The Audit & Supervisory Board Members (the "Corporate Auditors"), the accounting auditor, and the Internal Audit Office work closely together in carrying out the three forms of audit, thereby enhancing both the efficiency and quality of audits.

The Company’s Audit & Supervisory Board consists of three Outside Audit & Supervisory Board Members, including one full-time member and two part-time members. The Audit & Supervisory Board meets approximately once a month to determine important matters such as audit policies and audit plans, and to conduct discussions, receive reports, and share information among its members. The Articles of Incorporation provide that the number of Audit & Supervisory Board Members shall not exceed four.

Audits by the Audit & Supervisory Board Members are conducted mainly by the full-time member, with responsibilities appropriately shared with the two independent Outside Audit & Supervisory Board Members. The Corporate Auditors attend meetings of the Board of Directors and other important meetings, express opinions as necessary, and receive reports from directors and others regarding the execution of business operations. In addition, the full-time Corporate Auditor inspects important documents and shares relevant information with the two independent Outside Audit & Supervisory Board Members, thereby ensuring a system under which the execution of duties by directors can be continuously monitored. Each Corporate Auditor also possesses expertise in his or her respective field, and effective audits are conducted through an appropriate division of responsibilities.

The Company has entered into an audit agreement with EY ShinNihon LLC. In addition to periodic audits of the Company’s financial statements, the Company is subject to reviews, to the extent deemed necessary for audit purposes, of the development and operation of systems and procedures related to internal controls, the accounting structure, and other systems associated with accounting records, and receives feedback on the results of such reviews. The Audit & Supervisory Board receives feedback from EY ShinNihon LLC on its audits and reviews on a quarterly basis and exchanges views with the firm on a regular basis..

The Company has established an internal audit system to enhance its internal control framework, improve management efficiency, and safeguard assets. Internal audit operations are carried out by the Internal Audit Office. Based on the Internal Audit Rules, the Internal Audit Office formulates an audit plan and conducts internal audits in accordance with that plan after obtaining approval from the President and Representative Director. These internal audits cover all departments of the Company, including its subsidiaries, and contribute to ensuring the appropriateness and efficiency of the Group’s business activities.

Prior to the implementation of each internal audit, the full-time Corporate Auditor and personnel of the Internal Audit Office hold meetings in advance so that audits can be conducted efficiently and effectively through close coordination. In addition, pursuant to the Audit & Supervisory Board Auditing Standards, the General Manager of the Internal Audit Office has served as a supporting employee and acted as the secretariat of the Audit & Supervisory Board since April 2024. Furthermore, the Audit & Supervisory Board and the Internal Audit Office work in coordination with the independent auditor to improve the efficiency and effectiveness of audit operations and strengthen their respective functions. They have also established a framework under which the results of internal audits are shared among them as appropriate.

All outside officers who meet eligibility criteria for independent officers are designated as independent officers.
In addition, the Company has established “Criteria for Independence of Outside Officers”, as shown below.

As a policy regarding the independence of outside directors and outside audit & supervisory board members, the Company selects independent officers from among people who meet the requirements for outside directors or outside audit & supervisory board members prescribed in the Companies Act and who do not meet any of the following criteria regarding independence:

• Person who executes the business*1 of the Company, its subsidiaries, etc. (hereinafter, the “Group”)
• Major shareholder*2 of the Company or person who executes the business of the major shareholder
• Entity of which the Group is a major shareholder or person who executes the business of the said entity
• Person or entity a major business partner of whom is the Group*3 or person who executes the business of the said person or entity
• Person or entity that is a major business partner of the Group*4 or person who executes the business of the said person or entity
• Major lender of the Group*5 or person who executes the business of the said lender
• Person who receives donations from the Group in an amount exceeding a certain amount*6
• Person who belongs to an audit corporation that serves as the Group’s accounting auditor
• Person who belongs to a law firm, audit corporation, tax accountant corporation, or consulting firm, etc., association or other group that receives a large amount of money or other property benefits from the Group
• Consultant, certified public accountant, or legal specialist, etc. who receives a large amount of money or other property benefits from the Group in addition to officer compensation*7
• In a case where a person who executes the business of the Group concurrently serves as an outside officer of another company, another person who executes the business of that company
• Person who fell under any of Items 2 to 11 above in the past three years
• The spouse or relative within the second degree of kinship of the persons meeting any of Items 1 to 12 above

*1:

Person who executes business shall mean an executive director or executive officer of a corporation, etc. and other persons and employees with similar positions who execute the business of the corporation.

*2:

Major shareholder means a person who directly or indirectly holds 10% or more of the total voting rights.

*3:

Person or entity a major business partner of whom is the Group means a person or an entity who conducted transactions with the Group in the most recent business year in an amount exceeding 2% of the consolidated sales of the person or the entity.

*4:

Person or entity that is a major business partner of the Group means a person or an entity who conducted transactions with the Group in the most recent business year in an amount exceeding 2% of the consolidated sales of the Group.

*5:

Major lender of the Group means a person or an entity that the Group's borrowing amount from them in the most recent business year exceeds 2% of the consolidated total assets of the Group.

*6:

Person who receives donations from the Group in an amount exceeding a certain amount means a person or an entity that received donations or subsidies in the past three business years in an amount exceeding an average of 10 million yen per year; provided, however, if the said person is a corporation, association or other group, this means a person who belongs to such a group that receives donations in an amount exceeding 30% of the total expenses of the group.

*7:

Consultant, certified public accountant, or legal specialist, etc. who receives a large amount of money or other property benefits from the Group in addition to officer compensation means a person who receives assets in an amount exceeding 10 million yen in addition to officer compensation in the most recent business year; provided, however, if the said person is a corporation, association or other group, this means a person who belongs to such a group that receives money or other property benefits in an amount exceeding 2% of the consolidated net sales or total revenue of the group.