Hanwa : Corporate Governance Report

Corporate Governance Report		Hanwa Co, Ltd.
	Report	date: June 27,2024

Hanwa Co., Ltd.

Yoichi NAKAGAWA, Director, President

Contact: Corporate Planning Dept.

[phone]

Securities code:8078 https://www.hanwa.co.jp/

The corporate governance of Hanwa CO., LTD.(the Company) is described below.

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

Basic Information

1. Basic Views

We aim to fulfill our social responsibilities as a good corporate citizen so that we can gain and retain the respect from stakeholders and be recognized as a valuable enterprise. We work to establish a high degree of transparency in managementsystems to ensure full legal and regulatory compliance and respect for social norms.

In addition, to coexist with the Earth and society and to develop sustainably, we have established the Sustainability Promotion Committee and promoted management initiatives with a focus on sustainability.

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

Supplementary Principles 2.4.1

We have set a numerical target for the ratio of new female graduates hired (30% or more for career-track positions) and for mid-career hiring (30% by FY2025). In addition, as part of our efforts to create an internal environment to secure a diverse workforce, we are developing infrastructure for telecommuting and have established an "in-house university" to create a comfortable work environment and a system where employees can grow autonomously. As a result, the number and ratio of women, foreign nationals, and mid-career hires are increasing year by year.

Furthermore, we have set a target of 3.7% for the ratio of female employees in managerial positions by FY2025 and are working to form a population for promotion to core personnel. Our action plan based on the Act on the Promotion of Women's Active Engagement in Professional Life is available on our website.

In the development of our human resources, we have adopted the keyword "Professional & Global." We are working to develop human resources with an expanded sense of humanity who can communicate with an understanding of the uniqueness and diversity of each of the world's regions. Specifically, we are promoting the development of human resources with management knowledge, business knowledge, language skills, and international perspectives by combining the acquisition of knowledge and language skills through systems that dispatch employees to MBA programs in Japan, language education institutions in and outside Japan, and overseas subsidiaries as trainees, with practical application in the workplace by assigning them to related positions after completion of the training program.

Supplementary Principles 3.1.3

In the "Medium-Term Business Plan 2025", we have set "Sustainability Management" as one of our basic policies and are working on "business/investment strategies rooted in ESG and SDGs" as well as "strengthening the organizational structure to support sustainable growth." We also have a human resources strategy and are working to create an environment in which a diverse workforce can work while growing sustainably, as well as promoting the introduction of systems that support each employee's ability to demonstrate his or her strengths and take on challenges.

The Company discloses information on sustainability as appropriate through the "Sustainability" page (https://www.hanwa.co.jp/en/csr/) on its website.

With regard to the impact of climate change-related risk and profit opportunities on the Company's business activities and earnings, the Company is preparing an internal system to disclose information in accordance with the TCFD framework and gradually disclosing information as it is complied.

1

Supplementary Principles 4.1.3

With regard to the personnel affairs of directors, the Company has established a Nomination Advisory Committee as an advisory organ of the Board of Directors. The Committee, which includes outside directors and an outside corporate auditor, examines and submits personnel proposals to the Board of Directors. Concerning successors of the CEO and other top executives, candidates will be narrowed down based on close examinations of the individual performance, characters, knowledge, and other factors of each director and executive officer.

The Company does not have a specific procedural plan, such as succession plan, clearly defined. However, since FY2003, the Company has had a qualitative review system for executive officers, including executive directors, and has presented the desirable management requirements as evaluation criteria. The results of evaluations of all executive officers have been accumulated. Through the accumulation of evaluations and feedback conducted every fiscal year, candidates who possess the appropriate qualities for the CEO will be selected. Considering the number of senior executives and other factors, the Company believes that it is at a level where the rationale for and the appropriateness of the selection of successor candidates can be shared within the Board of Directors.

Disclosure Based on the Principles of the Corporate Governance Code

The Company's policies and initiatives in response to all 83 items of general principles, principles and supplementary principles of the Corporate Governance Code are disclosed on our website as the Principles for Responding to the Corporate Governance Code(https://www.hanwa.co.jp/en/company/governance.html).Amongthese, disclosure items based on each principle of the Corporate Governance Code are as follows.

Principle 1.4

(1) Holding Policy

From the perspective of business partnerships, creating business opportunities, maintaining and strengthening business relationships, etc., the Company holds shares of business partners, etc., when it is considered to contribute to enhancing corporate value over the medium to long term.

(2) Verification and Reduction Policy

Each year, the Board of Directors and the Management Committee regularly and comprehensively examine the appropriateness of the holding of individual shares, taking into account factors such as investment returns from transactions and dividends, capital efficiency, and the purpose of holding. The Company promotes the sale of shares that are deemed to be inconsistent with the purpose of the holding.

(3) Criteria for Exercising Voting Rights

The Company has established the following screening criteria for exercising voting rights. For the stock issues that meet the criteria, the Company will scrutinize the details of the proposals and determine whether to vote for or against them.

1. a company whose value of shares are judged to be significantly impaired according to its stock price level and financial conditions
2. a company whose operating income, ordinary income, or net income was recorded as negative in its business results for the previous fiscal year
3. a company that caused a scandal with significant social impact, including violations of laws and regulations or anti-social acts
4. a company that submits a proposal that is likely to hinder the purpose of shareholding and significantly impair the value of shares, including any proposal on changes of control or substantial revisions of corporate organization

(4) Reduction Status for the Year Ended March 2024

The Company sold all shares of 29 issues and a portion of shares of 7 issues. As of the end of March 2024, the ratio of cross-shareholdings to consolidated net assets was 19.6%.

Principle 1.7

If the Company intends to engage in a transaction with a director of the Company or a company where a director of the Company holds office as a representative (related party transaction), the Company will conduct the related party transaction only after the Board of Directors deliberates on the transaction and gives approval.

With regard to transactions with major shareholders, financial transactions with Sumitomo Mitsui Banking Corporation and The Dai-ichi Life Insurance Company, Limited are conducted with approval from the Board of Directors. With regard to commercial transactions, the Company conducts them based on the Standards for Decision-making Authority established with approval from the Board of Directors according to the sizes of the transactions, and applies the same procedures to the Company's transactions with major shareholders such as Nippon Steel Corporation.

2

Supplementary Principles 2.4.1

We have set a numerical target for the ratio of new female graduates hired (30% or more for career-track positions) and for mid-career hiring (30% by FY2025). In addition, as part of our efforts to create an internal environment to secure a diverse workforce, we are developing infrastructure for telecommuting and have established an "in-house university" to create a comfortable work environment and a system where employees can grow autonomously. As a result, the number and ratio of women, foreign nationals, and mid-career hires are increasing year by year.

Furthermore, we have set a target of 3.7% for the ratio of female employees in managerial positions by FY2025 and are working to form a population for promotion to core personnel. Our action plan based on the Act on the Promotion of Women's Active Engagement in Professional Life is available on our website.

In the development of our human resources, we have adopted the keyword "Professional & Global." We are working to develop human resources with an expanded sense of humanity who can communicate with an understanding of the uniqueness and diversity of each of the world's regions. Specifically, we are promoting the development of human resources with management knowledge, business knowledge, language skills, and international perspectives by combining the acquisition of knowledge and language skills through systems that dispatch employees to MBA programs in Japan, language education institutions in and outside Japan, and overseas subsidiaries as trainees, with practical application in the workplace by assigning them to related positions after completion of the training program.

Principle 2.6

The Company manages pension reserves through Pension Fund of Hanwa Co., Ltd. (hereinafter referred to as the Pension Fund). Although it is difficult to say that the Company sufficiently assigns personnel who are highly qualified and experienced in investment in pension funds due to our size and expertise, the Company has established a Pension Committee within the Company to ensure stable and efficient management of Pension Fund and its investments. The Pension Committee is composed mainly of officers and section managers in charge of the Personnel Department, Finance Department, and Accounting Department. The committee selects investment institutions to be entrusted, allocates premiums, and evaluates investment performance. The results are submitted to the Board of Directors, Representatives of the Pension Fund, and the Chairman of the Board of Directors. Based on the report of the Pension Committee, the Pension Fund presents its investment policy to the investment management contractors, entrusts them to the fund, monitors the investment status of the fund to the contractors on a regular basis, and shares the investment results with the Pension Committee.

The selection of individual issues and the exercise of voting rights are left to the trustees, and the Company does not direct them directly. Therefore, the Company believes that there will be no conflict of interest between the pension beneficiaries and the Company.

Principle 3.1

i) Company objectives (e.g., business principles), business strategies and business plans;

The Company's Corporate Philosophy proclaims that by "Coping with changing times and markets quickly, Hanwa makes a great contribution to society by satisfying various needs of customers as a 'distribution specialist.'" Under this Corporate Philosophy, the Company, as a user-oriented trading company which provides high value-added product distribution and proposal-based services which meet customer demands, pursuits trading company logistics with distinction. The Company also has a policy of increasing its corporate value as well as fulfilling social responsibility with an emphasis on compliance through these activities. With regard to business strategies and business plans, the Company establishes a medium-term business plan every three years in principle and broadly discloses it.

1. Basic views and guidelines on corporate governance based on each of the principles of the Code;
   We aim to fulfill our social responsibilities as a good corporate citizen so that we can gain and retain the respect from

stakeholders and be recognized as a valuable enterprise. We work to establish a high degree of transparency in management systems to ensure full legal and regulatory compliance and respect for social norms.

In addition, to coexist with the Earth and society and to develop sustainably, we have established the Sustainability Promotion Committee and promoted management initiatives with a focus on sustainability.

iii) Board policies and procedures in determining the remuneration of the senior management and directors;

The Company has established a remuneration system consisting of monetary remuneration and compensation in the form of company stock (restricted stock compensation) for Directors. The annual monetary remuneration decided at the General Shareholders Meeting held in June 2006 is within the total amount of 860 million yen. The restricted stock compensation is within the total annual amount of 150 million yen (the maximum number of shares to be paid is 50,000 per year) decided at the 76th General Shareholders Meeting held in June 2023. The Board of Directors determines the specific amount of remuneration for each Director. The Company has established a decision-making policy pertaining to the content of this

3

remuneration, a summary of which is as follows.

The basic policy of the Company's remuneration system for Directors is to ensure that it functions sufficiently as an incentive for the sustainable enhancement of corporate value and that it is at an appropriate level based on the responsibilities of each position. Specifically, the remuneration system consists of basic remuneration, which is a monthly fixed amount determined based on the standard amount of remuneration for each position and taking into consideration the comprehensive evaluation of Directors made by the Officers Evaluation Committee chaired by the President, with an emphasis on their attitude toward medium- and long-term issues aimed at sustainable growth and the results of their efforts; performance-linked remuneration, which reflects the performance indicators for each fiscal year that the management team as a whole bears; and restricted stock compensation designed to provide incentives to increase corporate value over the medium to long term. Outside Directors, who are responsible for supervisory functions, are paid only basic remuneration in consideration of their duties.

In determining the ratio of remuneration by type, the Remuneration Advisory Committee considers the level of remuneration based on the benchmarks of companies in the same scale of business and related industries and business categories as the Company.

With regard to procedures for determining the individual compensation of the management members and directors, the Remuneration Advisory Committee, the majority of whose members are outside directors and outside corporate auditors, plays a leading role in determining them, in accordance with the following procedures.

The Officers Evaluation Committee, chaired by the President and composed of members including outside directors and outside corporate auditors who serve as advisors, meets at least twice a year to conduct a comprehensive evaluation of basic remuneration based on an assessment of the commitment of directors and executive officers (excluding the President) and a qualitative evaluation of directors and executive officers. Based on the results of the comprehensive evaluation by the Officers Evaluation Committee, the Remuneration Advisory Committee, the majority of whose members are outside directors and outside corporate auditors, prepares a proposal for basic remuneration and the Board of Directors makes a decision on the amount.

Performance-linked remuneration is determined by the Board of Directors after the Remuneration Advisory Committee examines the proposed calculation method for each fiscal year, with the aim of ensuring that the remuneration accurately reflects the achievements and responsibilities of each management member and director.

Restricted stock compensation is positioned as compensation for each management member's responsibilities to shareholders in increasing corporate value in accordance with his or her position. With this in mind, the Board of Directors determines the specific number of shares to be paid (the amount of monetary compensation claims to be used to pay for the acquisition of shares) based on the Remuneration Advisory Committee's consideration of the level deemed appropriate for each position.

The amount of remuneration for each executive member of the management team other than directors (executive officers) is determined in accordance with the same system and procedures as those for executive members who also serve as directors.

1. Board policies and procedures in the appointment/dismissal of the senior management and the nomination of directors and kansayaku candidates;
   To select internal directors, the Nomination Advisory Committee, which is chaired by an outside director and the majority of its members consist of outside directors and outside corporate auditors, reviews the directors of the following fiscal year based on their evaluation from directors and executive officers and the results of their performance evaluations of employees. A draft is then submitted to the Board of Directors where a proposal of the list of candidates is then forwarded to the Annual Shareholders Meeting. In addition, the Nomination Advisory Committee deliberates on the positions of directors and draws up a draft to be approved by the Board of Directors.
   With regard to internal corporate auditors, the Board of Directors selects persons deemed capable of executing the duties of corporate auditors as candidates from among internal directors and executive officers, etc. in consideration of their fields of specialty, their careers, and other factors. A proposal list of candidates is then forwarded to the Annual Shareholders Meeting with prior consent from the Board of Corporate Auditors.
   To select outside directors and outside corporate auditors, appropriate candidates are examined from all perspectives in consideration of the balance of their abilities and any excesses or deficiencies in the fields of specialty of the outside directors and outside corporate auditors based on the fields of specialty of those retiring and of those remaining, and a proposal of the list of candidates is then prepared.
   More specific criteria for the nomination of candidates for directors and corporate auditors and the appointment and dismissal of senior management are currently under consideration, including the necessity of such criteria. Discussions will be held at the Nomination Advisory Committee in the future.

4

v) Explanations with respect to the individual appointments/dismissals and nominations based on iv).

Reasons for proposals for electing the senior management, directors and corporate auditors are stated in the Notice of Shareholders Meeting, together with brief career summaries. In the event that a senior executive is dismissed, the company will explain the background and the reason for the dismissal of the previous executive when disclosing the replacement.

Supplementary Principles 3.1.3

In the "Medium-Term Business Plan 2025", we have set "Sustainability Management" as one of our basic policies and are working on "business/investment strategies rooted in ESG and SDGs" as well as "strengthening the organizational structure to support sustainable growth." We also have a human resources strategy and are working to create an environment in which a diverse workforce can work while growing sustainably, as well as promoting the introduction of systems that support each employee's ability to demonstrate his or her strengths and take on challenges.

The Company discloses information on sustainability as appropriate through the "Sustainability" page (https://www.hanwa.co.jp/en/csr/) on its website.

With regard to the impact of climate change-related risk and profit opportunities on the Company's business activities and earnings, the Company is preparing an internal system to disclose information in accordance with the TCFD framework and gradually disclosing information as it is complied.

Supplementary Principles 4.1.1

The Company stipulates the decision-making authority of an organ according to the importance of decisions and monetary scale and other factors in the Regulation on the Board of Directors and the Standard for Submission to the Board of Directors, as well as the Regulations on the Management Committee and the Standard for Submission to the Management Committee, while prescribing the scope of operational delegation according to the positions of the executive officers, etc. in the Standard for Approval.

Principle 4.9

With regard to standards for judgment when electing independent outside directors, we make use of articles referring to independence of outside officers stated in the Enforcement Rules for Securities Listing Regulations and the Guidelines for Listing Examination, etc., both established by the Tokyo Stock Exchange, on which the Company is listed. However, at a meeting of the Board of Directors held on September 26, 2017, the Company passed a resolution regarding "Independence Standards for Outside Officers" as follows.

"Independence Standards for Outside Officers"

When an outside officer (outside director and outside corporate auditor) of the Company does not fall under any of the following cases, he or she is judged independent from the Company.

1. A major shareholder of the Company (meaning a shareholder who holds either directly or indirectly 10% or more of the total voting rights of the Company at the end of the most recent fiscal year), or an executing person thereof.
2. A person belonging to or an executing person of a company of which the Company is a major shareholder (holding10% or more of the total voting rights of the company at the end of the most recent fiscal year.)
3. A major business partner of the Company (whose annual transaction with the Companyexceeds2% of the consolidated net sales of the Company during the most recent fiscal year), or an executing person thereof.

4．A major lender to the Company (whose outstanding loans to the Company at the end of most recent fiscal year exceeds2% of the consolidated total net assets of the Company), or an executing person thereof.

5．A representative or an employee who belongs to the audit corporation that is the accounting auditor of the Company.

6. A consultant, legal professional, certified public accountant, tax accountant, or other person providing a specialist service who received 10 million yen or more of monetary consideration or other properties per year from the Company other than officer remuneration in the most recent fiscal year (referring to a person belonging to the organization if the one who received the relevant property is an organization such as corporation and association.)

7．A person who received the annual total of 10 million yen or more of donations or aid funds from the Company in the most recent fiscal year (referring to an executing person who belongs to the organization if the one who received the relevant donations or aid funds is an organization such as corporation and association.)

8．A person who falls under any of 1 to 7 above in the past three years

9．A person whose close relative falls under any of 1 to 8 above.

(Note1.) An executing person refers to an executive director, executive officer, corporate officer, or staff executing business of an entity

(Note2.) A close relative means a relative within the second degree of kinship

Even if a person falls under any of the above criteria, such person maybe elected as a candidate for independent outside officer if the person satisfies the requirements of an outside director or an outside corporate auditor under the Companies

5

Act, has specialization and experience necessary in view of the Company's current situations and his/her knowledge and viewpoint are judged to be beneficial to the Company's management, on the condition that the Company provides explanations to shareholders of the reasons of its judgement and the fact that the person satisfies the requirements of an independent outside officer.

Supplementary Principles 4.10.1

With regard to the evaluation, appointment, and remuneration of directors and executive officers, the Company has established three committees: the Officers Evaluation Committee, the Nomination Advisory Committee, and the Remuneration Advisory Committee, to ensure the independence and objectivity of the supervisory function of the Board of Directors. Specifically, an outside director serves as the chairperson of the Nomination Advisory Committee while the President serves as the chairperson of the Officers Evaluation Committee and the Remuneration Advisory Committee. In addition, the Officers Evaluation Committee, with the participation of independent outside directors and independent outside corporate auditors (collectively referred to as the "Independent Outside Officers." In addition, the Company has replaced the words "independent outside directors shall be the principal members" with "independent outside officers shall be the principal members" and "the majority of the members shall be independent outside directors" with "the majority of the members shall be independent outside officers" in these supplementary principles.), determines the individual evaluation of each director and executive officer based on evaluations of achievement levels for medium- to long-term management issues and qualitative evaluations, etc. Based on the results of these evaluations, the Nomination Advisory Committee and the Remuneration Advisory Committee, the majority of whose members are independent outside officers, consider appointment and remuneration proposals.

The Nomination Advisory Committee and the Remuneration Advisory Committee are mainly composed of independent outside officers to ensure independence from the management. The role of the Nomination Advisory Committee is to discuss the composition of the management team and directors (including candidates), and the role of the Remuneration Advisory Committee is to discuss the overall remuneration system for the management team and directors. Each committee has the authority to discuss matters stipulated in their respective committee regulations and to report to the Board of Directors the decisions made by the committee.

Supplementary Principles 4.11.1

Regarding the appointment of directors and corporate auditors, please refer to Principle 3-1 iv). The Company believes that the main skills required of each director and corporate auditor to ensure the effectiveness of the Board of Directors are "corporate management," "sales/business strategy," "overseas experience," "finance/accounting," "legal/risk management," "human resources/labor affairs," and "IT/digital." The expertise possessed by each director and corporate auditor is as shown in the skill matrix, and we appoint persons with each skill in a well-balanced manner.

The Board of Directors of the Company consists of eleven members, including four independent outside directors, three of whom have management experience at other companies.

The expertise held by each officer is listed in the skills matrix attached at the end of V-2. "Other Matters Concerning the Corporate Governance System" of this report.

Supplementary Principles 4.11.2

Currently, internal officers only hold concurrent positions as officers of the Company's group companies. The Company believes it is desirable for its directors and corporate auditors to focus their efforts on the Company. However, concurrent service as officers of other listed companies may broaden their knowledge and, in turn, have a positive impact on their managerial decisions at the Company. Therefore, the Company does not rule out concurrent positions unless they become excessive.

Ryuji Hori, Outside Director, concurrently serves as Representative Director and President of TMI Ventures Co., Ltd., Outside Director of Riskmonster.com and Outside Corporate Auditor of Lotte Co., Ltd. Kamezo Nakai, Outside Director, concurrently serves as Outside Director of TAIHEI Engineering Co., Ltd. Reiko Furukawa, Outside Director, concurrently serves as External Member of the Board of NHK Spring Co., Ltd. Chika Sato, Outside Director, concurrently serves as Outside Director of Asahi Group Holdings, Ltd. Hideyuki Takahashi, Outside Corporate Auditor, concurrently serves as Outside Director of Aozora Bank, Ltd. and Sunshine City Corporation. There are no special transaction relations between the above companies and the Company.

Supplementary Principles 4.11.3

The effectiveness of the Board of Directors is not only confirmed on a daily basis by the corporate auditors through their attendance at Board of Directors meetings, hearings with business departments, and exchange of information with the Internal Audit Department, but the Company has also established a Board of Directors Evaluation Committee chaired by one of the outside directors. This committee introduces a mechanism to report evaluation results and make

6

recommendations to the Board of Directors based on the results of a questionnaire survey of all directors and corporate auditors. The outline of the most recent evaluation of the effectiveness of the Board of Directors is disclosed on "Corporate Governance" page (https://www.hanwa.co.jp/en/company/governance.html) of the Company's website and other media.

Supplementary Principles 4.14.2

Training for internal directors includes guidance when they assume their positions, internal study sessions on amendments to laws and regulations, etc., and encouragement to attend external training, etc., as necessary. The Company provides outside directors with opportunities to attend monthly joint meetings of sales departments to enable them to understand the status of the Company's business operations. The Company also distributes Management Committee materials to outside directors and outside corporate auditors to provide information on management decisions other than the agenda items submitted to the Board of Directors. In addition, the Company actively encourages outside directors to visit domestic and overseas group companies and investees, thereby providing the outside directors with opportunities to understand the Group's current situation.

With regard to the provision of further training opportunities and financial support for associated expenses, the Company examines the necessity therefor, cost-effectiveness, etc., and judges the adoption or rejection each time training is requested.

Principle 5.1

The Company has a structure in which the Corporate Planning Department is in charge of IR activities and promotes the activities in cooperation with the Finance Department, Accounting Department, other administrative departments, and sales departments. The Company proactively conducts dialogue with investors and may approach investors to provide meetings, in addition to meetings requested by investors. The Company thinks of IR activities as opportunities to provide investors with materials that help them to deepen their understanding about the Company's actual business conditions and revenue structure and judge the Company's growth potential and future prospects. Going forward, the Company will aggressively strive for stronger ties with investors accordingly.

[Actions to implement management that is conscious of cost of capital and stock prices] [English disclosure available] Regarding "Actions to implement management that is conscious of cost of capital and stock prices," please refer to page

16 of the "Outline of Financial Results for the Fiscal Year ended March 31, 2024" released in May 2024. [Dialogue with shareholders] [English disclosure available]

Regarding "Dialogue with shareholders," please refer to page 17 of the "Outline of Financial Results for the Fiscal Year ended March 31, 2024" released in May 2024.

The above explanatory materials are available on our website in the "IR Library". The URL is as follows: https://www.hanwa.co.jp/en/ir/library/explain.html

2. Capital Structure

Foreign Shareholding Ratio20% or more but less than 30%

Status of Major Shareholders

Name or Company Name	Number of Shares Owned	Percentage (%)
The Master Trust Bank of Japan, Ltd. (Trust account)	5,637,600	13.86
Hanwa Clients' Stock Investment Association	2,291,000	5.63
Custody Bank of Japan, Ltd. (Trust account)	2,103,900	5.17
JP Morgan Chase Bank 385632	1,738,076	4.28
Sumitomo Mitsui Banking Corporation	1,526,080	3.75
Hanwa Employees' Stock Investment Association	1,095,259	2.69
DFA Intl Small Cap Value Portfolio	625,600	1.54
State Street Bank And Trust Company 505223	616,892	1.52
The Bank of New York Mellon 140044	616,645	1.52
Nippon Steel Corporation	600,200	1.48

7

	Name of Controlling Shareholder, if	applicable			―
	(excluding Parent Company)
	Name of Parent Company, if applicable				None

Supplementary Explanation

―

3. Corporate Attributes

Listed Stock Exchange and Market Segment

Fiscal Year-End

Business Sector

Number of Employees (Consolidated) as of the Endof the Previous Fiscal Year

Net Sales (Consolidated) as of the End of thePrevious Fiscal Year

Number of Consolidated Subsidiaries as of the Endof the Previous Fiscal Year

Tokyo Stock Exchange Prime Market

March

Wholesale Trade

1,000 or more

1 trillion yen or more

50 or more but to fewer than 100 companies

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

Not applicable.

1. Business Management Organization and Other Corporate Governance Systems regarding

Decision-making, Execution of Business, and Oversight in Management

1. Organizational Composition and Operation

Corporate Governance System		Company with Audit and Supervisory Board

*Referred to in the Corporate Governance Code reference translation as "Company with Kansayaku Board"

Directors

Number of Directors Stipulated in Articles ofIncorporation

Directors' Term of Office Stipulated in Articles ofIncorporation

Chairperson of the Board

Number of Directors

25

1 year

President

11

8

Election of Outside Directors		Elected
Number of Outside Directors		4
Number of Independent Directors		4

Outside Directors' Relationship with the Company (1)

Name

Attributes

Relationship with the Company*

a

b

c

d

e

f

g

h

i

j

k

Ryuji Hori

From another company

Kamezo Nakai

From another company

Reiko Furukawa

From another company

Chika Sato

From another company

△

*Categories for "Relationship with the Company".

(Use "○" 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; and "▲" when a close relative of the director fell under the category in the past.)

1. Person who executes business of the Company or a subsidiary
2. Person who executes business or a non-executive director of a parent company
3. Person who executes business of a fellow subsidiary
4. Person/entity for which the Company is a major client or a person who executes business for such person/entity
5. Major client of the Company or a person who executes business for such client
6. Consultant, accounting expert, or legal expert who receives large amounts of cash or other assets in addition to director/Audit and Supervisory Board Member compensation from the Company
7. Major shareholder of the Company (in cases where the shareholder is a corporation, a person who executes business of the corporation)
8. Person who executes business for a client of the Company (excluding persons categorized as any of d, e, or f above) (applies to self only)
9. Person who executes business for another company holding cross-directorships/cross-auditorships with the Company (applies to self only)
10. Person who executes business for an entity receiving contributions from the Company (applies to self only)
11. Other

Outside Directors' Relationship with the Company (2)

Designation as

Supplementary Explanation of

Name

Independent

Reasons for Appointment

the Applicable Relationship

Director

Ryuji Hori

○

―

He

has

expertise and extensive knowledge in

legal affairs, cultivated through his many years of

experience mainly in risk management at a general

trading company, along with his experience as a

university professor. The Company expects that he

can provide advice on the Company's management

decisions and supervision towards the Company's

business execution from a general and multilateral

perspective.

There is no special interest relationship between

Mr. Hori and the Company, so we determine that

there is no potential for conflicts of interest with

regular shareholders.

Kamezo Nakai

○

―

He

has

extensive knowledge and abundant

experience cultivated through his many years of

corporate management in the securities industry

and real estate industry. The Company expects that

he can provide advice on the Company's

management decisions and supervision towards the

9

										Company's business execution from a practical and
										multilateral perspective especially in finance and
										investment.
										There is no special interest relationship between
										Mr. Nakai and the Company, so we determine that
										there is no potential for conflicts of interest with
										regular shareholders.
	Reiko Furukawa			○			―			She has profound insight supported by her many
							years of varied experience in business,
										management, audits, etc., at a large company for IT
										service providing. The Company expects that she
										can provide advice on our management decisions
										and supervision towards the Company's business
										execution from a practical and objective
										perspective, especially in the areas of information
										systems and internal control.
										There is no special interest relationship between
										Ms. Furukawa and the Company, so we determine
										that there is no potential for conflicts of interest
										with regular shareholders.
	Chika Sato			○			She was a business executive at			She has served as a manager of human resources
					NEC Corporation until March			divisions at Japanese companies and foreign capital
									companies for many years, and has profound
							2024.
									insight and various experience regarding human
										resources measures. The Company expects that she
										can provide advice on our management decisions
										and supervision towards the Company's business
										execution from a practical and objective
										perspective, especially in the areas of global HR
										strategy and promoting diversity.
										The Company has a transactional relationship
										with NEC Corporation, but the amount is less than
										0.1% of the Company's annual consolidated sales.
										Given the scale and nature of the relationship, she
										has no special interest relationship with the
										Company, so we determined that there is no
										potential for conflicts of interest with regular
										shareholders.

Voluntary Establishment of Committee(s) equivalent toEstablished

Nomination Committee or Remuneration Committee

Status of Voluntarily Established Committee(s), Attributes of Members Constituting the Committee and the Committee

Chair (Chairperson)

Voluntarily Established Committee Equivalent to NominationCommittee

Voluntarily Established Committee Equivalent to RemunerationCommittee

Committee's

All

Full-time

Inside

Outside

Name

Members

Members

Directors

Directors

Nomination

Advisory

9

0

3

4

Committee

Remuneration

Advisory

11

0

3

4

Committee

OutsideOther Chairperson Experts

	0				2				Outside Director

0		4		Inside Director

10