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Initiatives for Corporate Governance Code

[As of July 29, 2019]

In order to step up the effectiveness of corporate governance, the Company thoroughly takes steps to exercise adequate risk management, maintain an internal control system and ensure compliance from the perspective of securing management soundness and fairness and continuously strives to earn greater trust and strengthen the self-cleansing power of the Company. At the same time, we will make clear our policy on and status of initiatives taken toward implementing each principle of the Japan's Corporate Governance Code to facilitate sufficient dialogue with stakeholders.

< Corporate Governance Code >

The Financial Services Agency and Tokyo Stock Exchange established all 73 codes, including five basic principles, 30 principles and 38 supplementary principles for corporate governance guidelines.

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

Principle 1.4 Cross-Shareholdings
When companieshold shares of other listed companies as cross-shareholdings2, they should disclose their policywith respect to doing so,including theirpolicies regarding the reduction ofcross-shareholdings. In addition, the board should annually assess whether or not to hold each individual cross-shareholding, specifically examining whether the purpose is appropriate and whether the benefits and risks from each holding cover the company’s cost of capital. The results of this assessment should be disclosed.
Companies should establish and disclosespecificstandards with respect to the voting rights astotheir cross-shareholdings, and votein accordance with the standards.
The Company defines cross-shareholdings as referring “not to the shares of subsidiaries and associates but to those acquired for purposes other than pure investment (shares acquired for purposes other than pure investment among shares acquired by the Company other than the shares of subsidiaries and associates),”and, as a rule, does not hold cross-shareholdings. However, in the case of listed stocks of customers or business partners for which cross-shareholdings are expected to result in sustainable growth for both the Group and the cross-shareholding counterparties, because such holdings will likely “maintain and develop the relationship with such parties as strategic partners in business activities including a business alliance and joint R&D,” the Company shall make a decision based on comprehensive consideration of the situation. When the significance or rationale for holding such stocks is no longer recognized, the Company shall initiate negotiations to sell the positions, while taking into account the impact on the market, and other factors.
With regard to the voting rights associated with cross-shareholdings, the basic approach is to exercise them after investigating carefully each individual proposal and evaluating its reasonableness by taking into account the business direction, business strategy, business plans of the cross-shareholding counterparty, as well as social conditions.
In particular, in the event that doubts arise from the following perspectives, we make a decision on whether to approve or reject based on dialogue with the cross-shareholding counterparty:
(1) Whether the content of each proposal would lead to an increase in the corporate value of the crossshareholding counterparty over the medium to long term
(2) Whether it would impair the corporate value of the Company or any of the Group companies
Supplementary Principles 1.4.1
When cross-shareholders (i.e., shareholders who hold a company’s sharesfor the purpose of cross-shareholding) indicate their intention to sell theirshares,companiesshould not hinder the sale of the cross-held shares by, for instance, implying a possible reduction of business transactions.
In cases where a cross-shareholding counterparty indicates an intent to dispose of the cross-shareholdings, the Company shall not attempt to prevent the sale by hinting that it will reduce transactions with the other party.
Supplementary Principle 1.4.2
Companiesshould notengage in transactions with cross-shareholders which may harm the interests of the companies or the common interests of their shareholders by, for instance, continuing the transactions without carefully examining the underlying economic rationale.
With regard to transactions with cross-shareholding counterparties, the Company shall make a decision as to whether the Company is offering more favorable conditions relative to those offered to transactions with other third parties with attention to the following matters:
(1) Compatibility with the objective of holding the shares
(2) Track record of transactions
(3) Individual transaction conditions
Principle 3.1 Full Disclosure
(iii)
In addition to making information disclosure in compliancewith relevantlaws and regulations, companies should disclose and proactively provide the information listed below (along with the disclosures specified by the principles ofthe Code) in order to enhancetransparency and fairness in decision-making and ensure effective corporate governance:
(iii) Board policies and procedures in determining the remuneration of the senior management and directors;
(iii) The policy on determining remuneration of Directors, etc., and the process of determination are defined separately for Directors serving on the Audit and Supervisory Committee and other Directors. The remuneration for Directors (excluding those serving on the Audit and Supervisory Committee) is divided into basic remuneration, shares remuneration, and bonuses and is determined through consultation between the two Representative Directors (Chairman and President), who also take into consideration the opinion of the Audit and Supervisory Committee, based on the resolution of the Board of Directors, within the scope of remuneration resolved at the general meeting of shareholders.
The remuneration for Directors serving on the Audit and Supervisory Committee is determined through consultation among Directors serving on the Audit and Supervisory Committee.
Principle 4.1 Roles and Responsibilities of the Board (1)
Supplementary Principle 4.1.3
Based on the company objectives (business principles, etc.) and specific business strategies, the board shouldproactively engage in theestablishment and implementationofasuccession plan for the CEOand other top executivesand appropriately oversee the systematicdevelopmentof successioncandidates, deployingsufficient time and resources.
In responses to changes in both domestic and global business environment, and with the objective of further strengthening the management structure, the Company has set out “Standards for the Retirement Age of Officers,” which prescribe retirement ages in accordance with rank.
In addition to utilizing internal human resources, the Company also invites personnel who are not part of the organization to join the firm, based on its policy of reinvigorating the management team and promoting the circulation of management.
Plans for fostering the successors to the Representative Directors, CEO, and others of a corresponding level, shall be deliberated by the Board of Directors in a way that takes into consideration changes in domestic and global business environment and the development of the Company’s business.
Based on the results of these deliberations, the Board of Directors shall perform appropriate supervision of the plans for fostering successors, having taken into account experience, track record, human resources evaluation and interviews with each of the Directors.
Principle 4.2 Roles and Responsibilities of the Board (2)
Supplementary Principle 4.2.1
The board should design management remunerationsystems such that theyoperateas a healthy incentive togeneratesustainable growth,and determineactual remuneration amounts appropriatelythrough objective and transparent procedures.The proportion of management remuneration linked to mid-to long-termresults and the balanceof cash and stock should be set appropriately.
Incentives as part of the remuneration of Directors with executive authority over operations are provided by means of bonus payments. Under the Company’s performance-linked remuneration system, the amounts of payments are determined based on discussions held between the two Representative Directors (Chairman and President) and by comprehensively taking into account performance, magnitude of targets achieved and other factors in line with the respective positions and duties and within the scope of the total amount of remuneration, etc. based on the resolution of the general meeting of shareholders and the source of profit distribution for the fiscal year.
As for the remuneration for Directors with executive authority over operations, the basic remuneration is determined by setting the monthly standard compensation amount based on, in principle, position, duties and other elements from the perspective of fairness in personnel administration. Shares remuneration is determined, under a restricted shares remuneration system using shares of the Company, in consideration of the balance between shares remuneration and cash remuneration. A performance-linked remuneration system above is adopted for bonuses to incorporate a certain level of incentive factor for contributions made to business results for each fiscal year.
The Company currently does not adopt incentives that are linked to medium- to long-term performance, but will consider the possibility.
Principle 4.3 Roles and Responsibilities of the Board (3)
Supplementary Principle 4.3.2
Because the appointment/dismissalof the CEOis the most important strategic decision foracompany,the board shouldappointa qualified CEOthrough objective, timely,and transparent procedures,deploying sufficient time and resources.
The Company considers it a minimum requirement that the CEO, who supervises the management of the Company, shall be honest, forward-looking, strong-willed, and be possessed of a humble nature. In addition, the Company shall perform a comprehensive verification as to whether candidates for CEO meet requirements with regard to experience, knowledge, values and the ability to execute CEO’s duties, and shall nominate and select a successor to the CEO from among the candidates for the successor or the successor candidate pool.
Moreover, with regard to the nomination and selection, or developing a proposal for selection of a successor to the CEO, the Company shall ensure the objectivity and transparency of the decision by such measures as requesting the involvement and the advice of Independent Outside Directors, as appropriate, or when necessary by requesting an evaluation based on consultations with Independent Outside Directors.
Supplementary Principle 4.3.3
The board shouldestablishobjective, timely,and transparent proceduressuchthat a CEOisdismissed when it is determined, via an appropriate evaluation of the company’s business results,that the CEO isnot adequately fulfilling the CEO’sresponsibilities.
In relation to the CEO, in cases where a certain act by the CEO comes under the criteria for dismissing a Director presented in Principle 3.1 (iv), or when there is a deviation from the requirements presented in Supplementary Principle 4.3.2, or the risk of such a deviation, the Board of Directors shall carry out a prompt investigation and, after providing the opportunity for a hearing, request the involvement and the advice of Independent Outside Directors and deliberate the decision of whether to release or dismiss the CEO, while ensuring objectivity and transparency by such measures as requesting a report on suitability based on consultations with Independent Outside Directors, when necessary.
Principle 4.10 Use of Optional Approach
Supplementary Principle 4.10.1
Ifthe organizational structure of a company is either Company with KansayakuBoard or Company with Supervisory Committee and independent directors do not compose a majority of the board, in order to strengthen the independence, objectivity and accountability of board functions on the matters of nomination and remuneration of the senior management and directors, the company should seek appropriate involvement and advice fromindependent directors in the examination of such important matters as nominations and remuneration by establishing independentadvisory committeesunder the board, such as an optional nomination committee and an optional remuneration committee,to which independent directors make significant contributions.
The number of Independent Outside Directors is currently three (3) among ten (10) Directors in total and does not constitute a majority. However, the Audit and Supervisory Committee, a majority of which are Outside Directors, submits an opinion on such matters as nomination and remuneration as appropriate and requests explanations from the Board of Directors. In addition, each Independent Outside Director states opinions at Board of Directors’ meetings and to individual directors and provides advice as necessary, drawing on his/her strong expertise and ample experience. For these reasons, the Company believes that proper management and supervision are in place.
Principle 4.11 Preconditions for Board and Kansayaku Board Effectiveness
The board should be well balanced in knowledge, experience and skills in order to fulfill its roles and responsibilities, and it should be constituted in a manner to achieve both diversity, including genderand international experience, and appropriate size. In addition, persons with appropriate experience andskills as well as necessary knowledge on finance, accounting,and the law should be appointed as kansayaku.In particular, at leastone person who has sufficientexpertiseonfinance and accounting should be appointed as kansayaku.
The board should endeavor to improve its function by analyzing and evaluating effectiveness of the board as a whole.
[Knowledge, competence, diversity and size of the Board of Directors]
As a company with an audit and supervisory committee, the Board of Directors of the Company currently comprises 10 individuals (of which seven are Directors and three are Directors serving on the Audit and Supervisory Committee). The Board includes Directors with executive authority over operations who are deeply familiar with each of the business areas of the Company, as well as Outside Directors, comprising an attorney at law holding US legal qualifications, as well as those who are specialists with a deep knowledge of company management, information systems development, and corporate finance. Furthermore, with regard to their selection, the basic approach is to take into account experience, knowledge and personal character, with absolutely no restrictions or conditions relating to gender, nationality and so on. The Company strives to achieve a composition for the Board of Directors that balances both diversity and an adequate size.

[ Directors with important concurrent positions at other companies]
Currently, there are no Directors or Directors serving on the Audit and Supervisory Committee who hold important concurrent positions at other companies. In the event that Directors come to hold important concurrent positions, this situation will be disclosed, in a timely and appropriate manner, in the notice of the general meeting of shareholders, the securities report, and in corporate governance- related reports.

[Initiatives aimed at ensuring effectiveness]
The Company strives to improve the functionality of the Board of Directors by issuing, at the end of every fiscal year, Director’s Business Execution Confirmation Sheet and Internal Control Environment Check Sheet, etc.
Based on the content of Director’s Business Execution Confirmation Sheet and Internal Control Environment Check Sheet, the Audit and Supervisory Committee analyzes and evaluates the effectiveness of the Board of Directors as a whole, and conveys its opinion to the Board of Directors.
Principle 5.2 Establishing and Disclosing Business Strategies and Business Plans
When establishing and disclosing business strategies and business plans, companies should articulate their earnings plans and capital policies, and present targets for profitability and capital efficiency after accurately identifying the company’s cost of capital. Also, companies should provide explanations that are clear and logical to shareholders with respect to the allocation of management resources, such as reviewing their business portfolio and investments in fixed assets, R&D, and human resources, and specific measures that will be taken in order to achieve their plans and targets.
In order to enhance corporate value over the medium to long term, the Company publishes not only numerical targets of net sales and operating profit (financial information) but also information on management and business strategy (non-financial information), and works to promote the understanding of shareholders and investors.
When publishing such information, the Company uses the targets of such as ROE and dividend payout ratio (financial information), which recognize the cost of capital. Specific measures (non-financial information) aimed at the realization of these targets, and the outcomes of medium- to long-term business plans, are explained simply and concisely at the general meeting of shareholders and at the financial results briefing meeting, etc., as well as being made available on the company website.

Disclosure Based on the Principles of the Japan's Corporate Governance Code

Principle 1.4 Cross-Shareholdings
When companies hold shares of other listed companies as cross-shareholdings2, they should disclose their policy with respect to doing so, including their policies regarding the reduction of cross-shareholdings. In addition, the board should annually assess whether or not to hold each individual cross-shareholding, specifically examining whether the purpose is appropriate and whether the benefits and risks from each holding cover the company’s cost of capital. The results of this assessment should be disclosed.
Companies should establish and disclose specific standards with respect to the voting rights as to their cross-shareholdings, and vote in accordance with the standards.
The basic policy and view on cross-shareholdings is as described in [Reasons for Non-compliance with the Principles of the Japan’s Corporate Governance Code].
Principle 1.7 Related Party Transactions
When a company engages in transactions with its directors or major shareholders (i.e., related party transactions), in order to ensure that such transactions do not harm the interests of the company or the common interests of its shareholders and prevent any concerns with respect to such harm, the board should establish appropriate procedures beforehand in proportion to the importance and characteristics of the transaction. In addition to their use by the board in approving and monitoring such transactions, these procedures should be disclosed.
The Company defines in its Regulations for the Board of Directors that any transaction by a Director involving competition or conflict of interest is subject to a resolution by the Board of Directors.
In addition, any business relationship, etc., between a Director of the Company and its group company is indicated in the securities report and the notice of the general meeting of shareholders pursuant to relevant laws and regulations.
Principle 2.6 Roles of Corporate Pension Funds as Asset Owners
Because the management of corporate pension funds impacts stable asset formation for employees and companies’ own financial standing, companies should take and disclose measures to improve human resources and operational practices, such as the recruitment or assignment of qualified persons, in order to increase the investment management expertise of corporate pension funds (including stewardship activities such as monitoring the asset managers of corporate pension funds), thus making sure that corporate pension funds perform their roles as asset owners. Companies should ensure that conflicts of interest which could arise between pension fund beneficiaries and companies are appropriately managed.
The Company establishes a defined contributions pension plan for the employees. In addition, the Company provides continuous education for those insured, such as by periodically inviting speakers to give seminars aimed at deepening their understanding of, for example, a matching contribution plan and of how assets under management are selected, so as to assist employees with stable formation of assets.
Principle 3.1 Full Disclosure
In addition to making information disclosure in compliance with relevant laws and regulations, companies should disclose and proactively provide the information listed below (along with the disclosures specified by the principles of the Code) in order to enhance transparency and fairness in decision-making and ensure effective corporate governance:

(i) Company objectives (e.g., business principles), business strategies and business plans;
(ii) Basic views and guidelines on corporate governance based on each of the principles of the Code;
(iii) Board policies and procedures in determining the remuneration of the senior management and directors;
(iv) Board policies and procedures in the appointment/dismissal of the senior management and the nomination of directors and kansayaku candidates; and
(v) Explanations with respect to the individual appointments/dismissals and nominations based on iv).
(i) The Company’s philosophy, vision and business plan, basic policy and management strategy of each fiscal year are announced at the financial results meeting, etc., as well as publicized along with supplementary materials on the Company’s website. (https://www.cresco.co.jp/ir/)

(ii) The Company recognizes the “expectations” of its various stakeholders, as presented in “1. Basic Views,” above.

(iii) The policy on determining remuneration of Directors, etc., and the process of determination are defined separately for Directors serving on the Audit and Supervisory Committee and other Directors. The remuneration for Directors (excluding those serving on the Audit and Supervisory Committee) is divided into basic remuneration, shares remuneration, and bonuses and is determined through consultation between the two Representative Directors (Chairman and President), who also take into consideration the opinion of the Audit and Supervisory Committee, based on the resolution of the Board of Directors, within the scope of remuneration resolved at the general meeting of shareholders. The remuneration for Directors serving on the Audit and Supervisory Committee is determined through consultation among Directors serving on the Audit and Supervisory Committee.

(iv) With regard to the policy and procedure followed when nominating candidates, the Company seeks to appoint human resources in a way that takes diversity into account, and based on the corporate philosophy and vision of the Company, candidates are selected fundamentally on the assumption that they can be expected to contribute to the further development of the Company. And after a comprehensive evaluation on the matters presented below, nominations are made and are discussed by the Board of Directors, following which a proposal is tabled at the general meeting of shareholders.

(1) Experience
(2) Leadership, and the ability to form an accurate understanding of the issues faced by the departments that they supervise
(3) Personality
(4) The ability and insight required to resolve problems in cooperation with relevant parties both inside and outside of the Company
(5) The understanding to thoroughly comply with laws and regulations, and corporate ethics

Also, in cases where the individual’s abilities, insights, etc., deviate from those given in the reasoning behind the nomination of the candidate, after the opportunity for a hearing is provided, the situation shall be deliberated by the Board of Directors, and the individual shall be relieved of their duties. In addition, in cases that meet the following criteria for dismissing a Director, when considering whether or not to dismiss, the Board of Directors shall afford the utmost respect to the opinions of Independent Outside Directors. If a decision of dismissal is ultimately reached, a proposal for dismissal shall be tabled at the general meeting of shareholders.

(1) When there has been an infringement of laws and regulations, or of the Articles of Incorporation, during the course of his/her duties
(2) When a mental or physical disability has been suffered
(3) When the individual is clearly unfit for his/her duties
(4) When other due cause exists

(v) The career summary, important concurrent positions, etc., consisting the materials on which the nomination of a Director is based are disclosed in the notice of the general meeting of shareholders and on the Company website.
In addition, in the event of a Director being relieved or dismissed, the reasoning shall be disclosed, but a more appropriate method shall be employed, than those such as timely disclosure and the like.
Principle 4.1 Roles and Responsibilities of the Board (1)
Supplementary Principle 4.1.1
The board should clearly specify its own decisions as well as both the scope and content of the matters delegated to the management, and disclose a brief summary thereof.
The Company may delegate the decision to execute important business operations based on resolutions of the Board of Directors in accordance with relevant laws and regulations to Directors as stipulated in its Articles of Incorporation and disclosed thereof. In addition to the matters stipulated in the Articles of Incorporation and in laws and regulations, the Board of Directors of the Company defines matters to be resolved by the Board of Directors in the Regulations for the Board of Directors. The decision to execute other business operations is delegated to each Director in light of the size and the nature of each transaction.
Principle 4.9 Independence Standards and Qualification for Independent Directors
Boards should establish and disclose independence standards aimed at securing effective independence of independent directors, taking into consideration the independence criteria set by securities exchanges. The board should endeavor to select independent director candidates who are expected to contribute to frank, active and constructive discussions at board meetings.
In appointing Outside Directors, the Company focuses on each candidate’s abundant experience and highlevel expertise in corporate management, etc., in addition to the independence requirements set forth under the Companies Act. The Company also takes into consideration the requirements for independent directors set forth by Tokyo Stock Exchange, Inc. and makes it a standard that Independent Outside Directors nominated do not impose a risk of any conflict of interest to arise with general shareholders.
Principle 4.11 Preconditions for Board and Kansayaku Board Effectiveness
Supplementary Principle 4.11.1
The board should have a view on the appropriate balance between knowledge, experience and skills of the board as a whole, and also on diversity and appropriate board size. Consistent with its view, the board should establish policies and procedures for nominating directors and disclose them along with its view.
Although no policy or procedure on diversity and size has been defined at the present, the Board of Directors works to comprehensively taking into account factors in appointing Directors to achieve an appropriate balance of members to cover each function and business unit of the Company and to ensure accurate, speedy decision-making while also giving considerations to diversity.
The Board of Directors consists of seven (7) Directors not serving on the Audit and Supervisory Committee (including one (1) Outside Director) and three (3) Audit and Supervisory Committee Members (including two (2) Outside Directors), including three (3) Independent Outside Directors. The Company believes that this is an appropriate size for ensuring accurate, speedy decision-making.
With regard to the number of the board, the Board of Directors shall have not more than twelve (12) Directors other than those serving on the Audit and Supervisory Committee and not more than four (4) Directors serving on the Audit and Supervisory Committee as stipulated in the Articles of Incorporation.
Supplementary Principle 4.11.2
Outside directors, outside kansayaku, and other directors and kansayaku should devote sufficient time and effort required to appropriately fulfill their respective roles and responsibilities. Therefore, where directors and kansayaku also serve as directors, kansayaku or the management at other companies, such positions should be limited to a reasonable number and disclosed each year.
The Company has a system in place where all Directors excluding those serving on the Audit and Supervisory Committee are Directors who do not concurrently serve as outside directors of other listed firms, thereby allowing them to concentrate on business operations as Directors of the Company. One (1) Director (Director not serving on the Audit and Supervisory Committee) and two (2) of the three (3) Directors serving on the Audit and Supervisory Committee are Independent Outside Directors who the Company judges can secure sufficient time and effort to serve as Outside Directors of the Company. The important concurrent position of each Director is disclosed in the Business Report and the Reference Documents for the General Meeting of Shareholders.
Supplementary Principle 4.11.3
Each year the board should analyze and evaluate its effectiveness as a whole, taking into consideration the relevant matters, including the self-evaluations of each director. A summary of the results should be disclosed.
At the end of each fiscal year, the effectiveness of the Board of Directors is evaluated based on the result of the analysis and evaluation of all Directors performed by the Directors using a Director’s Business Execution Confirmation Sheet and other documents. As a result, a positive evaluation was given by and large regarding the composition and operation of the Board of Directors. The effectiveness of the Board of Directors as a whole is thus judged to be ensured.
Principle 4.14 Director and Kansayaku Training
Supplementary Principle 4.14.1
Directors and kansayaku, including outside directors and outside kansayaku, should be given the opportunity when assuming their position to acquire necessary knowledge on the company’s business, finances, organization and other matters, and fully understand the roles and responsibilities, including legal liabilities, expected of them. Incumbent directors should also be given a continuing opportunity to renew and update such knowledge as necessary.
The Company provides Directors and Audit and Supervisory Committee Members (Auditors in subsidiaries), when assuming their position, the opportunity to participate in training programs given by an external training institution on business strategy, finance, organization, leadership, etc., as a way of encouraging individuals to acquire the knowledge necessary for decision-making associated with managing a corporation and promoting individuals to enhance their management skills to a level required to properly execute business operations. Furthermore, also after Directors and Audit and Supervisory Committee Members (Auditors) assume their position, the Company provides them with the opportunity to participate in external seminars, etc., so that they may acquire and brush up new knowledge in line with the circumstances of the times as well as crisis responses. If necessary, the Company also provides Outside Directors with explanations on an outline of the Company, issues faced in business, etc.
Principle 5.1 Policy for Constructive Dialogue with Shareholders
Companies should, positively and to the extent reasonable, respond to the requests from shareholders to engage in dialogue (management meetings) so as to support sustainable growth and increase corporate value over the mid- to long-term. The board should establish, approve and disclose policies concerning the measures and organizational structures aimed at promoting constructive dialogue with shareholders.
[Promoting Constructive Dialogue]
The Company designates its President and Executive Officer and Director and Managing ExecutiveOfficer, and General Manager of Accounting & Finance Unit as the persons in charge.
The Public Relations & IR Office assists the efforts for promoting dialogue by making arrangements, preparing materials, etc. The Company has a system in place where the Public Relations & IR Office coordinates on a day-to-day basis with other departments and group companies and also coordinates with the Legal Department which serves as the secretariat for the Board of Directors and the Audit and Supervisory Committee as well as for the Internal Control Committee and other committees in an effort to widely come in contact with management information across the organization and collect and compile the information necessary for promoting dialogue. In regard to the contents of dialogues, the President and Executive Officer or the Department Manager of the Public Relations & IR Office provides feedback to the Board of Directors, etc., as necessary to promote sharing of information.

[Creating Opportunities for Dialogue]
The Company holds quarterly (four times a year) financial results meeting for institutional investors and analysts and irregular (four to six times a year) financial results meeting for individual investors. Meanwhile, the Company provides explanations on the Company’s share, management plan, financial results, etc., to shareholders and investors in conferences and individual visits in Japan and abroad and seeks various comments and questions from shareholders and investors on such occasions.

[Day-to-day IR Activities]
The Public Relations & IR Office takes the lead in compiling materials, coordinating information exchange among relevant departments, taking care of external activities such as responding to phone interviews, attending meetings (including individual visits and interviews), delivering information (timely disclosure, news releases, etc.), creating and managing the IR site and preparing various IR tools.

[Information Management]
In order to prevent leakage of information that may impact the stock price while preparing materials for the announcement of financial results, the Company defines the three-week period retrospective of the day of the announcement of financial results in each quarter as the “Quiet Period” during which it refrains from conducting IR activities. When pursuing dialogue with shareholders regardless of in a financial results meeting or any other meeting, the Company ensures fair disclosure in handling important unreleased facts by managing information in compliance not only with the Financial Instruments and Exchange Act and other relevant laws and regulations but also with its Regulations for Insider Trading Prevention, which is a set of internal regulations defined with the purpose of preventing insider trading. In addition, the Department Manager of the Public Relations & IR Office is present at financial results meetings and various meetings for promoting dialogue in an effort to place uniform control over the information delivered by the Company.