Basic Policy on Internal Control Systems and Status of Implementation

In accordance with the Companies Act and the Companies Act Enforcement Regulations, the Board of Directors' meeting has resolved “Basic Policy on the Development of Internal Control Systems” for the corporate group consisting of our company and our subsidiaries (hereinafter “the Group”).
The outline is as follows.

1. Systems to ensure that the execution of duties by the Group's directors, executive officers and employees complies with laws and regulations and the Articles of Incorporation

(1) Recognizing that compliance with laws and regulations and the Articles of Incorporation is the foundation of corporate activities, the Group's directors shall execute their duties with integrity and fairness, and shall establish a highly transparent management system.

(2) To ensure that directors, executive officers, and employees act in compliance with laws and the Articles of Incorporation, the Group shall establish compliance-related regulations, and foster compliance mindset within the organization through continuous training and timely internal communications.

(3) Directors who are Audit and Supervisory Committee members (hereinafter “Audit and Supervisory Committee members”) shall audit the execution of duties by directors through attendance at Board of Directors' meetings and important meetings and by investigating the status of business execution, based on laws and regulations and the audit policy established by the Audit and Supervisory Committee.

(4) The Internal Audit Office (or the person in charge of internal audits; hereinafter “Audit Office”) shall conduct audits of the Group in accordance with the company's policies, business regulations, manuals and other internal regulations. The results of these audits shall be promptly reported and recommended to the directors and the Audit and Supervisory Committee.

(5) The Group shall establish a system that allows all employees of the Group to report any actions that may violate compliance, and shall establish rules for the operation of such a system and ensure that it is operated appropriately.

2. System for the storage and management of information related to the execution of duties by directors and executive officers

Information related to the execution of duties by directors and executive officers shall be appropriately created, stored and managed in accordance with laws and regulations and internal regulations such as the “Document Management Regulations”.

3. Regulations and other systems for managing the risk of losses for the Group

(1) In order to manage risks for the Group, the Risk Management Committee will be held regularly or as needed based on the “Risk Management Regulations”. The committee will identify risks, discuss management methods, and strive to minimize risks.

(2) Important matters discussed at the Risk Management Committee will be reported to the Board of Directors' meeting as necessary.

(3) Through reports on the status of business execution at the Management Meetings, the potential occurrence of new risks will be identified. If necessary, the Representative Director will give a order to relevant departments and establish a system to implement prompt crisis management measures.

4. Systems for ensuring the efficient execution of duties by the Group's directors and executive officers

(1) In accordance with the Articles of Incorporation and the “Board of Directors' Regulations,” the Board of Directors' meeting shall be held once a month to make decisions on important management matters and to supervise the execution of duties by directors and executive officers.

(2) The Management Meeting, which is composed of directors, executive officers, and division managers, shall be held once a month to report, discuss, and decide on important issues related to business execution.

5. Systems for ensuring the appropriateness of operations within the Group

(1) While respecting the independence and autonomy of the management of our subsidiaries, we shall strive to unify the control environment as a corporate group through business alliances and internal collaboration, ensuring the appropriate and efficient management of the entire group.

(2) We shall establish a basic policy on financial reporting and put in place the necessary systems to ensure the appropriateness and reliability of financial reporting for the entire Group.

(3) We shall put in place a system that enables directors and other employees of subsidiaries to execute their duties efficiently and report matters relating to the execution of their duties to the Company without delay.

6. Matters concerning directors and employees who assist the Audit and Supervisory Committee in its duties, their independence from other directors who are not Audit and Supervisory Committee members, and ensuring of effectiveness of instructions to them

(1) If the Audit and Supervisory Committee requests employees that assist its duties, employees will be assigned as necessary.

(2) The employees who assist the Audit and Supervisory Committee in the performance of their duties shall not receive instructions or orders from directors who are not Audit and Supervisory Committee members or other superiors.

(3) Employees who assist the Audit and Supervisory Committee may, based on instructions from the Audit and Supervisory Committee, request other departments to cooperate. They may also, based on instructions from the Audit and Supervisory Committee, attend important internal meetings and view important documents.

(4) Any personnel evaluations or disciplinary actions concerning these employees shall require the consent of the Audit and Supervisory Committee.

7. Systems for reporting to the Audit and Supervisory Committee by directors who are not Audit and Supervisory Committee members, executive officers and employees, and other systems for reporting to the Audit and Supervisory Committee

(1) Audit and Supervisory Committee members may attend important meetings such as the Board of Directors' meeting in order to understand the process of important decision-making and the status of business execution. When necessary, they may inspect important documents such as the minutes of the Board of Directors' meeting and approval documents, and request explanations from directors who are not Audit and Supervisory Committee members, executive officers and employees.

(2) Directors who are not audit and supervisory committee members, executive officers and employees shall report to the Audit and Supervisory Committee without delay on important matters that affect the business or business performance of the Company and group companies.

(3) The Audit and Supervisory Committee may request reports from directors who are not Audit and Supervisory Committee members, executive officers and employees as necessary.

(4) The Audit Office shall report to the Audit and Supervisory Committee without delay on the results of internal audits conducted.

(5) The department in charge of the internal reporting hotline shall report to the Audit and Supervisory Committee on the status of internal report cases made through the internal reporting system.

(6) Reports from directors, executive officers and employees to the Audit and Supervisory Committee shall be made to the full-time Audit and Supervisory Committee members, who shall then report to the other Audit and Supervisory Committee members.

(7) The Audit and Supervisory Committee may, as necessary, request reports from directors, executive officers and employees regarding their business activities and the status of improvements made in response to issues raised.

8. System for reporting to the Audit and Supervisory Committee by subsidiary directors and employees, or those receiving reports from them

The Audit and Supervisory Committee may request reports from directors who are not Audit and Supervisory Committee members, executive officers, and employees who have received reports from subsidiaries. In addition, the Audit and Supervisory Committee may request reports directly from directors and employees of subsidiaries as necessary.

9. System to ensure that those who report to the Audit and Supervisory Committee are not treated adversely for making such reports

It is prohibited to treat adversely those who have made reports to the Audit and Supervisory Committee.

10. Matters concerning the procedures for the advance payment or reimbursement of expenses incurred in the execution of duties by Audit and Supervisory Board members, and handling of expenses or liabilities incurred in the execution of said duties

When an Audit and Supervisory Board Member requests the advance payment or reimbursement of expenses incurred in the execution of said duties, the Company shall promptly handle said expenses or liabilities, except in cases where it is deemed that said expenses or liabilities are not necessary for the execution of said Audit and Supervisory Board member's duties.

11. Other systems to ensure that the Audit and Supervisory Committee's audits are conducted effectively

(1) Full-time Audit and Supervisory Committee members shall regularly exchange opinions with the President and Representative Director to deepen mutual understanding of important audit issues.

(2) Audit and Supervisory Committee members may collect information from directors who are not Audit and Supervisory Committee Members and employees as necessary.

(3) Audit and Supervisory Committee members shall collaborate with the Accounting Auditor and the Internal Audit Office to exchange information, and may request reports as necessary.

(4) Audit and Supervisory Committee members shall collaborate with each other to enable the formation of opinions as an Audit and Supervisory Committee.

Basic Policy and Status of Implementation for the Elimination of Antisocial Forces

(1) We have established a “Manual for Dealing with and Investigating Antisocial Forces”. We will not have any relationship with antisocial forces or groups that threaten the order and safety of civil society. We will firmly reject any demands from antisocial forces or groups, and will not conduct any transactions with companies, groups or individuals that have any relationship with these forces or groups.

(2) In dealing with antisocial forces, we will work to create an environment that allows us to respond quickly in close cooperation with our legal counsel and relevant police station, while striving to monitor trends related to antisocial forces.

(3) We will continuously work to eliminate antisocial forces, including incorporating antisocial force exclusion clauses into our standard contract forms and conducting internal training on preventing unreasonable demands from antisocial forces.