Our basic approach to corporate governance is to respond to changes in the business environment and aim for continuous improvement of corporate value by making transparent, fair, prompt, and decisive decisions based on the standpoints of our shareholders, customers, employees, local communities, and other stakeholders. According to this approach, we are working to speed up management decision-making and clarify management and business execution responsibilities as well as strengthening management oversight, compliance, risk management, and internal control systems under a Board of Directors and Board of Corporate Auditors that include highly independent outside officers.

Our corporate governance structure (as of June 20, 2023)

• The Board of Directors, consisting of three directors who are well versed in the company's business and three highly independent outside directors, deliberates and decides on important matters related to business execution, including matters related to management planning. Once a year, a questionnaire on the effectiveness of the Board of Directors is distributed to all directors and corporate auditors, and analysis and evaluation of the effectiveness of the Board of Directors are conducted based on the responses.
• The Board of Corporate Auditors consists of three members, including two outside corporate auditors. Corporate auditors audit the legality of the execution of duties by directors independently from directors.
• The Nomination and Compensation Advisory Committee was established as an advisory body to the Board of Directors. The purpose for this is further enhancing corporate governance by establishing a system in which independent outside directors are appropriately involved and by improving the objectivity and transparency of such decision-making procedures. The main roles of the Board of Directors are to elect and dismiss directors and corporate auditors, select and dismiss representative directors and executive directors, and advise the Board of Directors on director compensation.

• The Company has established a Risk Management Committee for the purpose of ensuring that the execution of duties by directors and employees complies with laws and regulations and the Articles of Incorporation, and for the management of risk of loss. Its main role is to assess company-wide risks, determine who is responsible for managing each important risk item, and determine and implement response policies based on the "Risk Management Policy" and "Crisis Management Policy. It consists of one director in charge of risk management selected by the Board of Directors, a compliance officer, and one full-time auditor (as of June 20, 2023).
• The Company is rebuilding its business continuity plan (BCP) for raw material procurement, sales, and logistics in anticipation of geopolitical risks.

• We believe that the maintenance and strengthening of the compliance (including legal compliance) system and supervision of management is the foundation of corporate value and essential for achieving long-term sustainable growth, and have therefore established the following systems.
• The Board of Directors shall appoint a "Compliance Officer" to ensure that all directors and employees comply with laws and regulations and the Code of Conduct, and the Compliance Officer shall report to the Board of Directors on the status of compliance with ethics and laws and regulations.
  The Compliance Officer shall report to the Board of Directors on the status of compliance with ethics, laws and regulations.
• The Company has established and operated an internal reporting system with the General Manager of the Corporate Planning Department and the legal advisor as so-called whistleblowing system.
• The Internal Audit Office, which is independent from the executive departments and directly supervised by the President, shall conduct periodic internal audits to ascertain the status of execution of duties and verify whether they are being performed properly, appropriately, and rationally in compliance with laws, regulations, the Articles of Incorporation, etc. The results of such audits shall be reported to the Board of Directors, the Board of Corporate Auditors, and the Board of Corporate Auditors, as necessary, to the Accounting Auditors.
• As a business operator handling personal information under the Act on the Protection of Personal Information, we recognize the necessity and importance of protecting personal information and consider it our social responsibility to ensure the protection of personal information. In order to ensure the proper handling of information assets, including personal information, we have established a privacy policy and thoroughly protect personal information in terms of organizational safety control measures, personnel safety control measures, physical safety control measures, technical safety control measures, and understanding of the external environment.

We have identified the following as our main goals and specific themes for governance initiatives.

• Strengthen monitoring of management
  We promote corporate governance by integrating outside directors and executive officers.
• Strengthen information dissemination and communication to stakeholders
  We provide information on our business model, performance trends, business strategies, etc. to investors through research companies. We also enhance IR activities for institutional investors.
• Information Security
  We develop an information security environment that addresses the latest cyber attacks and information leak risks.