Corporate Governance / Code Implementation

We indicate specific disclosure items that require disclosure based on the codes revised in June 2021.

Correspondence Table for Specific Disclosure Items in Japan's Corporate Governance Code (Revised June 11, 2021)

Principles	Item requiring disclosure	Content/Location
Principle 1.4	Cross-shareholdings	In principle, the Company policy is not to hold any cross-shareholdings. As an exception, the Company may hold cross-shareholdings if it determines that there is a rational reason for doing so for strengthening business alliance or business relationship with a business partner. In such a case, status of maintaining and strengthening business relationship will be analyzed by the Board of Directors from a mid- to long-term relationship perspective every fiscal year to determine continuation of holding the share and revising the ratio of held shares, and will be disclosed as necessary. In addition, in terms of cross-shareholdings, the Company confirm whether the purpose of holding the share contributes to the improvement of its corporate value and then exercise its voting rights.
Principle 1.7	Basic Policy on Related Party Transactions	With regard to conflict of interest and competing transactions by directors, the Company will obtain prior approval on the material facts of the said transactions at the Board of Directors as stipulated in the Companies Act and Board of Directors Regulations as well as report the results of the transaction to the Board of Directors. The Company will also survey whether there is any transaction between the directors and the Company every year. The Company will monitor important transactions between the Company and its Group companies and non-regular transaction between the Company and its major shareholders require approval upon deliberation at the Board of Directors to prevent loss of shared profit for the Company and its shareholders. Transactions between related parties will be disclosed in compliance with the Companies Act and the Financial Instruments and Exchange Act.
Principle 2.3 Supplementary Principle 2.4.1 Supplementary Principle 3.1.3	Basic Policy on Sustainability	Since then, the Company continued to grow under "We contribute to the development of society and create a culture for the future" and other management policies and has strived to solve social issues while also working to reduce waste and offer new values as a leading company in the motorcycle reuse market. As a company with a corporate mission of "We create excitement the world has never seen before" and a group that strives to become a life-design company that transcends bike life to remain vitally active 50 and even 100 years from now, fulfilling our responsibility in realizing a sustainable society by solving climate change, issues related to resources, and other environmental issues as well as work life balance, human rights issues, and other social issues is our most important issue. Amidst such environment, we have stipulated the following as the Basic Sustainability Policy and important issues (materialities) to contribute to the realization of a sustainable society and continuously improving our corporate value. (1) Solving social issues ・Enhancement of measures that address issues related to sustainability, focusing on motorcycles and other reuse businesses and realization of a sustainable society. ・Promotion of ESG management (2) Continuous enhancement of management infrastructure ・Promotion of constructive dialogue with shareholders, customers, employees, business partners, local communities, industry, and other stakeholders ・Further enhancement of activities such as strengthening of corporate governance, support for employee development, and realization of circular society through ensuring fairness and transparency of management (3) Important Issues (Materialities) ・Provision of Safe, Secure, and Comfortable Mobility ・Reduction of environmental impact ・Human Resources Management ・Promotion of Governance In addition, the Group will actively address issues related to climate change and other environmental issues as well as issues related to sustainability to realize a sustainable, low-carbon society. As such, we identify and analyze the state in a scenario in which the temperature increase is under 1.5°C based on the scientific basis of the International Energy Agency (IEA) and other bodies before formulating strategies related to climate change. We then identify transition and physical risks related to climate change from short-, medium-, and long-term perspectives to evaluate the amount of impact on our business.
Principle 2.6	Roles of Corporate Pension Funds as Asset Owners	The Company currently does not implement corporate pension system which it is the asset owner.
Principle 3.1(i)	Corporate Philosophy/Charter of Corporate Behavior	Corporate Mission We create excitement the world has never seen before. Management Philosophy We always seek out growth and can find happiness in growing together. We strive to bring smiles to our customers' faces. We contribute to the development of society, and create a culture for the future. We will always hold onto our dreams and be a company that earns affection and respect. Charter of Corporate Behavior We are aware of the Company's social responsibilities, and work toward the realization of a sustainable society, complying with laws and regulations in addition to social norms.
Principle 3.1(ii)	Basic policy on corporate governance	To enable management that responds to the trust of shareholders and other stakeholders, we respect the rights of each stakeholder, ensure fair and transparent management, and fulfill our accountability. The Company will build a corporate governance structure that enable quick, decisive decision making that contribute to the sustainable growth and improvement of the corporate value in the mid to long term.
Principle 3.1(iii) Supplementary Principle 4.10.1	Policy on director renumeration	The Company has established a policy related to deciding the amount of renumeration for officers and its calculation method as follows. Basic Policy on Officer Renumeration Stipulate transparent, highly objective rules on deciding renumeration that contribute to securing a talented management team for achieving our Philosophy, Vision, and Mission, sharing awareness about profit with our stakeholders, and increasing awareness about management focusing on the shareholders. The rules should be something that increase the common understand about profits with our stakeholders as well as awareness of management focusing on shareholders, and as such, renumeration are to be linked to achieving targets and plans based on unrelenting challenge and to increase the awareness to realize the enhancement of the Company’s mid- to long-term performance and corporate value required by the society. In regards to the date and the content of the General Meeting of Shareholders that made resolutions related to the renumeration for officers, a resolution on the limit of renumeration for directors excluding Audit and Supervisory Committee members was made on the 19th General Meeting of Shareholders held on February 24, 2017, with an annual amount of up to 200 million yen, with four directors subject to this limit at the time of the resolution. A resolution on the limit of renumeration for directors that are Audit and Supervisory Committee members was also made on the 19th General Meeting of Shareholders held on February 24, 2017, with an annual amount of up to 30 million yen, with three directors subject to this limit at the time of the resolution. The Board of Directors has the authority to determine the Company's policy on the amount of renumeration for its officers and its calculation method. In addition, for fair and highly transparent evaluation of directors, renumeration of directors are discussed at an advisory committee, which is mainly composed of outside directors, and the results are reported to the Representative Director and the Board of Directors. Renumeration for directors excluding Audit and Supervisory Committee members is decided within the resolution regarding the total amount at the General Meeting of Shareholders upon discussing amount deemed appropriate at the Board of Directors, taking account skills, experience, experience, and other aptitudes related to management as well as contribution to business performance in a comprehensive way. Specifically, we have formulated a standard remuneration for directors and for roles based on the chief officer system, which consists of fixed and variable remunerations. Variable remuneration is determined based on the consolidated sales and consolidated net profit and the degree of achieving their goals. Consolidated sales and consolidated ordinary profit were selected as the determining values as the Group views ordinary profit as an important indicator for determining growth and profitability, which the Company regards as important factors in management. Ordinary profit is set as the determining value as the Company views ordinary profit as an important indicator for determining growth and profitability, which the Company regards as important factors in management. In addition, the Company implements a stock compensation system for the directors and executive officers (hereafter directors, etc.). This system introduces a compensation system for Board members, etc., and the Company's performance and stock value and compensation system. For the purpose of encouraging directors, etc. to increase the corporate value in the mid to long term, the system clarifies the relation between renumeration for directors, etc. and the Company's performance and stock value so that the directors, etc. benefit from the increase in stock value while also sharing the risk of the stock value declining with the shareholders. Remuneration for directors that are Audit and Supervisory Committee members is determined within the total amount based on the resolution of the General Meeting of Shareholders upon discussion at the Audit and Supervisory Committee meeting.
Principle 3.1(iv) Supplementary Principle 4.10.1	Policy on director nomination	In regards to director nomination, director candidates are decided upon discussion at the Board of Directors meetings based on recommendation of each director, taking into account the requirements for directors as stipulated in the director regulations, their skills and knowledge related to management, and other aptitudes such as personality. The Company has established an advisory committee to ensure candidate nomination is fair and highly transparent. The committee discusses nomination of director candidates upon receiving advice from the Representative Director. Nomination of directors is discussed and reported at an advisory committee consisting of board members, mainly outside directors, to ensure an objective and transparent process. Dismissal of representative directors and directors is discussed as necessary at the advisory committee and reported to the Board of Directors.
Principle 3.1(v)	Policy on explanation for the reason of individual appointments/dismissals and nomination of directors	Career summary and important concurrent positions used to determine the appointment and dismissal of individual directors are described here.
Supplementary Principle 4.1.1	Scope of Matters Delegated to the Management	The Company has formulated regulations for the Board of Directors and Business Execution Meeting under the policy of separating executive and auditing functions. The Company clearly stipulates standard for items to be discussed and reported at the Board of Directors meeting and items to be delegated to the Business Execution Meeting, which is responsible for making decisions on execution. The Company has designated that the basic policies on management items such legal and articles of incorporation are to be discussed at the Board of Directors meetings while the Business Execution Meeting executes basic policies and management plans that were decided at the Board of Directors meetings. Part of the authority to make decisions on business execution is delegated to the directors to enable more flexible and efficient management.
Principle 4.9	Standard for Determining the Independence of Independent Directors	The Company has established standards for determining the independence of independent directors referring to the standards set by the stock exchange. We determine that the outside director has sufficient independence if the outside director does not fall under any of the following items. (1) Former member of the Company or its consolidated subsidiaries (hereafter the Group) (2) Major stakeholder of the Company (3) Operational executive of a company or other entities listed below Major business partner of the Group Major lender for the Group Company that holds more than 10% of the voting shares of the Group (4) Belongs to an auditing firm that is the accounting auditor of the Group (5) Consultant, accountant, tax accountant, attorney, or other expert that receives large sum of monetary or other assets from the Group (6) Those receiving large sum of donations from the Group (7) Operational executive of another company that will be in mutual appointment relationship as an outside director (8) Those whose close relative falls under any of the items (1) to (7) (person of importance excluding items (4) and (5)) (9) Those who fall under any of the items (2) to (8) in the past three years (10) Those who are recognized to have special interests that may conflict with the Company
Supplementary Principle 4.11.1	Policy on the Balance, Diversity, and Size of Board of Directors	The Board of Directors identifies the skills it requires in reference to our management strategy and establishes a policy on the balance, diversity, and scale of the knowledge, experience, and ability of the Board as a whole. Then, the Board formulates a skill matrix that lists knowledge, experience, ability, and other items of each director and makes it public here.
Supplementary Principle 4.11.2	Status of directors with concurrent positions	The Company will disclose important concurrent positions held by each director including positions at other listed companies in its business reports and reference materials for General Meeting of Shareholders.
Supplementary Principle 4.11.3	Analysis and Evaluation of the Effectiveness of Board of Directors	We evaluate the effectiveness of the Board of Directors every year in order to improve its functionality. Evaluation is conducted based on questionnaires from all directors, which are analyzed and evaluated by a voluntary advisory committee and then reported to the Board of Directors. The Board discusses the final evaluation and the outcome and overview of the results are released to the public.
Supplementary Principle 4.14.2	Policy on Director Training	The Company continuously provides opportunities for training that is necessary in fulfilling the role and responsibility of a director. The Company provides advice on being a manager, knowledge related to the Companies Act and corporate governance, etc., useful information related to complying to laws and regulations as well as management for the directors. For outside directors, the Company explains the Group's management strategy and details and status of business to deepen their understanding at the time of their appointment as well as offers tours of our stores and offices and explanation by the director in charge.
Principle 5.1	Constructive Dialogue with Shareholders	(1) The Company has assigned the director in charge of IR as the Representative Director in its IR policy. The Representative himself/herself shows the approach toward IR, recognizes the responsibility of the Company, and holds individual briefings as well as financial results briefing for analysts and institutional investors. In addition, the Director and CFO is appointed as the person in charge of information handling and the Corporate Department to take charge of IR operations. (2) The department in charge of IR closely shares information with accounting and finance, administrative planning, personnel, general affairs, legal, and information system departments to enable organic coordination. In addition, the department in charge of IR coordinates with the Risk Management Committee which determines matters related to information disclosure. (3) Feedback on IR activities and information of shareholders are reported to the director in charge of IR as necessary, in order to share information and have shared recognition on issues. (4) When engaging in dialogue with shareholders, investors, and analysts, the Company only talks on numerical information that has already been released to the public and on themes related to the sustainable growth and improvement of corporate value in the mid to long term to manage insider information appropriately.