The Compliance Program was established to ensure that all members of the KING JIM Group can act based on shared standards to realize its Management Philosophy. Based on this Compliance Program, the entire Group is working to promote the compliance system.

＞Please follow this link for the Compliance Program Compliance is often taken for granted in day-to-day operations and corporate activities, but everyone is susceptible to making mistaken decisions or taking the wrong action for a variety of reasons. Even in the unlikely event that a compliance breach occurs, the KING JIM Group can prevent it from escalating into a major risk by swiftly identifying it and taking corrective action.

To accomplish this, it is essential for each individual and department to detect and solve problems at an early stage while they are still minor. Consequently, the Group’s fundamental approach is to (1) correct problems through individual self-checks, and (2) correct problems via self-correcting actions by office organizations and each department.

The Company has appointed the General Manager of the Administration Division as the Chief Compliance Officer, and it has established a Compliance Committee, comprising Directors other than External Directors and external legal counsel, as members. The Compliance Committee is a body that provides fair, impartial, and objective surveys, advice, and decisions on any compliance problems at the KING JIM Group. The Chief Compliance Officer convenes the Compliance Committee as necessary. The Chief Compliance Officer, as the person in charge of all aspects of KING JIM’s compliance, manages the Compliance Program and monitors and supervises the status of compliance.
Moreover, the Auditors are able to audit the compliance status of the entire Group and attend and express their opinions in Compliance Committee meetings, as needed. The KING JIM Group’s compliance system is as follows: The KING JIM Group ensures that the Compliance Program can be viewed at all times to facilitate the understanding, widespread awareness and implementation of the program by all Group members. Furthermore, as part of compliance education, the Group works to improve the awareness of all Group members by conducting regular awareness-building activities through e-learning and internal memos. The KING JIM Group has established the Speak Out System as a mechanism of an internal whistleblowing and other reports. By discovering and properly addressing compliance issues at an early stage while they are still minor, compliance issues can be resolved before they become a serious issue.
The Speak Out System can be used by all KING JIM Group members if they witness an action that could lead to a compliance problem, and it is impossible or impracticable to conduct individual self-checks or self-correcting actions by office organizations or departments. The system allows Group members to raise the alarm by informing the Company of a situation from a public-interest perspective.
The system’s contact point is an external Speak Out System lawyer.
The name of the whistleblower isn’t released, and the system can be used even if anonymously. Besides, according to the Work Regulations for Employees and Speak Out System Operation Regulations, the Company will not treat whistleblowers unfavorably for consulting and reporting to the Speak Out System Lawyer.
Harassment consulting desks have been set up at each Group company, and they take appropriate measures to resolve harassment issues in accordance with internal rules.

＞Further information on the prevention of harassment Number of reports (KING JIM non-consolidated basis) in the fiscal year ended June 2023

	Speak Out System	Harassment consulting desks
Number of reports	0	0

The KING JIM Group complies with the tax-related laws, regulations, and other rules in the countries where its Group companies are located and meets its tax obligations. In addition, the Group understands and respects the legislative intent and spirit behind those rules.

The KING JIM Group endeavors to identify and reduce potential risks concerning transfer pricing for inter-Group transactions between KING JIM and its overseas Group companies. Transfer prices are set following a review conducted by the Risk Management Committee, considering international tax standards (OECD Transfer Pricing Guidelines, etc.).
In addition, disclosed information is confirmed through external audits.

The KING JIM Group cultivates satisfactory and sound relationships with the tax authorities of each country and answers with honesty and integrity to their requests in tax audits and other instances. In circumstances where there are differences of opinion with tax authorities, the Group endeavors to engage in dialogue with them and resolve issues in accordance with tax-related laws, regulations, and other rules. Risk Factors The Company constantly manages risks by identifying risk factors that may affect the KING JIM Group’s business activities and assigning relevant departments to each risk factor.
Each relevant department monitors the threat level of its assigned risks, and in cases where events deemed significant to management could occur, each relevant department immediately reports the matter to the Risk Management Committee via the officer in charge, while the Risk Management Committee discusses and approves response measures. Once a year, each relevant department reports to the Board of Directors on risk avoidance, countermeasures, management status and other matters. In addition, risk factors are revised in response to changes in the environment surrounding the KING JIM Group’s business activities, as well as the magnitude of their impact, and the frequency of occurrence.

Business strategy risk	External environment risk	Legal risk	Natural disaster and related risk	Infrastructure and related risk
Research and development investment	Price fluctuations in raw materials, etc.	Protection of intellectual property	Natural disasters	Information security
Inventories	International situations	Product liability	COVID-19
Ｍ＆Ａ	Foreign exchange fluctuations

* The risk categories are determined at the discretion of the Company.

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Business and Other Risks Among the matters concerning business, financial and other conditions presented in the Annual Securities Report for the fiscal year ended June 2023 (the 75th Term), matters that could have a significant impact on investor decisions include the following.
Forward-looking statements in this document are based on the judgment of the KING JIM Group as of the close of the fiscal year ended June 2023.

Risk Factors	Description
Research and development investment	In the KING JIM Group’s business environment, the Group’s mainstay market for filing tools is shrinking as progress on digitalization encourages consumers to go paperless. The Group is actively investing in developing new products suitable for work styles and lifestyles that have changed due to the COVID-19 pandemic and the post-COVID-19 situation. However, there is no assurance that the market will accept all of this development investment, and the outcomes could affect the Group’s operating results. In addressing risks, the Group will seek to establish a third pillar alongside KING FILE and TEPRA by focusing on developing products that create new markets, and environmentally friendly products from the perspective of sustainability.
Protection of intellectual property	In addressing risks, with regard to commercialization, the KING JIM Group investigates the intellectual property rights of third parties, and the Group has developed a system to respond in the event of lawsuits brought by third parties in cooperation with the intellectual property department and external attorneys-at-law and patent attorneys. Furthermore, when the Group finds products that are suspected of violating its intellectual property rights, it takes action such as sending a warning message.
Product liability	In addressing risks, the KING JIM Group will continue to make efforts to develop and establish a management system in accordance with the quality management standards and to ensure thorough compliance with its operations.
Price fluctuations in raw materials, etc.	In addressing risks, the KING JIM Group is working to mitigate risks by implementing measures, such as purchasing raw materials from multiple companies, collaborating with suppliers, responding to alternatives, and reducing costs through more efficient production.
International situations	The KING JIM Group’s products are mainly manufactured outside Japan. Factors such as changes in overseas economic conditions and political climate, wars and terrorism, and the halting of production operations owing to lockdowns to prevent the spread of COVID-19 could make component procurement and manufacturing difficult. This issue could impede the stable supply of the Group’s products and have an impact on the Group’s operating results. In addressing risks, the Group makes efforts to diversify its suppliers of main products without becoming overly concentrated on specific countries or regions, and collects information on market trends of components and other information to ensure safety inventory. Furthermore, in terms of overseas sales, behavioral restrictions imposed in each country may continue to hinder sales activities although the COVID-19 situation has shown an improving trend. In particular, due to differences in the level of economic recovery, sales conditions in the Southeast Asian region are projected to remain subdued. The Group has developed a system to properly manage risks through cooperation among the departments in charge of overseas business and overseas subsidiaries.
Foreign exchange fluctuations	The KING JIM Group’s products are mainly manufactured outside Japan, and the Group conducts certain foreign-currency-denominated transactions for import and export products, raw materials, and other items. In addition, the Group holds foreign currency-denominated receivables and payables. Therefore, if, significant foreign exchange fluctuations occur, it may impact the Group’s operating results. In addressing risks, the Group engages in foreign exchange forward contract transactions and other transactions.
Inventories	If a significant drop in product value is caused by factors such as changes in the market environment and product obsolescence, or a net selling value falls below the acquisition cost due to a downturn in profitability, the Group may record a loss on valuation of inventories, which could affect the Group’s operating results. In addressing risks, the Group collects external environmental and operating information appropriately to improve the accuracy of demand forecasts and monitors inventory levels as needed to adjust production.
M&A	In addressing risks, when considering an M&A deal, the KING JIM Group performs extensive due diligence thoroughly to prevent any omissions, and discusses and verifies the business development and the profit-and-loss plan after management integration to make decisions. Furthermore, in order to realize synergy effects at an early stage, the Group has established an in-house committee spanning various departments to facilitate the management integration.
Information Security	The KING JIM Group has a risk of information leakage, tampering, or other incidents caused by cyber-attacks and unauthorized access from outside the Group, software and IT equipment defects, and unauthorized removal of information from inside the Group. Such events, if they occur, may hamper business operations, and have an impact on the Group’s operating results. In addressing risks, the Group has installed anti-virus software and has conducted employee training and awareness-building activities to prevent the loss of vital information, leaks of personal or confidential information, and other such incidents. Furthermore, the Group has set forth rules for the use of external storage as a measure to prevent unauthorized removal of information from inside the Group.
Natural disasters	In addressing risks, the KING JIM Group has established the KING JIM Group Crisis Management Regulations, the Detailed Regulations on Crisis Management, the Action Manual for Emergency Disasters , and other rules. When the Group is informed that a crisis has occurred or is imminent, it immediately takes countermeasures in accordance with the crisis management system stipulated in the relevant regulations and other rules.
COVID-19	With regard to COVID-19, the risk of severe symptoms has decreased due to the widespread use of vaccination, and economic activities have been returning to normal. However, if the infection situation and the impact are prolonged, a resulting stagnation of supply chains and a downturn in economic conditions in Japan and abroad may have an impact on the Group’s operating results. In addressing risks, the Group gives top priority to customer and employee safety, implementing infection prevention measures, such as promoting telework, encouraging staggered work shifts, actively utilizing Web conferencing, and strictly enforcing hand sanitation, as it conducts business management.