Basic Policy on Corporate Governance

Based on our management philosophy, our company has established a basic corporate governance policy in order to contribute to improving our corporate value, and if this basic policy is revised, we will disclose its contents in a timely and appropriate manner.

Chapter 1 General Provisions

(Basic philosophy regarding corporate governance)
Article 1

In order to live up to the trust of stakeholders such as customers, shareholders, business partners, and employees, and to achieve sustainable growth and increase corporate value over the medium to long term, we have established a transparent and fair management system. Build. In addition, we will make swift and decisive decisions in response to changes in the business environment, strengthen our supervisory functions, and strive to enhance corporate governance.

Chapter 2 Ensuring shareholder rights and equality

(General meeting of shareholders)
Article 2

The Company shall determine the date of the general meeting of shareholders by ensuring sufficient timetables for the preparation of legal documents and auditing schedules, as well as taking into consideration the period for convocation procedures, etc.

2. The Company will strive to create an environment in which all shareholders, including those who do not attend the general meeting of shareholders, can exercise their voting rights appropriately, such as by using the electronic voting platform and by translating convocation notices into English.

(Ensuring shareholder equality)
Article 3

The Company treats all shareholders equally according to their ownership stake, and strives to disclose information in a timely and appropriate manner to avoid information gaps among shareholders.

(Basic policy regarding cross-shareholdings and the exercise of voting rights related to cross-shareholdings)
Article 4

By strategically holding listed stocks that we deem beneficial and important to maintain and strengthen cooperative relationships in order to continuously develop our business, we will help the companies we hold and our company increase corporate value over the medium to long term. Our basic policy is to strive for improvement.

2. The board of directors shall closely monitor stock prices based on dividends, operating policies, capital costs, etc., monitor the impact of declines on the company's financial condition and the business continuity of the company as appropriate, and take measures to increase corporate value over the medium to long term. Verification shall be made from this perspective.

3. When exercising voting rights for cross-shareholdings, a comprehensive and appropriate judgment will be made to determine whether the proposal is expected to improve corporate value or whether it will lead to damage to shareholder value.

Chapter 3 Consideration of stakeholder interests

(Related party transactions)
Article 5

When conducting transactions with the Company's officers, major shareholders, etc. (related party transactions), ensure that such transactions do not harm the common interests of the Company and its shareholders, or that they do not give rise to such concerns. , the approval of the Board of Directors shall be obtained in advance in accordance with the provisions of the Companies Act and the Board of Directors Regulations.

(Relationship with stakeholders)
Article 6

Based on our management philosophy, we aim to be a company that is trusted not only by our stakeholders but also by the local community and is needed by society. By establishing a corporate code of conduct and striving to maintain good and smooth relationships with stakeholders, we will gain the trust of our stakeholders, achieve sustainable growth, and increase corporate value over the medium to long term.

Chapter 4 Ensuring appropriate information disclosure and transparency

(Disclosure of our company's policies regarding internal control systems, etc.)
Article 7

The Basic Policy of Establishing Internal Control Systems is published on our website.

https://www.focus-s.com/sustainability/corporate_codeofconduct/internalcontrol

Chapter 5 Responsibilities of the Board of Directors, etc.

(Role of the Board of Directors)
Article 8

The Board of Directors, as the decision-making body for the Company's business management, discusses and decides on legal matters, determines or approves basic management policies and important matters regarding the execution of business operations, and supervises the status of business execution. will do.

(Role of outside directors)
Article 9

Based on their own knowledge, the Company's outside directors shall provide necessary advice in order to promote the sustainable growth of the company and improve its corporate value over the medium to long term.

2. The Board of Directors shall supervise management through the appointment and dismissal of senior management, determination of remuneration, and other important decisions of the Board of Directors.

3. Conflicts of interest between the company and management, controlling shareholders, etc. shall be supervised.

4. From a standpoint independent from management and controlling shareholders, the opinions of stakeholders shall be appropriately reflected in the Board of Directors.

(Chairman of the Board of Directors)
Article 10

The chairman of the board of directors of the company shall be a director in accordance with the regulations of the board of directors.

2. The chairman of the board of directors must ensure that sufficient time is secured for all proposals (particularly those related to strategic agenda items) and that each director receives appropriate information in a timely manner.

(Composition of the Board of Directors)
Article 11

The number of directors of the Company shall be 10 or less. Of these, one-third of the directors shall be independent outside directors.

2. The independence of outside directors shall be ensured based on the Company's own independence standards that comply with the standards set by the Tokyo Stock Exchange.

(Director nomination procedure)
Article 12

In order to continuously increase the corporate value of our company, we will select from a wide range of diverse human resources those who meet the nomination criteria set by our company, and when making nominations, we will consider the balance of abilities and knowledge of all executives. The decision shall be made in due course.

2. The President and Representative Director shall prepare a draft proposal for candidates based on the nomination policy and nomination criteria and consult with the Nomination Advisory Committee.

3. The Nomination Advisory Committee shall deliberate whether the draft proposal has been appropriately prepared in light of the nomination criteria and selection process, and shall report the results to the Board of Directors.

4. The Board of Directors shall deliberate on the matter based on the report of the Nomination Advisory Committee, and decide on candidates. The candidates shall be presented to the General Meeting of Shareholders for resolution.

(Procedures for nomination of auditors)
Article 13

Our corporate auditors shall strive to maintain an independent position, maintain a fair and impartial attitude, and act based on their own beliefs. In addition, when selecting candidates for corporate auditors, we take into consideration whether they are full-time or part-time, internal or external, and the number of candidates, the term of office of current corporate auditors, the presence or absence of specialized knowledge, and what to do in the event of a vacancy. The decision shall be made accordingly.

(Term of office of officers)
Article 14

The term of office for directors is within two years from the date of their election, and the term of office for auditors is until the conclusion of the annual general meeting of shareholders for the last business year ending within four years from the date of their election.

(Establishment of Nomination Advisory Committee and Remuneration Advisory Committee)
Article 15

The Company shall establish a Nomination Advisory Committee and a Compensation Advisory Committee as advisory committees to the Board of Directors.

2. The majority of the members of the Nomination Advisory Committee and Compensation Advisory Committee shall be independent outside directors, and the chairs of these committees shall be served by independent outside directors.

(Nomination Advisory Committee)
Article 16

The purpose of the Nomination Advisory Committee is to strengthen the independence, objectivity, and accountability of the Board of Directors' functions regarding the appointment and dismissal of senior management and the nomination of directors, etc., and to enhance corporate governance.

2. The Nomination Advisory Committee shall deliberate on the following matters in response to inquiries from the Board of Directors and make a report to the Board of Directors.

(1) Policies and procedures for the appointment and dismissal of senior management (representative directors and directors with special positions) and nomination of directors, etc.

(2) Draft proposals for the appointment and dismissal of directors, etc. to be submitted to the general meeting of shareholders

(3) Proposals for selection and dismissal of senior management to be submitted to the Board of Directors

(4) CEO succession plan

(5) Other matters deemed necessary by the Board of Directors in connection with each of the preceding items.

(Remuneration Advisory Committee)
Article 17

The purpose of the Compensation Advisory Committee is to strengthen the independence, objectivity, and accountability of the Board of Directors' functions regarding compensation, etc. for senior management and directors, and to enhance corporate governance.

2. The Compensation Advisory Committee shall deliberate on the following matters in response to inquiries from the Board of Directors and make a report to the Board of Directors.

(1) Policy for determining remuneration, etc. of senior management (representative directors and directors with special positions), directors, etc.

(2) Draft proposal regarding remuneration, etc. of directors, etc. to be submitted to the general meeting of shareholders

(3) Policy regarding decisions regarding the content of individual remuneration of directors to be discussed at the Board of Directors meeting

(4) Details of individual remuneration, etc. of directors to be discussed at the board of directors meeting

(5) Other matters deemed necessary by the Board of Directors in connection with each of the preceding items.

(Governance Committee)
Article 18

The purpose of the Governance Committee is to exercise company-wide control over corporate governance and promote initiatives to realize the Company's basic corporate governance policy.

2. The Governance Committee shall supervise the activities of each division related to the corporate governance of the Company, and shall deliberate and make decisions on the following matters. In addition, proposals will be submitted to the Board of Directors, etc. according to the results of such deliberations.

(1) Matters related to the formulation and revision of management philosophy

(2) Matters related to the formulation and revision of basic policies and other policies and guidelines regarding corporate governance

(3) Matters related to the Corporate Governance Code

(4) Various matters based on various laws and regulations, including the Company Law

(5) Other matters deemed necessary by the Board of Directors in connection with each of the preceding items.

3. Notwithstanding the preceding paragraph, matters related to the nomination of the Company's officers shall be handled by the Nomination Advisory Committee, matters related to compensation shall be handled by the Compensation Advisory Committee, and matters related to promoting the Company's sustainability management shall be handled by the Sustainability Committee.

(Sustainability Committee)
Article 19

In order to realize a sustainable society, the Sustainability Committee clarifies our company's direction, comprehensively considers our purpose, materiality, medium- to long-term vision, etc. The purpose is to realize sustainability management at our company.

2. The Sustainability Committee shall deliberate and make decisions on the following matters regarding the promotion of sustainability management of the Company. In addition, proposals will be submitted to the Board of Directors, etc. according to the results of such deliberations.

(1) Matters related to the formulation and revision of the basic sustainability policy

(2) Matters related to identifying important issues

(3) Matters related to the setting of various goals and evaluation standards for each important issue

(4) Matters related to the formulation of basic plans for sustainability promotion activities based on the preceding items

(5) Matters related to promotion of the basic plan, evaluation analysis, and information disclosure

(6) Other matters related to individual sustainability measures

(7) Other matters deemed necessary by the Board of Directors in connection with each of the preceding items.

3. For the purpose of conducting preliminary deliberations on matters related to the preceding paragraph, a working group consisting mainly of personnel from each competent department may be established directly under the Sustainability Committee, and the activities of the working group will also be subject to this. shall be in charge.

(Corporate Governance Basic Policy)
Article 20

Our company has established a basic corporate governance policy as described in this document, and based on this policy, we will strive to strengthen our company's governance.

(Basic Sustainability Policy)
Article 21

Our company has established the following basic sustainability policy and will promote sustainability management based on this policy.

``Our company aims to be a company that is needed in the future and contributes to the realization of a sustainable society and environment.We value engagement with stakeholders in our corporate activities and strive to improve corporate value.'' ”

(Succession plan)
Article 22

The Board of Directors shall formulate a succession plan for the President (Chief Executive Officer) and periodically review it after obtaining the opinions of the Nomination Advisory Committee.

2. After obtaining the opinion of the Nomination Advisory Committee, when the President (Chief Executive Officer) retires, the Board of Directors shall determine the successor to the President (Chief Executive Officer) based on the succession plan set forth in the preceding paragraph. shall be done.

(Study and training of directors and auditors)
Article 23

In order to fulfill their roles, directors and auditors of the Company must acquire the necessary knowledge and skills through self-improvement.

2. The Company shall provide Directors and Audit & Supervisory Board Members with information on training sessions, etc., and bear the costs associated with such training.

(Access to internal information by outside directors and auditors)
Article 24

The Company's outside directors and corporate auditors may request internal directors and employees to provide explanations or submit internal materials whenever necessary or when they deem it appropriate.

(Evaluation of effectiveness of board of directors)
Article 25

Every year, we will evaluate the effectiveness of the entire Board of Directors with the advice of a third-party evaluation organization, analyze the results, and disclose the summary in a timely and appropriate manner.

(Remuneration for directors, etc.)
Article 26

The remuneration of the Company's directors (excluding outside directors) is aimed at sustainably increasing the Company's corporate value in an industry where technological innovation and market conditions are rapidly changing, and increasing motivation to contribute to improving business performance over the medium to long term. Our basic policy is to set an appropriate level of compensation based on each individual's duties when determining compensation for individual directors.

2. Compensation consists of director compensation as basic compensation, director bonuses as short-term performance-linked compensation, and restricted stock compensation that serves as medium- to long-term incentives. Furthermore, in view of their duties and from the perspective of ensuring a high degree of independence, external directors who are responsible for supervisory functions will be paid only a base remuneration, with no link to performance.

3. When determining the content of director remuneration, etc., in order to increase its transparency and fairness, the draft proposal shall be consulted with the Remuneration Advisory Committee, and the Board of Directors shall respect the content of the deliberation and report results. The decision shall be final.

4. Regarding the distribution of individual remuneration for directors, the remuneration advisory committee shall be consulted on the distribution plan prepared by the representative director and president within the total amount approved at the general meeting of shareholders, and the board of directors shall consult with the remuneration advisory committee. After respecting the contents of the deliberation and report results, decisions will be made based on the resolution.

Chapter 6 Dialogue with shareholders

(Dialogue with shareholders)
Article 27

The policy regarding the establishment of systems and initiatives to promote constructive dialogue with our shareholders, etc. is as follows.

(1) A specialized department (IR/Public Relations Office) will be established to promote constructive dialogue with shareholders.

(2) The department in charge of IR and the department in charge of accounting will be placed on the same floor to strengthen collaboration, and information will be closely shared with other departments related to IR.

(3) For institutional investors, we will hold a financial results briefing session after the announcement of year-end financial results, and will proactively respond to requests for individual dialogue (interviews). In addition to providing opportunities for dialogue with individual investors through holding briefing sessions for individual investors, we will also proactively respond to inquiries via the form on our website.

(4) Opinions, requests, concerns, etc. received from shareholders are regularly reported to the Board of Directors. Additionally, the information is shared with management and within the company as needed.

(5) Regarding the management of insider information, in addition to thorough daily management based on ISMS, we will also set a quiet period for IR activities.

Established May 29, 2023

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