Board of Directors and Board Meetings

The Board of Directors decides on important management matters in accordance with laws and regulations as well as the company's articles of incorporation, and supervises business execution to ensure effective mutual oversight among directors. Regular board meetings are held once a month, and in the case of urgent matters, emergency meetings are promptly convened to facilitate swift decision-making. Currently, the board comprises 10 directors, including 2 outside directors, and meetings are held with the participation of all directors unless there are exceptional reasons. Additionally, group companies hold regular board meetings or equivalent important meetings once a month, and in the case of urgent matters, emergency meetings or equivalent important meetings are promptly convened to ensure rapid decision-making.

Audit Committee Members and Audit Committee

The Audit Committee Members exercise their statutory authority and, in collaboration with the external auditors and the internal audit department, conduct audits of the execution of duties by directors, including subsidiary management, in accordance with the "Audit Committee Rules" and "Audit Committee Audit Standards." The Audit Committee meets monthly as a general rule, and additional meetings are held as necessary. The committee is composed of four part-time members, all of whom are external directors. Each Audit Committee Member attends board meetings and oversees and supervises the execution of duties by directors. They also attend board meetings and significant meetings held by group companies, rigorously monitoring the performance of directors and engaging in information exchange and discussions about important issues affecting the company and its group. This helps in understanding the management status of the company and sharing issues. Additionally, the Audit Committee Members regularly exchange information with the internal audit department and external auditors to enhance the effectiveness of audits. The secretariat of the Audit Committee includes individuals well-versed in accounting and auditing, providing support for the committee's operations and information gathering.

Internal Audit Department

To investigate the appropriateness of the duties performed by directors and employees of the company and its group companies, as well as compliance issues, we have established an Internal Audit Department directly under the President and CEO. This department conducts audits based on an annual audit plan. Currently, it operates with a team of two members who perform internal audits across all departments of the company and its group, focusing on compliance, risk management, and the appropriateness and efficiency of business processes. The basic matters regarding internal audits are outlined in the "Internal Audit Regulations." The Internal Audit Department, along with auditors appointed by the President and CEO as needed, oversees and implements internal audits for the company and its group companies. After completing an audit, the head of the Internal Audit Department prepares an internal audit report and submits it to the President and CEO. Additionally, the Internal Audit Department exchanges information with the Audit Committee and provides timely updates on the status of internal audits to ensure mutual coordination. Besides the above, the company has appointed an external auditor and receives advisory services on corporate governance from a lawyer with whom we have a consultancy contract.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee reviews the appointment and dismissal of directors, as well as the individual remuneration details for directors, in response to the Board of Directors' inquiries. The committee provides advice and recommendations to the Board. It is composed of five directors, with four of them being external directors.

Sustainability Committee

The Sustainability Committee, chaired by the Representative Director and President, with directors including outside directors as committee members and subsidiary directors participating as observers as necessary, was established under the Board of Directors in March 2024. The committee will meet whenever necessary, and its main roles are to consider basic issues related to the Group's sustainability, identify issues that are important for improving the Group's medium- to long-term corporate value, determine policies on human rights and behavior common to the Group, set goals for women's participation in the workforce, consider the risks and opportunities of climate change, and establish governance, including formulating a CEO succession plan.

Compliance System

To ensure that our company's and group companies' directors and employees engage in compliance-based business activities, we have established a group-wide 'Regulation for Compliance with Laws and Regulations' and are implementing various measures to achieve this goal.

Whistleblowing System

To prepare for instances where compliance-related issues are identified, we have established a 'Group Internal Reporting Regulation' and set up a 'Compliance Helpline' as the contact point for compliance consultations and reports at our company and group companies.

Basic Policy on Internal Control Systems.

Our company, in order to achieve the sustainable development of corporate value through business activities based on our management philosophy, has established the following basic policy on the system to ensure the transparency, efficiency, and soundness of management at our company and group companies, in accordance with the Companies Act and the Companies Act Enforcement Regulations.

• A system to ensure that the execution of duties by directors and employees of our company and group companies complies with laws, regulations, and the articles of incorporation.
• A system for the preservation and management of information related to the execution of duties by our company's directors.
• Regulations and other systems related to the management of risk of loss for our company and group companies.
• A system to ensure that the execution of duties by directors and employees of our company and group companies is carried out efficiently.
• A system to ensure the appropriateness of operations within the corporate group.
• Matters related to employees designated to assist the Audit Committee in its duties if the committee requests such employees, and matters concerning the independence of those employees from directors.
• A system for directors and employees of our company and group companies to report to the Audit Committee, and other systems related to reporting to the Audit Committee.
• Matters related to the policy on the prepayment or reimbursement procedures for costs incurred in the execution of duties by Audit Committee members, and the handling of such costs or liabilities.
• Other systems to ensure that audits by the Audit Committee are conducted effectively.