The TSUZUKI Group aims to fulfill its social responsibilities as a corporation and continuously increase shareholder value through efficient and transparent corporate management.

1. i)Overview of the corporate governance system

TSUZUKI DENKI is a company with a Board of Corporate Auditors.
In addition to the Board of Directors, we have established a Board of Executive Officers.

1. ii)Reasons for adopting the corporate governance system

As of June 25, 2021, our Board of Directors consists of 12 directors (including 5 outside directors), and the Board of Directors is positioned as an important decision-making body as well as a body to monitor management. In addition, we have established a Management Committee consisting of full-time directors and full-time corporate auditors to expand the delegation of authority to executive officers and increase the speed and strategic effectiveness of management. Furthermore, we share information with executive officers and are working to enhance compliance.

1. iii)Relationship between the Company's Organization and Internal Control (see chart; as of June 25, 2021)

   

1. iv)Status of internal control system and risk management system
   1. a) Systems to ensure that the execution of duties by directors and employees complies with laws and regulations and the Articles of Incorporation
      1. 1)Directors shall comply with the TSUZUKI Group Code of Conduct, which was formulated for the purpose of establishing corporate ethics and ensuring compliance with laws, regulations, the Articles of Incorporation, and internal regulations, and shall work to promote compliance throughout the Group. In addition, in order to ensure the thoroughness of this system, we will operate the Risk and Compliance Committee, which deliberates on important compliance issues and works to maintain and improve the system. Furthermore, we have established an internal reporting system to ensure the early detection and correction of violations of laws and regulations and other improper acts within the Group companies.
      2. 2)In the event that a director discovers or receives a report of a serious violation of laws, regulations, the Articles of Incorporation, or internal regulations, the director shall immediately report the matter to the corporate auditors and also report the matter to the Board of Directors without delay.
   2. b) Systems for the storage and management of information related to the execution of duties by directors. Information related to the execution of duties by directors shall be appropriately stored and managed in accordance with laws and regulations and the Document Management Regulations, and we will establish a system to enable prompt access to such information when requested by directors, corporate auditors, independent auditors, etc.
   3. c) Rules and other systems for managing the risk of loss
      1. 1)We have established the Risk Management Regulations as the basis of our risk management system, and the Risk and Compliance Committee will manage and promote this system.
      2. 2)In the event of an unforeseen event, the Risk and Compliance Committee will strive to properly identify the relevant risk and designate a person responsible for the management of each risk, and establish a system to promptly respond and prevent the spread of damage.
      3. 3)Directors and employees shall report any problems, accidents, etc. to the Risk and Compliance Promotion Committee, which is an advisory body to the Risk and Compliance Committee, through the escalation route.
   4. d) Systems to ensure that the execution of duties by directors is carried out efficiently
      1. 1)As the foundation of a system to ensure the efficient execution of duties by directors, Board of Directors meetings shall be held on a regular basis once a month, and extraordinary meetings shall be held as necessary. In addition, important management matters are discussed at the Management Committee, an advisory body to the President and Representative Director, and decided by the Board of Directors.
      2. 2)With respect to business execution based on the decisions of the Board of Directors, the Division of Duties Regulations and the Administrative Authorities Regulations stipulate the responsible persons and their responsibilities, as well as the details of execution procedures.
   5. e) Systems to ensure the appropriateness of operations of the corporate group consisting of the Company and its subsidiaries
      1. 1)In order to ensure the appropriateness of the operations of each group company (consolidated subsidiaries, hereinafter the same), the TSUZUKI Group Code of Conduct shall be applied to each Group company, and each Group company shall establish its own regulations based on the Code of Conduct.
      2. 2)In accordance with the Affiliated Company Management Regulations and the Affiliated Company Management Detailed Regulations, the business status of each Group company are reported to the Company for approval in accordance with the Group Management Agreement concluded between each Group company and the Company. In addition, a liaison meeting of affiliated companies will be held by the managers of the Company and Group companies to ensure that operations are managed appropriately.
      3. 3)As a basis for a system to ensure the efficient execution of duties by the directors of each Group company, Board of Directors meetings shall be held on a regular basis and extraordinary meetings shall be held as necessary in accordance with the Board of Directors Regulations of each Group company. With respect to business execution based on the decisions of the Board of Directors of each Group company, the rules and regulations of each Group company shall stipulate the responsible persons and their responsibilities, as well as the details of execution procedures.
      4. 4)We will apply an internal reporting system to the directors and employees of each Group company to ensure the early detection and correction of violations of laws and regulations and other improper acts.
      5. 5)The TSUZUKI Group Helpline Regulations prohibit any disadvantageous treatment of whistleblowers.
   6. f) Systems to ensure the reliability of financial reporting
      1. 1)To ensure the reliability of the Group's financial reporting, we will establish an effective and appropriate internal control system based on the Financial Instruments and Exchange Act.
      2. 2)We will continuously evaluate the status of the development and operation of internal control over financial reporting and take necessary corrective measures to build an effective system.
   7. g) Matters concerning the system for employees to assist in the duties of corporate auditors and the independence of such employees from directors
      1. 1)Corporate auditors may request pre-determined personnel of the Audit Office to assist them in their auditing duties, and such personnel shall follow the direction and orders of the corporate auditors.
      2. 2)Personnel changes, evaluations, and disciplinary actions for the aforementioned assisting personnel must be approved by the Board of Corporate Auditors.
   8. h) Systems for directors and employees to report to corporate auditors, other systems for reporting to corporate auditors, and systems to ensure that audits by corporate auditors are conducted effectively.
      1. 1)In the event that any director or employee discovers any fact that may cause significant loss or damage to the operations or business results of the Company or any Group company, or receives any such report, he or she shall immediately report such fact to the corporate auditors. Notwithstanding the aforementioned, the corporate auditors may request reports from directors and employees as necessary. In addition, the person who provided such report shall not be treated disadvantageously for providing such report.
      2. 2)When a corporate auditor requests payment of reasonable expenses for the execution of their duties, the Company shall comply with such request.
      3. 3)The Board of Corporate Auditors will hold regular meetings to exchange opinions with the President and Representative Director, the Audit Office, and independent auditors.
      4. 4)The corporate auditors will work in close coordination with the corporate auditors and others of each Group company to ensure efficient audits.