Corporate Governance

The Group believes that the fundamentals of corporate governance are to achieve thorough legal compliance, to increase management transparency and promote corporate ethics, and to make prompt decisions and effectively execute operations. By enhancing and reinforcing corporate governance, we aim to further increase our corporate value and joint profits with shareholders.

1. Corporate Governance System

   The Company has selected the Company with Audit & Supervisory Committee system described in the Companies Act of Japan for its organizational structure. The Company has placed directors that are also Audit & Supervisory Committee members with voting rights on its Board of Directors in order to strengthen the Board’s supervisory function, with a view to stepping up corporate governance and to streamlining management even further. The Company has appointed 12 directors, of whom three are Audit & Supervisory Committee members and five are outside directors.

   Held once a month to make important decisions with regard to management, Board of Directors’ meetings are also held on an ad hoc basis as necessary to strive for rapid decision making. Primarily comprising executive officers (including directors serving concurrently) responsible for the execution of business, management meetings are also held once a month and endeavor to streamline business operations through the sharing of information among all business divisions.

   The Audit & Supervisory Committee meets once a month and conducts monitoring audits that focus on matters reported from the Audit Office, which is the Company’s internal audit division. In addition to performing audits covering the appropriateness and legality of the execution of directors’ duties, each and every Audit & Supervisory Committee member also plays a role in supervising the execution of the directors’ duties through the exercise of the voting rights on the Board of Directors.

   

   ･ Evaluation of Board of Directors’ effectiveness

   In April 2022, the Company conducted an evaluation of the effectiveness of the Board of Directors. Details are as follows.

   (Overview)

   All directors filled out a questionnaire and open-ended questions, in order to evaluate the effectiveness of the Board of Directors at LINTEC. This time, the Company used a governance survey conducted by a third party to improve the effectiveness of the Board of Directors and asked the directors to express their opinions about what steps to take to address the issues identified in the third party survey: items where the Company was given low marks and items that companies in general do not emphasize but investors emphasize. The representative directors analyzed and evaluated the results of the survey, identified issues, and examined which issues are to be addressed first this fiscal year. The themes identified as most important include sustainability initiatives and the consideration of capital cost and capital efficiency in decision making. Those themes will be discussed further primarily by the Sustainability Committee, the Council of the Board of Directors and the Nomination and Compensation Committee. In this process, the Company’s independent outside directors have made a final evaluation about the effectiveness of the entire Board of Directors. The main points of the evaluation of the independent directors are as follows: (1) The questionnaire, which was prepared based on objective information, reflects trends in corporate governance and is reasonable; (2) The business execution side formulates initiatives and implements them throughout the year, although the effectiveness evaluation is internal evaluation. The process is examined by the independent outside directors (including Audit & Supervisory Committee members), and the evaluation process is reasonable; and (3) Specific initiatives to address themes based on problems faced by today's enterprises and problems unique to the Company are proposed, and reasonable and appropriate initiatives are formulated. Based on the evaluation, the Company will continue to develop an environment that will make it possible to increase the effectiveness of the Board of Directors.

   ･ Director Training Policies

   1. New director training
      After assuming their position, new directors are provided training from outside institutions to endow them with the legal, accounting, and other knowledge necessary to management.
   2. Regular training
      Once or twice a year, directors undergo training on contemporary issues from lawyers or other outside lecturers. These training sessions serve as opportunities to hone the sense of judgment that is crucial to members of the Board of Directors.
   3. Special training
      When necessary, directors participate in seminars at the Company’s expense to acquire the specialized insight required to perform their duties.

   ･ Director Diversity

   The following table shows the fields in which each director is expected to make an especially strong contribution.

   

   * The above table does not indicate all of the knowledge of each director.

2. Internal Control System

   The following is an explanation of the internal control system to ensure that the execution of directors’ duties is in compliance with laws and regulations as well as the Articles of Incorporation, and the system to ensure the appropriateness of the execution of other business.

   ･ System to ensure that the execution of the duties of directors and employees is in compliance with laws and regulations as well as the Articles of Incorporation

   To ensure that the execution of the duties of directors and employees is in compliance with laws and regulations as well as the Articles of Incorporation and that a sense of ethics is maintained, the Company established its motto of “Sincerity and Creativity,” on which its Code of Conduct was based. To ensure the effectiveness of the compliance system with regard to laws and regulations as well as the Articles of Incorporation, the Audit Office—an organization under the president’s direct supervision—investigates and verifies, by means of audits based on the Internal Audit Regulations, whether all of the Company’s operations are being appropriately and reasonably implemented and pursuant to laws, the Articles of Incorporation, and internal rules and regulations. The results of those audits are regularly reported to the Board of Directors.

   ･ System for storing and managing information related to the execution of directors’ duties

   Documents are stored and managed in accordance with rules determined for each document type, including those documents stipulated by law.

   ･ Regulations and other systems pertaining to management of risks of loss

   By promoting the issuance of manuals by division and facilitating their thorough use, the Company makes preemptive efforts to reduce or avoid risk. In the case of specific risks, the Company promotes reviews of and improvements to response measures as risks arise. For emergency situations, such as the occurrence of a disaster, the Company has established the LINTEC Group Crisis Management Regulations, in addition to a BCMS, which is based on these regulations. These are separate from risk management initiatives conducted through normal operations, and we strive to ensure that a crisis management organization can be quickly established in the event of an emergency.

   ･ System to ensure that the execution of the duties of directors is efficiently conducted

   In addition to setting out the duties for which directors are responsible for and that correspond to the allocation of roles of each organization, based on the Regulations on the Division of Duties, the Company works to separate management from execution and accelerate decision making by the introduction of an executive officer system. Moreover, the Company reviews internal organizations as necessary to be able to respond to environmental changes and works to maintain efficiency in the execution of the duties of directors by such means as the setting up of cross-organizational committees on an as-required basis.

   ･ System to ensure the appropriateness of business in the corporate group comprising the Company and its subsidiaries

   Based on the Affiliate Company Operational Regulations, the Company works to maintain the appropriateness of its operations as a group entity by having each of its principal business divisions control the operations of Group companies. Based on the Affiliate Company Operational Regulations, the Company works to maintain a system for receiving corporate performance, risk, and other important reports from each Group company regularly or on an as-required basis. Providing business management and support from the appropriate division as necessary, the Company promotes management efficiency in each company. To ensure that Group companies are in compliance with laws and regulations as well as the Articles of Incorporation, audits are conducted by each company’s internal audit system and by the Company’s Audit Office.

   ･ Matters relating to the employees who are tasked to assist the duties of the Audit & Supervisory Committee, matters relating to the independence of said employees from directors, and matters relating to ensuring the effectiveness of Audit & Supervisory Committee instructions with respect to said employees

   To further raise the effectiveness of Audit & Supervisory Committee audits and maintain a system to carry out audit duties more smoothly, the Company has established the Audit & Supervisory Committee secretariat, which supports and takes on Audit & Supervisory Committee duties. It is assumed that the Audit & Supervisory Committee’s consent has to be obtained for transfers of personnel to the Audit & Supervisory Committee secretariat staff, personnel evaluations, and disciplinary action. The instructions and orders given to Audit & Supervisory Committee secretariat staff are also deemed to be given by directors serving as Audit & Supervisory Committee members. With regard to said instructions and orders received from Audit & Supervisory Committee members, with the exception of those instructions and orders that are not necessary for the duties of Audit & Supervisory Committee members, it is assumed that Audit & Supervisory Committee secretariat staff do not receive instructions and orders from directors or other employees.

   ･ System relating to the reporting of cases to the Audit & Supervisory Committee and system for ensuring that the submitting of such reports is not seen as reason enough for the person who submitted them to be subjected to disadvantageous treatment

   With regard to cases that are likely to significantly damage the Company or a Group company, such as violations of laws or regulations, all Group directors and employees are to report such cases to the Company’s Audit & Supervisory Committee. In addition, it is deemed that the Audit & Supervisory Committee will be able to directly demand business-related reports for all Group directors and employees. Under the Company’s Internal Reporting System Operation Regulations and its Global Internal Reporting System Regulations, the Company has established a helpline that can be used by all Group directors and employees and endeavors to maintain a system to ensure that the submitting of such reports is not seen as reason enough for the person who submitted said notification or report to be subjected to disadvantageous treatment. In the event of an internal notification via the helpline, this will be reported to the Audit & Supervisory Committee.

   ･ Matters concerning policy relating to the handling of costs or liabilities arising from the execution of duties of Audit & Supervisory Committee members

   When an Audit & Supervisory Committee member invoices the Company for the prepayment or redemption of expenses incurred for the execution of their duties, said costs or liabilities will be promptly handled following discussions in the department responsible, with the exception of cases in which said costs have been recognized as being not necessary for the execution of said Audit & Supervisory Committee member’s duties. In addition, should Audit & Supervisory Committee members deem that independent outside experts (such as lawyers, certified public accountants, etc.) are necessary as advisers to the Audit & Supervisory Committee, the Company will bear those costs, with the exception of cases in which said costs have been recognized as being not necessary for the execution of said Audit & Supervisory Committee’s duties.

   ･ Other systems for ensuring that the Audit & Supervisory Committee carries out audits effectively

   With a view to ensuring a system so that Company information reaches the Audit & Supervisory Committee unhindered, the Company works to maintain an environment in which information is received not only from directors (excluding directors serving as Audit & Supervisory Committee members) and from employees but also from independent auditors, corporate lawyers, tax accountants, and other specialists. The Company has a system in place to ensure regular meetings with representative directors and venues for important discussions, such as management and strategy meetings, for Audit & Supervisory Committee members to attend and state opinions.

3. Basic Policies and Systems for Preventing Relationships with Antisocial Forces

   The Company stands in firm opposition to all antisocial forces and organizations that threaten to disrupt the order and safety of civil society while practicing a strict policy of non-association with such entities. We have made this commitment clearly apparent in the LINTEC Compliance Guideline and are taking steps to ensure thorough awareness with this regard among all directors and employees.

   We reject any illegitimate requests from antisocial forces and organizations and maintain close collaborative relationships with the police, centers for the removal of criminal organizations, lawyers, and other specialists to combat such requests. Should we be approached by antisocial forces or organizations, we will closely coordinate with such institutions, organizations, lawyers, or other specialists to furnish a quick, organization-wide response.

4. Risk Management System

   The Company has established the LINTEC Group Crisis Management Regulations as well as a risk management system for minimizing the possible impact and damage to corporate value if a major problem arises. It has also implemented and oversees the Information Security Management Rules and the Trade Secret Management Rules for the preservation and management of information. There are also Companywide risk assessments centered on the Corporate Risk Management Committee.

5. Limited Liability Contracts

   In accordance with Article 427, Paragraph 1 of the Companies Act, the Company has entered into a contract with each of its non-executive directors—outside directors Akira Sebe, Akiko Okushima, Shigeru Sugimoto, Satoshi Ohoka, and Kanako Osawa—that limits liability for compensation for damages under Article 423, Paragraph 1 of the Companies Act. Based on this contract, liability for compensation for damages is limited to ¥10 million or the minimum liability amount stipulated by law, whichever is greater.

6. Content of General Liability Insurance Policies for Directors

   The Company has taken out general liability insurance policies for its directors based on Article 430 (3)-1 of the Companies Act. This insurance covers any legal compensation for damages and legal costs in the event that the insured person engages in behavior that is subject to damage claims during the term of insurance coverage. However, if the insured person illegally receives profits or benefits, conducts criminal acts, fraud, or deception, or violates other laws and regulations, the insurance policies will not provide any compensation for damages.
   The persons insured under the insurance policies are directors, auditors, and executive officers of the Company and its subsidiaries, and persons in similar positions as defined by the laws and regulations of the countries where subsidiaries have been established. For all insured persons, the Company pays the full amount of the insurance premium.

7. Number of Members of the Board of Directors

   The Company's Articles of Incorporation state that the number of members of the Board of Directors (excluding Audit & Supervisory Committee members) shall be 12 or fewer and that the number of directors who are Audit & Supervisory Committee members shall be 4 or fewer.

8. Requirements for Appointment of Directors

   The Company's Articles of Incorporation state that resolutions to appoint directors may be adopted by a majority of the voting rights of the shareholders in attendance if those shareholders hold one-third or more of the voting rights of the shareholders who can exercise their voting rights.

9. General Meeting of Shareholders Resolution Matters that may be Resolved by the Board of Directors

   To support rapid responses to changes in the management environment and flexible execution of various management measures, in regard to matters stipulated in each item of Article 459, Paragraph 1 of the Companies Act, such as dividends from surplus, etc., excluding cases in which there are special legal stipulations, the Articles of Incorporation state that these matters may be decided by resolution of the Board of Directors.

10. Special Resolution Requirements for General Meeting of Shareholders

    With the objective of enabling the smooth operation of General Meeting of Shareholders, the Company's Articles of Incorporation state that in regard to special resolution requirements for shareholders' meetings, as stipulated in Article 309, Paragraph 2 of the Companies Act, such resolutions may be adopted by at least two-thirds of the voting rights of the shareholders in attendance if those shareholders hold one-third or more of the voting rights of the shareholders who can exercise their voting rights.

1. Outside Directors

   The Company has appointed five outside directors— Akira Sebe, Akiko Okushima, Shigeru Sugimoto, Satoshi Ohoka, and Kanako Osawa. Two of these outside directors—Satoshi Ohoka and Kanako Osawa—are Audit & Supervisory Committee members.

   Name	Human, Financial, and Business Relationships and Other Shared Interests between the Outside Directors and the Company	Reason for Appointment
   Akira Sebe	There are no particular sharedinterests between the Company andAkira Sebe but Nippon PaperIndustries Co., Ltd., where he servesas an executive offi cer, is a majortrading partner of the Company, whichpurchased ¥1,610 million worth ofraw materials from and sold ¥83 million worth of products to NipponPaper (both results from the fi scalyear ended March 31, 2022). In addition, Nippon Paper is a majorshareholder in the Company; itsholding amounted to 21,293,592shares (30.49% of the total number of Company shares outstanding, excluding treasury stock) on March 31,2022.	By utilizing knowledge and experience from his directorship experience at Nippon Paper Industries Co., Ltd., and his many years of business experience in this company’s materials department, Akira Sebe is able to strengthen the Company’s Board of Directors’ supervisory function. Therefore, he has been appointed as an outside director.
   Akiko Okushima	There are no particular shared interests between the Company and Akiko Okushima.	By utilizing her extensive knowledge in the field of marketing, and her know-how and experience gained through many years of work in a different industry from that of the Company as Representative Director and President, Akiko Okushima is able to strengthen the Company’s Board of Directors’ supervisory function. Therefore, she has been appointed as an outside director. She is a member of the Nomination and Compensation Committee, an advisory body to the Board of Directors. The Company has designated her She is also designated as an independent officer based on the criteria stipulated by the Tokyo Stock Exchange, Inc. (TSE).
   Shigeru Sugimoto	There are no particular shared interests between the Company and Shigeru Sugimoto.	By utilizing his abundant business experience as an outside director and auditor in a sector different from the Company, even managing his own company, as well as his practical experience, broad knowledge, and advanced expert insight as a Certified Public Accountant, Registered Real Estate Appraiser, and Certified Tax Accountant, Shigeru Sugimoto is able to strengthen the audit and supervisory functions of the Company’s Board of Directors. Therefore, he has been appointed as an outside director. He is a member of the Nomination and Compensation Committee, an advisory body to the Board of Directors. The Company has designated him as an independent officer based on the criteria stipulated by the TSE.
   Satoshi Ohoka	There are no particular shared interests between the Company and Satoshi Ohoka.	By utilizing his long years of policy-based finance experience, his rich international experience, his specialist academic experience, and his knowledge and experience gained as an outside director in industries different to that of the Company, Satoshi Ohoka is able to strengthen the audit and supervisory functions of the Company’s Board of Directors. Therefore, he has been appointed as a director serving as an Audit & Supervisory Committee member. He is a member of the Nomination and Compensation Committee, an advisory body to the Board of Directors. The Company has designated himHe is also designated as an independent officer based on the criteria stipulated by the TSE.
   Kanako Osawa	There are no particular shared interests between the Company and Kanako Osawa.	By utilizing her specialist expertise and extensive knowledge gained as an attorney, along with the knowledge and experience gained through her career in corporate legal affairs both at home and abroad, Kanako Osawa is able to strengthen the audit and supervisory functions of the Company’s Board of Directors. Therefore, she has been appointed as a director serving as an Audit & Supervisory Committee member. She is a member of the Nomination and Compensation Committee, an advisory body to the Board of Directors. The Company has designated her She is also designated as an independent officer based on the criteria stipulated by the TSE.

2. The Company’s Basic Way of Thinking with Regard to the Independence of Outside Directors

   The Company does not have its own set standards and policies with regard to the independence of outside directors and refers instead to the standards stipulated by the TSE. Since appointment is based on a request from the Company, we recognize that independence from management is to be ensured.

3. Status of Outside Directors’ Supervision

   In addition to attending Board of Directors’ meetings and making necessary and effective remarks as appropriate during agenda deliberations, outside directors attend meetings of the Internal Control Committee and oversee directors in the execution of their duties.

1. Status of Audit & Supervisory Committee Audits

   The Company’s Audit & Supervisory Committee comprises three directors serving as Audit & SupervisoryCommittee members, of whom two are outside directors. While utilizing the internal control system, theAudit & Supervisory Committee cooperates with the Audit Offi ce and the independent auditor, receives thenecessary reports, and conducts audits of the directors’ business execution through such methods asexchanges of opinions. Each Audit & Supervisory Committee member attends management and othermeetings, obtains the information needed for the audits, attends Board of Directors’ meetings as a director,and supervises the directors in the execution of their duties by stating opinions and participating inresolutions through their voting rights. Audit & Supervisory Committee member Masaaki Kimura has many years of experience working in the administration division and audit division of the Company and has considerable knowledge about finance and accounting. In the fiscal year under review, the Company convened the Audit & Supervisory Committee once a month and the attendance of individual Audit & Supervisory Committee members was as follows. Masaaki Kimura was elected at the 127th General Meeting of Shareholders held on June 21, 2021, and his attendance is the number of Audit & Supervisory Committee meetings held after he was elected.

   Name	Total Number of meetings	Number of meetings attended
   Masaaki Kimura	10	10
   Satoshi Ohoka	13	13
   Kanako Osawa	13	13

   The principal matters audited by the Audit & Supervisory Committee include the following: (1) in regard to the performance of directors, whether or not there are important cases of wrongdoing or violations of laws, regulations, or the Articles of Incorporation; (2) whether or not the details of the Board of Directors’ discussions regarding the internal control system, and the status of the establishment/operation of the internal control system, are reasonable; (3) whether or not the business reports, settlement related documents, etc., are in accordance with laws, regulations and the Articles of Incorporation and accurately show the Company’s circumstances; (4) whether or not the independent auditor’s audit methods and results are reasonable; and (5) whether or not a system to secure the proper execution of the duties of the independent auditor has been established. At the end of the period, the committee prepares an audit report that describes the audit methods and details as well as the audit results.

   In addition, the activities of the full-time Audit & Supervisory Committee member include conducting Audit & Supervisory Committee audits of the head office, work sites, subsidiaries, etc., which are implemented in combination with the Audit Office’s internal audits; holding liaison meetings with the auditors of domestic and overseas subsidiaries; and sharing this information at meetings of the Audit & Supervisory Committee.

2. Status of Internal Audits

   The Company has established the Audit Office as an internal auditing unit. The Audit Office regularly implements internal audits of divisions, work sites, plants, and affiliated subsidiaries in addition to verifying that operational execution processes and results comply with the law and internal regulations. The Audit Office has the central role in audits in such areas as quality and the environment, which are implemented in collaboration with the supervising division. The Audit Office provides advance notice to the Audit & Supervisory Committee of a summary of internal auditing plans and audit items, and after internal audits are completed, reports all of the audit results and assessments to the Audit & Supervisory Committee. In addition, the full-time Audit & Supervisory Committee member and the general manager of the Audit Office hold monthly liaison meetings to exchange opinions and information. Periodically sharing information with the independent auditor, the group works to enhance the effectiveness of three-way audits by coordinating closely with the Audit & Supervisory Committee, independent auditors, and internal audit division.

3. Status of Accounting Audits

   ･ Name of audit firm

   Ernst & Young ShinNihon LLC

   ･ Continuous period for which the independent auditor has performed audits

   Since 1981

   ･ Certified public accountants who executed the audit

   Designated limited liability partner Koichi Taniguchi
   Designated limited liability partner Tsuyoshi Kawamura

   ･ Composition of the group of assistants involved with the audit

   In regard to the composition of the group of the assistants involved with the audit, there were 9 certified public accountants and 35 people who have passed accountant examinations.

   ･ Selection policy and reason for selection of audit firm

   Each period, the Audit & Supervisory Committee conducts an evaluation in accordance with the standards for evaluation and selection of the independent auditor. The independent auditor is selected based on a comprehensive assessment of the independent auditor's independence, internal control system, audit plans, audit methods and results, and the status of execution of audit duties.

   The Audit & Supervisory Committee may dismiss the independent auditor in any of the cases stipulated in Article 340, Paragraph 1 of the Companies Act, based on the agreement of all Audit & Supervisory Committee members. In that event, an Audit & Supervisory Committee member selected by the Audit & Supervisory Committee will provide a report of the dismissal and the reason for the dismissal at the first General Meeting of Shareholders convened after the dismissal.

   In addition, in the event that the Audit & Supervisory Committee, with consideration for the status of the implementation of the independent auditor's duties, the Company's audit system, etc., determines that it is necessary to change the independent auditor, then the Audit & Supervisory Committee may decide the details of a proposal to the General Meeting of Shareholders concerning the dismissal or non-reappointment of the independent auditor.

   ･ Evaluation of audit firm by the Audit & Supervisory Committee

   In accordance with the standards for evaluation and selection of the independent auditor, the Audit & Supervisory Committee will conduct evaluations from the perspective of the audit firm's quality control; audit team; audit compensation, etc.; communications with the Audit & Supervisory Committee; relationship with senior executives, etc.; Group audits, and misconduct risk.

4. Details of Audit Remuneration, Etc.

   ･ Remuneration of the independent auditor, etc.

   Category	Fiscal year ended March 31, 2021		Fiscal year ended March 31, 2022
   	Remuneration for audit services (Millions of yen)	Remuneration for non-audit services (Millions of yen)	Remuneration for audit services (Millions of yen)	Remuneration for non-audit services (Millions of yen)
   LINTEC	90	0	93	2
   Consolidated subsidiaries	-	-	-	-
   Total	90	0	93	2

   * The non-audit services provided to the Company in the previous fiscal year and the fiscal year under review were officer training and advice regarding the promotion of digital transformation.

   ･ Remuneration to the same network (Ernst & Young) as the independent auditor, etc. (excluding remuneration of the independent auditor, etc.)

   Category	Fiscal year ended March 31, 2021		Fiscal year ended March 31, 2022
   	Remuneration for audit services (Millions of yen)	Remuneration for non-audit services (Millions of yen)	Remuneration for audit services (Millions of yen)	Remuneration for non-audit services (Millions of yen)
   LINTEC	-	1	-	2
   Consolidated subsidiaries	36	19	36	20
   Total	36	21	36	23

   * The non-audit services provided to consolidated subsidiaries in the previous fiscal year and the fiscal year under review were tax-related advisory services, etc.

   ･ Details of remuneration for other material audit services

   Not applicable

   ･ Policy for determination of audit remuneration

   In regard to audit remuneration for the Company's independent auditor, etc., an amount estimated from the number of planned audit days, etc., is decided with the approval of the Company's Audit & Supervisory Committee.

   ･ Reason for agreement to the independent auditor's remuneration, etc., by the Audit & Supervisory Committee

   The reason the Company's Audit & Supervisory Committee agreed to the remuneration, etc., for the independent auditor proposed by the Board of Directors, pursuant to Article 399, Paragraph 1 and Paragraph 3 of the Companies Act, is that the Audit & Supervisory Committee judged it to be appropriate following necessary verification by the Audit & Supervisory Committee of the details of the independent auditor's audit plan, the status of execution of the accounting audits, and the basis for the calculation of the audit remuneration.

1. Policy Regarding Decisions on Amounts of Director Remuneration

   ･ Remuneration of directors (excluding outside directors and Audit & Supervisory Committee members)

   The Company has a basic policy of using appropriate levels of remuneration and calculation methods for directors based on rank and responsibilities, within the limits decided at the General Meeting of Shareholders. Remuneration for directors (excluding outside directors and members of the Audit & Supervisory Committee) consists of fixed compensation (basic remuneration), performance-linked remuneration (bonuses) as short-term incentives that reflect consolidated business results, and non-cash compensation (restricted stock) as long-term incentives to contribute to increasing the Company’s stock price and corporate value. Basic remuneration is 70% of total compensation, followed by bonuses at 20% and restricted stock at 10%. To increase the objectivity and transparency of evaluating and determining the remuneration of directors (excluding outside directors and members of the Audit & Supervisory Committee), the Nomination and Compensation Committee, on which independent outside directors form a majority, provides advice and suggestions as an advisory body to the Board of Directors. This policy was decided by the Board of Directors after its fairness was ascertained by the Nomination and Compensation Committee.

   1. Basic remuneration
      • ･ Fixed amounts paid based on rank
      • ･ The total amount paid does not exceed ¥420 million (includes up to ¥30 million for outside directors who are not members of the Audit & Supervisory Committee)
   2. Bonuses
      • ･ Short-term incentives (remuneration linked to business performance) paid in amounts adjusted based on consolidated business results, the total amount paid not exceeding ¥150 million
      • • (a) The representative director and directors who are also business execution officers are eligible for bonuses.
        • (b) The bonus amount is calculated as follows:
          Rank-based standard amount × multiplier (%) based on consolidated performance evaluation
        • (c) The multiplier (%) based on consolidated performance evaluation is calculated as follows:
          • 1. Consolidated performance evaluation indicators are consolidated net sales and consolidated operating income
          • 2. Regarding the above indicators,
            • (i) Ratio of results for the fiscal year in review versus externally disclosed targets at the outset of the fiscal year (consolidated earnings forecasts denoted in Consolidated Financial Results)
            • (ii) Ratio of average performance during period applicable to time of service within the lpast three years until the fiscal year in review, to average performance over the three years preceding the previous fiscal year
              The multiplier is decided based on the result of combining the aforementioned (i) and (ii) at a 60:40 ratio.
              * If there are any significant changes in the assumptions for comparison between indicators and performance due to M&A activities, changes in accounting policies, etc., the necessary adjustments will be made to the amounts of bonuses through consideration and discussion by the Nomination and Compensation Committee. In the fiscal year under review, adjustments were made according to the effects of M&A activities carried out in the fiscal year and the effects of the application of the Accounting Standard for Revenue Recognition from the fiscal year under review.
   3. Restricted stocks
      • ･ Long-term incentives to contribute to increasing the Company’s corporate value and share price provided by the allotment of restricted stocks
      • ･ The total amount paid does not exceed ¥60 million

   The total amount of basic remuneration has been approved by the 127th Annual General Meeting of Shareholders held on June 21, 2021, and totals for bonuses and restricted stock were approved at the 124th Annual General Meeting of Shareholders held on June 21, 2018.

   The Nomination and Compensation Committee, with a majority of independent outside directors as majority of members, is an advisory body that provides advice and makes suggestions for the Board of Directors on matters regarding evaluations and decisions on remuneration for directors (excluding outside directors and Audit & Supervisory Committee members), with the aim of improving objectivity and transparency.

   ･ Remuneration of outside directors (excluding Audit & Supervisory Committee members)

   This is decided by the Board of Directors in accordance with the Company’s internal rules on director remuneration and within totals approved at the General Meeting of Shareholders.
   ・Payment of fixed remuneration each month
   ・Total amount does not not to exceed ¥30 million

   ･ Remuneration of directors (Audit & Supervisory Committee members)

   This is decided through deliberations by the Audit & Supervisory Committee members, in accordance with the Company’s internal rules on director remuneration and within totals approved at the General Meeting of Shareholders.
   ・Payment of fixed remuneration each month
   ・Total amount not todoes not exceed ¥60 million

2. Matters regarding determination of remuneration and others for individual officers

   The Company has established the Company’s internal rules on director remuneration, after the Board of Directors has had their adequacy validated by the Nomination and Compensation Committee. Basic remuneration is paid under these internal rules. The Board of Directors will pass a resolution on the amounts of bonuses calculated based on the internal rules after the Nomination and Compensation Committee validates the adequacy of the amounts and the decision-making process. The Board of Directors determines the numbers of shares of restricted stock to be allotted by a resolution of the Board of Directors under the resolution adopted at the 124th General Meeting of Shareholders held on June 21, 2018 and the internal rules.

3. Total Remuneration by Corporate Officer Type

   • Slide to view.

   Corporate officer type	Total remuneration (Millions of yen)	Total remuneration by type (Millions of yen)			Number of people receiving remuneration
   		Basic remuneration	Bonuses	Restricted stocks
   Directors (excluding Audit & Supervisory Committee members and outside directors)	302	200	72	28	6
   Directors (Audit & Supervisory Committee members) (excluding outside directors)	21	21	-	-	2
   Outside officers	41	41	-	-	6

The Company views the establishment and maintenance of stable, long-term relationships with business partners as a matter of importance. For this reason, shares of business partners are held strategically based on a comprehensive evaluation of factors such as the Company’s business relationship with the partner in question. The company only acquires such shares when increasing trust and coordination with the business partner is judged as an effective means of mutually raising corporate value. These holdings are reviewed based on this perspective when necessary, and consideration is given to reducing them. In exercising voting rights, in regard to proposals made by business partners, the Company comprehensively considers whether or not a proposal will contribute to improved shareholder value.

1. Criteria for and Approach to the Classification of Investment Shares

   The Company classifies investment stocks held with the objective of receiving profits through stock price fluctuations or stock-related dividends as stocks held for pure investment purposes, and other stocks as investment stocks held for purposes other than pure investment (Capital Tie-Up Shares).

2. Stocks Held for Purposes other than Pure Investment

   ･ Number of issues and amount recorded on balance sheet

   	Number of issues (issues)	Total amount recorded on balance sheet (Millions of yen)
   Unlisted shares	17	118
   Shares other than unlisted shares	23	1,660

   ･ Information related to number of shares, amount recorded on balance sheet, etc., for specified investment shares and deemed shareholdings, by issue (top 10 issues)

   Issue	Fiscal year ended March 31, 2022	Fiscal year ended March 31, 2021	Purpose of holding, quantitative effects of holding, and reasons for increase in the number of shares	Whether or not investee holds shares of the Company
   	Number of shares (shares)	Number of shares (shares)
   	Amount recorded on balance sheet (Millions of yen)	Amount recorded on balance sheet (Millions of yen)
   Toray Industries, Inc.	1,160,000	1,160,000	To maintain and strengthen business relationships	Yes
   	741	826
   Fujipream Corporation	936,000	936,000	Same as above	No
   	331	376
   IMURA ENVELOPE CO., INC.	200,000	200,000	Same as above	Yes
   	169	197
   Mitsubishi UFJ Financial Group, Inc.	159,710	159,710	Same as above	Yes
   	121	94
   KING JIM CO., LTD.	76,630	76,630	Same as above	Yes
   	70	72
   OZU CORPORATION	17,384	16,978	Same as above*	No
   	36	34
   ASAHI PRINTING CO., LTD.	42,658	38,054	Same as above*	No
   	35	35
   Arisawa Mfg. Co., Ltd.	35,431	35,431	Same as above	No
   	33	35
   Mizuho Financial Group, Inc.	20,695	20,695	Same as above	Yes
   	32	33
   Canon Marketing Japan Inc.	6,938	6,938	Same as above	No
   	17	17

   * The reason for the increase in the number of shares was the acquisition of shares through the company’s stock ownership association.

The Company has not introduced takeover defense measures. However in regard to persons who are engaging in or aim to engage in a large-scale purchase of the Company's stock, the Company will act from the perspective of securing its corporate value and the common interests of its shareholders. From that perspective, the Company will request that persons who are engaging in or aim to engage in a large-scale purchase provide necessary and sufficient information to allow the shareholders to appropriately determine the pros and cons of the large-scale purchase in accordance with relevant laws and regulations. At the same time, the Company will disclose the opinions of the Board of Directors and endeavor to secure necessary time and information for the shareholders to consider such large-scale purchase. Further, if it is rationally judged that there is a risk of damage to the Company’s corporate value and the common interests of shareholders unless timely defensive measures are implemented to address a large-scale purchase, the Company will endeavor to secure its corporate value and the common interests of its shareholders, as an obvious obligation of the Board of Directors entrusted with management of the Company by its shareholders, by promptly deciding the content of the concrete measures deemed most appropriate at the time in accordance with the relevant laws and regulations and executing such measures.

The Company seeks to engage in constructive interactions with shareholders and other investors that contribute to sustainable growth and medium- to long-term improvements in corporate value. The Company has established an investor relations (IR) activity system and advances proactive initiatives based on the following policies to facilitate this endeavor.

1. The officer responsible for IR implements and oversees the Company’s various IR activities, including individual meetings with shareholders and investors. In regard to responses to requests for individual meetings, members of senior management or directors will meet with shareholders or investors requesting meetings based, whenever appropriate, on the desires and interests of the requester.
2. The Public Relations Office, Finance & Accounting Dep., General Affairs & Legal Dep., and Corporate Strategic Office will play a central role in advancing the Company’s various IR activities. Relevant divisions pursue close coordination with these offices and departments, exchanging information on a daily basis and meeting with members of senior management as appropriate to share necessary information.
3. In addition to individual meetings, the Company’s IR activities include regular briefings on financial results and medium-term business plans, visits to overseas investors, participation in IR conferences at which overseas investors gather, facility tours, business explanatory forums, and Company briefings for individual investors. We seek to expand the range of information provided to domestic and overseas shareholders and other investors by publishing shareholder newsletters and integrated reports and posting information in the IR section of our corporate website. At the same time, we collect feedback from a wide range of shareholders and other investors through surveys that are attached to shareholder newsletters and made available on the IR website.
4. Opinions and concerns of shareholders and other investors solicited through IR activities are relayed to management by the relevant divisions via quarterly business reports at the Board of Directors’ meetings or reported appropriately to management on an as-required basis.
5. In interactions with shareholders and other investors, we practice stringent management of information in accordance with the internal Insider Trading Prevention Regulations to ensure that insider information is not disclosed. In addition, the Company’s disclosure policy stipulates that we will observe a quiet period that begins approximately one month prior to the announcement of quarterly financial results to avoid leaks of financial results and to maintain fairness. During this period, we will not answer questions or make comments on our financial results and forecasts.