The Company’s Board of Directors consists of five (5) Directors, including three (3) Outside Directors, and is chaired by the Representative Director. In addition to holding regular monthly meetings, extraordinary meetings are convened as necessary. The Board deliberates, decides, and reports on legal matters as well as significant issues related to management and business execution. Moreover, the Board, incorporating perspectives from a majority of Outside Directors, supervises the execution of duties by the Directors.

The Board of Directors shall maintain a system for preparing, storing and managing information relating to the performance of Directors’ duties in documents (including electromagnetic records) in accordance with laws, regulations and internal rules, including the "Document Management Rules."

The Company shall set the standard to determine the independence of Outside Directors, based on which the Company determines that its Outside Director is independent from the Company if such Outside Director meets the independence standard specified by the Financial Instruments Exchanges and does not fall under any of the following conditions.

1. 1.A party whose major business partner is the Group (the Company and its subsidiaries; the same shall apply hereinafter) (*1), or an executive (*2) thereof;
2. 2.A major business partner of the Group (*3), or an executive thereof;
3. 3.A consultant, a professional in accounting or law who receives a significant amount (*4) of money or property from the Group other than remuneration for Directors or Audit & Supervisory Board Members (if such party is a body such as a corporation or an association, etc., a person who belongs to such body);
4. 4.A party who receives a significant amount of donations from the Group, or an executive thereof;
5. 5.A major creditor to the Group (*5), or an executive thereof;
6. 6.A major shareholder of the Company (*6), or an executive thereof;
7. 7.A close relative (*8) of an important person (*7) among those who fall under any of the above items from 1 to 6.

Notes:

1. *1. "A party whose major business partner is the Group" refers to a party whose transaction amount with the Group exceeded 2% of such party’s annual consolidated revenue for any of the most recent three fiscal years.
2. *2. "An executive" refers to an executive director, executive officer, corporate officer, or other employee, etc. (including a person who held such position in the most recent three fiscal years).
3. *3. "Major business partner of the Group" refers to a party whose transaction amount with the Group exceeded 2% of the Group’s annual consolidated revenue for any of the most recent three fiscal years.
4. *4. "Significant amount" refers to a case in which the amount exceeds 10 million yen per fiscal year in any of the most recent three fiscal years.
5. *5. "Major creditor to the Group" refers to a creditor from whom the Group owes an amount exceeding 2% of the consolidated total assets of the Group in any of the most recent three fiscal years.
6. *6. "Major shareholder of the Company" refers to a shareholder who holds 10% or more of the total voting rights of the Company.
7. *7. "Important person" refers to a person who holds an important position such as, among others, a director, executive officer, corporate officer, and an employee who is in the position of general manager or higher.
8. *8. "Close relative" refers to a spouse or a relative within the second degree of kinship.

The Audit and Supervisory Committee consists of three (3) Directors, all of whom are Audit and Supervisory Committee Members, including three Outside Directors. It is chaired by an Outside Director. In addition to holding regular monthly meetings, extraordinary meetings are convened as necessary. The Committee reports on the results of audits conducted in accordance with the audit policies, plans, and allocation of duties established by the Committee and conducts necessary deliberations and resolutions.

In addition, the following systems have been established to ensure that the Audit and Supervisory Committee performs its duties properly.

1. (A) Matters relating to employees who assist the Audit and Supervisory Committee in carrying out its duties, matters relating to the independence of such employees from the Directors, and matters relating to ensuring the effectiveness of their instructions
   
   1. i) When the Audit and Supervisory Committee deems it necessary, it may appoint audit support staff to assist with its duties, discussing their selection within the Committee.
   2. ii) To ensure the independence of the audit support staff from Directors (excluding Directors who are Audit and Supervisory Committee Members), their appointment, transfer, evaluation, and dismissal are discussed and consented to in advance with the Committee.
   3. iii) The audit support staff, in assisting the Audit and Supervisory Committee, shall follow the Committee’s commands and not accept orders from Directors (excluding Directors who are Audit and Supervisory Committee Members).
2. (B) System for reporting to the Audit and Supervisory Committee by the Company’s Directors (excluding Directors who are Audit and Supervisory Committee Members) and employees
   
   1. i) System for reporting to the Audit and Supervisory Committee by the Company’s Directors (excluding Directors who are Audit and Supervisory Committee Members) and employees
      
      1. a) Audit and Supervisory Committee Members have the right to attend Board of Directors meetings and other internal meetings as needed, and to request reports.
      2. b) Directors (excluding Directors who are Audit and Supervisory Committee Members) and employees regularly report the status of internal controls to the committee, and the Internal Audit Office reports on the planning and results of internal audits regularly.
      3. c) When Directors and employees become aware of any serious violation of laws, regulations, the Articles of Incorporation, or misconduct, or any fact that may cause substantial damage to the Company, they must promptly report these to the Audit and Supervisory Committee.
   2. ii) System for reporting to the Audit and Supervisory Committee of the Company by Directors, Corporate Auditors and employees of subsidiaries or persons receiving reports from them.
      Report to the Audit and Supervisory Committee of the Company, upon request, on the status of business operations and promptly report to the Audit and Supervisory Committee of the Company upon discovery of any serious violation of laws, regulations, the Articles of Incorporation, or misconduct, or any fact that may cause substantial damage to the Company or its subsidiaries.
3. (C) System to ensure that a person who makes a report as described in the preceding item is not treated adversely because of such report
   

   Directors and employees who report to the Audit and Supervisory Committee shall not be treated adversely because of such report.

4. (D) Matters relating to policies for the treatment of expenses or liabilities incurred in the performance of duties by Audit and Supervisory Committee Members
   

   The Company shall establish procedures for Audit and Supervisory Committee Members to request coverage for expenses incurred during their duties. Should a member request an advance or reimbursement, the Company is to fulfill this request following established procedures, except when the expenses are deemed unrelated to the member’s committee duties.

5. (E) Other systems to ensure the effective conduct of the Audit and Supervisory Committee’s audits
   
   1. i) The Audit and Supervisory Committee shall be composed of experienced and knowledgeable persons familiar with corporate management and qualified persons, such as certified public accountants, and shall maintain independence from the President, Directors (excluding Directors who are Audit and Supervisory Committee Members) and other persons who conduct the Company’s business.
   2. ii) The Audit and Supervisory Committee shall hold regular meetings with the President to exchange opinions and information.
   3. iii) In close cooperation, the Audit and Supervisory Committee and the Internal Audit Office will develop audit plans. The Audit and Supervisory Committee may direct the Internal Audit Office to undertake specific investigations as necessary. In performing duties under the direction of the Audit and Supervisory Committee, the Internal Audit Office will follow the Audit and Supervisory Committee’s directives, independent of the President's instructions.
   4. iv) Decisions regarding the appointment, transfer, performance evaluation, and dismissal of Internal Audit Office staff require prior discussion and approval by the Audit and Supervisory Committee.

The Company established the Nomination and Remuneration Committee as a voluntary advisory body to the Board of Directors on March 25, 2022. The Committee, composed of a majority of Independent Outside Directors, is chaired by an Independent Outside Director and consists of three (3) Directors. The purpose of the Committee is to enhance the transparency and objectivity of the decision-making process and to strengthen management’s oversight and control functions by providing an independent perspective on director nominations, compensation, etc. The Nomination and Remuneration Committee reports to the Board of Directors on the fairness and appropriateness of Director candidate nominations, succession planning, and Director compensation, etc., after deliberation within the Committee.

The Company’s audit is conducted by KPMG AZSA LLC, with which the Company and the personnel engaged in the audit have no special interest relationships.
The Audit and Supervisory Committee and the Internal Audit Office regularly exchange information with the Accounting Auditor regarding the audit contents, discussing audit results, and the evaluation of the internal control situation and risks identified by the auditor to ensure close cooperation.

All officers and employees within the Group ensure the propriety of business operations by practicing the “Group Activity Guidelines.” The Board of Directors of the Company has established the following basic policy for the internal control system and has established a system for the conduct of business.

1. (A) Systems to ensure efficient business operations, including Corporate Strategy Meeting and Weekly Report Meeting
   
   1. i) The Company separates decision-making and supervisory functions from business execution functions, aiming to enhance each function and optimize the Board of Directors. Under the supervision of the Board, which decides on the basic policy, Executive Officers within their authority make decisions and execute business tasks. The Executive Officers discuss the Group’s management issues to be deliberated, including items to be decided by the Board of Directors, and report on the execution status of business tasks at Corporate Strategy Meetings and Weekly Report Meetings according to the “Management Meeting Regulations.”
      The Corporate Strategy Meeting is composed of a total of nine (9) persons (the President and CEO, one (1) Senior Managing Executive Officer, two (2) Managing Executive Officers, four (4) Executive Officers, and one (1) Director who is a Full-Time Audit and Supervisory Committee Member) and chaired by the President and CEO. The meeting is held once a month to deliberate and make decisions on management issues such as matters related to basic management policies and important initiatives, and matters related to proposals to be submitted to the Board of Directors.
      The Weekly Report Meeting is composed of a total of 13 persons (the President and CEO, one (1) Senior Managing Executive Officer, two (2) Managing Executive Officers, four (4) Executive Officers, one (1) Director who is a Full-Time Audit and Supervisory Committee Member, three (3) Officers from Group companies, and one (1) employee involved in overseas business). The meeting is held once a week to share information by making reports, for example on the progress of business results and other operating matters, in addition to making decisions based on their authority.
      The Executive Officers clarify the goals and responsibilities of each division based on the management plan and analyze the difference between budget and actual results to achieve the desired performance targets.
   2. ii) To speed up decision-making, the Company has established internal rules such as “Organization Rules,” “Rules on Division of Duties,” and “Rules on Administrative Authority” to clarify roles, authority and responsibilities.
   3. iii) To ensure the reliability of financial reporting, the Company has established accounting rules and regulations and a “Basic Policy for the Development of Internal Control over Financial Reporting” to manage the risk of fraud and errors in financial reporting, develop, operate and evaluate prevention and control functions, and establish a system to correct any deficiencies. The Company has established a basic plan for company-wide internal control, general control over IT, and internal control over financial closing and reporting processes and other business processes, and has established and implemented these controls. The effectiveness of these controls is subject to self-assessment by the control implementation department and evaluation by the Internal Audit Office.
2. (B) Risk and Compliance Committee
   

   The Risk and Compliance Committee, chaired by the President and CEO, is composed of the President and CEO, the Senior Managing Executive Officer, two (2) Managing Executive Officers, one (1) Director who is a Full-Time Audit and Supervisory Committee Member, and one (1) employee of the Legal Department, for a total of six (6) members. In accordance with the “Risk Management Regulations,” which regulate basic matters of risk management, the Committee meets regularly to analyze risks to the Group, report on the progress of risk response policies, and exchange information. If a risk materializes, the President and CEO convenes a meeting of the Risk and Compliance Committee to discuss risk response and risk prevention measures. The Chairperson of the Risk and Compliance Committee reports regularly to the Board of Directors on the status of the Committee’s activities.
   The Risk and Compliance Committee incorporates the information security management system and the personal information protection management system, implements security measures for information management, including personal information, and conducts training for officers and employees to ensure proper information management.
   In the event of an unforeseen incident, the Company has established a task force under the direction of the President and CEO and, if necessary, in cooperation with outside professional organizations such as the Office of the General Counsel, etc., to take prompt and appropriate action to minimize the spread of loss, damage, etc.
   The Company recognizes that thorough compliance is essential to enhancing corporate value, and the Risk and Compliance Committee has studied countermeasures and implemented the following measures.

   1. i) The Company has established the “Corporate Code of Ethics”, and in accordance with the Code, all Officers and employees are required to act in accordance with laws and regulations and to conduct themselves with high ethical standards. In addition, as a measure to thoroughly promote and raise awareness of compliance, the Company holds training sessions for all officers and employees on the basics of compliance and information management essential to business operations, and conducts ongoing education and dissemination activities.
   2. ii) The Company as a whole takes a firm stance against antisocial forces that threaten social order and sound business operations, including cooperation with related organizations, and rejects any relationship with antisocial forces. In addition, the Company will continue to promote the development of a system to eliminate antisocial forces in cooperation with the police, relevant organizations, and professional organizations such as lawyers.
   3. iii) In order to properly handle reports of violations of laws and regulations, the Company has established “Internal Reporting Regulations” and operates an internal reporting system based on these regulations for the purpose of early detection and correction of violations of laws and regulations, the Articles of Incorporation and other internal regulations, or actions that may lead to such violations.
3. (C) Sustainability Committee
   

   The Sustainability Committee, chaired by the President and CEO, is composed of the President and CEO, the Senior Managing Executive Officer, two (2) Managing Executive Officers, one (1) Director who is a Full-Time Audit and Supervisory Committee Member, and one (1) employee of the Management Planning Department, for a total of six (6) members. In accordance with the “Sustainability Committee Regulations,” which regulate basic matters of its duties, the Committee meets regularly to formulate the sustainability policy of the Group, report on the progress of sustainability initiatives, and exchange information. The Chairperson of the Sustainability Committee reports regularly to the Board of Directors on the status of the Committee’s activities. Through these efforts, we strive to promote our sustainability-related initiatives across the Group.

4. (D) Internal Audit Office
   

   To ensure the independence and objectivity of internal audits, the Internal Audit Office is directly managed by the President and composed of one (1) dedicated personnel from the Internal Audit Department. It verifies, evaluates, and advises on the compliance and efficiency of the Group’s organizational, systemic, and operational adherence to management policies, laws, regulations, and rules. The Internal Audit Office conducts its audits based on an annual audit plan, which is created with the approval or directive of the Representative Director, President and CEO. It assesses the setup and operational status of internal controls, focusing on the effectiveness and efficiency of operations, the reliability of financial reporting, compliance with laws and regulations, and the protection of company assets, and provide advice and recommendations for improvement of risk management, control measures, and the adequacy and effectiveness of governance. Through these efforts, we strive to prevent violations of laws and regulations, fraud and errors, provide accurate information, safeguard assets, and improve business operations.
   Audit findings are consistently reported to the Representative Director, President and CEO, the Board of Directors, and the Audit and Supervisory Committee.
   Regular weekly meetings are held between the Full-Time Audit and Supervisory Committee Members and the Internal Audit Office to share fundamental data on audit targets, and exchange opinions on audit methods and results, audit progress, and annual plans etc. The Internal Audit Office, the Audit and Supervisory Committee, and the audit firm cooperate by exchanging opinions on audit results, audit plans, and other matters, as appropriate.

5. (E) Other measures to ensure the appropriateness of operations within the Group
   
   1. i) The Company shall establish the “oRo Group Policy”, a system of principles including human resources policy and compliance policy for the Group to share and disseminate the Corporate Philosophy among the Group and ensure the appropriateness of its operations.
   2. ii) Subsidiaries shall report to the Company and seek approval for matters to be discussed and approved or reported in accordance with the “Affiliate Management Regulations” and conduct regular business progress reports to share business management and crisis management information while ensuring the adequacy of their business execution systems.
   3. iii) The Internal Audit Office of the Company shall subject subsidiaries to its regular internal audits, and report the results of such audits to the President and CEO, the Board of Directors, and the Audit and Supervisory Committee of the Company.
   4. iv) The Audit and Supervisory Committee Members selected by the Audit and Supervisory Committee shall visit subsidiaries as necessary to review the status of business operations.
   5. v) The Company shall dispatch its Directors or employees as directors of subsidiaries as necessary and supervise the performance of duties by directors of subsidiaries through such Directors or employees.
   6. vi) The Company shall establish an internal reporting system directly accessible to Directors, Corporate Auditors and employees of subsidiaries, and detect and correct violations of laws, the Articles of Incorporation, and other internal regulations or actions that may lead to such violations at an early stage.