Independence Criteria for Outside Directors and Auditors

Independence criteria

The applicant must not fall under any of the following a. to g.

• A person who is currently or has been in the past 10 years a director (excluding outside directors), auditor (excluding outside auditors), or employee of the Company or its consolidated subsidiaries (collectively referred to as the "Company Group").
• A person who is currently or has been in the past three years a major business partner ^*3 of the Group or an executive ^*4 of a company that has the Group as its major business partner.
• A person who is currently or has been in the past three years a major shareholder of the Company ^*5 (or, if the major shareholder is a corporation, an executive of said corporation) or an executive of a company, etc. in which the Group is a major shareholder.
• A person who is a lawyer, certified public accountant, tax accountant, or other consultant who has received money or other assets from the Group in an amount exceeding 10 million yen per year, other than executive remuneration, in the current or any of the past three fiscal years.
• A person who is currently or has been within the past three years an employee, partner, associate or worker of a law firm, auditing firm, tax accountant firm or other consulting firm that has the Group as its major business partner.
• A person who has received donations of more than 10 million yen per year from the Group in the current or any of the past three fiscal years, or a person who is an executive officer of a corporation or organization that has received donations.
• Spouses or relatives within the second degree of kinship of the following persons:
  • A person who is currently or has been within the past three years a director, auditor or important employee of the Group ^*6.
  • Those listed in b. to f. above (in the case of employees, this applies only to important employees).

• An outside director is an outside director as defined in Article 2, Paragraph 15 of the Companies Act.
• An outside auditor is an outside auditor as defined in Article 2, Paragraph 16 of the Companies Act.
• The main business partners are:

  • In transactions with the Group, in any of the past three fiscal years

    i) Business partners whose sales or purchases of the Group exceed 2% of the Group's annual consolidated sales in each fiscal year

    ii) A business partner whose sales or purchases exceed the higher of 2% of the business partner group's annual consolidated sales for each fiscal year or 100 million yen

  • A group of financial institutions from which the Group borrows, and whose borrowings as of the end of the most recent fiscal year exceed 2% of the Group's consolidated total assets.
• An executive officer means an executive officer as defined in Article 2, Paragraph 3, Item 6 of the Enforcement Regulations of the Companies Act.
• A major shareholder is a person who holds, directly or indirectly, 10% or more of the total voting rights.
• Important employees are employees who hold the position of manager or above.