Corporate Governance

Independence Criteria for Outside Directors and Auditors

The Company hereby establishes the “Independence Criteria for Outside Directors and Auditors” to clearly set the criteria for independence to be fulfilled by outside Directors*1 and outside Audit and Supervisory Board Members*2 (collectively, the “Outside Directors and Auditors”) to be elected.

<Independence Criteria>


The Outside Directors and Auditors shall not fall under any of the following:

  1. A person who is, or was within the past ten years, a Director (excluding an outside Director), Audit and Supervisory Board Member (excluding an outside Audit and Supervisory Board Member) or employee of the Company and its consolidated subsidiaries (collectively, the “Group”);
  2. A person who is, or was within the past three years, a major business partner*3 of the Group or a person who executes business*4 of a major business partner of the Group;
  3. A person who is, or was within the past three years, a major shareholder*5 of the Company (in the case where a major shareholder is a corporation, a person who executes business of such corporation) or a person who executes business of a corporation of which the Group is a major shareholder;
  4. A lawyer, certified public accountant, certified tax accountant or other consultant who receives or received in any of the past three fiscal years from the Group cash and/or other assets exceeding 10 million yen annually in addition to director compensation;
  5. A person who is, or was within the past three years, an employee, partner or associate of a law firm, auditing firm, tax accountant firm or other consulting company of which the Group is a major clients;
  6. A person who receives or received in any of the past three fiscal years donations exceeding 10 million yen annually from the Group or a person who executes business of a corporation or organization which receives or received in any of the past three fiscal years such donations; or
  7. A spouse or a relative within the second degree of any of the following individuals:
1) A person who is, or was within the past three years, a Director, Audit and Supervisory Board Member or important employee*6 of the Group; or
2) A person who falls under the above b., c., d., e. or f. (if such person is an employee, this applies only to an important employee).

Notes:

*1.

An outside Director refers to an outside director as set forth under Article 2.15 of the Companies Act of Japan.

*2. An outside Audit and Supervisory Board Member refers to an outside auditor as set forth under Article 2.16 of the Companies Act of Japan.
*3. A major business partner means:
(1) in any of the past three fiscal years,
ⅰ) a business counterparty with whom the Group performed transactions (sales or purchase) of an amount exceeding 2% of the annual consolidated net sales of the Group or
ⅱ) a business counterparty whose group performed with the Group transactions (sales or purchase) of an amount exceeding the higher of 100 million yen or 2% of the annual consolidated net sales of such group; or
(2) a financial institution group from which the Group borrows funds, and the total amount of borrowing from such financial institution group exceeds 2% of the Group’s consolidated total assets as of the end of the previous fiscal year.
*4. A person who executes business refers to a person as set forth under Article 2.3.6 of the Ordinance for Enforcement of the Companies Act.
*5. A major shareholder refers to a person who directly or indirectly holds 10% or more of the total voting rights.
*6. An important employee refers to an employee at or above a general manager level.

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