Independence Standards for Outside Directors / Audit & Supervisory Board Members

The Company has established these “Independence Standards for Outside Directors/Audit & Supervisory Board Members” (hereinafter referred to as the “Standards”) as set forth below, with the aim of clarifying criteria for designating Outside Directors and Outside Audit & Supervisory Board Members of the Company (hereinafter collectively referred to as “Outside Executive(s)”) as Independent Directors/Audit & Supervisory Board Members.

  1. The Company determines that an Outside Executive or a candidate for Outside Executive of the Company is independent of the Company if one or more of the following do not apply with respect to the Outside Executive or the candidate for Outside Executive:
    • ⅰ.The individual is currently or recently*1 (the same applies hereunder) affiliated with the Company or its subsidiaries (hereinafter collectively referred to as the “Group”);
    • ⅱ.The individual is currently or recently affiliated with a business partner of which the Group accounts for at least 2% of the business partner’s prior fiscal year consolidated net sales, or a business partner that accounts for at least 2% of the Company’s prior fiscal year consolidated net sales;
    • ⅲ.The individual holds at least 10% of the total number of outstanding shares of the Company as of the last day of the prior fiscal year, or the individual is currently or recently affiliated with a company or a corporate group that holds at least 10% of the total number of outstanding shares of the Company as of the last day of the prior fiscal year;
    • ⅳ.The individual is currently or recently affiliated with a company or a group of which the Group holds at least 10% of the total number of issued shares as of the last day of the prior fiscal year;
    • ⅴ.The individual is currently or recently affiliated with an audit firm that conducts statutory audits of the Group;
    • ⅵ.The individual is currently or recently affiliated with a financial institution that is essential in enabling fund procurement of the Group, and is relied on to the extent that there is no substitute for the entity;
    • ⅶ.The individual currently or recently acts as a consultant, legal professional, accounting expert, or tax specialist who has received remuneration other than executive compensation exceeding 10 million yen directly from the Group during any one (1) business year of the past three (3) business years (in the case that such Individual receiving such remuneration is a corporation, association or other such body, then this refers to an individual belonging to such body);
    • ⅷ.The individual currently or recently acts as a trustee or other executor of business of an organization that has received contributions or grant funds exceeding 10 million yen from the Group during any one (1) business year of the past three (3) business years;
    • ⅸ.The individual acts as an executor of business of a company involved in mutual dispatch of directors and audit & supervisory board member to and from the Group, or;
    • ⅹ.The individual is a relative within the second degree of kinship of, or a member of family cohabiting with, an individual as described in any of the aforementioned items (excluding individuals who are not in key*2 positions).

    (Notes)*1: “Recently” refers to a period of less than three (3) years from the date of an individual’s appointment as a Director or an Audit & Supervisory Board Member of the Company.
    *2: An individual in a “key” position refers to an important employee of a respective company or business partner such as a director, an executive, an audit & supervisory board member and an executive officer, or an accounting auditor and a CPA or an attorney affiliated with respective audit firms and respective law firms.

  2. If any of the circumstances set forth above in section 1 apply to an individual, that individual may still be designated as an Independent Director/Audit & Supervisory Board Member at the discretion of the Board of Directors or the Audit & Supervisory Board following deliberations of the Nomination and Compensation Committee.
  3. Irrespective of whether or not any of the circumstances set forth above in section 1 apply, an Independent Director/Audit & Supervisory Board Member must not be in a situation that could be reasonably judged as one whereby the individual is unable to fulfill his or her duties as an Outside Executive acting in an independent capacity.
  4. An Independent Director/Audit & Supervisory Board Member must endeavor to ensure ongoing adherence to the Standards until his or her resignation, and must promptly report matters to the Company in cases where he or she no longer maintains independence as set forth in the Standards.
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