Policy regarding Cross-shareholdings and Criteria for Exercising Voting Rights

Policy regarding cross-shareholdings

In order to enhance our medium- to long-term corporate value, we may hold shares of other companies as cross - shareholdings for the purpose of maintaining and enhancing our transactional relationships, building, maintaining and enhancing our cooperative and transactional relationships for business expansion, or maintaining stable financial transactions.
From the viewpoint of improving asset efficiency, the Company intends to reduce its cross-shareholdings by approximately ¥30 billion during the revised medium-term management plan period (from the fiscal year ending March 31, 2024 to the fiscal year ending March 31, 2026), and to reduce the ratio of cross-shareholdings to net assets to 10% or less.

Examination regarding cross-shareholdings

We will examine whether the purpose of a cross -shareholding is appropriate from a medium- to long-term perspective and whether the benefit and risks related to such cross-shareholding are appropriate given the capital cost, and will report to the Board of Directors on a periodic basis. The Board of Directors will assess whether such shareholding contributes to the enhancement of our medium - to long-term corporate value based on the outcome of such examination, and will decide on whether to continue the cross-shareholding or to dispose of such shares. If our holding of any shares loses its significance, we will dispose of and reduce as appropriate our holding of such shares after considering the circumstances of the issuer The Board of Directors will examine the significance on each individual company.

Criteria for exercising voting rights

In voting any of the shares held for cross-shareholding purposes as to any agenda item, we will determine whether or not to vote in favor of such agenda item after closely examining comprehensively whether the relevant vote would contribute to the enhancement of the issuer’s and our corporate value, while fully respecting the issuer’s management policy. A close due diligence review will be performed in case an issuer releases Updated losses for certain consecutive periods, its shareholder value is significantly damaged as a result of reorganization, or there is a matter of serious concern regarding the issuer’s corporate governance such as a corporate scandal.

Reference: Shareholdings of Wacoal Corp.