Marumae : Corporate Governance Report updated on December 13, 2021

Note: This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.

Corporate Governance Report

Last Update: December 13, 2021

Marumae Co., Ltd.

President and Representative Director: Toshikazu Maeda Contact: inquiry_en@marumae.com Securities Code: 6264 https://www.marumae.com/en/

The corporate governance of Marumae Co., Ltd. (the "Company") is described below.

1. Basic Views on Corporate Governance, Capital Structure, Corporate Profile, and

Other Basic Information

1. Basic Views

In order to increase management transparency and make corporate governance work effectively based on compliance with laws and regulations, the Company acknowledges that it is important to establish and maintain an organizational structure that responds quickly and accurately to severe changes in the business environment and a fair management system that places importance on shareholders.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code] [Updated]

This section is based on the corporate governance code revised in June 2021.

Supplementary Principle 2-4-1

The Company recognizes the importance of ensuring diversity including the promotion of workplace advancement for women, and it is working to achieve this by appointing women to management positions as well as appointing its first female outside director. The Company promotes mid-career employees to management positions based on a comprehensive assessment of their skills and experience. However, it realizes that the number of women in managerial positions is currently inadequate. It will strive to develop human resources and improve its internal environment to increase the ratio of female managers in its core human resources in the future. Taking into consideration the Company's size, corporate structure, and business areas, the Company is not currently appointing people from abroad to managerial positions. However, the Company is accepting foreign trainees at its factory.

Principle 4-8: Effective Use of Independent Outside Directors

Out of eight directors at present, the Company has appointed four outside directors as independent outside directors. It believes that the current composition of directors is appropriate after

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comprehensively taking into account its management scale, business characteristics, and surrounding environment.

Supplementary Principle 5-2-1

The Board of Directors will discuss the formulation of basic policy regarding the business portfolio and consider the disclosure of this policy.

[Disclosure Based on the Principles of the Corporate Governance Code] [Updated]

This section is based on the corporate governance code revised in June 2021.

Principle 1-4:Cross-shareholdings

The Company holds shares in its business partner, an unlisted company, with the aim of enhancing its corporate value over the medium and long term by building a long-term relationship of trust with the partner. The Company deems this cross-shareholding necessary based on a comprehensive assessment of the need for cooperative relationships and the need to maintain and enforce transactions. When executing voting rights, the Company takes into consideration not only whether the proposal conforms to its holding policy, but also whether it is expected to increase the corporate value of the issuing company.

Principle 1-7: Related Party Transactions

Under the "Regulations of the Board of Directors," the Company requires directors to obtain the approval of the Board of Directors in the event that they engage in transactions with a director or a company that a director substantially controls (competitive transactions, principal transactions, or transactions with conflicts of interest, hereinafter collectively referred to as "related party transactions"). The Company also requests directors to submit once a year a "Related Party Investigation and Confirmation Form" to report whether there are any related party transactions and the details of such transactions. The Accounting Section of the Administration Headquarters verifies the submitted information against accounting data, and reports to the Board of Directors any existence of, and details related to, related party transactions in the "Related Party Transaction List."

Principle 2-6: Roles of Corporate Pension Funds as Asset Owners

The Company has determined that Principle 2-6 does not apply to the Company because it has not introduced a company pension plan or a defined contribution pension system. When introducing a company pension in the future, the Company will take appropriate measures in human resources, such as the planned appointment and assignment of personnel with appropriate qualifications for asset management, and disclose the details of such actions. In addition, in such case, the Company shall appropriately manage any conflict of interest which may occur between corporate pension beneficiaries and the Company.

Principle 3-1: Full Disclosure

1. The Company's management philosophy, management and quality policy strategies, and medium-term business plan are disclosed on TDnet and its website. (The Management Philosophy, Management and Quality Policy, and Environmental Policy: https://www.marumae.com/en/com_4.html)
2. The Company discloses its basic concept and policy regarding corporate governance, as based on each principle of the Corporate Governance Code issued by the Tokyo Stock
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Exchange, on TDnet, its website, the Annual Securities Report (IR Library: partially translated English version https://www.marumae.com/en/ir_4.htmland the Japanese original https://www.marumae.com/ir_4.html), and this report.

1. The Company discloses the policies and procedures regarding the determination of remuneration for directors in the "Remuneration of Directors" section of this report.
2. The Board of Directors decides personnel matters for senior management, who are general managers or higher, after deliberation under company regulations by the Personnel Committee. The Advisory Committee, led by outside directors, reports on the nominations of candidates for directors based on a comprehensive assessment of whether the candidates can contribute to improving the Company's business performance and corporate value in the future with consideration given to their abilities, knowledge, experience, and achievements in their areas of expertise. According to the report and opinions of the Audit and Supervisory Committee, the Board of Directors makes the nominations. Regarding the nominations of directors who are Audit and Supervisory Committee members, after receiving the report from the Advisory Committee, and bearing in mind that the Audit and Supervisory Committee has the responsibility of auditing and supervising the execution of duties by the directors as an organization entrusted by the shareholders, the Audit and Supervisory Committee selects as candidates those who have the insight and character needed to fulfill their responsibilities and appoints them by resolution of the Audit and Supervisory Committee.
3. The specific reasons for the election of directors are disclosed in the Notice of the Annual General Meeting of Shareholders and in this report.

Supplementary Principle 3-1-3

The Company is promoting initiatives for sustainability in line with its management strategy, and the details of these initiatives are disclosed as "ESG" on its website. The ESG Committee was established in September 2021 to identify materiality issues, set KPIs, check the status of achievements, review plans, and report the status of these to the Board of Directors in order to deal with the various challenges related to ESG (Environmental, Social, and Governance) in corporate management with a long-term perspective. Considering global environmental issues, the Company has set a goal to use renewable energy for more than 50% of its electricity consumption by 2030 (compared to the fiscal year ended August 31, 2019) and is planning to install solar panels to do so. The aim is to curb carbon dioxide emissions and reduce the burden on the environment by covering part of the electricity needed for its production and reducing the purchase of electricity from outside sources. In addition, GHG emission (Scope 1, 2, 3) as "ESG data" is disclosed on the website. The Company expressed support for the recommendations made by the Task Force on Climate-related Financial Disclosures (TCFD) in November 2021 and will gradually enhance the quality and quantity of its climate-related disclosure. The Company plans to conduct a scenario analysis of the impact of climate change-related "risks" and "opportunities" on its business activities, management strategies, and financial plans. It will disclose the results and progress made toward the goals of the analysis.

Supplementary Principle 4-1-1

The Company's Board of Directors stipulates the matters that need to be deliberated and reported to the Board of Directors in the "Regulations of the Board of Directors," as well as the matters and scope of decisions to be made by the management team under the "Regulations of Division of

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Duties" and the "Standards for Authorization and Approval" to clarify the responsibilities and authority of each position in the execution of business and to ensure the systematic and efficient operation of business.

Principle 4-9: Independence Standards and Qualifications for Independent Outside Directors As criteria for determining the independence of the Company's independent outside directors, in addition to satisfying the independence requirements of the Companies Act and the Tokyo Stock Exchange, the Company selects candidates with a high level of insight who can provide advice and supervise the Company's management.

Supplementary Principle 4-10-1

The Company has voluntarily formed an Advisory Committee, chaired by the first independent outside director, with a majority of its members being outside directors. When deciding the appointment and remuneration of directors, which is a typical conflict of interest between management and the company, the Board of Directors makes decisions after consulting with the Advisory Committee and considering its report, with consideration given to diversity and skills, in order to enhance the governance function.

Supplementary Principle 4-11-1

In order to enhance the effectiveness of discussions at Board of Directors' meetings, the Company has appointed four independent outside directors, out of a total of eight directors, with the goal of maintaining and improving management's transparency and soundness. Directors from within the Company are selected from the executives of each primary function of the Manufacturing & Technology Headquarters, Sales Headquarters, and Administration Headquarters. Independent outside directors are elected from among those with expertise, knowledge, and experience in their respective areas, such as people with corporate management experience, certified public accountants and other accounting experts, and lawyers and other legal experts. Furthermore, after the Company-established Advisory Committee deliberates on the appointment of the directors, the Board of Directors and the Audit and Supervisory Committee decide on the proposed appointment. Regarding gender in the composition of the Board of Directors, a woman with extensive international experience has been elected as an outside director. There is a reference to the skill matrix of the elected directors attached at the end of this report.

Supplementary Principle 4-11-2

It is the Company's policy to disclose the status of all directors who concurrently serve as officers of other listed companies in the Notice of the Annual General Meeting of Shareholders and in the Annual Securities Report. The Company will also disclose the status of concurrent positions held by directors of unlisted companies when deemed necessary.

Supplementary Principle 4-11-3

The Company's Board of Independent Outside Directors conducts questionnaires with each director and analyzes and evaluates the effectiveness of the Board of Directors as a whole while referring to the self-evaluations and other information in the questionnaires. The first independent outside director reports on such analyses and evaluations to the Board of Directors with consideration given to fairness and transparency to strengthen the mutual monitoring and surveillance of the directors.

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The Company will disclose in this report a summary of the results of the analysis and evaluation conducted on the effectiveness of the Board of Directors as a whole.

Supplementary Principle 4-14-2

The Company's basic policy is to offer directors the ongoing training opportunities necessary to fulfill their roles and responsibilities. Each director can participate in various training programs and seminars conducted by outside organizations to acquire and update any necessary knowledge and information.

Principle 5-1: Policy for Constructive Dialogue with Shareholders

The Company's President and Representative Director holds individual meetings with major institutional shareholders after disclosing business results for each quarter to promote constructive dialogue with shareholders. The basic policy on information disclosure is disclosed on the Company's website as the "Disclosure Policy." The Company also strives to appropriately manage information under internal regulations to prevent insider trading, based on the basic idea of ensuring equality among shareholders in handling undisclosed material facts. (Disclosure Policy: https://www.marumae.com/en/ir_8.html)

Principle 5-1-1

Whenever possible, the President and Representative Director and the General Manager of the Administration Headquarters, who is in charge of investor relations, participate in dialogues (interviews) with shareholders to consider the requests and main concerns of shareholders and investors.

2. Capital Structure