Basic Policy on Internal Control System Development

1.System to ensure that Directors and employees of Central Glass Co., Ltd. (the “Company”) and its subsidiaries perform their duties in compliance with laws and regulations and the Articles of Incorporation

1. The Board of Directors shall make decisions on important matters related to business execution as stipulated in laws and regulations, the Articles of Incorporation, and the Board of Directors Regulations, based on Central Glass’s Corporate Philosophy, Creating a Better Future Through Monozukuri, its Purpose, Contribute to the realization of a sustainable society through innovative materials and technologies, and its Code of Conduct, Our Values and Responsibilities. In addition, the Board shall supervise the appropriateness of business execution delegated to Directors (including the Representative Director, President & CEO) in light of applicable laws and regulations and the Articles of Incorporation.
2. The Company shall establish the Anti-Monopoly Law Observance Committee, the Group Quality Compliance Committee, the Security Trade Control Committee, the Compliance Promotion Committee, and the Information Security Committee. Through these specialized committees (hereinafter “specialized committees”) and related compliance training programs, the Company shall seek to foster and entrench a culture of compliance throughout the Group.
3. The Company shall establish internal and external whistleblowing channels (including external legal counsel offices) in order to facilitate the early detection of organizational or individual violations of laws and regulations, and to implement corrective measures.
4. The Company shall establish the Audit Department as its internal audit function to audit the overall operations of the Group.
5. The Company shall establish a system for the appropriate design, operation, and evaluation of internal controls over financial reporting, and shall continuously assess whether such internal controls are functioning effectively and appropriately. Accordingly, the Company shall ensure the reliability of financial reporting through this system, while implementing necessary corrective measures and improvements as needed. In addition, the Company shall establish a Financial Reporting Risk Assessment Committee to evaluate and analyze factors that may affect the reliability of financial reporting, and shall promote improvements in related processes.
6. The Company shall respond resolutely as an organization to any unlawful demands made by antisocial forces and shall establish an internal system to ensure that it maintains no transactional or any other relationships with antisocial forces.

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

1. The Company shall prepare minutes of meetings of the Board of Directors, Management Committee, and other committees in accordance with internal rules. The preparation of documents related to other important decision-making matters shall be governed by the Internal Approval (Ringi) Regulations. In addition, the organization, storage, and disposal of minutes and important documents shall be prescribed in the Document Management Regulations to ensure proper information management.
2. Directors, including Audit and Supervisory Committee members, may access and review these minutes and important documents.

3.System to ensure efficient execution of duties by Directors

1. In order to clarify responsibility and authority for business execution and strengthen the supervisory function of the Board of Directors, the Company shall adopt an executive officer system.
2. The Board of Directors shall appoint Representative Directors and delegate part of the decision-making authority for important business execution to the Representative Director, President & CEO.
3. The Board of Directors shall appoint Executive Directors, who concurrently serve as Executive Officers.
4. The Board of Directors shall appoint Executive Officers, including the President & CEO, and shall define their positions and areas of authority in order to clarify the chain of command and establish a system that enables agile business execution within the organization.
5. The Board of Directors shall, in principle, meet at least once per month and may meet as necessary in order to facilitate prompt decision-making on matters submitted for Board approval. In addition, to deepen Outside Directors’ understanding of agenda items, advance briefing sessions shall be held as needed, thereby supporting efficient decision-making.
6. In principle, the Company shall hold Management Committee meetings on a weekly basis. Based on the Management Committee Regulations and the Internal Approval (Ringi) Regulations, Executive Officers who comprise the Management Committee shall deliberate on matters of material importance to business execution, and the President & CEO shall make final decisions.

4.System for management of risks of loss for the Company and its subsidiaries

1. The Company shall manage risks in accordance with the Integrated Risk Management Regulations, based on the degree of impact on management, in order to respond to risks arising from business activities, as follows.
   Risks associated with the business activities of the Company and its subsidiaries shall be identified and organized based on enterprise risk management (Three Lines Model), and the President & CEO shall determine response policies following deliberation by the Risk Management Committee.
   In the event a risk event or incident occurs or may occur within the Company and its subsidiaries, the head of the relevant department shall promptly share information with the responsible Executive Officer. Based on an assessment of the impact, the responsible Executive Officer shall, as necessary, report to the President & CEO and the Audit and Supervisory Committee. According to the severity of an incident, the President & CEO shall take appropriate measures, including establishing a cross-functional Crisis Response Headquarters headed by the Executive Officer responsible for the relevant matter, as necessary. The Company shall also promptly carry out recovery and post-incident handling measures.
2. The Board of Directors shall seek to understand risks by receiving reports from Executive Officers and others at any time or by requesting such reports, and shall provide advice as necessary.
3. The Board of Directors shall receive reports from the following specialized committees (the Environment and Safety Promotion Committee, the Anti-Monopoly Law Observance Committee, the Group Quality Compliance Committee, the Security Trade Control Committee, the Financial Reporting Risk Assessment Committee, the Compliance Promotion Committee, and the Information Security Committee), share risk-related information, and establish a group-wide risk management system.

5.System to ensure the appropriateness of operations within the corporate group (system for reporting matters related to the execution of duties by Directors of subsidiaries and system to ensure efficient execution of duties by such Directors)

1. The Company shall establish Regulations for Affiliated Companies in order to ensure the smooth execution of related operations with subsidiaries, and shall provide guidance and supervision to subsidiaries in accordance with such regulations, receiving reports from subsidiaries on their operational status.
2. The Company shall require subsidiaries, pursuant to the same regulations, to establish internal systems, and shall require prior approval from the Company when subsidiaries make decisions on important management matters.
3. The Company shall require subsidiaries to establish governance systems, including thorough compliance equivalent to that of the Company, and in principle, subsidiaries shall be subject to internal audits.

6.Matters concerning employees assigned to assist the Audit and Supervisory Committee when requested, and matters concerning the independence of such employees from Directors (excluding Audit and Supervisory Committee members) and ensuring the effectiveness of instructions from the Audit and Supervisory Committee

1. The Company shall establish an Audit and Supervisory Committee office and appropriately assign employees necessary to assist the Audit and Supervisory Committee and its members (hereinafter “support staff”). The Company shall also establish a support system within the internal audit, accounting, general affairs, and legal departments.
2. In order to ensure the independence of the support staff from Directors (excluding Audit and Supervisory Committee members), the Audit and Supervisory Committee shall have the authority to approve personnel transfers, performance evaluations, and other personnel-related matters concerning such staff.
3. The Company’s internal audit department shall be directly subordinate to the President & CEO. However, the Audit and Supervisory Committee shall collaborate with the internal audit department and may issue direct instructions to it as necessary to ensure proper audit operations. In such cases, the internal audit department shall give priority to instructions from the Audit and Supervisory Committee over those from the President & CEO. Furthermore, if deemed necessary by the Audit and Supervisory Committee, the authority of direction and supervision over the internal audit department shall be transferred from the President & CEO to the Audit and Supervisory Committee.

7.System for reporting to the Audit and Supervisory Committee by Directors and employees of the Company, and Directors, Corporate Auditors, and employees of its subsidiaries

1. Directors and Executive Officers shall promptly report to the Full-time Audit and Supervisory Committee Member or the Audit and Supervisory Committee when they discover any fact that may cause significant damage to the Company.
2. When requested by the Audit and Supervisory Committee to conduct an investigation, or to provide a report or explanation, Directors (excluding Audit and Supervisory Committee members), Executive Officers, other employees, as well as Directors, auditors, and employees of subsidiaries shall promptly carry out such investigations and provide such reports.
3. Pursuant to the Whistleblowing System Regulations, the Company shall establish internal reporting channels (the Compliance Promotion Committee and external law firms) to receive reports concerning internal violations of laws and regulations. With respect to matters that may cause significant damage to the Company, the Legal Department, which serves as the secretariat of the Compliance Promotion Committee, shall report such matters to the Full-time Audit and Supervisory Committee Member or to the Audit and Supervisory Committee.
4. In cases involving compliance violations by Directors or Executive Officers, the Audit and Supervisory Committee may, as necessary, request the cooperation of the Legal Department. In such cases, the President & CEO shall ensure the neutrality of the Legal Department and cause it to cooperate with internal investigations conducted by the Audit and Supervisory Committee. The Company shall prohibit any disadvantageous treatment of employees on the grounds that they conducted, or participated in, internal investigations. In addition, where the Audit and Supervisory Committee deems it necessary in the course of such internal investigations, external professionals (such as lawyers) may be engaged. The Company shall bear the related costs, except where such expenses are not necessary for the execution of the Audit and Supervisory Committee’s duties.
5. The Company shall prohibit any disadvantageous treatment of whistleblowers on the grounds that they have reported compliance violations to the Audit and Supervisory Committee or its members, and shall ensure that this policy is thoroughly communicated within the Company and its subsidiaries.

8.System to ensure the effectiveness of audits conducted by the Audit and Supervisory Committee

1. The full-time Audit and Supervisory Committee members shall attend meetings of the Board of Directors, important meetings, and various committees in order to understand the decision-making process and the status of business execution. They may also, as necessary, review important documents such as minutes, materials from important meetings, and approval documents, and request explanations from Directors, Executive Officers, and other employees.
2. The Audit and Supervisory Committee shall regularly exchange views with the Representative Directors regarding management policy and important issues.
3. The Audit and Supervisory Committee shall regularly share information and exchange views with the internal audit department.
4. When Audit and Supervisory Committee members request advance payment or reimbursement of expenses in connection with the execution of their duties, the Company shall promptly pay such expenses or obligations, unless it is demonstrated that the relevant expenses or obligations are not necessary for the performance of their duties.