Corporate Governance Report
Last Update: July 30, 2021
Sun Frontier Fudousan Co., Ltd.
Seiichi Saito,
President and Representative Director
Contact: Takeshi Hirahara,
Executive Officer andGeneral Manager ofCorporate Planning Division
Securities Code: 8934
https://www.sunfrt.co.jp
The corporate governance of Sun Frontier Fudousan Co., Ltd. (the “Company”) is described below.

I.

Basic Views on Corporate Governance, Capital Structure, Corporate Profile andOther Basic Information

1. Basic Views
The Company's basic policy for corporate management is that all officers and employees should set "theright thing to do as a human being" based on high ethical standards as a criterion for business execution andpractice it.
Based on this, we recognize that it is an important mission of management to contribute to society throughbusiness activities and to pursue profit fairly, and to build firm trust from stakeholders such as shareholders,customers and employees by continuously increasing corporate value over the long term.

Based on this recognition, the Company is working to strengthen its corporate governance with the below
basic policies:(1) improving transparency and ensuring fairness,(2) swift decision-making and business execution,(3) thorough accountability,(4) timely and appropriate information disclosure, and(5) enhancement of compliance awareness.

In order to improve efficiency by separating management decision-making and supervisory functions frombusiness execution functions, and to strengthen business execution functions, an executive officer system wasintroduced on June 27, 2012.
In addition, from the perspective of ensuring management transparency, on June 20, 2014, the Company-1-

appointed 1 outside director. On July 1, 2015, the Company newly appointed 1 outside director, and on June21, 2019, another outside director was appointed. Currently, 3 of the 9 directors are outside directors. In the
future, in order to respond to changes in the social environment and legal systems, the corporate governanceplan considered suitable for our Company will be reviewed and revised as necessary.
[Reasons for Non-compliance with the Principles of the Corporate Governance Code]All principles are described based on the code revised in June 2018.

[Principle 4-1. Roles and Responsibilities of the Board of Directors (1)] Supplementary Principle 4-1 (3)Although the Company has not established a specific successor plan for the Representative Director, theCompany aims to foster successors by giving authority and responsibility to the General Managers andaccumulating experience in a climate of friendly competition.

[Principle 4-3. Roles and Responsibilities of the Board of Directors (3)] Supplementary Principle 4-3 (2)and Supplementary Principle 4-3 (3)Given that the appointment and dismissal of the President-Representative Director is the most important
strategic decision making, the Board of Directors will appoints a person who has excellent personality andinsight, is well-respected, and has a wealth of experience after giving due consideration to the objectivity,
timeliness, and transparency of the appointment procedures, and sufficient discussions within the Board of
Directors.

[Principle 4-11. Prerequisite for Ensuring the Effectiveness of the Board of Directors and the Audit &Supervisory Board]
Although the composition of the Board of Directors of the Company is all male and Japanese, they haveaccomplished a variety of expertise and experience, including international aspects. We will continue toconsider gender issue.
For Audit & Supervisory Board members, the Company appoints highly specialized human resources such as
attorneys and U.S. certified public accountants, as well as personnel with sufficient knowledge of finance andaccounting.
[Disclosure Based on the Principles of the Corporate Governance Code][Principle 1-4. Cross-Shareholdings]
As a basic policy, the Company does not hold cross-shareholdings unless the significance of such holdings
is fully recognized. The case where the significance of holding is fully recognized is the case where it isjudged to contribute to the maintenance and improvement of the Company's corporate value.
In the event that the Company holds cross-shareholdings, the Company shall exercise its voting rights after
comprehensively judging the pros and cons of such shareholdings, taking into consideration whether theissuing company has established an appropriate governance system and makes appropriate decisions that-2-

will lead to an increase in corporate value over the medium to long term, and from the perspective ofimproving the Company's corporate value. If the Company judges that it cannot approve the proposal, theCompany may consider the necessity of selling.

[Principle 1-7. Related Party Transactions]
In order to protect the interests of shareholders, the Company endeavors to prevent officers and employeesof the Company from engaging in transactions that are contrary to the interests of the Company and its
shareholders. The directors of the Company shall not pursue their own interests or the interests of third
parties against the interests of the Company, and even if they do not intend to do so, the supervisors shallnot conduct conflict of interest transactions or competitive transactions without the approval of the Board of
Directors. With regard to transactions between related parties, the relevant officers shall be excluded fromthe quorum of the resolution as specially interested parties, and the resolution shall be adopted in the Boardof Directors. The Company shall verify after the fact that such transactions have been carried out properly
and report this to the Board of Directors.
The Company also conducts quarterly investigations of all officers, including those of the Company and its
subsidiaries, to confirm whether there is any transaction between related parties.

[Principle 2-6. Function as an asset owner of corporate pension]
The Company does not have a corporate pension system. When considering the adoption of a corporate
pension system, the Company will make personnel and management efforts so that the corporate pension
can function as an asset owner, considering that the management of the reserve fund of the corporate
pension will affect the stable asset formation of employees and the financial condition of the Company.

[Principle 3-1. Enhancement of Information Disclosure]<Company policy, Corporate philosophy, etc.>
The Company policy is “altruism” and conducts management based on this principle. We have been striving
to develop human resources based on ethics, norms, and "fairness" and "consideration" as human beings,
and we have been seeking to be useful from the client’s perspective. We believe that by making clients
happy, we can contribute to the realization of a prosperous society, grow and develop as a company, andrealize the happiness of our employees.
The Company is also engaged in business with the basic policy of management based on the following
Management Principle and Corporate Philosophy.
Management Principle: To protect all employees and pursue physical and mental well-being, while at thesame time contributing to the prosperity of mankind and society with a spirit of symbiosis.
Corporate Philosophy: Our employees will improve their knowledge, skills, and personality through theirwork, and by concentrating on the utilization and distribution of real estate stocks, we will reduce wastefuluse of resources that cannot be reproduced, and contribute to the everlasting prosperity of human beings andplants and animals on earth.

-3-

<Management Strategy>
We have defined our clients as building owners, asset holders, and wealthy individuals, and we aim to be"the world most loved and selected real estate company" as a real estate utilization professional byapproaching clients and solving all real estate problems. Although we mainly target small and medium-sizedbuildings in central Tokyo, our policy is not to focus on the property itself, but on creating the happiness ofthe owners who own the property and on solving their problems. Based on this philosophy, employees are
educated based on the philosophy of “altruism.” Through this education, we are striving to foster humanresources who are most beneficial to society and who are able to think about people's happiness and earn thetrust of clients. We also extract needs and problems of clients from information obtained through repeatedconversation with them and solve this through cooperation with different divisions in the company, andprovide services and products that are optimal for each client. We believe that our superiority will beestablished by continuing to provide satisfaction and added value to clients and by gaining their confidence.
In order to realize Management Principle, the Company is working to strengthen and establish 6
foundations: 1. Human Resources Foundation, 2. Client Foundation, 3. Financial Foundation, 4. Business
Foundation, 5. Business Process Foundation, and 6. Business Partner Foundation. Based on thesefoundations, the Company will further promote its core Office Building Business while focusing on HotelBusiness and Overseas Business. As a real estate utilization professional, the Company will continue toprovide an one-stop for a wide range of specialized services, thoroughly pursuing the creation of services
and products demanded by building owners, asset holders, and wealthy individuals, and aim for steady
growth as a highly profitable company.

<Management Plan>On May 2021, the Company announced the revision of its medium-term management plan for the fiscal
year ending March 31, 2023 to be extended for two years to the fiscal year ending in March 2025. However,the financial target in the medium-term management (net sales 100 billion yen, ordinary profit 20 billion
yen, profit attributable to owners of parent company 14 billion yen, ratio of ordinary profit 20% or more,
equity ratio 50% level, and ROE 10% or more) will stay the same. The basic policy is to provide “places
where people gather and communicate with each other, and create social development and happiness forpeople” and will grow making use of the Office Business, Hotel Business, Overseas Business, and M&A.
Moreover, as the 3 key points to be strengthened the Company focuses on ESG, digital, and cash flow tochange and challenge to upgrade each business, work on creating new added value, aim to establish abalanced flow and stock business structure, and the continuous growth of the company even beyond thefinal fiscal year of the medium-term management plan.

<Basic Stance and basic policy on Corporate Governance>
The Company's basic guiding principle in corporate management is that all officers and employees shall do"the right thing to do as a human being" based on high ethical standards as a criterion for business execution-4-and practice it. Based on this, we recognize that it is an important mission of management to build
unwavering trust from stakeholders, clients and employees by contributing to society through businessactivities, pursuing profit in a fair and honest way, and enhancing corporate value over the long term andcontinuously. Based on this understanding, we will always pursue the best corporate governance, and willcontinuously work on enhancing it.
The Company has also introduced an executive officer system since June 27, 2012 in order to improve
efficiency and to strengthen business execution functions by separating management decision-making andsupervisory functions from business execution functions.

<Policies and Procedures for Determining Remuneration for Directors>
The Company has established the following policies for determining the amount of remuneration, etc. forofficers and the method of calculating such amount.
The remuneration, etc., of the Company's directors (excluding outside directors) consists of fixed
remuneration, performance-linked remuneration and stock options, with a target of 65% fixed remuneration,
30% performance-linked remuneration and 5% stock options. The fixed remuneration is an amount that isdeemed to be an appropriate level in comparison with the performance of other companies in the real estateindustry, taking into consideration the duties of directors and the status of the Company. With a viewpointof reflecting the results of performance improvement, performance-linked remuneration is determined basedon the consolidated performance (Ordinary profit (loss)) for the fiscal year concerned, taking into
consideration the achievement status for the consolidated performance forecast.
At the 18th Annual General Meeting of Shareholders held on June 23, 2017, the Company resolved that the
maximum amount of remuneration, etc. for directors of the Company to be no more than 360 million yen
per year (including 36 million yen for outside directors, but excluding salaries for directors who
concurrently serve as employees). (The number of directors at the conclusion of the said general meeting forshareholders was 7 (including 3 outside directors). Moreover, at the 22nd Annual General Meeting of
Shareholders held on June 22, 2021, the Company resolved to allocate stock acquisition rights as sharebased compensation type stock options to directors (excluding outside directors) within the range of 36
million yen per year (the number of directors excluding outside directors at the conclusion of the said
general meeting for shareholders was 6).
With regard to the amount of remuneration, etc., for directors of the Company or the method of calculatingsuch amount, the Company has established a voluntary Nomination and Compensation Committee
consisting of the Chairman-Representative Director and President-Representative Director as well as 2 ormore outside directors in order to ensure the objectivity and transparency of the procedures for determining
remuneration for directors. The Chairman-Representative Director Tomoaki Horiguchi has the authority to
prepare a draft of the calculation method and the basic policy for the amount of remuneration, etc., of theCompany's directors. Based on the draft, the Nomination and Compensation Committee deliberates on thecomposition of remuneration, etc., the ratio thereof, the method for calculating the setting of indicators, etc.
The Board of Directors has the authority to determine the policy regarding the determination of the amount-5-

of remuneration, etc., of the Company's directors or the method of calculating such amount. However, theBoard of Directors determines the amount of remuneration, etc., of the Company's directors or the methodof calculating such amount, while respecting the contents of discussions by the Nomination andCompensation Committee to the maximum extent possible.

<Policies and Procedures for Nominating Candidates for Directors and Audit & Supervisory Board
Members>
In selecting all directors and Audit & Supervisory Board members, the Company assumes that the following
requirements are met, in addition to satisfying the requirements stipulated in laws and regulations and the
Articles of Incorporation, not being applicable to reasons for disqualification stipulated in the Regulations
for Officers, and not having been involved with anti-social forces at present and in the past.
⚫

Has empathy with the Company Policy, Management Principle, and Corporate Philosophy of theCompany, and has the intention to contribute to the progress and development of society through theCompany's business management⚫

Has excellent personality, knowledge, and insight, and has a high law-abiding spirit and ethics⚫

Has objective judgment capabilities, insight, and foresightIn addition to the preceding paragraph, the Company requires the following requirements in selecting
outside directors and outside Audit & Supervisory Board members:⚫

Has a high level of insight, a wealth of practical experience, or experience of playing a leading role inany field such as corporate management, internal control, legal compliance, finance/accounting,finance, legal profession, administration, crisis management, and education.

⚫

Has the ability to understand the Company as a whole, the ability to understand essential issues andrisks, and is expected to contribute to frank, active, and constructive deliberations in the Board of
Directors, etc.

⚫

Has no direct interests with the Representative Director and directors, and is independent from theCompany's general shareholders without the risk of causing conflicts of interest with generalshareholders.

In addition, the Company has established the following requirements according to each position and role:⚫

Outside directors shall be able to provide advice and support for the sustainable growth of theCompany and objective management supervision and judgment from a practical viewpoint based on a
wealth of experience in corporate management and specialized fields⚫

Full-time directors shall be familiar with the Company’s industry trends and related regulations and theCompany's business model, and shall have abundant practical experience in their respective specialized
fields-6-

Outside Audit & Supervisory Board members are appointed with the aim of further enhancing theneutrality and independency of the audit system from a company-wide perspective.
⚫

Outside Audit & Supervisory Board members are able to express their opinions on audits objectively
from a neutral standpoint⚫

Full-time Auditor is well-versed in the organization, business, and business processes of the Company,
appropriately collects information from within the Company, and is capable of conducting highly
effective audits

The Board of Directors deliberates on proposals to be submitted to the annual general meeting ofshareholders in light of the above requirements, and appoints the appropriate persons as candidates for
directors and Audit & Supervisory Board members
In addition, the Board of Directors will deliberate on proposals to be submitted to the annual general
meeting of shareholders in light of the above requirements, and if individual directors no longer meet therequirements or are likely to fail to meet the requirements, they will not be selected as candidates forreappointment as directors at the end of their terms of office.
In order to improve the objectivity and transparency of procedures related to the appointment and dismissalof directors as well as renumeration, the Company has established a Nomination and Compensation
Committee consisting of the Chairman-Representative Director and President-Representative Director aswell as 2 or more outside directors in order to ensure the objectivity and transparency of the procedures fordetermining remuneration for directors as voluntary advisory body of the Board of Directors.
The Nomination and Compensation Committee examines and deliberates standards, processes, basic policyof evaluation, etc. concerning appointment and dismissal of directors as well as remuneration, and the Boardof Directors makes decisions with maximum respect for the deliberation contents.

<Explanation of Individual Election and Nomination>
The reasons for the election of candidates for director and Audit & Supervisory Board member are disclosed
in the annual general meeting of shareholders Reference Documents.

[Principle 4-1. Roles and Responsibilities of the Board of Directors (1)] Supplementary Principle 4-1 (1)The Board of Directors is making efforts to the sustainable growth of the Company and corporate value overthe medium to long term.
For this reason, the Board of Directors aims to realize its Corporate Principle through the establishment of
optimal corporate governance. In addition to ensuring the fairness and transparency of management by
exercising its supervisory function over overall management, the Company makes the best decisions
through decisions on the execution of important business operations such as management basic policy,
evaluation of serious risks, and countermeasures.
In addition, the Board of Directors will supervise the implementation of timely and accurate information
disclosure and appropriately manage conflicts of interest that may arise between the Company and related-7-

parties such as management and controlling shareholders.
In order to ensure the mobility of the Company's business execution, to ensure sufficient deliberation time
for important matters in the Board of Directors, and to strengthen the supervisory function for overallmanagement, the Board of Directors delegates matters related to the decision of business execution to
executive directors and executive officers, except for matters stipulated in the Companies Act, related laws
and regulations, the Articles of Incorporation, matters authorized by the resolution of the shareholder at theannual general meeting for shareholders, etc. In addition, in order to ensure the rationality of the decisionmaking process for such matters to be delegated, the Board of Directors is making efforts to appropriately
develop internal control and risk management systems in the Company.

[Principle 4-9. Independence Standards and Qualifications of Independent Outside Directors]
The Company has judged that the Independence Standards established by the Companies Act and the Tokyo
Stock Exchange are appropriate as the Company's standards, and has selected candidates for independent
outside directors based on these standards.

[Principle 4-11. Preconditions for Ensuring the Effectiveness of the Board of Directors and the Audit &Supervisory Board] Supplementary Principle 4-11 (1)When nominating candidates for directors and Audit & Supervisory Board members, the Company selects awide range of candidates from both inside and outside the Company and elects candidates with excellent
personality, insight and high management ability for the Board of Directors. In particular, independent
outside directors are nominated from persons who have abundant experience and knowledge in various
fields and who are capable of fulfilling their roles and responsibilities from a professional and objective
viewpoint, such as providing advice to enhance corporate value over the medium to long term andsupervising management. The selection criteria for executive directors are that they are familiar with theCompany's industry trends and related regulations, the Company’s business model, and have a wealth ofpractical experience in their respective specialized fields.
For policies and procedures regarding the election of directors, please refer to the above (Principle 3-1:
Enhancement of Information Disclosure).

[Principle 4-11. Assumptions for Ensuring the Effectiveness of the Board of Directors and the Audit &Supervisory Board] Supplementary Principle 4-11 (2)The Company has established in its internal rules that the approval of the Board of Directors is required if
directors and Audit & Supervisory Board members other than outside officers concurrently serve as officers
of other listed companies.
Outside Director Kazutaka Okubo concurrently serves as an Outside Audit & Supervisory Board Member of
SEGA SAMMY HOLDINGS INC., Outside Audit & Supervisory Board Member of BrainPad Inc., Outside
Director of LIFULL Co.,Ltd., Outside Director of SALA Corp., Outside Director of The Shoko Chukin
Bank, Ltd., Outside Director who is an Audit & Supervisory Board Member of Musashi Seimitsu Industry-8-

Co., Ltd., and Representative Director of SS DNAFORM. The Company discloses this in the Annual
Securities Report of the Company.
Outside Audit & Supervisory Board Member Koichi Moriya concurrently serves as Outside Audit &Supervisory Board Member of Tamura Corporation and Outside Director of Samantha Thavasa Japan
Limited, and the Company discloses this in the Annual Securities Report of the Company.

[Principle 4-11. Preconditions for Ensuring the Effectiveness of the Board of Directors and the Audit &Supervisory Board] Supplementary Principle 4-11 (3)The Board of Directors of the Company has established the “Board of Directors Rules" regarding the roles
that the Board of Directors should play, and ensures that the decision-making function of management andthe supervisory function of business execution works appropriately. In order to ensure the most efficient andeffective functioning of each function, the Company has appointed 3 independent outside directors to ensure
management transparency and fairness, and has appointed diverse directors with different backgrounds
regarding expertise and experience. The Company believes that the Board of Directors of the Company,
which has a diverse background, is ensuring its effectiveness by conducting fair judgments and actions after
conducting a multifaceted and full review to increase its corporate value.

[Principle 4-14. Training for Directors and Audit & Supervisory Board Members] Supplementary Principle
4-14 (2)Although the Company has not established the "Policy for Training for Directors and Audit & Supervisory
Board Members" in a clear form, the Company has stated as a part of Management Principle to "Contributeto the prosperity of mankind and society with a spirit of symbiosis." For this reason, the Company provides
ample opportunities for officers and employees to acquire the knowledge necessary to fulfill their roles andresponsibilities, and bears the expenses for them.
The Company also holds seminars and participates in external seminars at the request of each officer.

[Principle 5-1. Policy for Constructive Dialogue with Shareholders]
The Company has the Corporate Planning Division as the department in charge of IR.
For shareholders and investors, the Company holds financial results briefings once every half year, and also
holds field tours of Replanning properties and hotels, small meetings, etc.
The Company has established the following policy regarding constructive dialogue with shareholders so thatsuch dialogue will contribute to the sustainable growth of the Company and the improvement of corporate
value over the medium to long term.
1. We will disclose information to all stakeholders, including shareholders and investors, in a fair and timely
manner, and place importance on direct communication by the Representative Director.
2. The Corporate Planning Division will serve as the IR contact point and promote organic coordination withrelated departments.
3. Provide a wide range of means of dialogue, including financial results briefings, briefings for individual-9-investors, field tours, and small meetings.
4. The Corporate Planning Division will report the status of the dialogue to the Representative Director and,if necessary, to the Board of Directors.
5. The Company shall establish rules for the prevention of insider trading and make them known to all
employees.

2. Capital Structure
Foreign Shareholding Ratio

From 20% to less than 30%[Status of Major Shareholders]Name / Company Name

NumberOwned

HOUON Co.,Ltd
Tomoaki HORIGUCHIQUINTET PRIVATE BANK (EUROPE)
S.A. 107704
SKAWAGOE Co., Ltd.
SMBC Nikko Securities Inc.
The Master Trust Bank of Japan, Ltd.
(Accounted in trust)
Custody Bank of Japan, Ltd. (Accounted intrust)
STATE STREET LONDON CARE OF
STATE STREET BANK AND TRUST,BOSTON SSBTC A/C UK LONDONBRANCHCLIENTS-UNITED KINGDOMSTATE STREET BANK AND TRUSTCOMPANY 505103
STATE STREET BANK AND TRUSTCOMPANY 505227
Controlling Shareholder (except for Parent
Company)
Parent Company

ofSharesPercentage (%)

17,957,500
3,013,800
2,340,900

36.83
6.18
4.80

1,566,400
1,422,800
1,250,400

3.21
2.96
2.56

729,800

1.50

594,300

1.22

504,0631.03

486,978

1.00

―
None

Supplementary Explanation
The status of major shareholders is as of March 31, 2021. In addition to the above, the Company holds 144
treasury shares.

3. Corporate Attributes

Fiscal Year-End

Tokyo Stock ExchangeFirst Section
MarchType of Business

Real Estate

Listed Stock Market and Market Section- 10 -

Number of Employees (consolidated) as of the
End of the Previous Fiscal YearSales (consolidated) as of the End of thePrevious Fiscal Year
Number of Consolidated Subsidiaries as of the
End of the Previous Fiscal Year

More than 1000
From ¥10 billion to less than ¥100 billion /From 10 to less than 50

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

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

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 & Supervisory Board[Directors]
Maximum Number of Directors Stipulated in
Articles of Incorporation
Term of Office Stipulated in Articles ofIncorporation

10 people
2 years

Chairperson of the Board

President

Number of Directors

9 people

Status of appointing Outside Director

Appointed

Number of Outside Directors

3 people

Number of Independent Directors

3 people

Outside Directors’ Relationship with the Company (1)- 11 -

Name

Attribute

Relationship with the Company*
a

b

c

d

e

f

g

h

i

j

k

Toshio Takahara
From another company○
Yukitoshi Kubo
Academic△Kazutaka Okubo
CPA○*
Categories for “Relationship with the Company”* “○” when the director presently falls or has recently fallen under the category;“△” when the director fell under the category in the past
* “●” when a close relative of the director presently falls or has recently fallen under the category;“▲”when a close relative of the director fell under the category in the pasta. Executive of the listed company or its subsidiaries
b. Non-executive director or executive director of a parent company of the listed company
c. Executive of a fellow subsidiary company of the listed company
d. A party whose major client or supplier is the listed company or an executive thereof
e. Major client or supplier of the listed company or an executive thereof
f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or otherproperty from the listed company besides compensation as a director/Audit & Supervisory Board member
g. Major shareholder of the listed company (or an executive of the said major shareholder if the shareholder
is a legal entity)
h. Executive of a client or supplier company of the listed 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 listed company outside directors/Audit & Supervisory
Board member are mutually appointed (the director himself/herself only)
j. Executive of a company or organization that receives a donation from the listed company (the director
himself/herself only)
k. Others

Outside Directors’ Relationship with the Company (2)NameToshio Takahara

Designation as
Independent
Director○

Supplementary
Explanation of
the Relationship
The Company isentrusted with the
management business of
the real estate held by
the Asset Management
Company of which Mr.
Toshio Takahara serves
as Representative
Director. However, theCompany judges that
there is no risk ofaffecting theindependence because
the level of thetransaction is at thesame level as theordinary transaction
conditions and thetransaction amount issmall.
- 12 -

Reasons of Appointment
He has a wealth of operational
experience as a corporate manager for
many years, and has provided valuable
opinions and suggestions regarding theCompany's management based on his
deep insight on management. Based on
the above, the Company has judged that
it is possible for him to provide
appropriate advice and proposals at an
independent standpoint from the
managers involved in businessexecution in the decision-making of theBoard of Directors. Therefore, theCompany has appointed him as an
outside director. In addition, he does nothave any attributes that would raise
doubts about his independence with theCompany. Accordingly, the Company
has judged that there is no risk of
conflict of interest with generalYukitoshi Kubo○

Yukitoshi Kubo has
been involved in theaccounting audit of theCompany in the past asa Certified Public
Accountant of the
Accounting Auditor of
the Company, BDO
Sanyu. However, he has
already retired from thesaid Audit Corporation,and the Company has
judged that the audit fee
paid to the Audit
Corporation does notcorrespond to "the casewhere the dependency
on remuneration for a
specific client in theaudit business accounts
for a certain percentage"as stipulated in the"Guidelines for
Independence"
established by theJapanese Institute ofCertified Public
Accountants. Therefore,
the Company has no
special interests and has
judged that there is norisk of affecting theindependence.

Kazutaka Okubo○

Kazutaka Okubo
concurrently serves as
an Outside Director of
The Shoko Chukin
Bank, Ltd.
As of the end of March
2020, the Company has
an interest-bearing debt
balance ofapproximately 3.7% of
the Company's
borrowings balance tothe said company.
However, the amount ofborrowing is small, andthere are no matters to
be noted with regard totransaction conditions.
Therefore, the Company
has judged that there is- 13 -

shareholders and has appointed him as
an independent officer.
He is a Certified Public Accountant, hasserved as General Manager of theTokyo Stock Exchange listing
screening, was a Representative Partnerof an Audit Corporation, and is a
Professor at Ohara Graduate School of
Accounting (to present.) He specializes
in accounting and the FIEA, which
provides research and practicalguidance on disclosure regulations,International Financial ReportingStandards (IFRS) and settlement
support, and research and practicalguidance on disclosure regulations inthe securities market (the Financial
Instruments and Exchange Act).The
Company has appointed him as an
outside director based on its judgmentthat it is possible for him to provide
appropriate advice and proposals at an
independent standpoint to the managers
involved in business execution in thedecision-making of the Board of
Directors, by utilizing his abundant
experience and his expertise in financeand accounting mentioned above.
In addition, he does not have any
attributes that would raise suspicion of
his independence from the Company.
Therefore, the Company has judged that
there is no risk of conflict of interest
with general shareholders and has
appointed him as an independent
officer.
He is well-versed in corporate audits asa certified public accountant. He hasserved as an executive of an auditing
firm, various advisory committee
members of public offices, andexecutive officers of businessorganizations. He has a wealth ofknowledge and experience in the fields
of crisis management, compliance,
CSR, etc. The Company has judged that
it is possible for him to provide
appropriate advice and proposals at an
independent standpoint to the managers
involved in business execution in thedecision-making of the Board of
Directors. Therefore, the Company has
elected him as an outside director. In
addition, he does not have any attributes
that would raise suspicion of his
independence from the Company.
Therefore, the Company has judged that

no risk of affecting
independence.

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

there is no risk of conflict of interest
with general shareholders and has
appointed him as an independent
officer.

Established

Committee’s Name, Composition, and Attributes of Chairperson

All Committee Members

Committee
Corresponding
toNomination Committee
Nomination and Compensation
Committee
5 peopleCommittee
Corresponding
toRemuneration Committee
Nomination and Compensation
Committee
5 people

Full-time Members

0 people0 people

Inside Directors

2 people2 people

Outside Directors

3 people3 people

Outside Experts

0 people0 peopleOther

0 people0 people

Chairperson

Inside Directors

Inside Directors

Committee’s Name

Supplementary Explanation
In order to improve the objectivity and transparency of procedures related to the appointment and dismissalof directors as well as renumeration, the Company has established a Nomination and Compensation
Committee consisting of the Chairman-Representative Director and President-Representative Director as well
as 2 or more outside directors in order to ensure the objectivity and transparency of the procedures fordetermining remuneration for directors as voluntary advisory body of the Board of Directors. The Nomination
and Compensation Committee considers and deliberates on standards, processes, basic policy of evaluation,etc. concerning officers' appointment and dismissal and officers' remuneration, and the Board of Directors
makes decisions with maximum respect for the deliberation contents.
[Audit & Supervisory Board Member]
Establishment of Audit & Supervisory Board

Established

Maximum Number of Audit & Supervisory
Board members stipulated in Articles of

4 people

Incorporation
Number of Audit & Supervisory Board members

3 people- 14 -

Cooperation among Audit & Supervisory Board members, Accounting Auditors and Internal Audit
Departments⚫

Cooperation between Audit & Supervisory Board members and Accounting Auditors
The Company works closely by holding regular meetings once every six months and holding meetings
whenever issues arise.

⚫

Cooperation between Audit & Supervisory Board members and the Internal Audit Office
The Company works closely with Audit & Supervisory Board members, the Legal Department and theInternal Audit Office through monthly meetings.

Appointment of Outside Audit & Supervisory
Board Members
Number of Outside Audit & Supervisory
Board Members
Number of Independent Audit & Supervisory
Board Members

Appointed
2 people2 people

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

Koichi Moriya
Hidetaka Tanaka

LawyerCPA***

Relationship with the Company*
a

b

c

d

e

f

g

h

i

j

k

l

m

Categories for “Relationship with the Company”“○” when the 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 listed company or its subsidiaryb. Non-executive director or accounting advisor of the listed company or its subsidiaries
c. Non-executive director or executive of a parent company of the listed company
d. Audit & Supervisory Board member of a parent company of the listed company
e. Executive of a fellow subsidiary company of the listed company
f. A party whose major client or supplier is the listed company or an executive thereof
g. Major client or supplier of the listed company or an executive thereofh. Consultant, accountant or legal professional who receives a large amount of monetary consideration orother property from the listed company besides compensation as an Audit & Supervisory Board member
i. Major shareholder of the listed company (or an executive of the said major shareholder if the shareholder isa legal entity)
j. Executive of a client or supplier company of the listed company (which does not correspond to any of f, g,or h) (the Audit & Supervisory Board member himself/herself only)
k. Executive of a company, between which and the listed company outside directors/Audit & Supervisory
Board member are mutually appointed (the Audit & Supervisory Board member himself/herself only)
l. Executive of a company or organization that receives a donation from the listed company (the Audit &Supervisory Board member himself/herself only)- 15 -

m. Others
Outside Audit & Supervisory Board Member’s Relationship with the Company (2)Name
Koichi Moriya

Hidetaka
TanakaDesignationas
Independent Audit &Supervisory Board
Member○○

Supplementary
Explanation of
the Relationship―

Reasons of Appointment
The Company has appointed him as an
Outside Audit & Supervisory Board
Member based on its judgment that hewill be able to apply to the Company's
auditing system from an independent
standpoint with regard to the overallmanagement of the Company in the
future, as he currently has an attorney
office, has accumulated legal experiencein various fields including real estate,and has experience as an Audit &Supervisory Board Member of othercompanies. In addition, he does nothave any attributes that would raisesuspicion of his independence from theCompany. Therefore, the Company has
judged that there is no risk of conflict ofinterest with general shareholders andhas appointed him as an Independent
Officer.
He is qualified as a U.S. Certified
Public Accountant and has a wealth ofbusiness experience in foreigncountries. Based on his specialized
knowledge in the financial industry,
experience as an employee working
abroad, and experience as a corporate
manager, etc., the Company has judgedthat he will be able to utilize theCompany's auditing system from an
independent standpoint with regard to
the Company's overall management
including overseas businessdevelopment in the future. Therefore,
the Company has appointed him as an
Outside Audit & Supervisory Board
Member. In addition, he does not haveany attributes that would raise suspicionof his independence from the Company.
Therefore, the Company has judged that
there is no risk of conflict of interest
with general shareholders and has
appointed him as an independent
officer.

―- 16 -

[Independent Directors/ Audit & Supervisory Board Members ]Number of Independent Directors/ Audit &5 people

Supervisory Board Members

Matters relating to Independent Directors/Audit & Supervisory Board Members
All outside directors who satisfy the qualifications of independent directors / Audit & Supervisory Board
members are designated as independent directors / Audit & Supervisory Board members.
[Incentives]
Performance-linked Remuneration
Stock Options

Incentive Policies for Directors
Supplementary Explanation

The Company grants executive officer awards to each director for the purpose of enhancing motivation andmorale to improve business performance by linking the improvement of the Company's businessperformance with the profit of the Company's directors.
The Company also allocates share acquisition rights as a share-based compensation type stock option to
directors (excluding outside directors) within the range of 36 million yen per year that can be used atretirement.
Inside Directors

Recipients of Stock Options
Supplementary Explanation

Directors of the Company (excluding outside directors) are eligible.
[Director Remuneration]
DisclosureofIndividual

Remuneration

Directors’

No Individual Disclosure

Supplementary Explanation⚫

Remuneration Paid to Directors

Remuneration for the Company's directors for fiscal year ended March 31, 2021 is as follows.
Remuneration paid to directors: 218 million yen (including 20 million yen paid to outside directors)(Supplementary Information)
1) The above includes the provision for bonuses for directors (and other officers) for the 22nd fiscal yearof 76 million yen for 7 directors (including 7 million yen for 3 outside directors).
2) 76 million yen (including 7 million yen for 3 outside directors) was paid to 7 directors as bonuses forthe 21st fiscal year.

- 17 -

This officer's remuneration is included in the provision for bonuses for directors (and other officers)
amount of 76 million yen for the 21st fiscal year.
⚫

Means of disclosure: The Company discloses matters related to remuneration for directors described in
the Corporate Governance Report in the Annual Securities Report and the Business Report.

Policy on Determining Remuneration Amounts
and Calculation Methods

Established

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods
The Company has established the following policies for determining the amount of remuneration, etc. forofficers and the method of calculating such amount.
(1) Fixed remuneration shall be an amount considered to be at an appropriate level in comparison with theperformance of other companies in the real estate industry in Japan, etc., in consideration of the content of
duties of Directors and the Company's situation, etc.
(2) Performance-linked remuneration shall be determined from the perspective of reflecting the results of
the improvement in performance by taking into consideration the status of achievement against theconsolidated performance ordinary profit (loss) based on the consolidated performance forecast during therelevant fiscal year.
(3) Directors (excluding outside directors) shall be granted share acquisition rights as share-based
compensation stock options upon a resolution of the Board of Directors to share the benefits and risks ofstock price fluctuations with shareholders and to enhance the incentive effect of Directors to improve
corporate performance and the management awareness of shareholders.
(4) With regard to the ratio of individual remuneration, etc. for Directors, excluding Outside Directors, if thetarget indicator for the performance-linked remuneration is 100% achieved, fixed remuneration will be 65%,
performance-linked remuneration will be 30%, and stock options will be 5%. With regard to Outside
Directors, only fixed remuneration and performance-linked remuneration will be provided, but the above
target will be referred to.
(5) The timing of payment of remuneration, etc. shall be as follows.
a．Fixed compensation
It is provided every month.
b．Performance-linked compensation
Payment shall be made once a year after the end of the Annual General Meeting of Shareholders
pertaining to the relevant fiscal year.
c．Stock option- 18 -

The amount shall be determined and granted by the resolution of the Board of Directors held once a year
after the end of the Annual General Meeting of Shareholders and shall be exercised at the time ofretirement of each Director.
(6) Matters concerning delegation pertaining to determination of contents of remuneration, etc. forindividual Directors
The amount of fixed remuneration and performance-linked remuneration for each individual or thedetermination of the methods for calculating such amounts shall be determined by resolution at the Board of
Directors and entrusted to the Chairman-Representative Director.
In order to improve the objectivity and transparency of the procedures for determining renumeration of
Directors, the Company has established a Nomination and Compensation Committee consisting of the
Chairman-Representative Director and President-Representative Director as well as 2 or more Outside
Directors as a voluntary advisory body. The Nomination and Compensation Committee considers anddeliberates on the amount of remuneration for Directors, the calculation method, the composition of
remuneration, the ratio, and the setting of indicators, and the Chairman-Representative Director makes
decisions with maximum respect for the deliberation contents.
(7) Status of the above decision policy for the fiscal year under review
The target for performance (consolidated ordinary profit (loss)), which is an indicator of performance-linked
compensation for the fiscal year under review, was 6,500 million yen, while the actual performance was7,524 million yen. The Board of Directors received a report from the Nomination and Compensation
Committee, and determined that the content of individual compensation for Directors for the fiscal year
under review, including the procedure and content of the decision by Mr. Tomoaki Horiguchi, ChairmanRepresentative Director, is consistent with the above decision policy.
[Supporting System for Outside Directors and/or Audit & Supervisory Board Members ]⚫

The Corporate Planning Department provides support as a point of contact for the communication of
information so that outside directors and outside Audit & Supervisory Board members can fully
perform their duties, by, for example, giving prior explanations to outside directors and outside Audit& Supervisory Board members at the Board of Directors meetings.

⚫

In cases where the Audit & Supervisory Board members request that an employee be assigned to assist
the Audit & Supervisory Board members in their duties, an employee shall be assigned as an Audit &Supervisory Board member’s assistant. The Audit & Supervisory Board member’s assistant is
appointed from persons who have sufficient knowledge of accounting or law, etc., and perform theirduties in accordance with the instructions of the Audit & Supervisory Board members.

2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration
Decisions (Overview of Current Corporate Governance System)- 19 -

Regarding the Audit System of the Audit & Supervisory Board, the Company has 3 Audit & Supervisory
Board members at present, of whom 2 are outside Audit & Supervisory Board members to ensure
independence and transparency and fulfill supervisory and auditing functions for management. With regard
to the internal audit system, the Company has established the Internal Audit Office (3 members) under the
direct control of President-Representative Director. The Internal Audit Office conducts regular audits basedon internal audit plans that understand the status of risk management in each division. The Internal Audit
Office requests improvement and correction of matters pointed out in the audits. The results of the audits arereported to the President-Representative Director after preparing an internal audit report.

With regard to accounting audits, the Company has entered into an audit agreement with BDO Sanyu andthe Company conducts accounting audits throughout the fiscal year without focusing on year-end audits.
The Company has established a system that enables appropriate handling of accounting issues, and hasenhanced the effectiveness of audits through close cooperation with the Audit & Supervisory Board
members of the Company and the Internal Audit Office.
The current auditing organization is as follows.
⚫

BDO Sanyu
Hiroshi Saito
Designated Partner
Engagement Partner

Satoshi Morita
Designated Partner
Engagement Partner⚫

Assistant for Accounting Audit Services
8 CPAs and 2 other persons

3. Reasons for Adoption of Current Corporate Governance System
The Company has appointed 3 outside directors, thereby establishing a system that enables appropriate
advice and proposals to be made at an independent standpoint from the executive management. In addition,
audits are conducted regularly and rigorously by 3 Audit & Supervisory Board members (2 of whom areoutside Audit & Supervisory Board members), and the Company has established a system that fully
functions in terms of management monitoring.
For the above reasons, the Company has selected the current system.

- 20 -

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting Rights
Supplementary Explanations
Early Notification of General
Shareholder Meeting

In order for shareholders to fully consider and deepen their understanding of
the proposals, we have sent them by three weeks prior to the annual general
meeting of shareholders.

Scheduling AGMs Avoiding
the Peak Day

In order to allow more shareholders to attend, the meeting is held on peak

Providing Convocation Noticein English (short form)

We have translated and provided the full English text of the matters disclosed

day, but the time is set to be in the afternoon.
on the Internet at the time of the notice of convocation and the notice ofconvocation of the general meeting of shareholders.

Other

In order to encourage more shareholders to attend, the Company has
established a forum for proactive communication with shareholders, such as
holding a shareholders meeting on the day of the annual general meeting ofshareholders.
The Shareholders Meeting held on June 23, 2020 after the 21st annual general
meeting of shareholders was cancelled in light of the spread of COVID-19.

2. IR Activities
Supplementary Explanations

Direct explanation from theRepresentative Director

Regular Investor Briefings for
Individual Investors

The Company holds briefings for individual Yes
investors at least once a year to increase thenumber of shareholders who can support theCompany over the long term.

Regular Investor Briefings forAnalysts and Institutional
Investors

At least once every quarter, we hold company
briefings

foranalysts

andinstitutional

investors.
Posting of IR Materials on
WebsiteThe IR materials used in the above-mentioned
company briefing sessions are posted on the
Company's website, and the scenes of thebriefing sessions on the day can be viewed in
an on-demand format.

Establishment of Department
and/or Manager in Charge ofIR

The Company's IR Division is as follows.
⚫

Division in charge: Corporate Planning
Division⚫

Tel.: 03-5521-1551- 21 -Yes

3. Measures to Ensure Due Respect for Stakeholders
Supplementary Explanations
ImplementationofEnvironmental Activities, CSR
Activities etc.

The Company policy is “altruism” and with our slogan “to protect all
employees and pursue physical and mental well-being, while at the same time
contributing to the prosperity of mankind and society with a spirit ofsymbiosis” for management principle, we engage in the growth of ourbusiness as well as solving environmental and social issues.

In the medium-term management plan that was revised May 2021, the basic
policy was set to provide “places where people gather and communicate witheach other, and create social development and happiness for people”, and as
we promote the Office Business, Hotel Business, and Overseas Business,selected to focus on ESG, digital, and cash flow as the 3 key points to bestrengthened.
With regard to ESG, based on our corporate philosophy which is “ouremployees will improve their knowledge, skills, and personality through theirwork, and by concentrating on the utilization and distribution of real estate
stocks, we will reduce wasteful use of resources that cannot be reproduced,
and contribute to the everlasting prosperity of human beings and plants andanimals on the earth”, we will continue to focus on businesses that contributeto the resolution of environmental issues.
In our core business, the Real Estate Revitalization Business (Replanning (R)Business), we contribute to the reduction of greenhouse gas emissions byeliminating the need for restoration work in set-up offices, thereby reducing
wasteful use of resources. We will also develop a new J-credit business that
contributes to carbon neutrality through carbon offsetting. In addition to
office buildings, we will create buildings that respond to the needs ofcommunities such as nursery schools and medical facilities.

While we promote both the growth of our business and resolution ofenvironmental issues, as we have done before, in order to contribute to the
local community all employees will continue to clean up the area around theCompany and implement volunteer activities conducted by volunteers.
Please refer to https://www.sunfrt.co.jp/esg/ for our Company’s ESG
activities.

- 22 -

IV. Matters Related to the Internal Control System
1. Basic Views on Internal Control System and the Progress of System Development
The Company has decided the basic policy for development of the Internal Control System in the Board of
Directors as follows.
1. Systems to Ensure That Directors and Employees Execute Their Duties in Compliance with Laws andRegulations and the Articles of Incorporation
The Company recognizes that it is its corporate social responsibility to ensure that all directors andemployees, based on a fair and high sense of ethics, always realize the spirit of legal compliance andexecute business operations. The Company is working to strengthen its internal management system,
raise awareness of compliance, and establish a management system that will continue to be trusted bysociety in the future.
To be more specific, we have established the Internal Audit Office, which is under direct control of
President-Representative Director, to conduct regular internal audits of all departments and groupcompanies without exception. In the internal audit, the Company ascertains the status and structure ofbusiness operations, and fairly investigates and verifies whether all business operations are conducted
properly in accordance with laws and regulations, the Articles of Incorporation, and internal rules, aswell as whether corporate systems, organizations, and rules are appropriate and proper, and reports theaudit results to the President-Representative Director. In addition, the Company has established a"Corporate Ethics Help Line" for the prevention and early detection of misconduct due to violations oflaws and regulations and misconduct, improvement of the mobility of the self-purification process,control of reputational risk, and assurance of social trust. The Company has also established a thoroughwhistle-blowing system that protects whistle-blowers. Furthermore, in order to improve complianceawareness, the Legal Affairs Department has been established and various types of training andeducation are conducted.
The Company and its group companies have no involvement with anti-social forces and respond firmly
to unreasonable demands.
2. Systems for the Preservation and Management of Information Concerning the Execution of Duties byDirectors
The Company properly records information concerning the execution of duties by directors, such asrecords concerning the decision-making at important meetings, including the Board of Directors
meetings, and documents approved by each director based on the "Regulations on Authority of Duties."
The Company also retains such information for a specified period of time based on laws and regulations
and the "Document Handling Regulations," etc., and maintains a condition in which directors and Audit& Supervisory Board members can inspect it as necessary. In addition, the General Manager of theManagement Division is responsible for supervising the preservation and management of information.
3. Regulations on Risk Management and Other Systems for Risk Management
In order to cope with all risks that threaten the improvement of corporate value and sustainable
development, a risk management manual, etc. shall be prepared, and in the event of an unexpected- 23 -

situation, a response headquarters (including the formation of a team of outside experts such as
corporate lawyers) headed by the President-Representative Director shall be established.
4. Systems to Ensure Efficient Execution of Duties by Directors
The Board of Directors formulates medium-term management policies and single-year management
plans as indicators to establish and implement the corporate vision of the Company as a whole. In orderto realize these management policies and management plans, MOFA clarifies the executive authority of
directors and the duties in charge, thereby enhancing the efficiency of execution of duties.
In addition, with regard to matters for which decisions on business execution have been delegated to
President-Representative Director and other directors who are in charge of business execution, theCompany makes necessary decisions based on the "Organization Rules" or the "Management Rules for
Affiliated Companies" including group companies.
The Company will revise these rules as appropriate in light of revisions and abolition of laws andregulations and for the purpose of improving the efficiency of the execution of duties.
5. Systems to Ensure the Appropriateness of Business Operations in our Company as well as Corporate
Group Consisting of Group Companies
In order to ensure the appropriate execution of business operations by group companies, the Corporate
Planning Division shall have jurisdiction over the management of group companies in accordance withthe "Regulations for Management of Affiliated Companies." While respecting the autonomy of groupcompanies, the Corporate Planning Division shall receive periodic reports on the status of business
operations and shall require prior consultation or approval with the Company with regard to importantmatters concerning the management of group companies. The management plans of the groupcompanies are also formulated under the management of the Company, and the Company provides
timely and appropriate advice and guidance during the business period to improve the efficiency of theoperations of the group companies. In addition, the Company and group companies have established the
Risk Management Committee, which is chaired by the President-Representative Director, and a person
responsible for risk management is assigned to each department. Any management or business risks that
may arise are reported to the Risk Management Committee, where risk information is analyzed andcountermeasures are considered to prevent or minimize damage to the Company and its groupcompanies. The Company has established a system under which violations of laws and regulations orillegal acts that occur or are likely to occur at group companies are reported to internal reporting offices
or outside Audit & Supervisory Board members as stipulated in the "Corporate Ethics Helpline
Regulations, and is working to detect and resolve such violations at an early stage.
The Internal Audit Office conducts internal audits of all group companies in order to ensure theeffectiveness and appropriateness of systems, organizations, and rules for the overall operations of thegroup companies, and reports the results to the Company's Executive President and other designatedorganizations.

- 24 -

The President-Representative Director prepares and reports its financial statements in accordance withfair and appropriate accounting standards in order to enhance the reliability of its financial reporting andenhance its corporate value.
6. Matters concerning Employees who assist the Audit & Supervisory Board Members in their Duties
If the Audit & Supervisory Board members request an employee to assist the Audit & Supervisory
Board members in their duties, the Company appoints employees as Audit & Supervisory Board
member’s assistant. The Audit & Supervisory Board member’s assistant is appointed from persons who
have sufficient knowledge of accounting or law, etc., and perform their duties in accordance with the
instructions of the Audit & Supervisory Board members. In addition, when the Audit & Supervisory
Board is established, the assistant also serves as the secretariat board of the said Audit & Supervisory
Board.
7. Independence of Employees from Directors
In order to ensure the independence of the Audit & Supervisory Board member’s assistant as set forth in
the preceding paragraph, the Company has decided to report personnel changes and personnel of thesaid employee to the Audit & Supervisory Board members in advance and obtain their consent.
8. Matters concerning Assurance of Effectiveness of Instructions to the Employee who is designated to be
the Audit & Supervisory Board Member’s assistants in Paragraph 6
The Audit & Supervisory Board member’s assistants in Paragraph 6 are ensured the opportunity toattend important meetings of the Board of Directors and other meetings accompanying Audit &Supervisory Board members. In addition, the Audit & Supervisory Board member’s assistantaccompany Audit & Supervisory Board members to regularly exchange opinions with the PresidentRepresentative Director and the Accounting Auditor.
With regard to instructions from Audit & Supervisory Board members, Directors and employees
cooperate in the development of an audit environment so that the Audit & Supervisory Board member’s
assistant’s work is carried out smoothly.
9. System for Reporting to Audit & Supervisory Board Members by Directors and Employees of theCompany and Group Companies and System for Reporting to other Auditors
All directors and General Managers of Departments shall report on the status of the execution of theduties they are in charge at meetings of the Board of Directors and other meetings where the Audit &Supervisory Board members are present. In addition, Audit & Supervisory Board members are
permitted to attend any internal meetings when requested. All directors and employees of the Company
and its group companies immediately report to the Audit & Supervisory Board members as soon as they
discover any matter that may or may have a material impact on the Company's credit, businessperformance, etc., or any material violation of the Corporate Vision, Corporate Behavior Rules, etc.
Directors and employees of the Company and its group companies may report to the Internal Reporting
Office of the Company as set forth in the "Corporate Ethics Corporate Ethics Help Line" at any time,and in addition, they can report voluntarily to outside Audit & Supervisory Board members.
The Compliance Division of the Company encourages the directors and employees to familiarize- 25 -

themselves with the contact points for reporting and actively report through educational and training
opportunities.
The "Rules Concerning the Corporate Ethics Help Line" clearly stipulate that directors and employeesof the Company and its group companies will not be subjected to disadvantageous treatment inpersonnel evaluation and will not be subject to adverse dispositions such as disciplinary action byreporting to the Whistleblower Hotline. In addition, the Company makes it known to the public thatthey will not be subject to adverse dispositions on the grounds that they have reported to the Audit &Supervisory Board members.
10. Matters concerning the Policy for the Disposition of Expenses or Liabilities Incurred in the Executionof Duties by Audit & Supervisory Board Members
When Audit & Supervisory Board members request advance payment of expenses incurred in theexecution of their duties, reimbursement of expenses paid, etc., or performance of liabilities incurred,
the Company promptly responds thereto, except in cases where it can be proven that such expenses, etc.
have not arisen in the execution of duties by Audit & Supervisory Board members.
11. Others, System to Ensure Effective Audits by Audit & Supervisory Board Members
President-Representative Director holds regular meetings with Audit & Supervisory Board members formutual communication.
In addition, in accordance with the "Regulations for Internal Audit" and the "Internal Audit
Implementation Guidelines," the Internal Audit Office will closely communicate and coordinate with
the Audit & Supervisory Board members and the outside Audit & Supervisory Board members in order
to efficiently and effectively conduct audits.

2. Basic Views on Eliminating Anti-Social Forces(1) Establishment of Response Control Department and Person in Charge of Prevention of Unreasonable
Demands
The Company has established a Person in Charge of Control and Person in Charge of Response as asystem against anti-social forces. The Company has established a system that enables it to respond in an
organized manner by contacting and consulting with the General Manager and the Response Manager
without taking any personal response in the event of an unjust act or request.
(2) Cooperation with External Specialized Agencies
The Company has established a system against anti-social forces in cooperation with competent police
stations and external experts such as corporate lawyers. In addition, the Company is a member of theSpecial Violence Prevention Association under the Metropolitan Police Department (Tokubouren) andactively participates in activities to eliminate organized crime groups.
(3) Status of Aggregation and Management of Information on Anti-Social Forces- 26 -

The Compliance Division gathers and manages information on anti-social forces in order to prevent
damage from anti-social forces by judging the attributes of business partners.
(4) Preparation of Response Manuals
The Company has prepared the Anti-Social Forces Response Manual, which sets standards of conduct
for anti-social forces. All officers and employees of the group view the manual on the Company's LAN.
(5) Status of Implementation of Training Activities
In the training by the Compliance Department, the Company strives to ensure that officers andemployees are thoroughly educated and informed.

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

Not Adopted

Supplementary Explanation―

2. Other Matters Concerning to Corporate Governance System
Outline of Timely Disclosure System
The status of the Company's internal system for timely disclosure of corporate information is as follows.
1.

Basic Stance on Timely Disclosure
The Company discloses information in a timely, accurate and fair manner to shareholders and investors
from the perspective of corporate social responsibility and increasing corporate value over the medium
to long term. The Company will comply with the rules of the Companies Act, the Financial
Instruments and Exchange Act, various laws and regulations, and rules established by stock exchanges(hereinafter referred to as the "Laws and Regulations"). In addition to promptly disclosing informationthat falls under the Securities Listing Regulations, we will actively disclose socially useful information
related to the Company.

2. Internal System for Timely Disclosure
Important corporate information, including information related to subsidiaries, is managed centrally
under the Corporate Planning Division, which is the department in charge of timely disclosure of
information. Corporate Planning Division shall determine whether or not the information is subject totimely disclosure in accordance with the Securities Listing Regulations of the Tokyo Stock Exchange,
and after obtaining the approval of the President Representative Director (or, if absent, the officer or
employee with a title who have been notified to the other Representative Director and the Tokyo Stock
Exchange as the person responsible for handling information of the Company), the content, timing and- 27 -

methods of the disclosure shall be determined.
In response to this decision, information disclosure is, in principle, conducted by the Representative
Director or a delegated party, and is managed by the Corporate Planning Division. Disclosure is madeby registering on the Timely Disclosure Network of the Tokyo Stock Exchange (TDnet) and postingpress conferences and materials as necessary. All information registered on the TDnet is also posted on
the Company's website. In addition to various laws and regulations, the Company discloses
information in accordance with internal regulations such as regulations regarding the prevention of
insider trading.
The system for collecting important corporate information by the Corporate Planning Division is asfollows. Moreover, the Corporate Planning Division is aware of all proposals submitted and reported to
the Board of Directors and the Executive Officer Committee.
(1) Decided facts
At the Company, important matters that fall under decided facts are determined in the meeting ofBoard of Directors. Therefore, Corporate Planning Division has a system to grasp all decisions madeby the Board of Directors.
(2) Occurring facts
Officers and employees of the Company are obligated to promptly contact Corporate Planning Division
regarding the details of any material facts that have occurred or may have occurred.
(3) Financial results
The Accounting Division prepares financial statements and at the same time is audited by the
Accounting Auditor. The main items of financial results, including analytical data, are submitted to
Board of Directors.
We are striving for accurate and prompt disclosure by implementing the audit by the Accounting
Auditor during the fiscal year to lessen the burden at the end of the fiscal year.
(4) Information on subsidiaries
Officers and employees of the Company in charge of subsidiaries and officers and employees ofsubsidiaries are required to contact Corporate Planning Division when they learn that a material fact
has occurred or may have occurred in a subsidiary.

- 28 -

- 29 -