Under the corporate philosophy, "Company delivering Kando beyond expectations," Komori understands that it is one of the most important material issues to meet expectations from all stakeholders including shareholders, customers, suppliers, local communities, and employees and their families in its business activities, fulfill its responsibilities and maximize corporate value. To that end, Komori employs a Company with Audit & Supervisory Board system as a core part of its corporate governance activities.
Komori also acknowledges that securing management transparency, prompt decision-making, compliance, and strengthening the audit function are fundamental to corporate governance. Based on these fundamental concepts, the Company pursues efforts to ensure solid corporate governance in all facets of management, including the supervision of management.

Corporate governance structure

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We ensure that all our officers and employees in Japan and overseas conduct their activities in compliance with laws, regulations, social ethics, and respect for human rights based on the "Komori Group Code of Corporate Conduct" and the "Komori Group Employee Conduct Standards" both of which were formulated as basic guidelines for corporate activities. In addition, we have established the CSR Committee and the section in charge of compliance to promote and raise compliance awareness throughout the Komori Group by providing a whistle-blowing system for domestic Group companies, as well as compliance education for all employees.

Laws and regulations controlling bribery and corruption have tightened on an international scale in recent years, with exposure of such activities becoming ever more severe. Although the Komori Group has always endeavored to prevent violations through our corporate behavior charter which includes the statement of "fair and transparent corporate activities in accordance with laws, regulations, and social ethics," and specifically defining employee standards of conduct as "prohibiting bribes to civil servants." In light of the global development of the Group's business, tightening laws and regulations, and more severe exposure of such activities, it is necessary for the Komori Group as a whole to further enhance measures against the risk of bribery.

In 2011, the board of directors expressed their resolve to ensure that the Komori Group "takes a firm stance on preventing bribery." In view of increasing worldwide interest in preventing bribery such as the American Foreign Corrupt Practices Act, the British Bribery Act, the Chinese Commercial Bribery Regulations, and the Japanese Unfair Competition Law, we declare that the laws and regulations regarding anti-bribery measures that apply in the countries and regions where the Komori Group operates its businesses will be strictly adhered to, that reception of bribes is prohibited, and that accurate records of all Group transactions will be maintained. In addition to eliminating bribery from the businesses involved in the Group, we request that companies who conduct business on our behalf, whether fully or partially, and our partners in business dealings, be in compliance with anti-bribery laws and regulations in order to conduct our business with integrity.

The Komori Group requests the following of all Group executives, employees, agents, and business partners.

1. Prohibition of bribes

Do not give, offer, promise, or accept bribes to or from any person, whether directly or indirectly.

2. Proper authorization procedures and follow-up confirmation procedures

Payments to public officials must conform to proper authorization procedures and proper follow-up confirmation (review procedures). The same also applies to payments to executives of private enterprises.

3. Understand and abide by Komori Group policy on bribery regulations

Undergo training to sufficiently understand and abide by laws and regulations on bribery and the Komori Group code of conduct.

4. Due diligence and introduction of anti-bribery clauses by agents and business partners

Business may only be conducted with legitimate and trustworthy agents and business partners, due diligence must be conducted before executing business with such persons, and the contract concluded with such parties must contain an anti-bribery clause.

5. Periodic risk evaluation

Bribery risk evaluation must be conducted periodically for all Komori Group companies.

6. Records maintenance

Records must be maintained in order to show compliance with bribery-related laws and regulations and the Komori Group code of conduct.

7. Periodic review and improvements

The code of conduct and controls for preventing bribery and corruption must be periodically reviewed and amended/improved as necessary.

8. Prompt reporting

If any Komori Group executive, employee, agent, or business partner is suspected of violating the anti-bribery laws and regulations or the terms of this policy, a report must be promptly filed with the immediate supervisor or supervisor of the department in charge in order to take timely and appropriate measures.

• "Public officials" include all public officials, members of a political party, official candidates, and state-owned businesses and businesses under the control of the government (examples include employees and executives at a state-owned bank).
• "Agents" refer to persons who act as an intermediary in transactions or act on behalf of or as an intermediary for the Komori Group.
• "Business partners" refers to those with whom the Komori Group conducts business.
• "Bribes" denotes presenting something of value to a civil servant or other party with the goal of obtaining or maintaining business or obtaining unfair advantages, and a so-called facilitation payment (payment intended to facilitate government affairs) would constitute a bribe.
• The "code of conduct" is a set of rules and concepts that must be followed by all Komori Group executives and employees which covers the policy, regulations, standards, and guidelines on preventing bribery and includes the Komori Group Basic Policy on Anti-bribery and Corruption.

We have identified individual risks in the Komori Group and examined countermeasures for them at various meetings, and responded to issues in daily operations to a certain extent. However, as the environment surrounding us is changing, there are concerns that any lack in common understanding and partnership between departments regarding important risks could lead to a delay in taking countermeasures. Therefore, the CSR and Environmental Countermeasure Planning & Coordination Office is working together with each department to narrow down and manage 17 risk factors, in view of the severity of the risks we faced in the past and the priority of risks we are currently facing.
In our internal activities, the risk management organization headed by CEO was formed, taking responsibility for identifying and assessing risks from group-wide perspectives. In accordance with the Regulations for Risk Management and the Operational Guidelines for Risk Management established to this end, we set up the Risk Management Committee which is responsible for formulating the group-wide risk management policy, reviewing the risk management system, monitoring the status of measures taken for each individual risk, and implementing necessary follow-up action. The status of progress is reported to the CSR Committee quarterly and the Board of Directors as necessary. The emergency headquarters will be in charge for risks in emergencies.

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If information security is breached, resulting in information leaks, destruction or falsification of data, or suspension of operations or services, it could not only affect our Group's business performance but also lead to a loss of trust in our group.
To this end, our Group has established policies for the promotion of information security in the form of Information Security Standards and specific guidelines for usage and operation rules, as well as an IT Security Committee as a promotion organization, which is responsible for building, maintaining, and improving security systems, including those of Japan and overseas Group companies. In addition, regular vulnerability and risk assessments are carried out to identify risks at an early stage and establish a system for taking countermeasures.
We will continue to monitor changes in threat trends and continue our cybersecurity initiatives.