Sun Frontier Fudousan : Corporate Governance Report

Corporate Governance

Sun Frontier Fudousan Co., Ltd.

Last Updated: December 20, 2023

Sun Frontier Fudousan Co., Ltd. Seiichi Saito, President Representative Director Contact: Takeshi Hirahara, General Manager of Corporate Planning Division Tel: [phone] Securities Code: 8934 https://www.sunfrt.co.jp/

The status of the Company's corporate governance is as follows.

I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information

1. Basic Views

The Group's basic policy for corporate management is that all officers and employees should set "the right thing to do as a human being" based on high ethical standards as a criterion for business execution and practice it.

Based on this, we recognize that it is an important mission of management to contribute to society through business activities and to pursue profit fairly, and to build firm trust from stakeholders such as shareholders, customers and employees, business partners, partner companies, the environment, and local communities 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.

At the 23rd Annual General Meeting of Shareholders Meeting held on June 21, 2022, the Company obtained approval for the necessary Company's Articles of Incorporation change and made the transition from a company with Audit & Supervisory Board to a company with Audit & Supervisory Committee. By adopting this corporate governance system, Audit & Supervisory Committee Members, who is in charge of audit and supervision of execution of duties of directors, will become a member of the Board of Directors, thereby strengthening the supervisory function of the Board of Directors and further enhancing corporate governance. In addition, by enabling Board of Directors to broadly delegate decisions on business execution to directors, we aim to speed up decision-making on business execution. At the same time, we aim to achieve sustainable growth and increase corporate value over the medium to long term by focusing on important management decisions such as management plans by Board of Directors.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]

[Supplementary Principle 4-1 (iii) Successor Plan]

Although the Group has not established a specific successor plan for the Representative Director, the Company aims to foster successors by giving authority and responsibility to the General Managers and accumulating experience in a climate of friendly competition.

[Supplementary Principle 4-3 (ii) and Supplementary Principle 4-3 (iii) Roles and Responsibilities of Board of Directors (3)]

Given that the appointment and dismissal of the Representative Director is the most important strategic decision making, the Board of Directors appoints a person who has excellent personality and insight, 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.

[Supplementary Principle 4-10 (i) Voluntary Nomination and Compensation Committee]

As a voluntary advisory body of Board of Directors, in order to improve the objectivity and transparency of the procedures concerning the appointment and dismissal of officers and the officers' remuneration, the Company has established a voluntary Nomination and Compensation Committee consisting of two or more members of Chairman- Representative Director, President-Representative Director and Outside Directors. For details, please refer to "II 1. Organizational Composition and Operation [Voluntary Committee]" of this report. From now on, we will consider making Outside Directors the majority of the members of the committee.

[Disclosure Based on the Principles of the Corporate Governance Code] [Principle 1-4 Cross-shareholdings]

As a basic policy, the Group 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 is judged to contribute to the maintenance and improvement of the Company's corporate value.

In the event that the Group holds cross-shareholdings, the Group shall exercise its voting rights after comprehensively judging the pros and cons of such shareholdings, taking into consideration whether the issuing company has established an appropriate governance system and makes appropriate decisions that will lead to an increase in corporate value over the medium to long term, and from the perspective of improving the Company's corporate value.

If the Group judges that it cannot approve the proposal, the Group may consider the necessity of selling.

[Principle 1-7 Related Party Transactions]

In order to protect the interests of shareholders, the Group endeavors to prevent officers and employees of the Group from engaging in transactions that are contrary to the interests of the Group 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 shall not 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 from the quorum of the resolution as specially interested parties, and the resolution shall be adopted in the Board of 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.

【Supplementary Principle 2-4 (i) Ensuring Diversity in the Company, including the Promotion of Active Participation of Women】

The Group assigns employees to managerial positions based on performance and aptitude, regardless of gender, nationality, or mid-career recruitment. The Company has set a target of raising the ratio of female managers to 12% or more by April 2025. As of the end of March 2023, 8.8% of the Company's managers (section managers and above) were women. For other indices related to diversity, please refer to " ESG data (Social)" at the page of 36 in our sustainability report 2023 (https://www.sunfrt.co.jp/en/pdf/sustainability_report_2023i_en.pdf) on the Company's website.

In addition, " Human Resource Development Policy" and "Internal Environment Development Policy" is at the page of 24 in our sustainability report (https://www.sunfrt.co.jp/en/pdf/sustainability_report_2023i_en.pdf) on the Company's website.

[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]

The Group's Company policy, Credo, mission and management plans are available on the Company's website.

• Credo, mission and such https://www.sunfrt.co.jp/en/company/concept_comp.html
• Medium-termmanagement plan https://www.sunfrt.co.jp/en/ir_info/ir_prospects/
• Sustainability https://www.sunfrt.co.jp/en/sustainability/

Please refer to "I 1. Basic Views" of this report for the Group's basic views on corporate governance.

（２）

（３）

（４）

（１）

With respect to remuneration of directors, who are not Audit & Supervisory Committee members, the remuneration amount and stock remuneration, which consist of a performance-linked portion and a fixed portion based on rank, are determined for internal director. With respect to outside director, the appropriate fixed remuneration amount is determined from the viewpoint of ensuring independence, based on the Board of Directors' resolution, within the framework approved by the General Meeting of Shareholders. This decision was made by the Board of Directors after consultation to the Nomination and Compensation Committee with two or more members from Chairman-Representative Director, President-Representative Director and Outside Directors.

In selecting a director, the Group 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

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

（２） Has excellent personality, knowledge, and insight, and has a high law-abiding spirit and ethics

（３） Has objective judgment capabilities, insight, and foresight

In addition to the preceding paragraph, the Company requires the following qualifications in selecting outside directors. （１） Has a high level of insight, a wealth of practical experience, or experience of playing a leading role in any field

such as corporate management, internal control, legal compliance, finance/accounting, finance, legal profession, administration, crisis management, and education

（２） Has the ability to understand the Group as a whole, the ability to understand essential issues and risks, and is expected to contribute to frank, active, and constructive deliberations in the Board of Directors, etc.

（３） Has no direct interests with the Representative Director and directors, and is independent from the Company's general shareholders without the risk of causing conflicts of interest with general shareholders

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 the Company 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 Group's industry trends and related regulations and the Group's business model, and shall have abundant practical experience in their respective specialized fields

Also, they are appointed with the aim of further enhancing the neutrality and independency of the audit system from a company-wide perspective

Outside directors, who is an Audit & Supervisory Committee Member, are able to express their opinions on audits objectively from a neutral standpoint

As a full-time Audit & Supervisory Committee Member, the Director 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 of shareholders in light of the above requirements, and appoints the appropriate persons as candidates for directors.

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 the requirements or are likely to fail to meet the requirements, they will not be selected as candidates for reappointment as directors at the end of their terms of office.

The reasons for the election of candidates for director are disclosed in the annual general meeting of shareholders convocation notice.

【Supplementary Principle 3-1 (iii) Initiatives for Sustainability】

The Group established the "Sustainability Committee" as an advisory body to the President Representative Director with the aim of contributing to the realization of a sustainable society and increasing corporate value over the medium to long term, through stronger promotion of activities that contribute to the resolution of social issues based on the Management Principle and Corporate Philosophy. The Sustainability Committee meets four times a year on a regular basis and as needed. In order to promote our sustainability activities, we disclose the information based on the TCFD (Task Force on Climate-related Financial Disclosures) recommendations, which we support. Please refer to

"Sustainability" https://www.sunfrt.co.jp/en/sustainability/ on the Company's website for information on the status of our sustainability activities.

[Supplementary Principle 4-1 (i) Scope of delegation to management]

In order to further strengthen the supervisory function of the Board of Directors and to speed up management decision- making, in June 2022 we made the transition to a Company with Audit & Supervisory Board Committee. With the exception of matters specified by laws and regulations as matters to be determined exclusively by Board of Directors and important matters specified by the Board of Directors Regulations, Board of Directors delegates important business execution decisions to directors, thereby focusing on making important business basic policy decisions and supervising business execution.

[Principle 4-9 Independence Standards for an Independent Outside Director]

The Group has judged that the Independence Standards established by the Companies Act and the Tokyo Stock Exchange are appropriate as the Group's standards, and has selected candidates for independent outside directors based on these standards.

[Supplementary Principle 4-11 (i) Preconditions for ensuring the effectiveness of the Board of Directors and Audit & Supervisory Committee]

When nominating candidates for directors and Audit & Supervisory Committee members, the Company selects a wide 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 and supervising management. The selection criteria for executive directors are that they are familiar with the Group's industry trends and related regulations, the Group's business model, and have a wealth of practical experience in their respective specialized fields.

Director's expertise and experience (skill matrix) are disclosed on the Company's website. https://www.sunfrt.co.jp/en/sustainability/esg_governance.html

For policies and procedures regarding the election of directors, please refer to the above (Principle 3-1: Enhancement of Information Disclosure).

[Supplementary Principle 4-11 (ii) Concurrent Positions of Directors]

The status of concurrent positions of officers is disclosed in the notice of the Annual General Meeting of Shareholders.

[Supplementary Principle 4-11 (iii) Board of Directors Effectiveness Evaluation]

The Company analyzes and evaluates the effectiveness of the Board of Directors in order to improve the functions of the Board of Directors. To be more specific, we conduct surveys targeting directors and Audit & Supervisory Committee Members on general matters related to the Board of Directors, including the composition and operation methods of the Board of Directors, the status of deliberations, and the status of support systems for directors and Audit & Supervisory Committee Members. The results of these analyses are then evaluated by the Board of Directors. In order to obtain frank opinions from the survey subjects, we conduct an anonymous questionnaire survey and entrust the collection, tabulation and analysis of the survey results to an external organization.

As a result of this year's survey, we have determined that the effectiveness of the Board of Directors has been largely secured. In response to the survey results, issues from a medium- to long-term perspective were raised, such as "setting KPIs that enable the Company to achieve sustainable growth" and "a system to periodically review the entire Group's business portfolio in consideration of securing sustainable profitability and the cost of capital." Going forward, the Company will strive to improve corporate governance through the resolution of issues identified in this evaluation, and further promote management aimed at sustainable enhancement of corporate value.

[Supplementary Principle 4-14 (ii) Director training policies]

Although the Company has not established the "Policy for Training for Directors" in a clear form, the Company has stated as a part of Management Principle to "Contribute to the prosperity of mankind and society with a spirit of symbiosis." For this reason, the Company provides ample training opportunities for officers and employees to acquire the knowledge necessary to fulfill their roles and responsibilities, 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 Group has the Corporate Planning Division as the department in charge of IR.

For shareholders and investors, the Company holds financial results briefings once every quarter, and also holds small meetings, etc.

Moreover, the Company has established the following policy regarding constructive dialogue with shareholders so that such 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 with related departments.

（３） Provide a wide range of means of dialogue, including financial results briefings, briefings for individual 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.

[Action to Implement Management that is Conscious of Cost of Capital and Stock Price]

On December 20, 2023 we disclosed "Action to Implement Management that is Conscious of Cost of Capital and Stock Price". See the outline of the disclosure as below.

https://www.sunfrt.co.jp/en/pdf/20231220_en.pdf

Specific IR activities are disclosed in the IR presentation published for each quarter. Please refer to it at the link below. https://www.sunfrt.co.jp/en/ir_info/

2. Capital Structure

		Foreign Shareholding Ratio		From 10% to less than 20%
[Status of Major Shareholders]
		Name/Company Name	Number of Shares	Percentage
					Owned	(%)
		HOUON Co.,Ltd			17,957,500	36.89
		The Master Trust Bank of Japan, Ltd. (Accounted in trust)	4,272,100	8.78
		Tomoaki HORIGUCHI			3,026,796	6.22
		Custody Bank of Japan, Ltd. (Accounted in trust)	1,600,400	3.29
		SKAWAGOE Co., Ltd.			1,566,400	3.22
		THE BANK OF NEW YORK MELLON 140044	726,268	1.49
		MSIP CLIENT SECURITIES			552,900	1.14
		STATE STREET BANK AND TRUST COMPANY 505223	436,187	0.90
		Keiko Horiguchi			416,500	0.86
		Sun Frontier Employee Stock Ownership Plan	404,100	0.83
		Controlling Shareholder (except for		---
		Parent Company)
		Parent Company		None
		Supplementary Explanation

The status of major shareholders is as of September 30, 2023. In addition to the above, the Company holds 73,752 treasury shares.

3. Company Attributes

	Listed Stock Market and Market			Tokyo Prime
	Section
	Fiscal Year-End			March
	Type of Business			Real Estate
	Number of Employees
	(consolidated) as of the End of the			500 or more and less than 1,000
	Previous Fiscal Year
	Sales (consolidated) as of the End			From JPY10 billion to less than JPY100 billion
	of the Previous Fiscal Year
	Number of Consolidated
	Subsidiaries as of the End of the			From 10 to less than 50
	Previous Fiscal Year

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

-----------

1. 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 Committee

[Directors]

Maximum Number of Directors

Stipulated in Articles of14 people

Incorporation

Term of Office Stipulated in Articlesof Incorporation

Chairperson of the Board

Number of Directors

Status of appointing Outside Director

Number of Outside Directors

Number of Outside Directors designated as independent officers

1. year President

1. people Appointed

1. people

1. people

Outside Directors' Relationship with the Company (1)

Relationship

Name

Attribute

with the

Company *

a

b

c

d

e

f

g

h

i

j

k

Kazutaka Okubo

CPA

〇

Keiichi Asai

From another

company

Hidetaka Tanaka

CPA

Tsuneko Murata

From another

company

• 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 past
• 1. Executive of the listed company or its subsidiaries
  2. Non-executivedirector or executive director of a parent company of the listed company
  3. Executive of a fellow subsidiary company of the listed company
  4. A party whose major client or supplier is the listed company or an executive thereof
  5. Major client or supplier of the listed company or an executive thereof

1. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the listed company besides compensation as a director/Audit & Supervisory Board member
2. Major shareholder of the listed company (or an executive of the said major shareholder if the shareholder is a legal entity)
3. 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)
4. Executive of a company, between which and the listed company outside directors/Audit & Supervisory Board member are mutually appointed (the director himself/herself only)
5. Executive of a company or organization that receives a donation from the listed company (the director himself/herself only)
6. 1. Others

Outside Directors' Relationship with the Company (2)

			Audit &		Designation		Supplementary Explanation
			Supervisory		as
	Name				of		Reasons of Appointment
		Committee		Independent
					the Relationship
			Member		Director
									He has extensive knowledge and
									experience in a wide range of
									fields, including corporate
									compliance and corporate social
									responsibility, in addition to being
									familiar with governance and
									finance from his audit experience
							Mr. Kazutaka Okubo serves as		at a major audit corporation. The
							President Representative		Company expects him to provide
								management supervision and
							Director of SS DNAFORM,
								advice based on his extensive
							which is a business partner of
								knowledge and experience, and
							the Company. However, the
								he has actively provided advice
							net sales of the transaction is
								and recommendations to the
							insignificant at less than 0.1%
	Kazutaka Okubo				〇			Board of Directors. The Company
					in terms of both the		requests his re-election as Outside
							Company's consolidated net
								Director with the expectation that
							sales and the net sales of SS
								he will supervise the management
							DNAFORM in the most
								of the Company toward the
							recent fiscal year, and the
								sustainable improvement of the
							Company has determined that
							there is no risk of affecting his		corporate value of the Company.
							independence.		In addition, there are no attributes
								that would raise questions about
									his independence from the
									Company. Therefore, the
									Company has judged that there is
									no risk of conflict of interest with
									general shareholders and has
									nominated him as an independent
									officer.

				After joining Mitsubishi
				Corporation, he gained
				experience in oil business
				divisions such as oil sales, supply
				and demand, and refining. He
				worked in the United States and
				India, and in almost every
				instance was involved in
				international business in the
				energy sector. Since assuming the
				posts of Vice President Director
				of Lithium Energy Japan Co., Ltd.
				in 2013 and President
				Representative Director of KH
				Neochem Co.,Ltd. in 2014, he has
				been involved in general
				corporate management and has
Keiichi Asai		〇	---	extensive knowledge and
				experience.
				The Company has judged that he
				can be expected to supervise the
				management of the Company and
				perform his duties appropriately
				based on his abundant knowledge
				and experience and requests that
				he be re-elected as Outside
				Director. In addition, there are no
				attributes that would raise
				questions about his independence
				from the Company. Therefore, the
				Company has judged that there is
				no risk of conflict of interest with
				general shareholders and has
				nominated him as an independent
				officer.
				He is qualified as a Certified
				Public Accountant of the United
				States and has a wealth of
				experience as a corporate
				manager and has business
				experience overseas. He has a
				wide range of knowledge
				including a thorough knowledge
				of the financial industry and the
				field of sustainability. Based on
				his wealth of experience and
				knowledge, etc., the Company
				elected him as an Outside
Hidetaka Tanaka	〇	〇	---	Director so that he can audit and
				supervise the Company from an
				objective standpoint with regard
				to the overall management of the
				Company, including the
				promotion of sustainability. Based
				on his attributes and relationship
				with the Company, the Company
				has determined that there is no
				risk of conflict of interest with
				general shareholders and
				designated him as an independent
				officer as stipulated by the Tokyo
				Stock Exchange.

Tsuneko Murata

〇

〇

---

She has experience as a manager of the legal division of the Panasonic Group and as a board member and auditor of the Japan Pension Service, as well as a career in Outside Officer at a listed company. She has a wealth of knowledge related to legal affairs, management and audit. In addition, she has a wide range of knowledge in promoting the active participation of women. Based on this insight, the Company expects that she will make active proposals for strengthening corporate governance, deliberating important management matters in the Board of Directors, monitoring management, and promoting sustainability, and proposes her election as an Outside Director. In addition, there are no attributes that would raise questions about her independence from the Company. Therefore, the Company has judged that there is no risk of conflict of interest with general shareholders and has nominated her as an independent officer.

Audit & Supervisory Committee

Composition of Members and Attributes of Chairperson

			All Committee		Full-time
			Members		Member
	Audit &
	Supervisory		3 people		1 person
	Committee

Outside

Inside DirectorChairperson

Directors

	1 person				2 people				Inside Director

Whether there is a director or an

employee who is to assist the duties Present of the Audit & Supervisory

Committee

Matters related to the independency of the director and employees from the director in which the execution of business is carried out

In the event that the Audit & Supervisory Committee requests the assignment of employees to assist with their duties, employees shall be assigned to the Audit & Supervisory Committee. The Audit & Supervisory Committee's assistant shall be appointed from among persons with sufficient knowledge of accounting or law, etc., and shall perform his/her duties in accordance with the instructions of the Audit & Supervisory Committee.

Coordination Situation of Audit & Supervisory Committee, Accounting Auditor and Internal Audit Divisions

Based on the Internal audit Plan, the Internal Audit Office conducts Internal audit regarding the operational status of business activities, the effectiveness and accuracy of business execution, the status of compliance, etc., and regularly reports the audit results to the President-Representative Director and the Audit & Supervisory Committee, and also to the Board of Directors as necessary. In addition, the Internal Audit Office explains the purpose of internal controls and evaluation of controls, and provides specific advice and recommendations for business improvement and appropriate management.

Internal Audit Office, Audit & Supervisory Committee and Accounting Auditor closely coordinate with each other, and Audit & Supervisory Committee and Accounting Auditor have a system in which the Internal audit situation can be grasped in a timely manner, and coordination is established between the Audit & Supervisory Committee audit and accounting audit by exchanging information also.

[Voluntary Committee]

Voluntary Establishment of

Committee(s) Corresponding to Established

Nomination Committee or

Remuneration Committee

Committee's Name, Composition, and Attributes of Chairperson

Committee Corresponding to NominationCommittee

Committee Correspondingto Remuneration Committee

	Committee's		All
		Committee
	Name
		Members
	Nomination and
	Compensation		4 people
	Committee
	Nomination and
	Compensation		4 people
	Committee

Full-time Members

1. people

1. people

Inside

Directors

2 people

2 people

	Outside		Outside				Chairperson
	Directors		Experts		Other
	2 people		0 people		0 people		Inside
				Director
	2 people		0 people		0 people		Inside
				Director

Supplementary Explanation

In order to improve the objectivity and transparency of procedures related to the appointment and dismissal of directors as well as renumeration, the Company has established a voluntary 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 for determining 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 officers' appointment and dismissal and officers' remuneration decisions with maximum respect for the deliberation contents.

[Independent Directors]

	Number of Independent Directors	4 people

Matters relating to Independent Directors

All outside directors who satisfy the qualifications of independent directors are designated as independent directors.

[Incentives]

	Incentive Policies for Directors	Performance-linked remuneration system, stock options, others

Supplementary Explanation

The Group grants executive officer awards to each director for the purpose of enhancing motivation and morale to improve business performance by linking the improvement of the Group's business performance with the profit of the Group's directors.

In addition, as part of the review of the officers' remuneration system, directors (excluding outside directors), who are not Audit & Supervisory Committee members, was approved at the 23rd Annual General Meeting of Shareholders Meeting held on June 21, 2022 to introduce a new restricted stock remuneration system in place of the existing stock remuneration stock option system, in order to share the benefits and risks of stock price fluctuations with shareholders and to increase their willingness to contribute to higher stock prices and higher corporate value.