Hanwa : Principles for Responding to the Corporate Governance Code

IR NEWS

Date: June 27, 2024

Contact: Yoichi NAKAGAWA (Mr.)

Representative Director, President

Tel: [phone]

Principles for Responding to the Corporate Governance Code

HANWA Co., Ltd. ("the Company") will further introduce measures required for corporate governance hereafter in line with the trend of the times toward improved governance. In response to the enforcement of the Corporate Governance Code, the Company believes that explanations from the Company focused on its current situations and its views will be conducive to the common interests of its shareholders, investors, and the Company. Accordingly, we have disclosed these principles for responding to all items of the Corporate Governance Code.

For disclosure at this time, the Company has partly revised the principles based on its current situations. The Company will endeavor to take measures from a long-term and continuous viewpoint to increase corporate value through reinforced effectiveness of governance.

We appreciate our shareholders and investors' understanding.

Section 1: Securing the Rights and Equal Treatment of Shareholders

General Principle 1

Companies should take appropriate measures to fully secure shareholder rights and develop an environment in which shareholders can exercise their rights appropriately and effectively.

In addition, companies should secure effective equal treatment of shareholders.

Given their particular sensitivities, adequate consideration should be given to the issues and concerns of minority shareholders and foreign shareholders for the effective exercise of shareholder rights and effective equal treatment of shareholders.

The Company strives to develop an environment to secure the rights of all shareholders. With regard to corporate information, the Company proactively discloses information deemed beneficial to shareholders in addition to information subject to the timely disclosure standards of the stock exchange. In addition, the Company discloses the above information on its website without delay and makes efforts to disclose the information in English concurrently with its disclosure in Japanese, as far as practicable. With regard to voting rights, the Company provides a voting method via the Internet in addition to a method in writing, so that more shareholders have equal opportunities to exercise their rights.

Principle 1.1 Securing the Rights of Shareholders

Companies should take appropriate measures to fully secure shareholder rights, including voting rights at the general shareholder meeting.

With regard to the provision of opportunities to exercise voting rights, the Company uses a voting site operated by Sumitomo Mitsui Trust Bank, Limited and the Electronic Voting Platform operated by ICJ, Inc. (Investor Communications Japan). The Company therefore recognizes that it duly provides shareholders with wide opportunities to exercise their voting rights and takes appropriate measures.

Supplementary Principles

1.1.1 When the board recognizes that a considerable number of votes have been cast against a proposal by the company and the proposal was approved, it should analyze the reasons behind opposing votes and why

many shareholders opposed, and should consider the need for shareholder dialogue and other measures.

The Company will appropriately incorporate shareholders' opinions into its management. Therefore, when the ratio of vote against for a company proposal submitted to the General Shareholders Meeting is high, the Board of Directors will analyze the reasons and consider the need for a response, including dialogue with shareholders.

1. When proposing to shareholders that certain powers of the general shareholder meeting be delegated to the board, companies should consider whether the board is adequately constituted to fulfill its corporate governance roles and responsibilities. If a company determines that the board is indeed adequately constituted, then it should recognize that such delegation may be desirable from the perspectives of agile decision-making and expertise in business judgment.
   With regard to the delegation of the matters requiring resolutions of the Shareholders Meeting to the Board of Directors, the Company considers it a necessary condition that the Board of Directors be a structure that can bear the responsibilities to decide such matters. The Company has elected four outside directors who oversee the appropriateness of decision-making by the Board of Directors. As we consider it desirable to delegate authority within a confined scope even though permitted under laws and regulations, the matters requiring resolutions of the Shareholders Meeting delegated to the Board of Directors under the provisions of the Articles of Incorporation at this point are issuance of shares within the authorized number of shares to be issued, implementation of interim dividends, and acquisition of treasury stock.
2. Given the importance of shareholder rights, companies should ensure that the exercise of shareholder rights is not impeded. In particular, adequate consideration should be given to the special rights that are recognized for minority shareholders with respect to companies and their officers, including the right to seek an injunction against illegal activities or the right to file a shareholder lawsuit, since the exercise of these rights tend to be prone to issues and concerns.
   The Company has established Share Handling Regulations to stipulate procedures in advance for the exercise of rights by minority shareholders, and will not prevent the exercise of rights.

Principle 1.2 Exercise of Shareholder Rights at General Shareholder Meetings

Companies should recognize that general shareholder meetings are an opportunity for constructive dialogue with shareholders, and should therefore take appropriate measures to ensure the exercise of shareholder rights at such meetings.

To make the Shareholders Meeting an opportunity for constructive dialogue with shareholders, the Company discloses information at appropriate times, provides shareholders with opportunities to exercise their voting rights, explains business conditions using methods such as slides, and thereby strives to take appropriate measures to ensure the exercise of shareholder rights.

Supplementary Principles

1.2.1 Companies should provide accurate information to shareholders as necessary in order to facilitate appropriate decision-making at general shareholder meetings.

The Company considers that it should promptly disclose information which would facilitate appropriate

decision-making by shareholders at the Shareholders Meeting. In addition, the Company posts the Notice of the Shareholders Meeting on the Company's website to broadly provide information.

1.2.2 While ensuring the accuracy of content, companies should strive to send convening notices for general shareholder meetings early enough to give shareholders sufficient time to consider the agenda. During the period between the board approval of convening the general shareholder meeting and sending the convening notice, information included in the convening notice should be disclosed by electronic means such as through TDnet or on the company's website.

Currently, the notice for shareholders to access the electronic provision of information is to be sent out

approximately three weeks prior to the date of the General Shareholders Meeting, respecting the purpose of the electronic provision system, the introduction of which has been mandatory since March 2023. To ensure

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that shareholders have sufficient time to consider the agenda items, regardless of the start date of the electronic provision measure stipulated in the Companies Act, the notice of the General Shareholders Meeting is published electronically on Japan Exchange Group's website and the Company's website as soon as possible after the resolution to convene the General Shareholders Meeting.

1.2.3 The determination of the date of the general shareholder meeting and any associated dates should be made in consideration of facilitating sufficient constructive dialogue with shareholders and ensuring the accuracy of information necessary for such dialogue.

The date of the General Shareholders Meeting of the Company is scheduled in late June, the third month after the fiscal year end, which is the time limit for extensions of final returns under the Corporation Tax Act. The Company selects this schedule to ensure itself the time required for account settlement and other procedures necessary for holding the General Shareholders Meeting after the fiscal year end, with no intention to prevent shareholders from attending the meeting.

We traditionally used to hold our General Shareholders Meeting on the day when the general shareholders meetings are concentrated. However, starting from the 71st Ordinary General Shareholders Meeting, we have moved the meeting date forward to avoid the concentrated meeting day. We will continue to provide shareholders in Japan and overseas with sufficient time to consider the exercise of their voting rights by disclosing convocation notices as soon as possible. At the same time, we will flexibly set the date of the General Shareholders Meeting, while ensuring an appropriate time period for preparation.

1.2.4 Bearing in mind the number of institutional and foreign shareholders, companies should take steps for the creation of an infrastructure allowing electronic voting, including the use of the Electronic Voting Platform, and the provision of English translations of the convening notices of general shareholder meeting.

In particular, companies listed on the Prime Market should make the Electronic Voting Platform available, at least to institutional investors.

As mentioned above, the Company has created an infrastructure for the exercise of voting rights that allows shareholders to use a voting site operated by Sumitomo Mitsui Trust Bank, Limited and the Electronic Voting Platform operated by ICJ, Inc. (Investor Communications Japan), in addition to voting in writing, to ensure that institutional and foreign shareholders have opportunities to exercise voting rights. In addition, with regard to the Notice of the Shareholders Meeting, the essentials of the agenda are translated into English and posted on the Company's website, etc.

1.2.5 In order to prepare for cases where institutional investors who hold shares in street name express an interest in advance of the general shareholder meeting in attending the general shareholder meeting or exercising voting rights, companies should work with the trust bank (shintaku ginko) and/or custodial institutions to consider such possibility.

The Company permits shareholders recorded on the shareholder register to attend the General Shareholders

Meeting. The Company does not permit beneficial shareholders to attend the Meeting because there are no means by which to confirm the credibility of shareholding by substantial shareholders. However, if such a request is made in advance and it can be confirmed with appropriate evidence that the requester is a beneficial shareholder, the Company will consider allowing attendance at the General Shareholders Meeting and the exercise of voting rights, etc., in consultation with the trust bank and/or custodial institutions.

Principle 1.3 Basic Strategy for Capital Policy

Because capital policy may have a significant effect on shareholder returns, companies should explain their basic strategy with respect to their capital policy.

The Company aims at comprehensively increasing corporate value and sustainable corporate growth and believes that the most important management responsibilities is to enable sustainable returns of earnings to shareholders while building sufficient internal reserves for the reinforcement of management base and investment in future growth.

If the Company intends to raise funds by means that dilute existing shares, the Company will implement

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the fundraising after the Board of Directors sufficiently examines the purpose and effect of the funds and upon careful explanations are provided to shareholders.

With regard to shareholder returns, the Company's basic policy is to continuously pay stable dividends, while striving to sustainably enhance corporate value and aiming to increase the amount of dividends over the medium to long term.

In addition, the Company strives to improve capital efficiency and maintain financial soundness, taking into account capital structure and the levels of various management indicators.

Principle 1.4 Cross-Shareholdings

When companies hold shares of other listed companies as cross-shareholdings, they should disclose their policy with respect to doing so, including their policies regarding the reduction of cross-shareholdings. In addition, the board should annually assess whether or not to hold each individual cross-shareholding, specifically examining whether the purpose is appropriate and whether the benefits and risks from each holding cover the company's cost of capital. The results of this assessment should be disclosed.

Companies should establish and disclose specific standards with respect to the voting rights as to their cross-shareholdings, and vote in accordance with the standards.

(1) Holding Policy

From the perspective of business partnerships, creating business opportunities, maintaining and strengthening business relationships, etc., the Company holds shares of business partners, etc., when it is considered to contribute to enhancing corporate value over the medium to long term.

(2) Verification and Reduction Policy

Each year, the Board of Directors and the Management Committee regularly and comprehensively examine the appropriateness of the holding of individual shares, taking into account factors such as investment returns from transactions and dividends, capital efficiency, and the purpose of holding. The Company promotes the sale of shares that are deemed to be inconsistent with the purpose of the holding.

(3) Criteria for Exercising Voting Rights

The Company has established the following screening criteria for exercising voting rights. For the stock issues that meet the criteria, the Company will scrutinize the details of the proposals and determine whether to vote for or against them.

1. a company whose value of shares are judged to be significantly impaired according to its stock price level and financial conditions
2. a company whose operating income, ordinary income, or net income was recorded as negative in its business results for the previous fiscal year
3. a company that caused a scandal with significant social impact, including violations of laws and regulations or anti-social acts
4. a company that submits a proposal that is likely to hinder the purpose of shareholding and significantly impair the value of shares, including any proposal on changes of control or substantial revisions of corporate organization

1. Reduction Status for the Year Ended March 2024

The Company sold all shares of 29 issues and a portion of shares of 7 issues. As of the end of March 2024, the ratio of cross-shareholdings to consolidated net assets was 19.6%

Supplementary Principles

1.4.1 When cross-shareholders (i.e., shareholders who hold a company's shares for the purpose of cross- shareholding) indicate their intention to sell their shares, companies should not hinder the sale of the cross-held shares by, for instance, implying a possible reduction of business transactions.

If a cross-shareholder indicates an intention to sell the Company's shares, the Company will confirm the

background of the intention to sell the shares. However, in principle, the Company will respect the intention of the other party and will not hinder the sale.

1.4.2 Companies should not engage in transactions with cross-shareholders which may harm the interests of the companies or the common interests of their shareholders by, for instance, continuing the transactions

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without carefully examining the underlying economic rationale.

In its business activities, the Company believes that it is essential to ensure economic rationality in business transactions in order to achieve sustainable growth and increase corporate value, and this does not depend on whether or not the Company holds policy-held stocks.

Principle 1.5 Anti-Takeover Measures

Anti-takeover measures must not have any objective associated with entrenchment of the management or the board. With respect to the adoption or implementation of anti-takeover measures, the board and kansayaku should carefully examine their necessity and rationale in light of their fiduciary responsibility to shareholders, ensure appropriate procedures, and provide sufficient explanation to shareholders.

We have continued to implement Large Scale Purchase Countermeasures (so-called Takeover Defense) since they were introduced in February 2007. However, we discontinued the takeover defense measures at the conclusion of the Ordinary General Meeting of Shareholders held on June 22, 2018.

Supplementary Principles

1.5.1 In case of a tender offer, companies should clearly explain the position of the board, including any counteroffers, and should not take measures that would frustrate shareholder rights to sell their shares in response to the tender offer.

In the event of a large-scale purchase of our shares, we will require the purchaser to provide necessary and sufficient information, and will disclose the opinions of our Board of Directors in a timely and appropriate manner. In addition, we will endeavor to secure the time and information necessary for shareholders to consider, and will take appropriate measures to the extent permitted by the Financial Instruments and Exchange Act, the Companies Act, and other relevant laws and regulations.

Principle 1.6 Capital Policy that May Harm Shareholder Interests

With respect to a company's capital policy that results in the change of control or in significant dilution, including share offerings and management buyouts, the board and kansayaku should, in order not to unfairly harm the existing shareholders' interests, carefully examine the necessity and rationale from the perspective of their fiduciary responsibility to shareholders, should ensure appropriate procedures, and provide sufficient explanation to shareholders.

The Company is not currently scheduled to adopt a capital policy that results in a change of control or in significant dilution. If the Company plans to implement such a capital policy, however, the Company will duly consider the views of the independent outside directors and corporate auditors and make every effort to provide careful explanations to shareholders on the background, purposes, effects, etc. in relation to the adoption of the policy.

Principle 1.7 Related Party Transactions

When a company engages in transactions with its directors or major shareholders (i.e., related party transactions), in order to ensure that such transactions do not harm the interests of the company or the common interests of its shareholders and prevent any concerns with respect to such harm, the board should establish appropriate procedures beforehand in proportion to the importance and characteristics of the transaction. In addition to their use by the board in approving and monitoring such transactions, these procedures should be disclosed.

If the Company intends to engage in a transaction with a director of the Company or a company where a director of the Company holds office as a representative (related party transaction), the Company will conduct the related party transaction only after the Board of Directors deliberates on the transaction and gives approval.

With regard to transactions with major shareholders, financial transactions with Sumitomo Mitsui Banking Corporation and The Dai-ichi Life Insurance Company, Limited are conducted with approval from the Board of Directors. With regard to commercial transactions, the Company conducts them based on the Standards for Decision-making Authority established with approval from the Board of Directors according to the sizes of the transactions, and applies the same procedures to the Company's transactions with major shareholders such as Nippon Steel Corporation.

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Section 2: Appropriate Cooperation with Stakeholders Other Than Shareholders

General Principle 2

Companies should fully recognize that their sustainable growth and the creation of mid- to long-term corporate value are brought about as a result of the provision of resources and contributions made by a range of stakeholders, including employees, customers, business partners, creditors and local communities. As such, companies should endeavor to appropriately cooperate with these stakeholders.

The board and the management should exercise their leadership in establishing a corporate culture where the rights and positions of stakeholders are respected and sound business ethics are ensured.

The resources that sustain the Company's corporate activities and increase its corporate value are the Company's employees who share the majority of their lives with the Company; customers who purchase the Company's products and services; suppliers who provide the Company with products and services; financial institutions who provide the Company with operating funds and investment funds; and local communities who support the Company's business by providing infrastructure; and sustainable corporate activities and increased corporate value result from cooperation of all of these persons. For these various stakeholders, the Company voluntarily chooses business activities in recognition of the merit of the Company's existence, and the Company will further deepen cooperative relationships with each of these stakeholders.

Principle 2.1 Business Principles as the Foundation of Corporate Value Creation Over the Mid- to Long-Term Guided by their position concerning social responsibility, companies should undertake their businesses in order to create value for all stakeholders while increasing corporate value over the mid- to long-term. To this end, companies should draft and maintain business principles that will become the basis for such

activities.

The Corporate Philosophy of the Company proclaims that by "Coping with changing times and markets quickly, Hanwa makes a great contribution to society by satisfying various needs of customers as a 'distribution specialist.'" The Company has a policy of pursuing trading company logistics with a difference, increasing its corporate value, and fulfilling social responsibility with an emphasis on compliance.

Principle 2.2 Code of Conduct

Companies should draft and implement a code of conduct for employees in order to express their values with respect to appropriate cooperation with and serving the interests of stakeholders and carrying out sound and ethical business activities. The board should be responsible for drafting and revising the code of conduct, and should ensure its compliance broadly across the organization, including the front line of domestic and global operations.

The Company strives to promote understanding of its corporate culture by communicating the meaning of its corporate creed, corporate slogan, and other principles at the time of employees' entry into the Company. Additionally, we have established the Hanwa Group Ethical Standards, Hanwa Group Code of Conduct, Hanwa Group Human Rights Policy, and other standards. The contents of these standards are compiled in our Compliance Manual, which is prepared in six languages and made available for all officers and employees to access, thereby promoting their practice and permeation.

Supplementary Principles

2.2.1 The board should review regularly (or where appropriate) whether or not the code of conduct is being widely implemented. The review should focus on the substantive assessment of whether the company's corporate culture truly embraces the intent and spirit of the code of conduct, and not solely on the form of implementation and compliance.

In addition to the initiatives described in Principle 2.2, the Company has established a Compliance Committee, which raises awareness about compliance and responds appropriately if and when compliance incidents occur, formulating preventive measures for the future. The activities of this committee are reported to the Board of Directors.

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Principle 2.3 Sustainability Issues, Including Social and Environmental Matters

Companies should take appropriate measures to address sustainability issues, including social and environmental matters.

The Company has established the Sustainability Promotion Committee and addresses the issues related to the Company's sustainability. The Company has also established the "Environmental Policy" and "Guidelines for Environmental Corporate Action," has acquired ISO 14001 certification and promotes an environmental management program, where internal committee members and outside professionals conduct regular reviews.

The summary of the Company's sustainability basic policy is as follows.

1. Realization of sustainability through our business
2. Building of a sound and highly transparent organization
3. Creating a workplace where diverse personalities resonate and enhance each other
4. Passing on a rich global environment to the next generation
5. Realization of a society in which everyone can live comfortably

Furthermore, based on the Sustainability Basic Policy, we have identified the following sustainability issues (materiality) that the Group should focus on.

• Formation of a recycling-oriented society
• Realization of carbon neutrality
• Building strong and flexible social infrastructure

• Security and development of diversified human resources
• Advancement of risk management system

Supplementary Principles

2.3.1 The board should recognize that dealing with sustainability issues, such as taking care of climate change and other global environmental issues, respect of human rights, fair and appropriate treatment of the workforce including caring for their health and working environment, fair and reasonable transactions with suppliers, and crisis management for natural disasters, are important management issues that can lead to earning opportunities as well as risk mitigation, and should further consider addressing these matters positively and proactively in terms of increasing corporate value over the mid-tolong-term.

The Company is promoting various initiatives to address issues related to its sustainability in order to

realize the sustainable development and enhancement of corporate value of the Company and its group companies (collectively referred to as the "Group") over the mid- to long-term.

In responding to environmental issues, the Company obtained ISO 14001 certification for environmental management according to international standards in April 2000 and is promoting environmental management. With regard to business activities, in addition to its business development for the recycling of resources such as steel scrap, ferrous raw material, and wastepaper, the Company has realized effective measures for "reducing (curtailing waste), reusing (reusing waste) and recycling (recycling waste)" in its activities, including its trade business approved by the relevant countries' regulatory environmental authorities under the Basel Convention provisions governing procedures for the international transfer of metallic industrial waste and the biomass fuel/RPF business, in order to contribute to the evolution of a recycling-oriented society. In addition, we established a "Battery Team" in April 2021 and are working to realize a decarbonized society, aiming to expand business related to rechargeable batteries for automobiles, etc. by utilizing the know-how we have cultivated through the handling of battery raw material resources. Furthermore, in order to further enhance the functions of the Battery Team, we reorganized it into a global organization in April 2023 and launched the "BATTERY GLOBAL GROUP for ELECTRIFICATION."

Regarding respect for human rights, in accordance with the UK's Modern Slavery Act 2015, which prohibits modern slavery and human trafficking, the Company has disclosed a statement regarding our

response to modern slavery in our business activities and supply chain. In addition, we have formulated the Hanwa Group Human Rights Policy (https://www.hanwa.co.jp/en/csr/society/human-rights.html)

and are working to ensure that human rights are respected across our business activities.

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Regarding employee health management, the Company established the "Hanwa Health and Productivity Management Declaration" in April 2018, and the President and Representative Director assumed the position of Chief Health Officer (CHO). The Company also established a Health Management Promotion Section within the Personnel Department to promote the maintenance of physical and mental health among employees and the development of an environment in which employees can thrive.

Regarding crisis management, the Company has established a Crisis Management Manual and a Business Continuity Plan (BCP) Manual for Large Scale Disasters to respond to various risks that may arise while conducting business in a wide range of countries around the world. It works to minimize damage and ensure the safety of employees in the event of a crisis.

Regarding compliance issues, the Company has maintained a compliance manual since April 2006 as a guideline to be observed by all officers and employees. It has been prepared in various languages for all officers and employees of the Group around the world to ensure thorough compliance with laws and regulations.

In addition, to respond to sustainability issues, the Company established a Sustainability Promotion Committee in October 2021 and a system to discuss company-wide sustainability issues. Under the direction and supervision of the Board of Directors, the Committee plays a central role in promoting initiatives necessary for the Group to coexist with the Earth and society and pursue sustainable development.

Specific information on our sustainability initiatives, including the above, can be found on our website's "Sustainability" page (https://www.hanwa.co.jp/en/csr) , among other pages.

Principle 2.4 Ensuring Diversity, Including Active Participation of Women

Companies should recognize that the existence of diverse perspectives and values reflecting a variety of experiences, skills and characteristics is a strength that supports their sustainable growth. As such, companies should promote diversity of personnel, including the active participation of women.

The Company positions creating an environment in which individual employees acknowledge various backgrounds and values, and in which a variety of work styles can be pursued as an important management target. The Diversity Promotion Office is responsible for taking measures to ensure diversity of employees. We have introduced a supervisory scheme where senior employees supervise each new employee for a certain period, as well as a mentor scheme especially for female as well as for non-Japanese employees. An employee in a different section with longer work experience in the Company is assigned as a mentor to provide mental support, to create a better working environment. In addition, the Company assigns female employees to positions that will best enable them to develop to their full potential, proactively promotes female employees to managerial positions, and introduces study, training abroad, and job rotation programs for female employees. Through the combination of these initiatives, the Company promotes comprehensive development of human resources of a managerial caliber with a view to promoting female employees to executive officer positions.

Supplementary Principles

2.4.1 Companies should present their policies and voluntary and measurable goals for ensuring diversity in the promotion to core human resources, such as the promotion of women, foreign nationals and midcareer hires to middle managerial positions, as well as disclosing their status.

In addition, in light of the importance of human resource strategies for increasing corporate value over the mid-tolong-term, companies should present its policies for human resource development and internal environment development to ensure diversity, as well as the status of their implementation.

We have set a numerical target for the ratio of new female graduates hired (30% or more for career-track positions) and for mid-career hiring (30% by FY2025). In addition, as part of our efforts to create an internal environment to secure a diverse workforce, we are developing infrastructure for telecommuting and have established an "in-house university" to create a comfortable work environment and a system where employees can grow autonomously. As a result, the number and ratio of women, foreign nationals, and mid-career hires are increasing year by year.

Furthermore, we have set a target of 3.7% for the ratio of female employees in managerial positions by FY2025 and are working to form a population for promotion to core personnel. Our action plan based on the

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Act on the Promotion of Women's Active Engagement in Professional Life is available on our website.

In the development of our human resources, we have adopted the keyword "Professional & Global." We are working to develop human resources with an expanded sense of humanity who can communicate with an understanding of the uniqueness and diversity of each of the world's regions. Specifically, we are promoting the development of human resources with management knowledge, business knowledge, language skills, and international perspectives by combining the acquisition of knowledge and language skills through systems that dispatch employees to MBA programs in Japan, language education institutions in and outside Japan, and overseas subsidiaries as trainees, with practical application in the workplace by assigning them to related positions after completion of the training program.

Principle 2.5 Whistleblowing

Companies should establish an appropriate framework for whistleblowing such that employees can report illegal or inappropriate behavior, disclosures, or any other serious concerns without fear of suffering from disadvantageous treatment. Also, the framework should allow for an objective assessment and appropriate response to the reported issues, and the board should be responsible for both establishing this framework, and ensuring and monitoring its enforcement.

The Company has established the Internal Whistleblowing Rules and set up points of contact both inside and outside the Company that group employees can freely reach out to consult with and report on compliance and other issues with no restrictions from their organizations. The Company will not be notified of the names of employees who report issues without their consent. Information reported to a point of contact is forwarded to the office of the Compliance Committee with strict protection of privacy, and the Company promptly investigates all the facts in cooperation with members of the Compliance Committee and takes measures to correct them, etc., as necessary. If an event is judged to be critical, the Company will disclose the relevant information promptly and accurately, fulfill all its duties of accountability, and report the event to the Board of Directors.

Supplementary Principles

2.5.1 As a part of establishing a framework for whistleblowing, companies should establish a point of contact that is independent of the management (for example, a panel consisting of outside directors and outside kansayaku). In addition, rules should be established to secure the confidentiality of the information provider and prohibit any disadvantageous treatment.

The Company appoints external attorneys as points of contact who are independent from the management.

Such persons who are contacted for consultations report to the Company on facts that come to light through the consultations, give guidance, and conduct investigations with strict protection of the privacy of the consulters who contact them. In addition, the Company appropriately handles facts reported to the points of contact to ensure that the information providers are not treated unfairly by the Company, regardless of whether the information is reported anonymously or not.

Principle 2.6 Roles of Corporate Pension Funds as Asset Owners

Because the management of corporate pension funds impacts stable asset formation for employees and companies' own financial standing, companies should take and disclose measures to improve human resources and operational practices, such as the recruitment or assignment of qualified persons, in order to increase the investment management expertise of corporate pension funds (including stewardship activities such as monitoring the asset managers of corporate pension funds), thus making sure that corporate pension funds perform their roles as asset owners. Companies should ensure that conflicts of interest which could arise between pension fund beneficiaries and companies are appropriately managed.

The Company manages pension reserves through Pension Fund of Hanwa Co., Ltd. (hereinafter referred to as the Pension Fund). Although it is difficult to say that the Company sufficiently assigns personnel who are highly qualified and experienced in investment in pension funds due to our size and expertise, the Company has established a Pension Committee within the Company to ensure stable and efficient management of Pension Fund and its investments. The Pension Committee is composed mainly of officers and section managers in charge of the Personnel Department, Finance Department, and Accounting Department. The

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committee selects investment institutions to be entrusted, allocates premiums, and evaluates investment performance. The results are submitted to the Board of Directors, Representatives of the Pension Fund, and the Chairman of the Board of Directors. Based on the report of the Pension Committee, the Pension Fund presents its investment policy to the investment management contractors, entrusts them to the fund, monitors the investment status of the fund to the contractors on a regular basis, and shares the investment results with the Pension Committee.

The selection of individual issues and the exercise of voting rights are left to the trustees, and the Company does not direct them directly. Therefore, the Company believes that there will be no conflict of interest between the pension beneficiaries and the Company.

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