Corporate InformationBasic Policy on Internal Controls
The Company shall establish systems to ensure appropriateness of the operations (ďinternal controlĒ) of the Company and its subsidiaries (ďthe GroupĒ), as described below, in accordance with the Companies Act and the Ordinance for Enforcement of the Companies Act.

1. System for ensuring compliance of execution of duties by directors and employees with laws and regulations and the Companyís Articles of Incorporation
 
(1) The Company shall establish basic compliance policies, action guidelines and compliance rules through the board of directors as the basis for systems ensuring legal compliance in accordance with Toa Reís mission of “Providing Peace of Mind.”
(2) The Company shall establish the Compliance Committee chaired by the president and composed of committee members, including an external lawyer. In addition, the Company shall appoint department managers as compliance officers and establish the Compliance Steering Committee composed of such officers. The Compliance Committee shall be responsible for corporate-wide promotion of compliance and formulation of measures for ensuring effectiveness of compliance systems, and the Compliance Steering Committee shall be responsible for promotion and implementation of compliance.
(3) The Company shall establish the Internal Audit Department independent of organizations subject to internal audit and shall establish the Compliance Department as an organization responsible for supervising compliance.
(4) In the event that officer or employee of the Company detects inappropriate conduct, he/she shall follow the prescribed reporting procedures based on the compliance rules. Moreover, the Company shall establish a contact to consult and report any breach of laws and regulations in accordance with the Whistleblowing Rules.
(5) The Company shall, through the board of directors, formulate a compliance program, which is an annual action program concerning compliance, and shall execute compliance education and other compliance activities in accordance with such program.
(6) In the event that any breach of laws and regulations and/or the Articles of Incorporation, significant unjustifiable conduct, or any matter that may cause significant damage to the Company is detected concerning the Groupís operations, the directors and the chief audit executive of the Company shall report such fact to the Audit & Supervisory Board Members. When an Audit & Supervisory Board Member receives a report of such fact or detects such fact by himself/ herself, he/she shall report to the Audit & Supervisory Board, and, after consultation, report to the board of directors or provide proposals, advice or recommendations to directors for remediation, as necessary. The board of directors or the director in question shall report back to the Audit & Supervisory Board Members on progress in addressing the matter cited by the Audit & Supervisory Board Members.
(7) The Company shall firmly and systematically deal with antisocial forces that are a threat to public order and security in cooperation with lawyers, law enforcement agencies, and other relevant institutions. The Company shall have no relationship and no transactions (including those through affiliates) with any antisocial force and shall not engage in any surreptitious deal therewith or provision of funds thereto.

 
2. System governing the storage and management of information relating to the execution of duties by directors
  The Company shall retain and store the information relating to the execution of duties by directors, either in writing or in electromagnetic record, in accordance with the document management rules determined by the board of directors. Directors and the Audit & Supervisory Board Members shall have access to these documents whenever they so desire.

 
3. Rules and other systems governing management of risk of losses
 
(1) The Company shall establish ERM Rules in order to appropriately manage risk associated with the Groupís business operation.
(2) In accordance with the rules mentioned in the preceding paragraph, the Company shall put in place a structure for implementation of appropriate risk management of the entire Group, including establishment of a department for integrated risk management and departments responsible for individual risk categories and determining of necessary procedures. The Management Planning Department shall report the situation regarding risk and risk management of the entire Group to the board of directors.
(3) The Internal Audit Department of the Company shall formulate the internal audit plan in accordance with the internal audit charter and perform internal audits concerning the situation of risk management in each risk control department. An officer responsible for the Internal Audit Department shall report the results of internal audits to the executive management committee and to the board of directors.

 
4. System for ensuring efficient execution of duties by directors
 
(1) As the basis for the system for ensuring efficient execution of duties by directors, the Company shall hold meetings of the board of directors periodically in accordance with the regulations of the board of directors and, as necessary, extraordinarily.
(2) Regarding significant matters concerning management policies and management strategies, the Company shall discuss them at the executive management committee, which meets periodically in accordance with the executive management committee rules, and a decision on such matters shall be made by the board of directors, reflecting the deliberation at the executive management committee.
(3) The Company shall, through the board of directors, decide persons in charge of execution of operations and their responsibilities to be specified in the internal rules.
(4) The Company shall formulate a corporate business plan to be shared by directors and employees in accordance with the above-mentioned decision-making structure and communicate it to all officers and employees by means of internal management meetings held semiannually, etc.
(5) The Company shall, through the board of directors, periodically review the results of each departmentís activities for achievement of targets in accordance with the business plan described in the preceding paragraph and shall establish a system that contributes to enhancement of operating efficiency throughout the Company by promoting continuous improvement, including utilization of IT contributing to enhancement of operating efficiency, and removal or reduction of factors impeding efficiency enhancement.

 
5. System for ensuring the appropriateness of operations throughout the Group
 
(1) The Company shall appoint officers responsible for business segments of the Group, who will have authority and responsibility for establishing systems for ensuring the appropriateness of operations, including the compliance structure. Such officers shall report to the board of directors periodically concerning the situation regarding operation of each segment and the status of risk management.
(2) The Company shall have its subsidiaries report their business result, financial conditions, and other important information to the Company periodically, depending on the size and the importance of the subsidiary to the Group, in accordance with the internal rules and guidelines, etc.
(3) The Company shall have its subsidiaries report matters discussed at their important meetings to the Company, depending on the size and the importance of the subsidiary to the Group.
(4) The Company shall formulate the entire Groupís midterm business plan based on the size and the importance of the subsidiaries to the Group. In addition, the Company shall determine the Groupís priority management objectives and business plans, etc. for each business year and share them with the subsidiaries. The Company shall, through the board of directors, periodically review the results of activities for achievement of those objectives and plans, etc.
(5) In case of a compliance violation at any of its subsidiaries, the Company shall have such subsidiary report on such violation to the Company.
(6) To ensure the appropriateness of operations of the subsidiaries, the Company shall have the relevant organizations at the head office execute ongoing management concerning operations of the subsidiaries and shall conduct internal audits of the subsidiaries depending on the size and the importance of the subsidiary to the Group.

 
6. System for ensuring the reliability of the financial reporting
  The Company shall establish a system necessary for ensuring the appropriateness and reliability of the financial reporting of the entire Group in accordance with the rule of internal control over financial reporting.

 
7. Matters concerning employees who provide assistance to the Audit & Supervisory Board Members and the independence of such employees from directors
 
(1) In the case where an Audit & Supervisory Board Member requests to appoint employees which provide assistance to them, the Company shall appoint such employees and obtain consent from the Audit & Supervisory Board Member. When such employees perform operations of the Audit & Supervisory Board, they shall follow instructions and orders from the Audit & Supervisory Board Members. Regarding such instructions and orders, the employees shall not be subject to instructions and orders from the board of directors or directors, etc.
(2) In making decisions on personnel transfers and evaluations, and disciplinary action, etc. concerning such employees, the Company shall obtain consent from the full-time Audit & Supervisory Board Members.

 
8. System for reporting to the Audit & Supervisory Board Members applicable to directors
 
(1) System for reporting to the Audit & Supervisory Board Members applicable to directors and employees of the Company
a. In the event that any breach of laws or regulations and/or the Articles of Incorporation, significant unjustifiable conduct, or any matter that may cause significant damage to the Company is detected concerning the Groupís operations, our directors shall report such fact to the Audit & Supervisory Board Members.
b. The Audit & Supervisory Board Members of the Company shall have access to major managerial decision documents, reports and other significant documents concerning execution of operations and shall have the right to request directors or other personnel to provide a report and/or explanation, as necessary.
c. The Internal Audit Department of the Company shall refer the internal audit plan, reports on the results of internal audits, and other documentation to the Audit & Supervisory Board Members in accordance with the internal audit charter. In addition, the Internal Audit Department shall cooperate with the Audit & Supervisory Board Members through those activities.
(2) System for reporting to the Companyís Audit & Supervisory Board Members applicable to directors, auditors, and employees who execute operations of the subsidiaries, and those who received report from them
a. The Groupís officers and employees shall make a report in a prompt and appropriate manner when they are required by the Audit & Supervisory Board Members of the Company to report on matters concerning the execution of operations.
b. In the event that an officer or an employee of the Group detects any matter that may cause significant damage to the Company or its subsidiaries, such as breach of laws and regulations, he/she shall promptly perform the prescribed reporting procedures in accordance with the related rules and shall report to the Audit & Supervisory Board Members of the Company under the prescribed system.
c. The Internal Audit Department, the Compliance Department, and the department for risk management of the subsidiaries, etc. of the Company shall report the status of internal audits, compliance, and risk management, etc. of the Group to the Audit & Supervisory Board Members of the Company in a timely manner.
d. The department for management of whistle-blowing shall report the status of whistle-blowing from officers and employees of the Group to the Audit & Supervisory Board Members of the Company in a timely manner.
(3) The rules of the Group specify that officers and employees of the Group may blow the whistle to the Audit & Supervisory Board Members of the Company. In addition, dismissal or other unfavorable treatment due to such whistle-blowing shall be prohibited.

 
9. Matters concerning policies on the handling of expenses or debts resulting from the execution of the duties by the Audit & Supervisory Board Members, including procedures for the advance payment or indemnification of expenses, etc.
 
(1) If the Audit & Supervisory Board Members make requests to the Company for the advance payment of expenses, etc. with respect to the execution of their duties in accordance with the Companies Act, the Company shall have the relevant departments discuss such request, and except in cases where it proves that the expense or debt relating to such request is not necessary for the execution of the duties by such Audit & Supervisory Board Members, it shall pay such expense or debt promptly.
(2) If the Audit & Supervisory Board requests the hiring of its own outside experts (lawyer, certified public accountant, etc.) who will serve as advisors to the Audit & Supervisory Board Members, the Company shall bear the expenses except in cases where it proves that such hiring is not necessary for the execution of the duties by such Audit & Supervisory Board Members.
(3) In order to pay expenses, etc. resulting from the execution of the duties by the Audit & Supervisory Board Members, the Company shall set a certain amount of budget every year.

 
10. Other systems for ensuring effective audits by the Audit & Supervisory Board Members
  The Audit & Supervisory Board Members shall attend meetings of the board of directors and have the right to attend Executive Management Committee and the other important meetings and committees, and express their opinions.


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