On May 11, 2006, the Board of Directors adopted a resolution on the System to Ensure the Appropriateness of Operations pursuant to Article 362 of the Companies Act and Article 100 of the Ordinance for Enforcement of the Companies Act, with the aim of establishing and ensuring the effective operation of a corporate governance framework across the entire Group. The resolution was partially revised at meetings of the Board of Directors held on April 8, 2009, May 14, 2015, and May 17, 2022.

Basic Policy on the System to Ensure the Appropriateness of Operations

1. System to Ensure That the Execution of Duties by Directors and Employees Complies with Laws and Regulations and the Articles of Incorporation
   1. The Company has established an Internal Control Office to achieve the objectives of internal control: the effectiveness and efficiency of business operations, the reliability of financial reporting, compliance with laws and regulations applicable to business activities, and the safeguarding of assets.
   
   
   2. The Internal Control Office develops and periodically reviews the Company's Management Philosophy and Code of Conduct, various regulations and manuals, and job descriptions, to ensure that Directors and employees execute their duties in compliance with laws and regulations and the Articles of Incorporation.
   
   
   3. The Internal Audit Department conducts internal control audits and compliance audits to verify compliance with applicable laws and regulations and reports its findings to the President and the Audit & Supervisory Board Members.
   
   
   4. The Legal Affairs/Compliance Office serves as the internal reporting contact point for employees and other personnel. An external attorney designated by the Company serves as the external reporting contact point.
   
   
   5. The Company’s basic policy is to have no relationships whatsoever with antisocial forces. The Company has established relevant regulations, communicates the policy and regulations throughout the Company and its subsidiaries, and responds to antisocial forces in a resolute and systematic manner.
2. System for the Retention and Management of Information Relating to the Execution of Duties by Directors
   

   The Company maintains a system under which information relating to the execution of duties by Directors, including approvals by Directors and the design and operation of internal controls, is recorded and retained in documents and other records and made available to Directors and Audit & Supervisory Board Members as necessary.

3. Regulations and Other Systems for Managing Risks of Loss
   

   The President, who is responsible for risk management, directs the Internal Control Office and other relevant departments in accordance with the Risk Management Regulations and oversees and manages risks across the Group, including its subsidiaries. The President identifies and assesses various risks, including those relating to finance, information security, compliance, quality, the environment, and natural disasters, and implements necessary measures to avoid or mitigate such risks. The Company also reviews its organizational structure, regulations, manuals, and other relevant arrangements as necessary in light of the occurrence of risks.

4. System to Ensure the Efficient Execution of Duties by Directors
   

   The Board of Directors develops and reviews the Regulations on Approvals, Organizational Regulations, Regulations on the Division of Duties and Responsibilities, and other related regulations, thereby clarifying the respective duties and authority of Directors and facilitating day-to-day reporting, communication, and consultation among them.

5. System to Ensure the Appropriateness of Operations Across the Group, Including the Company and Its Subsidiaries
   
   1. System for reporting by subsidiary directors to the Company
      

      The Company requires its subsidiaries to submit regular reports on their business performance, financial condition, and other important management matters.
      Directors, department heads, and factory managers responsible for overseeing subsidiary operations maintain a thorough understanding of those operations, provide appropriate direction, report to the President and the Board of Directors as necessary, and complete the required procedures, including obtaining approvals.

   2. System for the Efficient Execution of Duties by Subsidiary Directors
      

      Taking into account the nature and scale of each subsidiary’s operations, the Company ensures consistency among the subsidiaries’ regulations, manuals, and other rules and maintains a framework under which operations across the Group are conducted appropriately and consistently through various meetings.

   3. System to Ensure That the Duties of Subsidiary Directors and Employees Comply with Laws and Regulations
      

      Through audits, meetings, circulars, and other means, the Company provides guidance to ensure that the operations of its subsidiaries are conducted appropriately and in compliance with laws and regulations and their Articles of Incorporation. The Company also maintains a framework to ensure the reliability of financial reporting, including consolidated financial statements.

6. System to Ensure the Efficient Conduct of Audits by Audit & Supervisory Board Members
   1. Employees Assigned to Assist Audit & Supervisory Board Members
      

      If the Audit & Supervisory Board Members request that employees be appointed to assist them in the performance of their duties, the Company, after consultation with the Audit & Supervisory Board, appoints dedicated employees.
      
      During the period of such assignment, those employees are subject to the direction and supervision of the Audit & Supervisory Board Members. Matters relating to their performance evaluation, transfers, and treatment are determined through consultation between the Audit & Supervisory Board Members and the Directors.

   2. System for Reporting to Audit & Supervisory Board Members
      

      The Internal Control Office and the Audit Department report to the Audit & Supervisory Board Members, on a regular basis or as necessary, on the status of the design and operation of internal controls and the results of internal audits.
      Employees of the Company, as well as directors and employees of its subsidiaries, may report directly to the Audit & Supervisory Board Members if they determine that such a report is necessary.
      
      The Company has established regulations to ensure that any employee or director or employee of a subsidiary who makes such a report is not subjected to any disadvantageous treatment on the grounds of having made the report.

   3. Other Systems to Ensure the Efficient Conduct of Audits by Audit & Supervisory Board Members
      

      In addition to meetings of the Board of Directors, Audit & Supervisory Board Members attend meetings of the Executive Board, which comprises Directors and Executive Officers, to receive reports and explanations regarding specific business management policies and the status of business operations.
      
      The Company provides regular and ad hoc opportunities for the President and the Audit & Supervisory Board Members, and for the Audit & Supervisory Board Members and the Administration Div. and other relevant departments, to exchange views and receive reports. It also holds regular meetings between the Audit & Supervisory Board Members and Audit & Supervisory Board Members of subsidiaries, heads of subsidiary audit departments, and other relevant personnel, thereby maintaining a coordinated Group-wide audit framework.

   4. Audit Expenses and Other Costs
      

      If an Audit & Supervisory Board Member requests the Company to pay expenses incurred in the performance of their duties, the Company processes the request unless the expenses are deemed unnecessary for the performance of those duties.