Basic Policies on Organizing Internal Control Structures

I. System to ensure that the execution of duties by directors and employees complies with laws and regulations and the Articles of Incorporation

1. The directors (including those who are members of the Audit and Supervisory Committee), executive officers, and employees of the Company and its subsidiaries (hereinafter collectively referred to as "Officers and Employees") shall not only comply with laws and regulations and the Articles of Incorporation but also act in accordance with the ethical standards required of society's members. The Company has established the Asahi Yukizai Group Code of Conduct as the fundamental rules for implementing the Group's philosophy. Regular training is conducted to ensure thorough implementation of the Code. Additionally, the Company maintains an appropriate system to ensure the reliability of the Group's financial reporting. In line with the Asahi Yukizai Group Code of Conduct, which mandates no association with antisocial forces threatening societal order and safety, the Group takes a resolute stance against such forces.
2. As a company with an Audit Committee, the Audit Committee members attend meetings of the Board of Directors and other important meetings and, based on the audit policy determined by the Audit Committee, conduct regular on-site audits of the execution of business by each division of the Group, and otherwise audit the execution of business by the Group's officers and employees in accordance with laws, regulations, and the Articles of Incorporation. The results of such audits shall be reported periodically to the Board of Directors of the Company.
3. The Board of Directors shall meet at least once a month in accordance with the "Regulations of the Board of Directors." Each director, including Audit Committee members, shall attend meetings of the Board of Directors and other meetings to monitor and supervise the execution of duties by directors and executive officers.
4. The most important matters, such as management policies of the Group, shall be decided by the Board of Directors of the Company in accordance with the specific standards stipulated in the "Regulations of the Board of Directors" and other relevant regulations.
5. Directors and executive officers executing the Company's business shall be responsible for their duties and execute them in accordance with the "Regulations of Authorized Persons" and other internal regulations. Similarly, employees shall execute their duties in accordance with the "Rules for Persons with Authority to Make Decisions" and other internal rules and shall be supervised by higher-ranking directors and executive officers.
6. The Company shall sincerely respond to reports from officers and employees of the Company and its domestic subsidiaries through the "Corporate Ethics Hotline," an internal reporting system independent of normal reporting channels, to strengthen the Group's corporate ethics practice system.
7. The Internal Audit Department shall monitor the status of business execution by officers and employees of the Group in accordance with the "Internal Audit Regulations," periodically report to the President and Chief Executive Officer of the Company and the Audit Committee on the status of compliance with laws, regulations, and internal rules, and provide appropriate guidance. If the Audit Committee finds any problem in the status of business execution by the officers and employees of the Group, it shall express its opinions and request the formulation of remedial measures.

II. System for the storage and management of information related to the execution of duties by Directors

1. The Company's directors and executive officers shall prepare minutes of the General Meeting of Shareholders, Board of Directors meetings, and approval documents, etc., in accordance with laws, regulations, and internal rules. These documents shall be stored and managed appropriately.
2. Minutes of the Company's Management Committee meetings and other significant management information and decisions shall be prepared by the relevant departments. They will be stored and managed in accordance with the 'Basic Rules for Information Management' and other internal rules. The Internal Audit Department shall periodically check the status of the storage and management of such information.

III. Regulations and other systems for managing the risk of loss

1. The Company has established 'Risk Management Regulations' as internal regulations. These regulations outline procedures and systems for preventing the occurrence of prioritized risks and how to address them should they occur. They detail management methods for 'management strategy risk' and 'operational risk.' To manage operational risk more effectively, a 'Risk Management Committee' has been established under the direct control of the Board of Directors. Chaired by the President and Chief Executive Officer, it periodically sets policies for handling significant operational risks. Additionally, any significant events that occur shall be reported to the Company's Board of Directors.
2. The Risk Management Committee, along with the Company's Administration Division, addresses the entire Group's risk of loss from a company-wide perspective. They also establish a cross-organizational check and control system. This system includes a business continuity plan (BCP), compliance with export control and antitrust laws, and a system to ensure the reliability of financial reporting.
3. To ensure that important reports related to the execution of the Group's business operations are regularly and comprehensively made, the Company's Board of Directors, Management Committee, and other critical meetings will involve reports by directors, executive officers, and senior management employees.
4. In the event of an emergency situation at a subsidiary, the Company and the subsidiary will collaborate to study and decide on countermeasures. This response will be in accordance with the 'Establishment of Company-wide Risk Response Headquarters and Initial Response Standards' set by the Company, ensuring prompt and appropriate action.

IV. Systems to Ensure Efficient Execution of Duties by Directors

1. The Company has introduced an Executive Officer System to clarify the division of functions related to management, and to accelerate decision-making and business execution through the delegation of authority. Directors who are involved in business operations also serve as Executive Officers. Each Executive Officer is responsible for the execution of business under the direction and supervision of the President and Chief Executive Officer, in accordance with the management policy determined by the Board of Directors.
2. To ensure judgment and transparency in decision-making, the Executive Committee shall meet once a month in principle, to thoroughly deliberate on matters that will be decided by the President and Chief Executive Officer of the Company in advance.
3. The Company shall enhance the efficiency of duty execution across the entire Group by having each executive officer report on the status of the Group's business execution and exchange information on management at the Management Meeting, which is chaired by the President and Chief Executive Officer of the Company.
4. Information on the Group's production, sales, profit, and loss, etc., shall be provided promptly and accurately to each director and executive officer, including directors who are members of the Company's Audit Committee, through an IT-based system.

V. System to ensure the appropriateness of operations of the corporate group consisting of the Company and its subsidiaries

1. In order to ensure the appropriateness of operations at subsidiaries, various systems akin to the corporate governance and compliance systems of the Company will be introduced at the subsidiaries, with efforts made to disseminate such systems.
2. The general manager of the business division, the general manager in charge of each subsidiary, or the executive officer appointed by the President for operation and management, shall regularly report on the status of operations of each subsidiary at the Company's Board of Directors meetings.
3. Subsidiaries will be managed in accordance with the 'Group Affiliated Companies Management Regulations' that clarify the Company's involvement in decisions on important management-affecting matters.
4. Directors who are members of the Audit Committee of the Company shall, as necessary, serve concurrently as auditors of subsidiaries, attend meetings of the Board of Directors and other important meetings, express opinions as appropriate, and ensure that the operations of subsidiaries are properly managed.

VI. System concerning employees to assist the Audit Committee in the event that the Audit Committee decides to appoint such employees to assist the Committee in its duties

Should the Audit Committee request the Company to appoint employees to assist in its duties, the Company shall appoint assistants to the Audit Committee from among its employees.

VII. Matters concerning the independence from directors (excluding those who are members of the Audit and Supervisory Committee) of the employees mentioned in the preceding item

In the event an assistant to the Audit Committee is appointed, the Company shall ensure their independence from Directors (excluding Audit Committee members).

VIII. System for Directors and Employees to Report to the Audit Committee and Other Systems for Reporting to the Audit Committee

1. Officers and employees of the Company's group shall report to the Audit Committee as required by established rules regarding matters and methods of reporting.
2. The Audit Committee may request reports from any officer or employee of the Company's group as necessary.
3. The Audit Committee may request a written confirmation from each Company director, excluding Audit Committee members, regarding the status of their duty execution at the fiscal year-end.
4. Directors, executive officers, and employees, excluding Audit Committee members, shall invite Audit Committee members to significant meetings concerning business execution, and Audit Committee members may attend these meetings as necessary.
5. The department responsible for the 'Corporate Ethics Hotline' shall periodically report to the Audit Committee on the nature of consultations and reports received.

IX. System to ensure that no one is treated disadvantageously for reporting to the Audit Committee

1. The Company shall prohibit any disadvantageous treatment of its officers and employees who report to the Audit Committee, ensuring that all officers and employees of the Company's group are adequately informed of this policy. This prohibition also applies to any officer or employee of the Group who reports to the 'Corporate Ethics Hotline' (whistle-blowing system)."
2. The Audit Committee shall monitor whether any officers or employees of the Group who have reported to the Committee are subjected to unfavorable treatment, such as in transfers or personnel evaluations. If necessary, the Committee will request the directors of the Group to provide explanations for such treatment."

X. Matters concerning procedures for advance payment or reimbursement of expenses incurred in connection with the execution of duties by Audit Committee members and other policies concerning the treatment of expenses or reimbursement incurred in connection with the execution of such duties

Should an Audit Committee member request advance payment or reimbursement for expenses incurred in duty performance, the request shall be promptly processed, unless deemed unnecessary for Audit Committee functions.

XI. Other systems to ensure the effective execution of audits by the Audit Committee

The Audit Committee shall regularly engage in discussions with the President, the Internal Audit Department, the Accounting Auditor, and the officers and employees of the Company's group, and shall also regularly request reports on duty execution from the group's officers and employees.