Corporate Governance

• Summary of Corporate Governance Structure of the Submitting Company and Reason for Selection of the Structure
• Reasons for Not Implementing the Principles of the Corporate Governance Code
• Disclosure Based on Each Principle of the Corporate Governance Code
• Information on Corporate Institutions
• Corporate Governance Structure
• Other matters related to corporate governance
• The Status of Internal Audits, Audits by Audit & Supervisory Board Members, and Accounting Audits
• Overview of Personal Relationships, Capital Relationships, or Transactional Relationships and other Interests between the Company and the Company’s Outside Directors, or Outside Audit & Supervisory Board Members
• Views on the Functions and Roles of Outside Directors and Outside Audit & Supervisory Board Members in Corporate Governance of the Company, the Independence Standard or Policy for Selecting Outside Directors and Outside Audit & Supervisory Board Members and the State of Their Appointment, and Collaboration between the Outside Directors, Outside Audit & Supervisory Board Members and Internal Control Division and Audits
• Directors’ Compensation, etc.
• Standards Concerning Independency of Outside Directors and Outside Audit & Supervisory Board Members
• Policy for Constructive Dialogue with Shareholders

Summary of Corporate Governance Structure of the Submitting Company and Reason for Selection of the Structure

Our vision is that it is crucial to place emphasis on the health, transparency and efficiency of corporate management, as well as to establish a corporate structure that will allow us to respond expeditiously and appropriately to rapid changes in our business environments. Specifically, in addition to speeding up decision-making and implementing mutual supervision of Directors that are well-versed in the business, we have enhanced our ability to supervise our management from a third-party perspective by Outside Directors and Outside Audit & Supervisory Board Members. By introducing the delegation-based Executive Officer with title structure and a division / business division system, we work toward efficient business execution, while we have established the Management Meeting consisting of Executive Directors, including the President, Representative Director, and Executive Officers in order to execute business flexibly and promptly. We are also engaged in implementing and enhancing our structure to ensure more openness in our disclosure to shareholders and investors.

The Company Group places the following corporate ideals at the root of its management, making it the starting point for all corporate activities.

Purpose

To Empower Creativity and Excitement Worldwide

Slogans

• Inspire the Enjoyment of Creativity
• Be the BEST rather than the BIGGEST
• The Roland Family – Cooperative Enthusiasm

Mission

Bringing new opportunities to society through digital technology

Vision

Transforming your imagination into reality

Additionally, the Company has also defined the following “Code of Conduct” to conduct business activities in line with the corporate ideals.

Code of Conduct

• Creation of New Value

  • We will maintain a spirit of creative inquiry to help make people’s lives better by creating innovative value.
  • We will strive harder towards making the company the best rather than the biggest and will work to improve corporate value through the excellence, sustainable business development.
  • We will continually challenge new fields with unrestricted imagination and originality.

• Global Business Expansion

  • We will constantly pursue new opportunities and engage in business activities with the goal of global expansion.
  • We will respect the diversity in various regions around the globe, including their histories and cultures, and will remain conscious of the importance of harmonious coexistence as we conduct our business activities.
  • We will do our part to conserve the global environment in order to ensure a pleasant society for the people of the world.

• Clean and Open Corporate Culture

  • Each one of us will remain conscious of social responsibility and will observe laws and social ethics when conducting ourselves.
  • Each one of us will build trust by following our consciences to make fair decisions and by maintaining transparency and accountability.
  • We will create a corporate culture in which everybody can work with enthusiasm and passion.

Reasons for Not Implementing the Principles of the Corporate Governance Code

• Supplementary Principle 2-4-1 Ensuring diversity in the promotion of core human resources

  We recognize that society consists of people with diverse attributes, and that it is essential to recognize, respect, and utilize diversity. Accordingly, the Code of Conduct clearly states that we will develop our business based on the concept of respect for diversity and coexistence. As a global company, in the past we have appointed foreigners to the Directors and Executive Officers who are responsible for the management of our company, regardless of nationality, and also appointed females to Directors, department heads and managers, as well we will continue to maintain and promote diversity in the future. We have been promoting an environment and system where diverse talents can thrive. At this point, we have not set measurable target values, but we will continue to maintain and promote diversity for the medium to long-term improvement of corporate value.

  In addition, the Company (Group) has set the two pillars of strategic human resources: securing human resources (recruitment, development, and optimal deployment) that will drive our growth strategy and supporting the self-realization of diverse individuals. From the perspectives of human resource development and improving the internal environment, we will mainly strengthen the following.

  • Selection and training of next-generation leaders and the systematic development of successors to management
  • Developing leaders who can leverage diverse human resources to drive the organization
  • Talent management and job rotation
  • Support for education to promote reskilling
  • Creating an environment that promotes a variety of working styles

Disclosure Based on Each Principle of the Corporate Governance Code

• Principle 1-4 Cross-Shareholdings

  The Company does not hold any cross-shareholdings of listed companies.

• Principle 1-7 Related Party Transactions

  When the Company engages in transactions with its Directors, Audit & Supervisory Board Members or major shareholders (i.e., related party transactions), designated approval is required as defined by internal regulations such as the “RULES OF THE BOARD OF DIRECTORS” and “APPROVAL RULES.” The Company deliberates and confirms that such transactions will not harm the interests of the Company or the common interests of its shareholders. Following disclosure standards, information on related party transactions is disclosed in the Business Report and the Securities Report.

• Principle 2-6 Roles of Corporate Pension Funds as Asset Owners

  The Company has established the "Retirement Pension Assets Management Committee" by selecting employees from Corporate Division who are well-versed in pension management. The committee deliberates on important matters for the safe and efficient management of pension assets, reports them to the Board of Directors, and receives counsel from external consultants as necessary to complement and improve their expertise. From January 2024, we abolished the “defined benefit pension system” and transitioned all corporate pensions to the “defined contribution pension system”. Therefore, our company has ended the operation of the corporate pension reserve fund and dissolved the committee.

• Principle 3-1 Full Disclosure

  1. Corporate ideals, business strategy and business plans: The Purpose, Slogans, Mission, and Vision are disclosed on the Company’s website and in its financial results briefing materials and disclosure materials, etc.
  2. Basic views and guidelines on corporate governance: Basic views are disclosed on the Company’s website and the Securities Report.
  3. Policies and procedures in determining the compensation of Directors: Regarding the determination of compensation for Directors, based on the "Policy for Determining the Content of Individual Compensation for Directors," which was resolved by the Board of Directors in February 2021, we strive to maintain fairness, transparency, and objectivity in procedures with the Nomination and Compensation Committee, chaired by an Independent Outside Director, serves as an advisory body to the Board of Directors. In addition, with regard to the amount of Directors’ compensation, etc., information is disclosed on the Company’s website, the NOTICE OF THE ORDINARY GENERAL MEETING OF SHAREHOLDERS, and the Securities Report.
  4. Policies and procedures for the appointment of candidates for Director and Audit & Supervisory Board Member: When nominating candidates for Directors and Audit & Supervisory Board Members, the Nomination and Compensation Committee, chaired by an Independent Outside Director, serves as an advisory body to the Board of Directors, discusses the suitability of candidates in light of the selection criteria stipulated in the “RULES OF NOMINATION AND COMPENSATION COMMITTEE,” and is reported to the President, Representative Director. The President, Representative Director submits this candidate appointment proposal to the Board of Directors and Audit & Supervisory Board, and upon their resolution, it is proposed to the General Meeting of Shareholders.
  5. Explanations with respect to individual appointments of senior management and appointment of Directors and Audit & Supervisory Board Members: Reasons for appointment of all candidates are disclosed in the NOTICE OF THE ORDINARY GENERAL MEETING OF SHAREHOLDERS.

• Supplementary Principle 3-1-3 Enhancement of Information Disclosure

  Based on the corporate ideals, we have formulated a "Basic Policy on Sustainability" to accelerate its efforts to achieve a sustainable society and increase our corporate value. The Sustainability Committee, which is an advisory body to the President, is primarily responsible for formulating plans related to sustainability-related activity policies, materiality, strategies, business models, KPIs, etc. and considers investment in human capital and intellectual property from the perspective of sustainable growth. In FY2023, we identified key sustainability issues (materiality), and will develop them into a roadmap for medium- and long-term initiatives, and reflect them in its medium-term management plan, which begins in FY2024, to promote initiatives.

  We believe that climate change issues may lead to risks and opportunities for the company as well, and are working to enhance the quality and quantity of information disclosure while improving governance and risk management systems.

  In addition, as a public company, we recognize that it is its responsibility to comply with laws and regulations and fulfill our social responsibilities. We therefore strive to build relationships of mutual trust with its stakeholders to improve our corporate value, while proactively engaging in efforts to make effective use of resources and reduce our environmental impact, and other CSR activities.

  Please refer to the Company’s website for Basic Policy on Sustainability, Information related to Climate Change, and information on CSR activities.

  https://www.rolanddg.com/en/about-us/sustainability

  Investment in human capital:

  As we expand our business globally, we are actively appointing foreign Directors and Executive Officers to oversee our global sales network, and we are building a diverse management system to gather the diverse voices of our stakeholders around the world, including our customers and employees, and utilize them for our next growth. Our strategic human resource policy is to secure human resources that will drive our growth strategy (recruitment, training, and optimal placement) and to support the self-realization of diverse individuals. To secure the human resources that will drive our growth strategy, we are not only strengthening the hiring of specialists and mid-career hires who will play an important role in the execution of our strategy, but we are also working to select and train the next generation of leaders and systematically develop management-level personnel. In the future, we will also strengthen talent management and job rotation to ensure an appropriate human resources portfolio (optimal allocation). To support the self-realization of diverse individuals, we will further strengthen our efforts to promote the empowerment of women, people with disabilities, and senior human resources, and at the same time, strengthen the development of leaders who can lead the organization by utilizing diverse human resources. At the same time, we will strengthen our efforts to develop leaders who can utilize diverse human resources and lead the organization. Furthermore, we will create an environment that allows employees to maximize their potential by supporting education that encourages reskilling and by enhancing the environment for diverse work styles regardless of time and place. We will also proactively invest in systems to improve the efficiency of conventional human resource management operations and to make human resource information more visible, which are essential for realizing these strategic human resource management measures.

  Investment in intellectual property:

  We believe that the utilization of and investment in intellectual property is essential for us to achieve a shift in our business portfolio and further growth. We will invest aggressively in the development of environmentally friendly inks, expansion of connected services, promotion of Co-Creation activities, establishment of traceability systems to ensure safety and security in medical facilities and systems to improve the efficiency of hospital management, and sales of the digital cell production system, our unique production method in order to create new markets.

• Supplementary Principle 4-1-1 Clarification of Scope of Delegation to Management

  The Company defines in its internal regulations such as the “RULES OF THE BOARD OF DIRECTORS” with regard to items defined by laws and regulation, items for resolution by the Board of Directors as important items, and items for reporting concerning execution status; and the “AUTHORITY RULES” with regard to the authority of Executive Directors. The Company defines in its internal regulations such as the “APPROVAL RULES” with regard to the range of decision-making delegation to management, etc.

• Principle 4-9 Independence Standards and Qualification for Independent Outside Directors

  The Company has defined the “Standards Concerning Independency of Outside Directors and Outside Audit & Supervisory Board Members” and discloses them on the Company’s website. With regard to appointment of personnel, in addition to standards set by the Tokyo Stock Exchange, candidates must satisfy the Company’s proprietary standards, emphasize diversity, have experience and expertise directly involved in company management, can be expected to contribute to honest, active and constructive consideration at the Board of Directors, and we strive to appoint a person who can attend the Board of Directors Meetings.

  Standards Concerning Independency of Outside Directors and Outside Audit & Supervisory Board Members

  PDF：196KB

• Supplementary Principle 4-10-1 Authority, Roles, etc. of the Nomination and Compensation Committee

  The Company has appointed three Independent Outside Directors but has not reached the majority of the Board of Directors. Therefore, the Nomination and Compensation Committee has been established as an advisory body to the Board of Directors in order to strengthen the fairness, transparency, and objectivity of procedures related to the treatment of executives and Directors, and to enhance corporate governance. In addition, in order for the Board of Directors to have a good balance of knowledge, experience, and abilities to effectively fulfill its roles and responsibilities, The RULES OF NOMINATION AND COMPENSATION COMMITTEE stipulate that the Committee should make proposals that balance appropriate scale and diversity, including gender, internationality, work history, and age.

• Supplementary Principle 4-11-1 Disclosure of Views Concerning the Diversity of the Board of Directors

  Policies and procedures regarding the appointment of the Company’s Directors are as shown in Principle 3-1 ⅳ, and the Board of Directors of the Company shall be appointed within the framework of a maximum of ten members, as defined in the Articles of Incorporation. The Board of Directors identifies the skills, etc. that it should possess in light of the management strategy, and then creates a skill matrix that lists the knowledge, experience, abilities, etc. of each Director as a whole, thereby giving due consideration to appropriate business management. Regarding the management experience of Independent Outside Directors at other companies, the criteria for appointment of Directors by the Nomination and Compensation Committee are set such that Independent Outside Directors include those who have management experience. The skill matrix is disclosed in the presentation materials of the Ordinary General Meeting of Shareholders, and the management experience at other companies is disclosed in the NOTICE OF THE ORDINARY GENERAL MEETING OF SHAREHOLDERS and the Securities Report.

• Supplementary Principle 4-11-2 Disclosure of Status of Concurrent Positions

  With regard to Outside Directors and Outside Audit & Supervisory Board Members of the Company, appointment is made, with the ability and will to attend various meetings in person, including the General Meetings of Shareholders and Board of Directors Meetings, as appointment standards. Active discussions are made from various angles, and the Company works to strengthen the structure to allow for the Board of Directors to function effectively. Furthermore, concerning the concurrent holding of officer positions at other companies, these items are resolved by the Board of Directors for Executive Directors. For Outside Directors (Non-executive Directors), these items are notified in advance to the President, Representative Director in writing and reported at the immediate meeting of the Board of Directors. Additionally, the maximum number of listed companies at which Outside Directors serve as Directors concurrent positions is limited to a maximum of five. If it exceeds this limit, these items are resolved at the Board of Directors. Furthermore, the Company believes that the current status of concurrently held positions and attendance is in a reasonable range, as the rate of attendance is extremely high. The current status of attendance is disclosed every year in the NOTICE OF THE ORDINARY GENERAL MEETING OF SHAREHOLDERS, and the status of concurrently held positions in the NOTICE OF THE ORDINARY GENERAL MEETING OF SHAREHOLDERS and the Securities Report.

• Supplementary Principle 4-11-3 Disclosure of Outlines of Analysis and Evaluation Results on Effectiveness of the Board of Directors

  The Company conducts questionnaires to Directors and Audit & Supervisory Board Members on the effectiveness of the Board of Directors and reports the questionnaire results to the Board of Directors by the Board of Directors Secretariat. The Company then discusses improvement plans for the Board of Directors with more effectiveness, and makes improvements as necessary. Based on the questionnaire results, the Company considers that the effectiveness of the Board of Directors as a whole is ensured without any major problem.

• Supplementary Principle 4-14-2 Disclosure of Training Policy

  With regard to the Company’s Directors and Audit & Supervisory Board Members, the Company’s policy is to hold timely training sessions by outside instructors, etc., as necessary, based on the following framework with the objective of achieving the appropriate fulfillment of duties and responsibilities expected of a Director or Audit & Supervisory Board Member.

  • Create opportunities for new Directors and Audit & Supervisory Board Members to acquire necessary knowledge concerning business, finance, and organizations, etc.
  • Create opportunities for Outside Directors and Outside Audit & Supervisory Board Members to share and deepen understanding of business content and management issues
  • Create opportunities to acquire other knowledge, etc., necessary to fulfill responsibilities

• Principle 5-1 Policy for Establishing Systems and Efforts to Promote Constructive Dialogue with Shareholders

  With regard to dialogue with institutional investors and individual investors, the Company positively responds to them to a reasonable extent. Additionally, the Company has defined the “Policy for Constructive Dialogue with Shareholders” and discloses it on the Company’s website.

  Policy for Constructive Dialogue with Shareholders

  PDF：69.8KB

  * Titles of supplementary principles are provided for convenience in the interest of readability.

Information on Corporate Institutions

The Company adopts an Audit & Supervisory Board Members system. Details of the main bodies of the Company including the Board of Directors are as follows:

• a. Board of Directors

  The Board of Directors consists of six Directors (including four Outside Directors) and meets at least once every month to make decisions on crucial operational matters and oversee the execution of Directors’ duties.

• b. Management Meeting

  The Management Meeting consists of Executive Directors including the President, Representative Director and Executive Officers, is held typically once every month and supervise the business execution of Executive Officers by having Executive Officers explain deliberation proposals and report on business execution.

• c. Audit & Supervisory Board

  The Audit & Supervisory Board consists of three Audit & Supervisory Board Members (including two Outside Audit & Supervisory Board Members) and meets in principle at least seven times a year to receive reports on important matters relating to audits, as well as carry out discussions and make resolutions on these matters. Additionally, a forum for sharing information and exchanging views, etc., among Audit & Supervisory Board Members will be installed as necessary, in order to contribute to the formulation of audit opinion and enhance the effectiveness of audits. In order to gain an understanding of important decision-making processes and the status of business execution, Audit & Supervisory Board Members also participate in Board of Directors meetings, Management Meetings, and other important meetings within the Company. Audit & Supervisory Board Members also conduct audits on various business locations and subsidiaries in addition to engaging in strengthening its function of monitoring the execution of Directors’ duties.

Members of each corporate institution are as follows:

Chairman for corporation institutions,
Member

Role	Name	Board of Directors	Management Meeting	Audit & Supervisory Board
President, Representative Director	Kohei Tanabe
Director Managing Executive Officer	Andrew Oransky
Outside Director	Osamu Hosokubo
Outside Director	Naoko Okada
Outside Director	Yasuhiro Kasahara
Outside Director	Brian K. Heywood
Audit & Supervisory Board Member	Naoki Nagano
Outside Audit & Supervisory Board Member	Mitsuhiro Honda
Outside Audit & Supervisory Board Member	Megumi Ikuma

In addition to the above, the Management Meeting is made up of five Executive Officers.

Corporate Governance Structure

Other Matters Related to Corporate Governance

1. a. Status of the internal control system and risk management system

   The Company carries out activities based on the “Basic Policies for Establishing an Internal Control System” which is resolved at the Board of Directors meeting each fiscal year. We have placed the corporate ideals at the foundation of our management, and use them as the starting point for all corporate activities.

   To secure conformity with laws and regulations and the Articles of Incorporation for execution of business by Directors and employees, our compliance structure includes internal education activities on Codes of Conduct, and the whistleblowing system to promote compliance with laws and regulations within the Group.

   The President, Representative Director assumes responsibility for the risk management structure as the Chief Risk Management Officer. The Board of Directors of the Company appoints the Risk Management Officer and the Risk Management Officer supervises and manages the Risk Management System of the Company and reports and proposes to the Board of Directors and the Chief Risk Management Officer on a regular basis. Additionally, a structure is established to receive periodic reports on risk management from subsidiaries, and matters related to the group-wide risk management are treated as risk management issues of the Company.

   Furthermore, to secure the appropriateness of operations of the Group, we have defined “RULES FOR MANAGEMENT OF AFFILIATED COMPANIES”, and while receiving reports on management status from subsidiaries, we supervise the management of key subsidiaries by seconding our Directors, etc., based on the business content and scope of subsidiaries. We secure appropriateness of operations by placing management advisory bodies at key subsidiaries to deliberate on significant management matters. With respect to the internal control reporting structure for financial reporting as required by the Financial Instruments and Exchange Acts, the management procedures and structure, etc., for development, operation and evaluation of the internal control system are defined, with the Finance & Accounting Department in charge. The evaluation of effectiveness is conducted through evaluation of the status of development and operation in each department and subsidiary, as well as independent evaluation by the Internal Audit Department.

   Apart from the above, the following procedures have been developed to realize appropriate internal control and risk management: a structure to secure efficient execution of duties by the Directors of the Group; a structure related to storage and management of information regarding the execution of duties by the Directors; a structure for the Directors and employees to make reports to Audit & Supervisory Board members; a structure regarding employees to assist the duties of Audit & Supervisory Board Members should they request assistance from such employees; and a structure to ensure that persons making reports to Audit & Supervisory Board Members do not receive detrimental treatment as a result of such reporting.

   Furthermore, we have defined “Basic Views and Maintenance Status Toward Elimination of Anti-social Forces ” with respect to anti-social forces, and under the basic principle of “taking a firm stance and having no relationships, and not conducting any transactions,” we strive to inculcate this to all employees while assigning the General Manager of the Corporate Affairs Department in charge of preventing wrongful requests, and through cooperation with related internal departments, we work to terminate relationships with anti-social forces across the entire company.

   In addition to the above, in order to respond to various legal contingencies, we have in place advisory contracts with multiple law firms with whom we consult and develop solutions to issues as needed.

2. b. The fixed number of Directors

   The Articles of Incorporation stipulate that the Company shall not have more than ten (10) Directors.

3. c. Requirements for resolution to appoint Directors

   The Articles of Incorporation stipulate that the resolution for electing a Director shall be adopted by a majority of the voting rights held by the shareholders present, whose number shall constitute at least one-third of the voting rights of all shareholders of the Company who are entitled to vote at the meeting and the resolution shall not be made by cumulative votes.

4. d. The decision-making body for interim dividend

   In order to enable flexible return of profits to shareholders, the Articles of Incorporation stipulate that the Company may, by a resolution of the Board of Directors, distribute interim dividends with a record date being June 30 of each year.

5. e. The decision-making body for the acquisition of own stock

   The Articles of Incorporation stipulate that the Company may, by a resolution of the Board of Directors, acquire its own stock through the market transactions, etc. pursuant to Article 165, Paragraph 2 of the Companies Act in order to enable the Company to flexibly acquire own shares.

6. f. Requirements for special resolutions at the General Meetings of Shareholders

   The Articles of Incorporation stipulate that a special resolution as stipulated in Article 309, Paragraph 2 of the Companies Act shall be adopted by a two-thirds majority of the voting rights held by the shareholders present, whose number shall constitute at least one-third of the voting rights of all shareholders of the Company who are entitled to vote at the meeting.

7. g. Limited liability agreement with Non-executive Directors and Audit & Supervisory Board Members

   The Company may enter into contracts, pursuant to Article 427, Paragraph 1 of the Companies Act, with Non-executive Directors and Outside Audit & Supervisory Board Members to the effect that, if such Directors are not aware of any problems and are not grossly negligent in performing their duties, the liability of the Directors under Article 423, Paragraph 1 of the same law shall be limited. The limited liability amount under such contracts shall be the minimum limited liability amount specified by the same law.

The Status of Internal Audits, Audits by Audit & Supervisory Board Members, and Accounting Audits

• With regard to internal audits, the Company has established the Internal Audit Department as an organization under the direct control of the President, Representative Director, which reports the results of internal control and internal audits of the fiscal year at the meeting of the Board of Directors. Audit & Supervisory Board Members and Internal Audit Department liaise on various matters, such as the development of audit plans, to improve the effectiveness and efficiency of audits. The state of audits by Audit & Supervisory Board Members is described in “c. Audit & Supervisory Board” presented in “Information on Corporate Institutions.” Audit & Supervisory Board Members receive explanations of the audit plan and reports of audit results from, and exchange views and information as necessary with, accounting auditors. The Audit & Supervisory Board Members and Internal Audit department liaise on various matters, such as the development of audit plans, to improve the effectiveness and efficiency of audits. Full-time Audit & Supervisory Board Member, Mr. Naoki Nagano, has been involved in operations in a financial institution for many years as well as corporate planning and accounting operations in the Company and also has an experience as the President of European subsidiary. Outside Audit & Supervisory Board Member, Mr. Mitsuhiro Honda, has abundant experience in international tax affairs, and Outside Audit & Supervisory Board Member, Ms. Megumi Ikuma, has many years of experience as a certified public accountant. All three individuals are well-versed in finance and accounting matters.

  While the Company has no vested interest to be stated pursuant to the provisions of the Certified Public Accountants Act with the accounting auditor, Deloitte Touche Tohmatsu LLC, or its engagement partners, the two parties maintain close contact with each other so that the Company is able to receive appropriate advice on an ongoing basis. In addition, overseas subsidiaries of important consolidated subsidiaries are audited (only in accordance with the provisions of the laws and regulations of the country where they are located, which are equivalent to the Companies Act or the Financial Instruments and Exchange Act) by persons other than our accounting auditor (persons with qualifications equivalent to certified public accountants or auditing firms in the country where they are located). Furthermore, the accounting audit for the fiscal year under review was conducted by Certified Public Accountants Messrs. Tadashi Nakayasu and Masanori Toyoizumi who are designated limited liability partners and engagement partners. (As the number of consecutive years conducting audits is within seven years, the number of years is omitted.) Assistance for audit operations is provided by eleven Certified Public Accountants and twenty other persons.

  The Internal Audit department, Audit & Supervisory Board Members, and the accounting auditor hold joint meetings in principle two times a year to execute audits from their respective standpoints in collaboration with each other.

Overview of Personal Relationships, Capital Relationships, or Transactional Relationships and other Interests between the Company and the Company’s Outside Directors, or Outside Audit & Supervisory Board Members

• Outside Director, Mr. Brian K. Heywood, is the CEO of Taiyo Pacific Partners L.P., a shareholder of the Company, and serves as an Outside Director of Roland Corporation. The Company has entered into an advisory contract with said company for the purpose of mainly receiving counsel and suggestions on management and business strategies. However, the Company receives advisory services under the advisory contract from different members of said company. Roland Corporation holds shares in our company and engages in transactions such as facility usage in product development.

  Outside Director, Mr. Yasuhiro Kasahara, is a partner of Nagashima Ohno & Tsunematsu, a law firm with which the Company has business transactions including the receiving of various services that are based on our legal advisory contract. However, the Company receives legal advisory services from different attorneys of the said law firm.

  Outside Audit & Supervisory Board Member, Mr. Mitsuhiro Honda, is an Outside Audit & Supervisory Board Member of YUASA TRADING CO., LTD with which the Company has business transactions including the sales of products.

  Additionally, there are no personal, capital or transactional relationships and other interests with companies, etc., at which other Outside Directors and Outside Audit & Supervisory Board Members serve or served as executives or employees either at present or in the past. (The “past” is defined as within the past 10 years, pursuant to the “range of confirmation of affiliation information” stipulated by Tokyo Stock Exchange.)

Views on the Functions and Roles of Outside Directors and Outside Audit & Supervisory Board Members in Corporate Governance of the Company, the Independence Standard or Policy for Selecting Outside Directors and Outside Audit & Supervisory Board Members and the State of Their Appointment, and Collaboration between the Outside Directors, Outside Audit & Supervisory Board Members and Internal Control Division and Audits

• We expect Mr. Osamu Hosokubo, Outside Director, to leverage his knowledge and experience as a corporate executive and investor, and Ms. Naoko Okada, Outside Director, to leverage her knowledge and experience in corporate management and corporate communications, and Mr. Yasuhiro Kasahara, Outside Director, to leverage his extensive experience and insight in corporate legal affairs over many years in all aspects of our corporate management and provide independent oversight and counsel regarding our corporate operations as well as to contribute to enhancing the transparency of Board of Directors proceedings and our supervisory functions.

  Additionally, Mr. Brian K. Heywood has knowledge and experience as a corporate executive and investor. We expect him to contribute to the enhancement of corporate value through providing advice on all aspects of our corporate management as a shareholder and investor.

  Furthermore, we can expect two Outside Audit & Supervisory Board Members to work with our Full-time Audit & Supervisory Board Members, drawing on their extensive knowledge of accounting and tax matters, and execute objective and neutral audits in their independent capacities regarding all aspects of our corporate management as described in “c. Audit & Supervisory Board” in “Information on Corporate Institutions” and “The Status of Internal Audits, Audits by Audit & Supervisory Board Members, and Accounting Audits.”

  As such, we believe Outside Directors and Outside Audit & Supervisory Board Members in our current organization are able to fulfill the functions and roles that are required with regard to our corporate governance.

  The Company has defined the “Standards Concerning Independency of Outside Directors and Outside Audit & Supervisory Board Members” which satisfies the requirements of independent officers stipulated by the Tokyo Stock Exchange and discloses them on the Company’s website.

  We have judged that three of Outside Directors, Osamu Hosokubo, Naoko Okada and Yasuhiro Kasahara and two Outside Audit & Supervisory Board Members satisfy these standards and have secured adequate independence and have reported three Outside Directors and two Outside Audit & Supervisory Board Members as independent officers.

  Standards Concerning Independency of Outside Directors and Outside Audit & Supervisory Board Members

  PDF：196KB

Directors’ Compensation, etc.

Total amount of compensation and other remuneration for different officer categories, total amount of compensation and other remuneration by type, and the number of eligible officers (Results in the 43rd Fiscal Year)

(Notes) The number of persons paid includes one Audit & Supervisory Board Member who retired at the conclusion of the 42nd Ordinary General Meeting of Shareholders held on March 24, 2023, and excludes one uncompensated Outside Director.

The total amounts, etc. of consolidated compensation, etc. for each officer of the submitting company

Matters pertaining to the policy for the determination of the amount and the method for calculation of the compensation, etc. for Directors

*The following is the policy as of December 31, 2023, and it is applied to the 43rd Fiscal Year. The policy to be applied from the 44th Fiscal Year onwards is currently undecided as of the update date, as The performance-linked share compensation plan described in the "4. Policy regarding the determination of the contents and the method for calculation of the performance-linked share compensation " has ended due to the expiration of the term. We are continuing our deliberations.

Directors’ compensation of the Company consists of basic compensation, officer bonuses, and performance-linked share compensation.

The Company's Board of Directors resolved the "Policy for the determining the compensation, etc. for each Director," at its meeting held on February 17, 2021, which was revised at the Board of Directors meeting held on February 24, 2022, in accordance with the introduction of the delegation-based Executive Officer with title structure as of March 24, 2022.

The Board of Directors has determined that the content of compensation, etc. for Directors is in line with this policy, as it is determined by the Board of Directors' resolution on the proposed compensation standards for Directors, etc. determined by the President, Representative Director based on the report of the Nomination and Compensation Committee, a majority of whose members consist of Independent Outside Directors. The content of the policy for the determination is as follows.

1. 1. Basic policy

   With regard to compensation for Directors, the Company has adopted a compensation system linked to business performance and shareholders’ interests so as to fully function as an incentive to realize a sustainable increase in corporate value. When determining the compensation for each Director, the Company’s basic policy is to set an adequate level based on the person’s responsibilities. Specifically, the compensation for Executive Directors consists of basic compensation, bonuses for Directors, and performance-linked share compensation, and for Outside Directors who have supervisory functions, the Company provides only basic compensation based on their duties.

   For foreign Directors, the Company sets a level based on compensation levels in the country of origin as well as on their responsibilities.

2. 2. Policy for determining the amount of basic compensation

   1) Policy for determining the total amount

   With regard to basic compensation for Directors, the Board of Directors determines the total amount for the next fiscal year, based on the deliberation of the Nomination and Compensation Committee, with the majority of the committee members being Independent Outside Directors.

   2) Policy for determining the amount for each Director

   With regard to the amount of basic compensation for each Director, the determination of amounts is delegated to the President, Representative Director by resolution of the Board of Directors, and the President, Representative Director determines amounts taking into consideration the post and responsibilities of each Director based on the compensation standards for Directors, within the limit for the compensation, etc. as resolved at the General Meeting of Shareholders. With regard to compensation standards for Directors, the President, Representative Director, based on reports of the Nomination and Compensation Committee, drafts the compensation standards for Directors, and the Board of Directors finalizes it by its resolution.

   The Company provides basic compensation on a monthly basis.

3. 3. Policy for determining the total amount of Executive Directors’ and Audit & Supervisory Board Members’ bonuses

   1) Policy for determining the total amount

   When determining the total amount to be paid, the total amount shall not exceed 300 million yen, the approved amount of basic compensation and Executive Directors' and Audit & Supervisory Board Members' bonuses at the General Meeting of Shareholders, and shall comply with the numerical standards prescribed in the OFFICERS' BONUS PAYMENT RULES (the total amount of Executive Directors' and Audit & Supervisory Board Members' bonuses shall be up to 2% of operating profit and 3% of net income in the consolidated financial forecast). In addition, in the event that one of the following applies before the settlement of financial results, the Company will not pay Executive Directors' and Audit & Supervisory Board Members' bonuses pursuant to the OFFICERS' BONUS PAYMENT RULES.

   1. (1) If consolidated operating profit or net profit is in deficit
   2. (2) If the business results fall below the following criteria compared to the consolidated business forecast disclosed at the beginning of the term
      Net sales: 30%
      Operating profit, ordinary profit, and net profit: 50%
   3. (3) If the President, Representative Director decides to postpone payment even if the preceding item 2 does not apply. When paying a bonus, approval shall be obtained by the Board of Directors in advance.

   2) Policy for determining the amount for each Director

   Bonuses to be paid for each Director shall be the amount obtained by multiplying the operating profit for the relevant business year by the coefficient for each role based on the OFFICERS' BONUS PAYMENT RULES. However, if the compensation limit for Directors (including bonus amount) approved at the General Meeting of Shareholders is exceeded, the coefficient for each position will be prorated and adjusted so that it falls within the approved limit.

   Bonuses shall be paid within one month after the end of the Ordinary General Meeting of Shareholders for the relevant business year.

4. 4. Policy regarding the determination of the contents and the method for calculation of the performance-linked share compensation

   The performance-linked share compensation plan is a share benefit trust that covers the five fiscal years from the fiscal year beginning on January 1, 2019.

   Under the plan, pursuant to the RULES CONCERNING PROVISION OF SHARES (FOR OFFICERS), eligible Directors receive points that are calculated by summing basic points based on their position and points (number of shares) multiplied by a coefficient according to achievement level and weight (consolidated net sales 30%, consolidated operating profit 40%, ROE 30%) against a target value of consolidated net sales (growth), consolidated operating profit (profitability) and ROE (management efficiency). When said Directors will no longer be Directors or employees of the Company or its subsidiaries, such Directors will receive the Company’s shares based on the points awarded (or in the event that the Company’s shares cannot be delivered, the amount of money obtained through disposition of such shares, excluding expenses). If any of performance-linked indicators represents less than 80% of the achievement rate, the Company will not award points in that fiscal year.

5. 5. Policy for determining the ratio by type of compensation, etc.

   The ratio by type of compensation for Executive Directors is examined by the Nomination and Compensation Committee based on a compensation criterion taking as a benchmark companies with the same business scale as the Company and companies belonging to related industries and business categories. The Board of Directors respects report of the Nomination and Compensation Committee and decides compensation, etc. for Directors. The standard ratio for each type of compensation, etc. is as follows; (when KPI achievement rate is 100%).

   Position	Basic compensation	Bonuses	Performance-linked share compensation
   Executive Director	35%	35%	30%

Standards Concerning Independency of Outside Directors and Outside Audit & Supervisory Board Members

The Company has defined the “Standards Concerning Independency of Outside Directors and Outside Audit & Supervisory Board Members” in order to clarify the standard for independency of Outside Directors and Outside Audit & Supervisory Board Members.

Policy for Constructive Dialogue with Shareholders

With regard to dialogue with institutional investors and individual investors, the Company positively responds to them to a reasonable extent. Additionally, the Company has defined the “Policy for Constructive Dialogue with Shareholders” and discloses it on the Company’s website.