Fundamental Policy

(As of June 28, 2023)

Basic Approach to Corporate Governance

Rasa Corporation positions the reinforcement of corporate governance as one of its highest priorities. There are many activities centered on the Board of Directors and Audit and Supervisory Committee for upgrading corporate governance. We are committed to establishing and maintaining a management structure capable of fulfilling our responsibility to provide explanations to shareholders, business partners and other stakeholders, achieving high levels of soundness and transparency, and adapting with speed and accuracy to changes in the operating environment.

Summary of corporate governance structure and reason for selecting this structure

Overview of Corporate Governance Framework

Explanation of Corporate Governance Units

The Board of Directors has twelve members. Nine directors are not members of the Audit and Supervisory Committee: Shuichi Imura, Yoshihiro Kubota, Kunio Aoi, Kazuaki Sakuragi, Yoko Ouchi, Hiroyuki Kawauchi, Masami Kuramochi, Hiroshi Yamaguchi and Eriko Kawajiri. Three directors are members of this committee: Tadashi Asakura, Masanori Nagato and Akira Harada. In addition, Mr. Yamaguchi, Ms. Kawajiri , Mr. Nagato and Mr. Harada are outside directors. The Board of Directors, which is chaired by President and Representative Director Shuichi Imura, meets at least once every month, as a rule. The directors make decisions about important items concerning how business operations are conducted and supervise the performance of the directors.

Rasa Corporation uses the executive officer system in order to manage business operations with speed and efficiency by separating the role of decision-making and management supervision and the role of conducting business operations.

Rasa Corporation has a Corporate Management Committee composed primarily of directors who are company executives as well as other committees. These committees examine important issues involving management for the purpose of upgrading the level of discussions of these issues at meetings of the Board of Directors. Issues are thoroughly examined by one or more of these committees before submission to the Board of Directors.

Audit and Supervisory Committee

The Audit and Supervisory Committee is composed of the three directors: Tadashi Asakura, Masanori Nagato and Akira Harada. Members of this committee attend meetings of the Board of Directors and the full-time member of this committee attends meetings of the Corporate Management Committee and other important meetings. Members of this committee perform appropriate audits of the performance of the directors and, by gathering sufficient information, perform a broad range of audits concerning all aspects of management.The chairperson of the Audit and Supervisory Committee is Tadashi Asakura, who is a full-time member of this committee.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee is composed of one internal director, Shuichi Imura and outside directors Masanori Nagato and Akira Harada. In response to requests from the Board of Directors, members of this committee discuss items involving selections and other activities concerning directors and the remuneration of directors. The committee then submits its conclusions to the Board of Directors.The chairperson of the Nominations and Remuneration Committee is President and Representative Director Shuichi Imura.

Internal Auditing Office

The Internal Auditing Office is supervised directly by the company president. As a rule, members of this office audit all business units, including group companies, once every year based on a plan established for each fiscal year and the Internal Audit Rules. The audits confirm that business operations are performed in a suitable, reasonable and efficient manner.
In addition, the Internal Auditing Office collaborates with the Audit and Supervisory Committee and accounting auditor to make internal audits more effective and efficient.

Reason for selecting this governance system

Rasa Corporation is a company with an Audit and Supervisory Committee. The Board of directors has twelve members, including nine directors (including two outside directors) who are not members of the Audit and Supervisory Committee and three directors (including two outside directors) who are members of this committee. The company is dedicated to conducting business operations with efficiency and speed as well as to maintaining a framework in which the outside directors properly perform their management oversight function.

In addition, there is an Audit and Supervisory Committee that works with the independent accountant and Internal Auditing Office to maintain an auditing framework that is effective and efficient.
Consequently, Rasa Corporation believes that the current corporate governance system is suitable for its operations.

Structure of Corporate Governance Units and Internal Controls

Other items concerning corporate governance

The purpose of this system is to maintain a framework for ensuring that directors and employees do their jobs in conformity with the applicable laws and ordinances as well as the Rasa Articles of Incorporation and a framework for ensuring that directors and employees of subsidiaries do their jobs in conformity with the applicable laws and ordinances as well as the applicable articles of incorporation.

The Rasa Group is well aware that a sound compliance system is a vital component of its management. The group has established Rules for Strict Compliance with Laws and Regulations and prepared a Compliance Manual. There are also activities to reinforce the framework for fostering and firmly establishing a corporate culture that places priority on compliance.
The Rasa Corporation General Affairs Division is responsible for the group’s compliance activities. To ensure that everyone has a strong commitment to compliance, there are constant educational activities for all executives and employees of the group and the executives and employees of all group companies perform compliance self-inspections.
The Rasa Group has a single compliance hotline for reports and consultations so that violations of laws, regulations and other guidelines can be discovered quickly.
To ensure the sound management of business operations, the Rasa Group has absolutely no connections or contact with antisocial forces and firmly and resolutely rejects any improper demands made by antisocial forces.
The Internal Controls Committee, which is chaired by the company president, establishes the Rasa Group’s internal control system and evaluates the operation of this system, under the oversight of the directors.

System for the storage and management of information related to directors' execution of duties

Information about the performance of the directors is recorded by using documents, digital media or other methods in accordance with the Rasa Document Management Rules. This information is stored with associated materials in a format that allows performing searches to locate specific items.

Rules and other systems concerning management of the risk of losses

The Risk Management Committee and Corporate Management Committee evaluate anticipated risk factors concerning the Rasa Group’s business operations and determine policies and countermeasures for these risk factors.
However, matters prescribed in the Board of Directors Regulations first require approval of the directors.

System for enabling Rasa Group directors to perform their duties efficiently

As a rule, the Board of Directors meets once each month and other meetings take place as needed. At these meetings, the directors make decisions about important matters involving the management of the Rasa Group. As needed, important items are first discussed by the Corporate Management Committee to provide a basis for the subsequent submission of proposals to the directors.
Rasa Group directors submit reports in a suitable manner and frequency concerning the performance of directors at meetings of the boards of directors of all group companies.
Rasa uses the executive officer system for the purpose of managing business operations quickly and efficiently by separating the role of management decision-making and oversight and the role of conducting business operations.
The Rasa Group has Board of Directors Regulations, Organizational Rules, Business Authority Rules and other internal rules. By clearly defining the roles and authority of executives and employees, these rules provide a framework for people to do their jobs properly and efficiently.
The Rasa Group uses information technology for the production of financial reports and management documents. In addition, increasing use is to be made of the internal portal site as a platform for sharing information.

System for ensuring proper business operations at the Rasa Group

To ensure that companies belonging to the Rasa Group conduct business operations properly, Rasa has an administrative framework based on Group Company Management Rules for providing subsidiaries with advice and guidance. In addition, proposals for significant actions involving management at subsidiaries must also be submitted to the Rasa Board of Directors.
Overseas subsidiaries and other overseas business sites comply with local laws and regulations as well as business and other customs.
In accordance with Internal Auditing Rules, the Rasa Internal Auditing Office performs internal audits of group companies to confirm that business operations comply with laws and regulations and are conducted properly.
As a rule, there is a Rasa Group Conference once every month that is attended by directors and others at group companies. Directors of subsidiaries submit reports about important items at their companies at these gatherings.

Directors and employees assisting the Audit and Supervisory Committee, independence of these directors (except Audit and Supervisory Committee members) and employees and assurance of effective instructions to these directors and employees

Rasa appoints employees to assist the activities of the Audit and Supervisory Committee.
Employees appointed to assist the Audit and Supervisory Committee are independent of the directors (except Audit and Supervisory Committee members) and follow only the instructions of this committee. The consent of the Audit and Supervisory Committee is required for evaluating the performance of these employees and reassigning these employees.

System for reports by directors and employees to the Audit and Supervisory Committee and system for other reports to this committee

The sharing of important information among Rasa directors and the directors and corporate auditors of subsidiaries is a fundamental policy of Rasa.
The full-time Audit and Supervisory Committee member attends meetings of the Corporate Management Committee and other important meetings. This provides a framework for monitoring voting on proposals, reports that are submitted and how discussions are held.
If a Rasa Group director (except Audit and Supervisory Committee members) discovers an item that may cause a significant loss or other damage to the group, a report must be submitted immediately to the Audit and Supervisory Committee, the full-time Audit and Supervisory Committee member or a corporate auditor.
When a Rasa Group director or employee receives a request from the Audit and Supervisory Committee to submit a report about how business operations are conducted or some other important matter, this report must be submitted promptly and properly.
The Rasa Internal Auditing Office submits reports about Rasa Group internal auditing plans, results of audits and other items to the Audit and Supervisory Committee.
The Rasa General Affairs Division submits reports to the Audit and Supervisory Committee concerning calls received on the Rasa Group’s compliance help line. There can be no retribution or negative consequences regarding personnel matters for individuals who submit reports using this help line because of the act of submitting a report.

Other systems to ensure the effectiveness of audits by the Audit and Supervisory Committee

The president of Rasa holds regular meetings with members of the Audit and Supervisory Committee. These meetings help maintain the proper environment for audits by this committee, provide an opportunity to share opinions about important issues involving audits, and build strong lines of communication.
The full-time member of the Audit and Supervisory Committee is present when the accounting auditor performs on-site audits and when the accounting auditor is evaluated.
The Audit and Supervisory Committee works closely with the Internal Auditing Office with the goal of performing audits effectively and efficiently.
Rasa Group Audit and Supervisory Committee members and corporate auditors hold a regular Group Auditing Conference where they share opinions and other information.
When an Audit and Supervisory Committee member asks Rasa for the advance payment of work-related expenses, the department with jurisdiction will make this payment or resolve the associated amount due after examining and approving the request.

System for ensuring the reliability of financial reports

The directors of Rasa Corporation fully understand that the preparation of reliable financial reports is critical to the company’s ability to maintain and increase the trust of the public. There are many activities for making internal controls even stronger. In particular, to ensure the reliability of financial reports, many opportunities are used for measures that make Rasa Group executives and employees well aware that conducting business operations properly contributes to making these operations more effective and efficient.
The directors of Rasa must do everything possible for the protection of the Rasa Group’s assets by using the correct procedure and receiving approval before acquiring, selling or making effective use of these assets.
The Rasa Group uses IT and maintains effective internal controls in order to prevent errors and other problems during the preparation of financial reports.

Basic position and systems for the rejection of antisocial forces

In accordance with its fundamental policy for internal control systems, for the soundness of business operations, the Rasa Group declares that there will be absolutely no connections or contact with antisocial forces and any improper demands made by antisocial forces will be firmly rejected.
When there is contact from an antisocial force, this contact will be handled directed to the General Affairs Division and handled by the general manager of the division. The entire Rasa organization will handle the contact in a unified and prudent manner while communicating efficiently with the General Affairs Division and cooperating with this division. Rasa uses its Compliance Manual and Antisocial Force Response Manual to give all employees guidelines for dealing with antisocial forces. Furthermore, as a member of the Central District Council for the Special Anti-Violence Countermeasures, Rasa participates in seminars and other activities to collect information about antisocial forces and has a framework for working with external information organizations as needed.

Support for outside directors

As a rule, the schedule for the regular monthly meetings of the Board of Directors is established at the beginning of each fiscal year.
The outside directors receive materials and other information about matters to be submitted at each meeting from the General Affairs Division, which is the secretariat for the Board of Directors. This secretariat also provides supplementary explanations as required. In addition, for certain proposals, materials are provided prior to a meeting to hear each director’s opinion in advance.
At meetings of the Audit and Supervisory Committee, the full-time member provides information to the outside director committee members about important meetings, important documents for making decisions and other matters. In addition, the outside director committee members perform audits themselves whenever they want. The General Affairs Department provides support to these outside directors for administrative tasks associated with their work as committee members.

The Board of Directors held 18 meetings during the fiscal year that ended in March 2023. Attendance at these meetings was as follows.

Name	Attendance at Board of Directors meetings in FY2023
Shuichi Imura	Attended 18 out of 18 Board of Directors meetings (attendance rate of 100%)
Nobutoshi Itoh	Attended 18 out of 18 Board of Directors meetings (attendance rate of 100%)
Yoshihiro Kubota	Attended 18 out of 18 Board of Directors meetings (attendance rate of 100%)
Kunio Aoi	Attended 18 out of 18 Board of Directors meetings (attendance rate of 100%)
Kazuaki Sakuragi	Attended 14 out of 14 Board of Directors meetings (attendance rate of 100%)
Yoko Ouchi	Attended 18 out of 18 Board of Directors meetings (attendance rate of 100%)
Hiroyuki Kawauchi	Attended 14 out of 14 Board of Directors meetings (attendance rate of 100%)
Hiroshi Yamaguchi	Attended 18 out of 18 Board of Directors meetings (attendance rate of 100%)
Tadashi Asakura	Attended 18 out of 18 Board of Directors meetings (attendance rate of 100%)
Koichiro Kakihara	Attended 18 out of 18 Board of Directors meetings (attendance rate of 100%)
Masanori Nagato	Attended 18 out of 18 Board of Directors meetings (attendance rate of 100%)

Notes:
The attendance of Board Directors Kazuaki Sakuragi and Hiroyuki Kawauchi shows the number of meetings held after their appointment on June 28,2022.

The Board of Directors mainly deliberated as below:

Management strategy	Approval of medium-term management plan Purchase of treasury shares Determination of important sales strategies and target values
Sustainability	Establishment of Sustainability Committee Establishment of Sustainability Policy Endorsement of the TCFD recommendations
Corporate Governance	Release of the Corporate Governance Report Evaluation of the Board of Directors' Effectiveness Evaluation of the Internal Control Convocation of General Meeting of Shareholders Contract of Directors and Officers Liability Insurance
Nomination and Remuneration	Electing the Representative Director, the President, and Executive Director Policy for Determining Remuneration of Directors Electing the chairperson and the member of the Nominations and Remuneration Committee
Financial statements	Approval of Financial Statements Revision of Earnings Forecast Determination of interim dividend Approval of funding plan Parent company guarantee for subsidiary debt

The Nomination and Remuneration Committee held 5 meetings during the fiscal year that ended in March 2023. Attendance at these meetings was as follows.

Name	Attendance at Nomination and Remuneration Committee meetings in FY2023
Shuichi Imura	Attended 5 out of 5 Nomination and Remuneration Committee meetings (attendance rate of 100%)
Koichiro Kakihara	Attended 5 out of 5 Nomination and Remuneration Committee meetings (attendance rate of 100%)
Masanori Nagato	Attended 5 out of 5 Nomination and Remuneration Committee meetings (attendance rate of 100%)

The Nomination and Remuneration Committee mainly deliberated as below:

Nomination and Remuneration	In response to requests from the Board of Directors, members of this committee discuss items involving selections and other activities concerning directors and the remuneration of directors. The committee then submits its conclusions to the Board of Directors.

Summary of Limitation of Liability

Rasa Corporation has contractual agreements with its outside directors and to limit their liability pursuant to Article 423, Paragraph 1 of the Companies Act. The maximum monetary liability of these individuals is the minimum monetary liability prescribed in Article 425, Paragraph 1 of the Companies Act.

Summary of insurance policies for directors and officers

Rasa has contracts with insurance companies concerning directors and officers liability insurance (D&O insurance) in accordance with Article 430-3-1 of the Companies Act. This insurance covers these individuals for their responsibilities involving the performance of their duties and for damages (except damages subject to disclaimers in the insurance policy) resulting from directives received in concerning these duties. The policy pays for damages and other losses for which directors and others who are covered by this policy are liable in association with the performance of their duties. Individuals covered by liability insurance are the directors and other officers of Rasa and its subsidiaries. Rasa pays all premiums for these policies.

Number of Directors

The Articles of Incorporation limit the number of directors who are not members of the Audit and Supervisory Committee to 10 and the number of directors who are members of this committee to seven.

Requirements for Election of Directors

Resolutions for Election of Directors

For the approval of a resolution for the election of directors, the Articles of Incorporation require that the resolution receive a majority of the voting rights at a shareholders meeting attended by shareholders eligible to vote who hold at least one-third of all voting rights.

Voting for Directors

The Articles of Incorporation prohibit cumulative voting for directors.

Shareholder Meeting Proposals Eligible for Approval by the Board of Directors

Purchase of Treasury Shares

Pursuant to Article 165, Paragraph 2 of the Companies Act, treasury shares can be purchased based on a resolution approved by the Board of Directors. This makes it possible to take actions involving equity with speed and flexibility.

Interim Dividend

Pursuant to Article 454, Paragraph 5 of the Companies Act, an interim dividend can be paid based on a resolution approved by the Board of Directors in order to return earnings to shareholders with flexibility.

Special Resolutions at Shareholders Meetings

In accordance with the Articles of Incorporation, the approval of special resolutions as defined in Article 309, Paragraph 2 of the Companies Act at shareholders meetings requires at least two-thirds of the voting rights at a shareholders meeting attended by shareholders who have at least one-third of all voting rights that can be exercised. The purpose is to facilitate the efficient operation of shareholders meetings by reducing the size of the quorum required for special resolutions.

Outside Directors

Rasa has four outside directors.
Hiroshi Yamaguchi has been the President and Representative Director of Shintec Co., Ltd. (formerly Shinwa Kogyo Co., Ltd.), which manufactures and sells corrosion-resistant steel pipes, since April 2001. Mr. Yamaguchi has many years of experience and accomplishments as a manager. He is an outside director because Rasa believes that he can use his experience and skills to contribute to the growth of Rasa’s global operations, the sustained growth of corporate value and the strengthening of corporate governance. There are no relationships between Mr. Yamaguchi and Rasa involving personnel, business, equity or other items. Consequently, Mr. Yamaguchi is designated an independent director because Rasa believes there is no risk of a conflict of interest with ordinary shareholders.
Eriko Kawajiri has many years of experience as a judge, public prosecutor, and attorney at law, as well as extensive experience and specialized knowledge of the law. She is an outside director because Rasa believes that she can use her experience and skills to contribute to the growth of Rasa’s global operations, the sustained growth of corporate value and the strengthening of corporate governance. There are no relationships between Ms. Kawajiri and Rasa involving personnel, business, equity or other items. Consequently, Ms. Kawajiri is designated an independent director because Rasa believes there is no risk of a conflict of interest with ordinary shareholders.
Masanori Nagato was a Representative Director and Senior Managing Director of Rasa until June 2020. He was in charge of accounting, investor relations and other activities and also has many years of experience and accomplishments as a manager. He is an outside director and member of the Audit and Supervisory Committee because Rasa believes that he can use his experience and skills to contribute to the growth of Rasa’s global operations, the sustained growth of corporate value and the strengthening of corporate governance. There are no relationships between Mr. Nagato and Rasa involving personnel, business, equity or other items. Consequently, Mr. Nagato is designated an independent director because Rasa believes there is no risk of a conflict of interest with ordinary shareholders.
Akira Harada has many years of experience in finance and accounting through his work at financial institutions and has extensive insight into corporate activities and management. He is an outside director and member of the Audit and Supervisory Committee because Rasa believes that he can use his experience and skills to contribute to the growth of Rasa’s global operations, the sustained growth of corporate value and the strengthening of corporate governance. There are no relationships between Mr. Harada and Rasa involving personnel, business, equity or other items. Consequently, Mr. Harada is designated an independent director because Rasa believes there is no risk of a conflict of interest with ordinary shareholders.
Rasa has established its own Standards for Determining Independence for Outside Directors that are consistent with the independence requirements of the Tokyo Stock Exchange. A director is judged to be independent when none of the following items are applicable.

a) An executive or a non-executive director of Rasa or a Rasa subsidiary in the past
b) An executive of a company that is currently a major shareholder of Rasa
c) An individual with a significant business relationship with Rasa or an executive of a company with a significant business relationship with Rasa
d) A consultant, accountant or attorney who has received significant monetary or other compensation from Rasa other than remuneration as a director
e) An individual where item b or d was applicable within the past two years
A close relative of an individual where item c or e is applicable
g) A close relative of an individual who is an executive or non-executive director of a Rasa subsidiary
h) A recipient of substantial donations from Rasa or an associated individual

Rasa has designated the three outside directors as independent directors because they fulfill the requirements for independence stipulated by the Tokyo Stock Exchange

Mutual cooperation for outside director supervision/audits and internal audits, Audit and Supervisory Committee audits and accounting audits and mutual cooperation with internal control departments

The Internal Auditing Office performs internal audits of all business units, including group companies, to confirm that business operations are performed in a suitable, reasonable and efficient manner. The office reports the results of these audits to the full-time member of the Audit and Supervisory Committee. The director who is the full-time member of this committee attends meetings of the Corporate Management Committee and other important meetings. This director also provides information received from Audit and Supervisory Committee audits to the other members (outside directors) of the committee. In addition, there are exchanges of information and other forms of cooperation with the accounting auditor in order to determine if the financial audits are performed properly.

Audits Status

Audits by the Audit and Supervisory Committee

The Audit and Supervisory Committee has three members, including two outside directors. Committee members attend meetings of the Board of Directors and the full-time committee member attends meetings of the Corporate Management Committee and other important meetings. Members of this committee perform appropriate audits of the performance of the directors as well as audits covering all aspects of management that are based on sufficient information.
The Audit and Supervisory Committee members understand that working closely with the accounting auditor is essential for improving the quality and efficiency of the committee’s audits as well as for reaching decisions about the suitability of audits performed by the accounting auditor.
The Audit and Supervisory Committee receives the internal auditing schedule from the Internal Auditing Office and exchanges opinions and information with this office in order to perform audits that are reasonable and effective manner.
The Audit & Supervisory Committee held 12 meetings during the fiscal year that ended in March 2023. Attendance at these meetings was as follows.

Name	Meetings	Meetings attended
Tadashi Asakura	12	12
Koichiro Kakihara	12	12
Masanori Nagato	12	12

The primary items examined by the Audit & Supervisory Committee are audit policies, audit plans the division of auditing duties, the performance of directors and other officers, agreement with the selection of the independent accounting auditor and the compensation for this auditor, and the evaluation of the performance of the independent auditor.
Activities of the members of this committee also include facilitating mutual understanding among directors, employees and others at the Rasa Group, attending meetings of the Board of Directors and other important meetings, checking documents for decisions and other important actions, facilitating mutual understandings and exchanges of information with directors of subsidiaries and others, and confirming the status and results of audits performed by the independent auditor.

Internal Audits Status

The Internal Auditing Office, which has three members, establishes an internal audit plan for each fiscal year. Internal audits are then performed in accordance with the Internal Audit Rules concerning the suitability, rationality and efficiency of ordinary business activities throughout the Rasa Group. In addition, the Internal Auditing Office works with members of the Audit and Supervisory Committee and the accounting auditor in order to perform audits effectively and efficiently.

Information concerning the Accounting Auditor

Accounting auditor

Yaesu Audit Corporation Accounting Office

Number of years the independent auditor has been used

Lead certified public accountants

The certified public accountants who were the engagement partners for auditing the financial statements of Rasa are Tsutomu Saito, Tatsuya Hirose and Ichiro Komatsu. All three are employed by Yaesu Audit & Co.

Audit assistants

Eight certified public accountants and three individual who has passed the accountant certification examination assisted with the financial audit of Rasa.

Method and reason for selection of Yaesu Audit Corporation

The selection of an accounting firm takes into consideration the suitability of a firm’s auditing framework, independence, specialized knowledge, quality assurance system and other items. If the Audit and Supervisory Committee determines that any of the items in Article 340, Paragraph 1 of the Companies Act apply to the auditing firm and would create significant problems regarding the financial audit of Rasa, the firm can be terminated with the unanimous consent of committee members. Furthermore, if the Audit and Supervisory Committee determines that a different accounting firm should be used because of a problem with the audits of the current firm or for some other reason, the committee can approve a proposal for termination or a statement of no confidence. Based on this decision, the Board of Directors will then submit the resolution at a shareholders meeting.

Evaluation of accounting auditor by the Audit and Supervisory Committee

The Audit and Supervisory Committee performed confirmations and checks concerning the independence and professional skills of the accounting auditor and the existence of an auditing framework for performing proper audits based on quality assurance standards. In addition, the committee received reports from this auditor about the performance of its duties and concluded that there are no problems with these activities.

Payments for Audits

a. Payments to auditing certified public accountants and others

Category	Current consolidated fiscal year
Category	Payments for audit certification tasks (million yen)	Payments for non-auditing tasks (million yen)
Rasa	38	-
Consolidated subsidiaries	-	-
Total	38	-

Category	Previous consolidated fiscal year
Category	Payments for audit certification tasks (million yen)	Payments for non-auditing tasks (million yen)
Rasa	38	-
Consolidated subsidiaries	-	-
Total	38	-

Notes:
For the previous consolidated fiscal year, in addition to the above, additional remuneration of 55 million yen was paid to Yaesu Audit & Co., the accounting auditor, for its audit in the previous consolidated fiscal year.

b. Compensation paid to individuals belonging to the same network as that of the certified public accountants and others used for audits (excluding compensation paid to these certified public accountants and others)

Not applicable

c. Compensation for other important audit certification procedures

Not applicable

d. Policy for Determination of Payments for Audits

There is no policy for payments. Rasa determines audit fees based on the number of days that audits are performed and on other items.

e. Reason for Audit and Supervisory Committee’s Agreement with the Audit Payment

The Audit and Supervisory Committee concluded that the payment for audit services is suitable after performing a study that included the activities performed by the accounting auditor, the basis for calculating the estimated fee and the activities listed in the audit plan. The agreement of the committee is based on Article 399, Paragraph 1 and Paragraph 3 of the Companies Act.

Remuneration of Directors and Corporate Auditors

On February 10, 2021, the Rasa Board of Directors approved a resolution concerning the following policy for determining compensation and other benefits for individual directors.

Policy for Determining Remuneration of Directors

In accordance with Rasa’s corporate philosophy, remuneration for directors and other executives is based on the following policy. This policy reflects the goal of using remuneration as a sound incentive for achieving sustained growth of the Rasa Group and the medium to long-term growth of corporate value.

Remuneration must contribute to the sustained growth of the Rasa Group and the medium to long-term growth of corporate value.
Remuneration must be linked to short-term as well as medium to long-term results of operations.
Remuneration must reinforce the commitment of management to the growth of shareholder value.
Remuneration must be at a level that allows attracting and retaining people with outstanding skills.
The process used for determining remuneration must be extremely transparent and objective.

Level of Remuneration

The level of remuneration should reflect the business environment of Rasa and utilize data of surveys performed by external organizations and surveys and analysis of the remuneration of executives at listed companies of the same size as Rasa and other applicable companies.

Composition of Remuneration

Cash remuneration for directors (excluding directors who are members of the Audit and Supervisory Committee) is limited to 400 million yen in each fiscal year (including a limit of 50 million yen for outside directors) in accordance with a resolution approved at the 115th annual shareholders meeting held on June 28, 2017. Basic remuneration is approximately 75% of this amount and remuneration linked to the short-term results of operations is approximately 25%.
Basic remuneration is determined for each director. The amount reflects Rasa’s results of operations, social trends concerning remuneration, the title and duties of each director, past remuneration, the remuneration of directors at other companies, and other relevant factors.
Remuneration linked to short-term results of operations (in the previous fiscal year) is based on a limit calculated using consolidated net income and then adjusted to reflect the individual’s contribution to the growth of sales and earnings (including a qualitative assessment of performance).
Cash remuneration determined in this manner is paid as a fixed amount every month.

Stock remuneration linked to results of operations is based on the Rules for Stock Grants that are established by the Board of Directors and is paid to directors (except outside directors and directors who are members of the Audit & Supervisory Committee). These individuals receive a number of shares of Rasa stock equal to the number of points they have received in accordance with their titles and the degree to which they achieved their performance targets (percentage of the consolidated net income target in the medium-term business plan). As a rule, directors receive this stock when their position as a Rasa director ends.

Remuneration for outside directors and directors who are members of the Audit & Supervisory Committee is only cash remuneration (fixed basic remuneration).

Remuneration for directors who are members of the Audit and Supervisory Committee is limited to 100 million yen in each fiscal year in accordance with a resolution approved at the 115th annual shareholders meeting held on June 28, 2017. Remuneration is determined by discussions of these directors from the standpoint of independence and neutrality.

Remuneration for directors = Cash remuneration (Basic remuneration + Remuneration linked to short-term results of operations) + Non-cash remuneration (stock remuneration linked to results of operations)

Remuneration for outside directors and directors who are members of the Audit & Supervisory Committee = Cash remuneration (fixed basic remuneration)

Procedure for Determining Remuneration

To ensure the transparency and fairness of the procedure for determining the remuneration of directors, there is a Nominations and Remuneration Committee, where the majority of members are independent outside directors, that serves as an advisory body to the Board of Directors.
For the cash remuneration of individual directors and other executives, discussions are first held by the Nominations and Remuneration Committee, which Rasa voluntarily established. The President and Representative Director then has sole responsibility for determining individual cash remuneration while taking into account the conclusions of the Nominations and Remuneration Committee.
For remuneration linked to results of operations, which is not cash remuneration, every director receives at the designated time of each fiscal year remuneration based on the Rules for Distributing Stock. For this remuneration, directors receive points that reflect their executive positions as of the end of the previous fiscal year and degree of accomplishing performance goals. These points are calculated as follows.
Performance-linked stock remuneration and method for calculating the number of shares of stock distributed
In accordance with resolutions approved at the 114th annual shareholders meetings held on June 28, 2016 and 115th annual shareholders meetings held on June 28, 2017, Rasa established a stock remuneration program that is linked to results of operations for directors (except directors who are Audit and Supervisory Committee members and outside directors, same hereafter). The expiration of the trust period for this program ended on July 31, 2022 and a resolution to extend this trust period by three years to July 31, 2025 was approved at the annual shareholders meeting held on June 26, 2022.

a. Summary of the stock remuneration program
For the stock remuneration program linked to results of operations, a trust established and funded by Rasa purchases Rasa stock. The trust is then used to distribute Rasa stock to directors based on the number of points granted to each director in accordance with the Rules for Distributing Stock, which are established by the Board of Directors. Points are based on each director’s executive position and degree of accomplishing performance goals (performance in relation to the consolidated net income target in the medium-term business plan). As a rule, directors receive this stock at the time they are no longer a Rasa director.

b. Calculation method for the maximum number of shares of Rasa stock distributed to directors
Method for granting points to directors and limit
In accordance with the Rules for Distributing Stock, which are established by the Board of Directors, individual directors receive points every fiscal year at the designated time during the trust period. The number of points reflect their executive positions as of the end of the previous fiscal year and degree of accomplishing performance goals. A maximum of 94,000 points (equivalent to 94,000 shares of Rasa stock) can be granted to the directors every fiscal year. These points are calculated as follows.

The following formula is used to calculate the number of points that directors receive.
Number of points*1 = (Basic points for executive position*2) x (Point distribution ratio*3) x (Eligible period coefficient*4)

*1 Fractions of points are discarded.
*2 Basic points for executive position are distributed as follows.

Executive position	Basic points
President	10,000
Vice president	9,000
Senior managing director	8,000
Managing director	7,000
Other full-time directors	5,000
Non-full-time directors	4,000

*3 The point distribution ratio is determined as follows based on the level of achievement of goals for results of operations.

Achievement of goals	Distribution ratio
150% or more	1.5
120% to under 150%	1.2
110% to under 120%	1.1
100% to under 110%	1.0
90% to under 100%	0.9
80% to under 90%	0.7
70% to under 80%	0.5
Under 70%	0.0

The achievement of goals is actual results of operations as a percentage of the medium-term plan goals in the following table for each applicable fiscal year.

Medium-term plan goals (Consolidated net income)	FY2022	FY2023	FY2024
Medium-term plan goals (Consolidated net income)	1,450 million yen	1,500 million yen	1,800 million yen

*4 The eligible period coefficient is calculated as follows for each director.

Eligible period coefficient = Number of months of period subject to the evaluation (fractions of months discarded) / 12

*The number of months of the period subject to the evaluation is for the fiscal year (April 1 to March 31 of the following year) that ended immediately prior to the day that points are distributed every year.

Remuneration for directors who are members of the Audit & Supervisory Committee is determined by the mutual agreement of these directors for the purpose of ensuring the independence and neutrality of this process.

Total remuneration for each category and composition of remuneration and number of directors and corporate auditors

Categories	Total remuneration (million yen)	Composition of remuneration (million yen)			Number of directors/ corporate auditors
Categories	Total remuneration (million yen)	Basic remuneration (fixed remuneration)	Remuneration linked to short-term results of operations	Stock remuneration linked to results of operations	Number of directors/ corporate auditors
Directors (excluding Audit and Supervisory Committee members and outside directors)	239	102	54	82	7
Audit and Supervisory Committee members (excluding outside directors)	17	17	-	-	1
Outside directors	20	20	-	-	3

Total consolidated remuneration for individual directors and corporate auditors of Rasa

Omitted because no individual director or corporate auditor received total consolidated remuneration of 100 million yen or more.

Equity Investments

Standard and approach for categorization of stock holdings

Rasa divides stock holdings into two categories. One is stocks held purely as investments for the purpose of earning profits from capital gains and dividends. The other is stocks held for all other purposes. This includes holdings for the purpose of maintaining and strengthening business and cooperative relationships or for the purpose of facilitating the efficient and reliable procurement of funds.

Stock holdings that are not pure investments

Content of verification by the Board of Directors regarding the method of verifying the benefits of its stock holding policy and stock holding and the appropriateness of holding individual stocks.

Rasa has a policy of holding the stock of business partners when it has judged that it will contribute to the sustainable growth of the Company and increase its corporate value over the medium to long term from the perspective of business strategy, maintenance of smooth business relationships, and expansion of transactions. With respect to stock holdings, we periodically conduct evaluations at the Board of Directors meetings based on qualitative factors such as the benefits of holding stocks for each company and the medium to long-term economic benefits. In addition, we evaluate the holdings from a quantitative perspective, considering factors such as the book value, market value, dividend income, dividend yield, ROE (return on equity), and annual trading volume of each company in relation to the Company's cost of capital. As a result of the verification, the Company will strive to reduce some holdings because of a decline in the benefits of owning certain stocks by selling them as appropriate. Furthermore, in the fiscal year under review, the benefit of stock holdings was verified at a meeting of the Board of Directors held in July 2022 using the method described above.

Number of stock issues owned and balance sheet values

	Issues (companies)	Total balance sheet value (million yen)
Unlisted stocks	3	183
All other stocks	14	548

(Increase in stock holdings during fiscal year ended March 31, 2023)

	Issues (companies)	Total cost of additional investments (million yen)	Reason for additional investments
Unlisted stocks	-	-	-
All other stocks	2	1	Periodic purchases by a holding company

(Decrease in stock holdings during fiscal year ended March 31, 2023)

None

Number of shares, balance sheet valuations and other information concerning specified investment equity securities owned or deemed to be owned

Specified investment equity securities

Company	FY2023	FY2022	Ownership purpose and quantitative benefit *1 and reason for additional investment	Ownership of Rasa stock
	Number of shares
	Balance sheet valuation (million yen)
TAKARA & COMPANY LTD.	42,100	42,100	A support contractor for Company's IR and disclosure-related operations, and is retained on an ongoing basis to preserve and reinforce stable business relationships and to facilitate smooth business operations.	Yes
TAKARA & COMPANY LTD.	94	82		Yes
Sanki Engineering Co., Ltd.	61,000	61,000	A　seller of products in the Industrial and construction machineries business, and is retained on an ongoing basis to preserve and reinforce stable transactions and business cooperation.	Yes
Sanki Engineering Co., Ltd.	89	85		Yes
Rasa Corporation	39,340	39,383	A supplier and seller of products in the Industrial and construction machineries business, and is retained on an ongoing basis to preserve and reinforce stable transactions and business cooperation.	Yes
Rasa Corporation	82	60		Yes
Sun-wa Technos Corporation	39,480	39,480	A　seller of products in the Industrial and construction machineries business, and is retained on an ongoing basis to preserve and reinforce stable transactions and business cooperation.	Yes
Sun-wa Technos Corporation	76	53		Yes
Sumitomo Mitsui Trust Holdings, Inc.	12,000	12,000	It conducts finance-related transactions such as fund procurement, etc., and is retained to ensure stable fund procurement and to preserve and reinforce stable transactions and business relationships.	None*2
Sumitomo Mitsui Trust Holdings, Inc.	54	48		None*2
Kubota Corporation	24,000	24,000	A　seller of products in the Industrial and construction machineries business, and is retained on an ongoing basis to preserve and reinforce stable transactions and business cooperation.	None
Kubota Corporation	47	55		None
Sumitomo Mitsui Financial Group, Inc.	6,000	6,000	It conducts finance-related transactions such as fund procurement, etc., and is retained to ensure stable fund procurement and to preserve and reinforce stable transactions and business relationships.	None*3
Sumitomo Mitsui Financial Group, Inc.	31	23		None*3
Meiko Trans Co., Ltd.	15,000	15,000	A logistics-related business partner in the Resources and metallic materials business, and is retained on an ongoing basis to preserve and reinforce stable transactions and business cooperation.	Yes
Meiko Trans Co., Ltd.	17	17		Yes
Central Glass Co., Ltd.	5,600	5,600	A seller of products in the Industrial and construction machineries business, and is retained on an ongoing basis to preserve and reinforce stable transactions and business cooperation.	None
Central Glass Co., Ltd.	16	11		None
Ishihara Sangyo Kaisha Ltd.	14,100	14,100	A seller of products in the Industrial and construction machineries business, and is retained on an ongoing basis to preserve and reinforce stable transactions and business cooperation.	None
Ishihara Sangyo Kaisha Ltd.	15	15		None
Sakai Chemical Industry Co., Ltd.	4,186	4,179	A　seller of products in the Industrial and construction machineries business, and is retained on an ongoing basis to preserve and reinforce stable transactions and business cooperation.	None
Sakai Chemical Industry Co., Ltd.	7	8		None
Mitsubishi UFJ Financial Group, Inc.	8,000	8,000	It conducts finance-related transactions such as fund procurement, etc., and is retained to ensure stable fund procurement and to preserve and reinforce stable transactions and business relationships.	None*4
Mitsubishi UFJ Financial Group, Inc.	6	6		None*4
Pacific Metals Co., Ltd.	3,000	3,000	It is retained to preserve and reinforce business cooperation in all aspects of the Company’s business.	Yes
Pacific Metals Co., Ltd.	5	12		Yes
Hokuhoku Financial Group, Inc.	1,500	1,500	It conducts finance-related transactions such as fund procurement, etc., and is retained to ensure stable fund procurement and to preserve and reinforce stable transactions and business relationships.	None*5
Hokuhoku Financial Group, Inc.	1	1		None*5

Notes:

Rasa believes that it is not possible to present quantitative benefits of owning investment equity securities held for a purpose other than a pure investment for individual holdings. The reason is that decisions to hold or sell these stocks are based on a comprehensive examination by the Board of Directors. Each holding is examined from the standpoint of preserving and strengthening the efficiency of transactions and soundness of cooperation from a medium to long-term perspective and the cost of capital is reflected.
Sumitomo Mitsui Trust Holdings, Inc. does not own Rasa stock, but its subsidiary Sumitomo Mitsui Trust Bank, Ltd. owns Rasa stock.
Sumitomo Mitsui Financial Group, Inc. does not own Rasa stock, but its subsidiary Sumitomo Mitsui Banking Corporation owns Rasa stock.
Mitsubishi UFJ Financial Group, Inc. does not own Rasa stock, but its subsidiary MUFG Bank, Ltd. owns Rasa stock.
Hokohoku Financial Group, Inc. does not own Rasa stock, but its subsidiary The Hokuriku Bank, Ltd. owns Rasa stock.

Stocks deemed to be owned

Not applicable

Holdings of stock as pure investments

Not applicable

Reclassification of stock held as a pure investment to stock held for a purpose other than a pure investment during the fiscal year ended March 31, 2023

Not applicable

Reclassification of stock held for a purpose other than a pure investment to a stock held as a pure investment during the fiscal year ended March 31, 2023

Not applicable