An overview of the Company’s system for ensuring the appropriateness of operations is as follows. The KING JIM Group shall comply with laws, regulations, and the Articles of Incorporation based on the Management Philosophy, Guidelines for Action, and the KING JIM Group Compliance Program, which is positioned as the Group’s highest regulations, and its officers and employees shall exercise self-discipline in their day-to-day conduct in order to put corporate ethics into practice. The Company has established the Compliance Committee as a body to survey, consult, and make decisions on the Group’s compliance issues. The Chief Compliance Officer, as the person in charge of all aspects of the Group’s compliance, monitors and supervises the operation of the KING JIM Group Compliance Program as well as the status of compliance. In addition, the Company has established the Speak Out System as a contact point for internal whistleblowing. If a person witnesses a questionable act in terms of compliance or an attempt to commit such an act, the Speak Out System enables the person to report it to the Speak Out System Lawyer. The whistleblower’s anonymity is guaranteed. The whistleblower’s legitimate actions are protected by the Work Regulations for Employees and Speak Out System Operation Regulations, and the whistleblower will not be treated unfavorably for reporting. The Auditors audit the status of the Group’s compliance and audit the management of the system by receiving notices from the Speak Out Lawyer and reports from the Compliance Committee. Information related to the execution of Directors’ duties is recorded in documents and stored appropriately in accordance with the Board of Directors’ Regulations, Document Management Regulations, Authorization Procedure Regulations, and Detailed Regulations on Approval Process. This information is properly managed based on these regulations and the Confidentiality Management Regulations. If a Director or Auditor wishes to view a document, the Director or Auditor may view the document in accordance with the aforementioned regulations. Regarding the Group’s management of the risk of loss, the General Managers of divisions, the Directors in charge, or the Presidents of subsidiaries, who each implement business execution in their respective areas, conduct overall daily management of the risk of loss in accordance with the KING JIM Group Crisis Management Regulations. The General Managers of divisions, the Directors in charge, or the Presidents of subsidiaries also enhance the establishment of operational regulations as needed. The Group has established the Risk Management Committee, chaired by the President & CEO of KING JIM CO., LTD., as an organization to discuss and approve response measures in cases where there are important themes and issues related to the promotion of Group-wide risk management in normal times. If the risk of loss could have a significant impact on the Group’s operating results, the Group companies will take action to minimize losses based on the Detailed Regulations on Crisis Management established by each Group company. The circumstances surrounding risk materialization and the status of responses will be reported to the Board of Directors and the Board of Auditors. Furthermore, matters that could have a significant impact on the Group’s operating results are reported to the Accounting Auditor immediately, and are disclosed to stakeholders via timely disclosure and other means. To develop the Group’s growth strategy, the Company establishes Company-wide targets through its medium-term management plan, and the General Managers of divisions, Directors in charge, or Presidents of subsidiaries implement specific measures to achieve those targets. The Company holds Board of Directors meetings at least once a month to decide important matters, report on the status of each Directors’ business execution, and supervise the execution of Directors’ duties. The Company has a system under which Auditors audit the status of execution of duties by Directors. Furthermore, to enhance the Board of Directors meetings, the Management Conference, a body that conducts deliberations prior to the Board of Directors meetings, is held and important matters are considered, thereby ensuring that the Directors’ duties are executed efficiently. The Company shall develop a system for ensuring the appropriateness of the operations of the Company and the entire KING JIM Group as well as a system for ensuring the reliability of financial reporting, among other matters. The KING JIM Group Compliance Program will be implemented as a Group-wide program at the Company and its subsidiaries. The system for ensuring the appropriateness of normal operations is assured by the Internal Audit Regulations, the Subsidiary Management Regulations, and other rules. The Directors in charge monitor the implementation of the system and are required to report to the Company regularly and continuously on the management status of subsidiaries and other crucial information. The Company’s internal audit department properly audits the appropriateness of subsidiary operations and reports the audit results to the Auditors, and also reports particularly critical matters to the Board of Directors. Subsidiaries promote the development of systems to ensure the appropriateness of operations, including the establishment of various rules in accordance with the KING JIM Group Compliance Program. Overseas subsidiaries will respect local laws, regulations, and customs in developing the aforementioned systems. The KING JIM Group will have no relations whatsoever with antisocial forces or groups and has established the KING JIM Group Compliance Program to ensure that it does not respond to any illegitimate requests. The Group will continue to ensure that this system remains in place. To conduct audits effectively, the Auditors may request that employees be allocated to support their duties. When such a request is made, the Company will assign employees who have the required knowledge and abilities to properly provide such support. Furthermore, to ensure the independence of the Auditors’ duties, the employees who support the Auditors’ duties will not receive the instructions and orders of the Directors against the instructions and orders of the Auditors. The Company will get a prior agreement with the Auditors on the appointment/dismissal, full-time/concurrent appointment, transfer, personnel evaluation, and disciplinary action of the employees who support the Auditors’ duties. If the Directors and employees of the Company and its subsidiaries discover matters that could cause significant damage to the Group, or matters that pose a risk of violating laws, regulations, and the Articles of Incorporation, they will report such matters to the Auditors or the Board of Auditors immediately. In addition, if the Directors and employees of the Company and its subsidiaries are requested by the Auditors to explain matters necessary for audits, they will swiftly provide the necessary reporting to the Auditors or the Board of Auditors. The Company and its subsidiaries will not unfavorably treat the Directors and employees who provide such reports to the Auditors of the Company and its subsidiaries on the grounds that they provided such reports. In formulating the Audit Plan, the Auditors will coordinate with the Accounting Auditor and the internal audit department and make decisions on matters including the audit method and the division of roles for audit operations in meetings of the Board of Auditors. To effectively implement audit operations, the Auditors will strive to communicate and exchange information with Directors and employees as well as the business execution staff of subsidiaries as they implement their audits. The Company will cooperate with audits by the Auditors. Regarding the various expenses associated with audits, the Company will bear the necessary expenses to ensure the effectiveness of audits. In cases deemed necessary by the Auditors, the Auditors will conduct appropriate audits by collaborating with lawyers, certified public accountants, and certified tax accountants, among others. Furthermore, the Auditors are permitted to attend various important meetings and view approval forms and other important documents for the purpose of gathering information needed for audits. As stated above, the KING JIM Group has no relations whatsoever with antisocial forces and groups, and has also established the KING JIM Group Compliance Program to ensure that it does not respond to any illegitimate requests. The Group will continue to ensure that this system remains in place.