Compliance

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

• ① Each department (or project team) will verify the establishment and operation of corporate rules and regulations in accordance with the Companies Act.
• ② Internal audit services are conducted by the corporate auditors, who provide specific advice and recommendations on the appropriateness of policies, plans and procedures and the effectiveness of business execution with respect to all business activities.
• ③ GCP (Good Clinical Practice) auditing services for clinical trials conducted for the purpose of applying for drug approval to the Research and Development Division are part of quality assurance activities to evaluate and verify independently from the audited division whether clinical trials are conducted in compliance with GCP, the Pharmaceutical Affairs Law, the clinical trial protocol, and the Standard Operating Procedures, etc. This improves the reliability of clinical trials.
• ④ In conducting research and development of new drugs and therapeutic techniques, an Ethics Committee, etc., consisting of at least five members, including members from outside the company, has been established to review and evaluate the results from safety management and ethical perspectives.

• ⑤ From the viewpoint of management transparency and legal compliance, the Company has established a system to exchange information on daily legal issues with attorneys with whom the Company has legal advisory contracts, and to receive advice and guidance on all legal issues that arise on a timely basis, while listening to their opinions. The Company has a system to ensure that the execution of duties by directors and employees complies with laws and the Articles of Incorporation.
• ⑥ Verify the establishment and operation of company rules.

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

• ① Record, store, and manage documents, etc., in accordance with laws and regulations, as well as the rules of the Board of Directors, the rules of the Research and Development Meeting, the rules for approval, and the rules for document management, etc.

• ② In accordance with the Information Security Management Regulations, promote effective information security measures, mainly from a systemic perspective, to ensure that information is not misused or leaked.
• ③ In addition, to prevent information leaks, unauthorized access, etc., a security system shall be established, including restrictions on who can access the information and password management.

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

• ① Risk management shall be conducted in accordance with relevant regulations and active efforts shall be made to mitigate risks, and the Business Administration Department shall periodically report the status of risk management to the Board of Directors.
• ② In the event of an emergency, an emergency task force headed by the Representative Director shall be responsible for crisis management throughout the Company in accordance with the Business Crisis Management Regulations.

4. Systems to ensure the efficient execution of duties by directors

• ① The Board of Directors shall meet once a month, or as necessary, to make decisions on important matters and report on research and development and business execution. In addition, a liaison meeting of officers shall be held once a month to ensure prompt execution of decisions made by the Board of Directors and to improve management efficiency.
• ② In order to ensure smooth, accurate, and efficient execution of research and development, an R&D meeting attended by relevant directors and persons in charge of relevant divisions shall be held at least twice a month to discuss the progress of research and development operations.
• ③ The Board of Directors shall determine the business plan and annual budget in accordance with the Company’s corporate philosophy, and each Director, including the Representative Director, shall perform his or her duties to achieve these goals and report regularly on the progress at the Board of Directors meetings.

5. Matters concerning employees who are requested by Corporate Auditors to assist them in the performance of their duties

6. Matters concerning the independence of the employee in the preceding item from directors

• ① In order to ensure the independence of the employees mentioned in the preceding item, decisions regarding their appointment, transfer, evaluation, and other personnel matters shall require the consent of the Corporate Auditors.
• ② Wages and other remuneration of the employees mentioned in the preceding item shall also be determined by the Board of Directors with the consent of the Corporate Auditors.

7. System for Directors and employees to report to Corporate Auditors and other systems related to reporting to Corporate Auditors

• Directors and employees shall report the following matters
• ① The status of the Company’s business operations (once a month).
• ② Decisions on matters that may have a significant impact on the Company’s management, serious violations of laws and regulations or the Articles of Incorporation, and other important matters.
• ③ Our performance status.

8. Systems to ensure that a person who makes a report under the preceding paragraph is not subjected to any disadvantageous treatment for making such a report

9. Matters concerning the policy for the treatment of expenses or liabilities incurred in the performance of duties by Corporate Auditors

10. Other systems to ensure that audits by corporate auditors are conducted effectively

• ① Corporate auditors shall receive explanations from the Company’s accounting auditor regarding the details of the accounting audit and shall cooperate with the accounting auditor by exchanging information.
• ② Corporate Auditors shall hold regular meetings with Representative Directors to exchange opinions.
• ③ Corporate auditors shall receive the audit plan from the accounting auditor in advance, receive periodic audit implementation reports, and interview the status of audit implementation as necessary.