Corporate Governance System

• Corporate Governance Structure
• Overview of Corporate Governance System
• Cooperation among Audit & Supervisory Committee Members, the Independent Auditor, and the Audit Department
• Reasons the Current Corporate Governance System was Selected

Corporate Governance Structure

Overview of Corporate Governance System

In addition to the General Meeting of Shareholders, the Board of Directors, and the Audit & Supervisory Committee defined in the Companies Act, Akebono has established important deliberative bodies such as the Management Conference and the Board of Executive Officers in order to build a mechanism for improving the efficiency of management through sufficient advance deliberation of important issues. Furthermore, to complement the functions of the Board of Directors and strengthen the transparency and soundness of management, Akebono has established the Director Nomination Advisory Committee and the Director Remuneration Advisory Committee.

Board of Directors

The Board of Directors shall determine important matters and supervise the execution of duties in accordance with laws and regulations, the articles of incorporation, "Provisions for the Board of Directors", and other internal company rules. The Board of Directors is chaired by the Representative Director and consists of two Inside Directors and four Outside Directors to establish a management monitoring system. All Directors, including the Representative Director, attend the Board of Directors meeting. As a general rule, regular meetings of the Board of Directors are held once a month, and extraordinary meetings are held as necessary.

Audit & Supervisory Committee

The Audit & Supervisory Committee shall audit the appropriateness of the Directors' execution of duties in accordance with the "Audit & Supervisory Committee Regulations", etc. The Audit & Supervisory Committee is composed of four highly Independent Outside Directors, including corporate executives, persons with corporate management experience, and attorneys at law. These appointments ensure audits from a more independent position, which work to strengthen the management auditing function.

As a general rule, regular meetings of the Audit & Supervisory Committee are held once a month, and extraordinary meetings are held as necessary.

The Audit & Supervisory Committee receives explanations and exchanges opinions with the Independent Auditor as appropriate regarding the audits for the fiscal year. The Committee also receives reports from the Internal Audit Office, the department in charge of internal audits, as appropriate regarding the audit plan, its progress and results, and provides advice and instructions to enhance the audit function. In addition, the Audit & Supervisory Committee conducts sufficient audits by collecting information from the Internal Control Office, which is the department in charge of internal control.

Management Conference

In accordance with the "Provisions for the Management Conference," the Management Conference deliberates, decides, or approves matters related to important management policies, management plans based on management policies, and other important matters to be discussed at the Board of Directors meetings that require prior deliberation. However, the matters determined at the Management Conference shall be escalated to the Board of Directors and approved.

The Management Conference is chaired by Mr. Yasuhiro Miyaji and consists of four other Executive Officers (Mr. Masaaki Ando, Mr. Keiichi Oka, Mr. Seiji Nishimura, and Mr. Takefumi Usami) appointed by the chairperson, and the standing Audit & Supervisory Committee Members may attend meetings and express opinions.

As a general rule, meetings are held at least once a month, and extraordinary meetings are held as necessary.

Board of Executive Officers

The Board of Executive Officers is responsible for reporting and explaining the status of execution of duties by Executive Officers in accordance with the "Executive Officer Regulations," sharing matters approved by the Board of Directors among Executive Officers, discussing and confirming matters necessary for business execution, sharing information related to important management matters, and reporting on the progress of matters approved by the Board of Directors or the Management Conference.

The Board is chaired by Mr. Yasuhiro Miyaji and consists of all Executive Officers and persons designated by the chairperson. As a general rule, meetings are held at least once a month, and extraordinary meetings are held as necessary.

Director Nomination Advisory Committee

The Director Nomination Advisory Committee shall formulate selection criteria for Directors and Executive Officers, including outside members, nominate candidates, and conduct appropriate deliberation in the selection and development plans of successor candidates such as for Chief Executive Officer, together with reporting to the Board of Directors.

The Committee is composed of Outside Directors Mr. Hiroaki Tanji, Mr. Yuichi Hiromoto, Mr. Shigeyuki Kawamoto, and the President, Mr. Yasuhiro Miyaji, with Mr. Hiroaki Tanji serving as Chairperson. As a general rule, meetings are held once every six months, and extraordinary meetings are held as necessary.

Director Remuneration Advisory Committee

The Director Remuneration Advisory Committee shall deliberate the settings of determination of the individual remuneration structure of Directors (excluding Directors who are Audit & Supervisory Committee Members) and Executive Officers, detail of individual remuneration, the remuneration system design, together with reporting to the Board of Directors.

The Committee is composed of Outside Directors, Mr. Hiroaki Tanji, Mr. Yuichi Hiromoto, Mr. Shigeyuki Kawamoto, and the President, Mr. Yasuhiro Miyaji, with Mr. Hiroaki Tanji serving as Chairperson. As a general rule, meetings are held once every six months, and extraordinary meetings are held as necessary.

Outline of Akebono's Corporate Governance Structure

Type of governance model	A company with an Audit & Supervisory Committee
Executive Officer System	Yes
Number of directors stipulated by the articles of incorporation	12
Director's term stipulated by the articles of incorporationn	1 year
Chairman of the Board	President
Number of acting directors	6
Of whom, outside directors	4
Of whom, those registered as independent directors	3

Cooperation among Audit & Supervisory Committee Members, the Independent Auditor, and the Audit Department

The Audit & Supervisory Committee Members and the Audit & Supervisory Committee receive reports directly from the Internal Audit Office on a quarterly basis regarding the annual audit plan, internal audit result, and assessment of internal control over financial reporting, and the Audit & Supervisory Committee receives instructions to conduct investigations if necessary for collaboration. In addition, the Internal Audit Office and the Independent Auditor have meetings as needed regarding the audit plan and results about assessment of internal control over financial reporting.

The Audit & Supervisory Committee receives explanations and exchanges opinions with the Independent Auditor as appropriate regarding the audit system, audit plan, key audit matters (KAM), and audit implementation status.

Reasons the Current Corporate Governance System was Selected

Akebono established the following corporate mission: "Through 'Friction and Vibration, their Control and Analysis,' we are determined to protect, grow and support every individual life". Under this corporate mission, we aim to create new value through monozukuri (manufacturing excellence) and further enhance corporate and shareholder value. In addition, as a manufacturer of critical safety parts, we believe that it is important to maintain and promote healthy and beneficial relationships with all stakeholders including customers, shareholders, suppliers, our employees, and the regional communities in order to achieve sustainable growth and development.

To accomplish this, we have recognized that the strengthening of corporate governance is an issue of the utmost importance. Akebono has adopted the governance structure of a company with an Audit & Supervisory Committee to further strengthen corporate governance and enhance corporate value by enabling faster decision-making and further enhancing the supervisory function of the Board of Directors through measures such as allowing Directors who are Audit & Supervisory Committee Members to vote at the Board of Directors meetings.

In addition, Akebono established the "Internal Control Committee" for the purpose of effective and appropriate operation of the Group's internal control system. The Internal Control Committee continuously reviews and improves the overall operation of the system and reports the implementation status to the Board of Directors and the Audit & Supervisory Committee.

Under these systems, Akebono will further strengthen corporate governance and enhance corporate value.