencies.” The Company has identified reinforcement of “compliance” as one of our materiality. To foster anorganization and atmosphere to place importance on compliance, the entire KOITO Group is committed toengage in compliance activities.
To strengthen its compliance system, the Company has established the Compliance Committee,
Compliance Promotion Office, Internal Audit Office, and whistle-blowing desk (Corporate Ethics Consulting
Desk). The Compliance Committee meets regularly to confirm and follow up on the action plans and resultsof the Compliance Promotion Office and the Internal Audit Office, the operational status of the Corporate
Ethics Consulting Desk, and responses to risks.
Personnel in charge of compliance are also appointed at the domestic and overseas subsidiaries tostrengthen compliance and grasp the compliance status in close collaboration. In this way, the Company
promotes compliance-related initiatives in the entire Group.

- 22 -

(1) Corporate Governance System
General Meeting of Shareholders
Election /Dismissal

Election /Dismissal

Board of Directors

Consult

10 directors(including 4
outside directors)

Appointment /RemovalNomination Committee

outside directors）

Consult

Election /Dismissal※

Representative
Directors

Audit and SupervisoryBoard

6 directors（including 4※

Remuneration Committee

Operational
Audit

6 directors（including 4
outside directors）

4 Audit andSupervisory Board
Members(including 2
outside Audit andSupervisory Board
Members)※ Deliberate and resolve
draft and policy

Directors
Collaboration
Collaboration

Corporate
Officers
Company-wide
departments

Financial
Audit

Audit

Auditing Section

Collaboration

Independent
Auditors(2) Internal System for Timely Disclosure＜Information Related to
Corporate Decisions＞＜Occurrence ofMaterial Facts＞

Section with Information to be Disclosed（Department in Charge, Subsidiaries and Others)
InformPersons Responsible for Handling Information(General Affairs Department)
ReportPresident
SubmitSubmission / Approval at
Board of Directors

Audit andSupervisory Board

Persons Responsible for Handling Information(General Affairs Department and Public Relations Department)
TimelyDisclosure
Tokyo Stock Exchange

Decisions /Discussions on
Disclosure

Election /Dismissal