Basic policy for Internal Control

Pursuant to the Japanese Corporate Law (and the Enforcement Regulation of the Corporate Law), the basic policies for the system to properly ensure appropriateness of the Company's operations (internal control system) shall be as follows:

Ⅰ. System to ensure that business execution by Directors and employees confirms to laws and regulations as well as Article of Incorporation and the appropriateness of other operations of the joint-stock company

1．System to ensure that Directors and employees perform their duties in compliance with laws, regulations, and the Articles of Incorporation

(1)Directors and Executive Officers strive to raise the employees' awareness of the various codes including the Declaration on Action of Sustainability, Code of Ethics, Quality Assurance Code, and Environmental Code, which have been set forth in line with the Company's business philosophy, while taking the lead in acting in compliance with them.
(2)The Ethics Subcommittee, in which external attorneys participate, plans and implements initiatives to ensure compliance with laws, regulations, the Articles of Incorporation, internal rules, etc. ("laws, etc.") in business activities by means such as enhancement of education and training. It also makes final decisions on compliance-related business issues. The officer in charge reports the activities to the Board of Directors.
(3)The Company establishes a whistle-blowing system where the Group's officers and employees can directly report to the Ethics Subcommittee about possible acts in violation of laws, etc. in the Group. The helplines are set inside and outside the Company and what is received via the helpline is concurrently reported to Audit & Supervisory Board Members to ensure the early detection and correction of possible acts in violation of laws, etc. The Company never discloses what a whistleblower says and never treats him/her unfavorably.
(4)To ensure the reliability of financial reporting, the Company establishes a dedicated internal organization to know the state of company-wide internal control. In addition, the Company documents key business processes and builds a system to make evaluations and improvements on a consolidated basis.

2．System to store and manage information related to the execution of duties by Directors

(1)The Company appropriately stores and manages the minutes of General Shareholder's Meeting, the Board of Directors meetings, and Executive Committee meetings, other documentation of other meetings chaired by Directors or Executive Officers, as well as approval form (ringi-sho) and execution reports (jisshi-hokoku) (the "Documents, etc.") in accordance with laws, regulations, and internal rules.
(2)The Directors and Audit & Supervisory Board Members shall always be able to view the Documents, etc.

3．Regulations regarding the management of the risk of loss, and other systems

(1)The Risk Management Committee, which is under the direct control of the Representative Director and President, builds the Group's whole risk management system and strives to maintain and improve it in accordance with the risk management regulations. The officer in charge regularly reports the committee's activities to the Board of Directors.
(2)For high-priority risks of the Group, the risk management organization plan measures to improve the effectiveness of risk management and monitors their progress, while the managers in charge of business departments perform appropriate risk management for their business operations.

4．System to ensure that Directors execute their duties efficiently

(1)Meetings of the Board of Directors are held at least once a month in principle. At the meetings, they decide the organizational structure and work taken charge of by the Representative Director(s) as well as other Directors and Executive Officers who execute business. The Board of Directors also makes decisions on important matters and supervises the business execution of Directors and Executive Officers. The Executive Committee consisting of Executive Officers are held at least once a month in principle and make decisions on major business execution.
(2)The Representative Director and President supervises the Group's business execution, and each Director/Executive Officer bears the responsibility for the business execution of the department he/she takes charge of.
(3)The Board of Directors determines medium- to long-term business strategies and budget for each fiscal year. Each Director/Executive Officer determines specific measures that the departments they are in charge of should implement and the efficient business execution structure. In addition, they make sure that progress toward achieving goals is monitored and regularly report the status to the Board of Directors.

5．System to ensure the appropriate business operations of the corporate group consisting of the Company and its subsidiaries

In addition to the measures to ensure that business is executed in compliance with laws, regulations, and the Articles of Incorporation, the Group builds the following systems:

（1）System for reporting to the Company on matters concerning the execution of duties by Directors, etc. of its subsidiaries

i.The Company regularly holds group management meetings attended by representatives from each Group company to share information within the Group, and ensure the instructions on important matters on business execution and discuss them.
ii.The Company requires the Group companies to regularly report on their business performance, financial status, and other important information.

（2）Regulations regarding the management of the risk of loss of its subsidiaries, and other systems

Through the Risk Management Committee, the Company discusses the challenges and countermeasures for the group-wide risk management promotion, and disseminates them to Group companies.

（3）System to ensure that Directors, etc. of its subsidiaries execute their duties efficiently

The Company requires the Group companies to comply with the subsidiary governance rules formulated by the Company while respecting each company's independence.

（4）System to ensure that Directors, etc. and employees of its subsidiaries perform their duties in compliance with laws, regulations, and the Articles of Incorporation

i.The Company appoints an Executive Officer as a responsible officer for each Group company to ensure the Group's governance through measures such as having such officers attend each company's Board of Directors meetings.
ii.Each Group company promotes its compliance activities in accordance with internal rules formulated by itself including the Code of Ethics by appointing an officer in charge of compliance and establishing a dedicated organization. The Company's Ethics Subcommittee supports those activities.

（5）Other systems to ensure appropriate business operations of the corporate group

The internal auditing division, which is under the direct control of the Representative Director and President, conducts internal audits on the Group based on annual plans and reports the results to Directors, Executive Officers, Audit & Supervisory Board Members, and the heads of the audited organizations. It also regularly reports the summary to the Board of Directors.

6．Basic Views on Measures for Eliminating Antisocial Forces and Status of Development

The Group eliminates any relationship with any antisocial force or organizations that poses a threat to public order or safety and refuses any unreasonable claims ir other requests from them. We ensure this by stipulating it in our Code of Ethics and Ethical Behavior Standards. We collect information from related administrative agencies on a regular basis so that, if any problem arises, we can promptly report it to departments in charge and seek consultation. In addition, we have built a system where we closely collaborate with administrative agencies and legal professionals to address such issues appropriately.

Ⅱ. System to ensure that Auditors' audit is conducted effectively

1．Matters regarding employees in the case where the employees are appointed by Audit & Supervisory Board Members to assist them

(1)If requested by Audit & Supervisory Board Members, employees from the internal auditing division, Secretarial Section, and other departments assist the duties of the Audit & Supervisory Board Members.
(2)If Audit & Supervisory Board Members request to appoint employees to assist their duties, the Company assigns staff for Audit & Supervisory Board Members

2．Matters regarding the independence of employees in preceding paragraph from Directors and the ensuring of the effectiveness of the directions by Audit & Supervisory Board Members

(1)When employees assist the duties of Audit & Supervisory Board Members as referred to in the preceding paragraph, they shall not be subject to directions and orders of Directors, Executive Officers, etc.
(2)When assigning staff for Audit & Supervisory Board Members, the Company shall respect the opinions of the Audit & Supervisory Board Members for the personnel affairs and evaluation of the staff.

3．System for reporting to Audit & Supervisory Board Members

（1）System for reporting from the Company's Directors and employees to Audit & Supervisory Board Members

i.Directors, Executive Officers, and employees promptly provide the Documents, etc. (in 2 (1)) to Audit & Supervisory Board Members and provide explanation promptly and appropriately when requested.
ii.Directors, Executive Officers, and employees immediately report to Audit & Supervisory Board Members if finding a fact that may cause significant damage to the Group or an important fact that may affect the Group' management.
iii.The internal auditing division reports the business audit results of the Group to Audit & Supervisory Board Members.
iv.The Audit & Supervisory Board Members build a system, with which they inspect the matters discussed, resolved, and reported at the Board of Directors and if necessary, ask Directors/Executive Officers to provide the status of business execution and review it.

（2）System for reporting to the Company's Audit & Supervisory Board Members from subsidiaries' Directors, Audit & Supervisory Board Members, employees, or a person who receives information from them

i.The officers and employees of the Group companies promptly and appropriately provide information on business execution to the Company's Audit & Supervisory Board Members when requested by them.
ii.If officers and employees of the Group companies find a fact that may cause significant damage to the Group or an important fact that may affect the Group' management, they immediately report to the Audit & Supervisory Board Members through the Company's management department. Alternatively, they report it to the Company's whistle-blowing hotline, where information provided is also reported to the Audit & Supervisory Board Members.
iii.When information is provided via the whistle-blowing hotline, the Company's Ethics Subcommittee provides the Audit & Supervisory Board Members with information on how the problem has been addressed as necessary.

4．System to ensure that whistleblowers are not treated unfavorably as a result of having provided information to Audit & Supervisory Board Members

In the case where the Group's officers and employees provide information to Audit & Supervisory Board Members, the Company prohibits treating them unfavorably as a result of having provided information, and ensures that officers and employees of the Group are fully aware of it.

5．Policy for the processing of expenses, etc. arising from the execution of duties by Audit & Supervisory Board Members

When Audit & Supervisory Board Members request the Company for payment of expenses, etc. incurred in executing duties, the Secretarial Section promptly processes the payment unless the expenses, etc. are considered unnecessary for their duties in accordance with regulations for officers.

6．Other systems to ensure that Audit & Supervisory Board Members execute their duties efficiently

(1)Audit & Supervisory Board Members conduct audits in accordance with implementation guidelines for internal control that the Audit & Supervisory Board formulated to ensure the effectiveness of audits, and make discussions with Directors and Executive Officers as necessary to improve the effectiveness of audits.
(2)Audit & Supervisory Board Members regularly receive reports on audit plans and results from the Auditor of Accounts and exchange information and opinions with it. In addition, they also exchange information and opinions with the internal auditing division.