Risks to Independence and the Fairness of Transaction Terms from Related-Party Transactions

「As a general policy, we do not engage in transactions with controlling shareholders. If it becomes unavoidable to do so, the Board of Directors will first carefully examine the rationality and necessity of the transaction and the appropriateness of its terms before making a decision, and we will respond in a manner that does not harm the interests of minority shareholders.」

「As of the end of the fiscal year, no related-party transactions existed. We also have a policy of not initiating new related-party transactions in the future.」

「In one of our real estate lease transactions, we received a guarantee of obligations from Toshio Yoshihara (吉原 俊夫), our Representative Director and Chairman. We paid no guarantee fee in connection with the guarantee, and the guarantee agreement was terminated on the date of listing. We have a policy of generally not initiating new related-party transactions in the future.」

「During the interim accounting period, there were no significant changes in the occurrence of the major risks that management recognizes could materially affect the company’s financial position, financial performance, and cash flows, or in the matters described as “Business Risks” in the annual securities report for the previous fiscal year.」

「From the perspective of our independence as a company, related-party transactions require particular attention because of the risk that we could be forced to enter into transactions that are not otherwise necessary or that transaction terms could be distorted, resulting in the outflow of benefits that should accrue to shareholders. Accordingly, the Board of Directors deliberates and approves the business necessity, appropriateness of the transaction terms and other aspects of each transaction, and we have established a system to ensure the soundness and fairness of related-party transactions.」