Basic Policy for Internal Control System Establishment

(1) The Representative Director and President shall ensure compliance with laws, regulations, and social ethics as assumptions for corporate activities by establishing the Kyudenko Charter of Behavior and repeatedly communicating the spirit of the Charter to officers and employees.

(2) The Compliance Committee chaired by the Representative Director and President shall deliberate on important issues for compliance and report the outcome to the Board of Directors.

(3) The Business Management Division, which serves as the division in charge of compliance, shall work on company-wide development of a compliance system and identification of issues, and ensure dissemination of manuals through offering education. In addition, each department/division and branch office shall develop a system for promoting compliance activities to plan and implement specific activities for compliance.

(4) The Company shall establish a compliance framework so that Directors and Audit & Supervisory Board Members can immediately report any compliance issue detected by them to the Compliance Committee, and the Kyudenko Group Compliance Desk (internal desk: phone, fax and email, external desk: phone and email) shall also be available to employees so they can directly report compliance issues and seek consultation.

(5) When the Business Management Division receives a report or whistleblowing from employees through the Kyudenko Group Compliance Desk or some other source, the Division shall investigate and report the details to the Compliance Committee after discussion with the relevant division on recurrence prevention measures, which shall be implemented company-wide.

(6) Any unfair treatment in terms of personnel affairs, salaries, and disturbance of the working environment against information providers or parties contacting the Kyudenko Group Compliance Desk for consultation is prohibited.

(7) The overall company shall take a firm attitude against inappropriate requests from anti-social forces and cut off any relationship with such forces.

A management supervisor shall be appointed for proper storage and management of documents and other records relating to Directors' execution of their duties, in accordance with the regulations on management of documents.

(1) While each division in charge shall establish rules and guidelines, conduct training, and prepare and distribute manuals for risks related to compliance, the environment, disasters, quality, and information security, the Business Management Division shall monitor the status of cross-organizational risks and address the risks with a company-wide approach.

(2) The Business Management Division shall audit the status of risk management of each department/division and branch office of the Company, and the results and countermeasures shall be regularly reported to the Internal Control Committee chaired by the Representative Director and President. In addition, the Directors in charge, etc. shall deliberate and determine countermeasures to report to the Board of Directors.

(1) The regulations on organization and administrative authority stipulate matters to be shared by each department/division, and basic roles, duties and authority, etc. of each position.

(2) The Management Meeting consisting of Directors, etc. appointed by the Representative Director and President shall be established for conducting preliminary discussions to facilitate the agenda of the Board of Directors meeting and to achieve efficient execution of operations.

(3) The Board of Directors shall formulate the Mid-term Management Plan and implement IT-based management of monthly/ quarterly financial results.

(1) The Company and its subsidiaries under the Company's direct management (hereinafter referred to as "Subsidiaries, etc.") shall work on nurturing compliance awareness for both Directors and employees based on the "Group Compliance Manual" established by the Company.

(2) Any important compliance issues arising from the Subsidiaries, etc., shall be deliberated by the Compliance Committee of the Company, and the results shall be reported to the Board of Directors of the Company.

(3) The Company shall establish the Kyudenko Group Compliance Desk to allow employees of Subsidiaries, etc. in Japan to make reports and consult directly with the Company upon the detection of compliance issues.

(1) The Business Management Division shall check the implementation status of the "risk management for business operations" table prepared by the Subsidiaries, etc.

(2) The Business Management Division shall conduct internal audits to check the risk management of the Subsidiaries, etc., and the results and countermeasures shall be regularly reported to the Internal Control Committee of the Company.

(1) The Company shall notify its annual "Basic Management Policy" to the domestic Subsidiaries, etc., and check the progress of annual policies formulated by the Subsidiaries, etc., based on the Company's Policy.

(2) The meeting of Presidents of affiliated companies mainly consisting of Directors, full-time Audit & Supervisory Board Members of the Company, and Presidents of domestic Subsidiaries, etc., shall be regularly held to share information including the Group's strategies.

(1) The "regulations on affiliated companies administration" formulated by the Company stipulate the matters to be reported by the Subsidiaries, etc., to establish a reporting system with main involvement by the Corporate Strategic Planning Division, and especially important matters shall be reported to the Management Meeting and the Board of Directors of the Company.

(2) With regard to important management matters of the Subsidiaries, etc., the "regulations on affiliated companies administration" designate matters which require prior discussion, and the Subsidiaries, etc. shall have prior discussions with the Company. Highly important matters shall be submitted to the Management Meeting and the Board of Directors of the Company, and decisions shall be made.

(3) The Business Management Division shall conduct internal audits on the status of reporting and prior discussion of the Subsidiaries, etc.

Employees shall exclusively be assigned to the Auditors' Office to assist audit duties.

(1) The Audit & Supervisory Board shall be notified of the transfer of employees who work for the Auditors' Office by the Director responsible for human resources, etc. in advance, and may request changes to such transfers of employees to the Director responsible for human resources, etc. as necessary by submitting the reason.

(2) In order to secure the effectiveness of instructions by Audit & Supervisory Board Members, the employees of the Auditors' Office shall not hold any concurrent positions relating to the execution of operations of the Company.

(1) Audit & Supervisory Board Members shall attend the Board of Directors meetings and other meetings including the Management Meeting to share important decisions and reported matters of the Company.

(2) Directors and employees are required to report matters described below to Audit & Supervisory Board Members.

1. Matters which may materially damage the Company
2. Results of internal audits and countermeasures
3. Matters reported to or consultation with the Kyudenko Group Compliance Desk
4. Other important matters of the Company

(3) Audit & Supervisory Board Members may request Directors and employees of the Company to make reports as necessary.

(4) When employees detect any significant facts that may materially damage the Company, they may directly report the facts to the Audit & Supervisory Board Members.

(1) Matters to be reported or matters for prior discussion to be submitted concerning the Subsidiaries, etc. at the Management Meeting and Board of Directors meetings shall be deemed to be reported when Audit & Supervisory Board Members attend such Management Meeting and the Board of Directors meetings.

(2) The results and countermeasures of internal audits for Subsidiaries, etc., conducted by the Business Management Division shall be reported to Audit & Supervisory Board Members in advance by the Business Management Division. In addition, the Audit & Supervisory Board Members shall attend meetings of the Internal Control Committee.

(3) Matters on violations of compliance by the Subsidiaries, etc., and matters reported to or consulted with the Kyudenko Group Compliance Desk shall be reported to Audit & Supervisory Board Members in advance by the Business Management Division. In addition, Audit & Supervisory Board Members shall attend meetings of the Compliance Committee.

(4) Any significant violation of laws and regulations or compliance detected by the Subsidiaries, etc. themselves, shall be reported to the Corporate Strategic Planning Division of the Company without delay, and the Corporate Strategic Planning Division shall report the violation to Audit & Supervisory Board Members.

(5) When Directors, Audit & Supervisory Board Members and employees of the Subsidiaries, etc. detect a significant fact that may materially cause damage, they may directly report it to Audit & Supervisory Board Members of the Company.

The Company prohibits any unfair treatment towards a person making a report to Audit & Supervisory Board Members on the grounds of making such a report.

A budget shall be reserved for audit expenses of the Audit & Supervisory Board members to secure effective audits.

(1) The Audit & Supervisory Board and Representative Director and President shall have regular meetings to exchange opinions.

(2) The Audit & Supervisory Board shall be guaranteed to have an opportunity to receive advice on audit duties by utilizing outside experts.