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Selection Criteria for Outside Directors/ Outside Audit & Supervisory Board Members

General policy regarding the roles and election of Outside Directors/ Outside Audit & Supervisory Board Members

Fundamental Approach

Two of our company's directors fulfill the prerequisites for outside directors. These individuals make efforts to strengthen the supervisory capability of the company and thereby enable objective management. Specifically, they fulfill a role that is important to the decision making process and provide opinions from the perspective of either technical experts or shareholders independent of executive management, based on a broad view that leverages knowledge of legal affairs related to the company and the experiences of corporate managers.

In addition, the company has four auditors (two of whom are managing auditors). Two of them fulfill the prerequisites as external auditors, and cooperate with each other to monitor the state of internal control of operations on a daily basis. Specifically, these auditors are responsible for investigating and verifying whether the corporate directors' work is being conducted in compliance with the pertaining laws. In addition to possessing technical and practical knowledge of their own in the fields of law and accounting, they objectively monitor the actions taken by our directors from an independent standpoint.

The activities of these outside directors and outside auditors fulfill a role that is important to the ability of our company to make management decisions. The company believes that appropriate personnel have been elected.

In order to ensure the transparency of its management oversight mechanism as concerns outside directors and outside auditors, the company has strengthened its criteria for election of outside directors by making the governing "Standards for the Independence of Outside directors" more rigid based on consideration of the "Securities Listing Regulations" set forth by the Tokyo Stock Exchange Group and other standards for independence set forth by other financial instruments Exchanges and subsidiary organizations advising the exercise of voting rights.

Standards for the Independence of Outside Directors/ Outside Audit & Supervisory Board Members

For an individual to be an independent officer of the company who does not pose any risk of conflict of interest arising among its general shareholders, the individual must not be categorized under one of the following:


Relationships with Shareholders

1)
A director, auditor, accounting advisor, corporate officer, operating officer (hereafter, officer), or employee of any of the major shareholders (holding 10% or more) of the company
2)
An individual who in the past five years has been an officer or employee of any of the current major shareholders of the company
3)
An individual who is an officer or employee of a company that is a major shareholder of the company







Relationship with Corporate Clients

1)
An individual of whom the company or one of its current subsidiaries is a major corporate client (accounting for 2% or more of the previous year's consolidated gross revenue)
2)
An individual of whom the company or one of its current subsidiaries has been a client in the last three years
3)
An individual who is a major client of the company, or who has been a major client of the company in the last three years






Relationships of Financial Interest

An individual who is a current officer or employee of a company or of one of its parent or subsidiary companies that employs a director or auditor from our company or one of our company's current subsidiaries.


Purveyors of specialized services

1)
An individual who is an employee, partner, or working staff member of a certified public accounting firm or auditing firm that is an accounting auditor or accounting advisor of the company or of one of its current subsidiaries.
2)
An individual not fulfilling any of the above criteria, but who is a certified public accountant, attorney, or other kind of consultant, and who, apart from director's compensation, has received from the company or one of its current subsidiaries money or other property benefits averaging 10 million yen or more annually in the last three years.







Close relatives

1)
A relative within two degrees of kinship of, or living together with, an executive director, or operating officer,, major shareholder, major client, or major creditor of the company or of one of its current subsidiaries.
2)
An individual who has a relative within two degrees of kinship, or a living together with the individual, who is an employee or partner of an accounting auditing firm of the company or one of its current subsidiaries.
3)
An individual who has a relative within two degrees of kinship, or a relative living together with the individual, who is an attorney or other kind of consultant who, apart from director's compensation, has received from the company or one of its current subsidiaries money or property benefits averaging 10 million yen or more annually for the last three years.
4)
An individual who has a relative within two degrees of kinship, or a relative living together with the individual, who is a director, auditor, accounting advisor, executive officer, or operating officer of a company that employs a director or auditor from our company or one of our company's current subsidiaries.

Important Note: The above content is a general overview of the company's "Standard for Independence of Outside directors," and is not an exact statement of the relevant bylaws, corporate laws, or other regulations.