Appointment Guideline for Outside Directors

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Appointment Guideline for Outside Directors

Appointment Guidelines for Outside Directors and Audit and Supervisory Board Members

The Daito Group’s outside directors and Audit and Supervisory Board members, and candidates for those positions, satisfy the following criteria:

1.Be able to directly supervise the deliberations and decision-making of the Board of Directors on key issues—for example, issues related to management, corporate law, and governance.

2.Be able to reflect their own knowledge and expertise to formulate growth strategies, determine management strategies, and achieve medium-term management plans.

3.Be able to offer advice and leadership based on their own knowledge, expertise and experience regarding other issues related to corporate management.

Standards for the Independence of Outside Directors and Audit and Supervisory Board Members

To ensure the independence of outside directors and Audit and Supervisory Board members (or candidates for those positions), those persons must not fall under any of the following categories. The periods for which these criteria apply are: 1) from the unlimited past to the present for Category 1 and 2) from the past 10 years to the present for Categories 2 to 5.

1Daito Group affiliate

The individual is not a director (unless an outside director), a member of the Audit and Supervisory Board (unless an outside board member), an accounting advisor, an executive officer, or an employee of Daito Trust, a subsidiary, or an affiliated company.

2Holder of voting shares

1)The individual is not a major shareholder (holding a 10% or greater share) of Daito Trust or an executive or employee of any major shareholder.

2)The individual is not an executive or employee of a company for which the Daito Group is a major shareholder (holding a 10% or greater share).

3Business partner affiliate

1)The individual is not an executive or employee of a business partner whose transactions with the Daito Group account for 2% or more of consolidated net sales.

2)The individual is not an executive or employee of a financial institution from which the Daito Group borrows capital amounting to 2% or more of Daito Trust’s consolidated gross assets.

3)The individual is not an executive or employee of the Daito Group’s main securities company.

4Provider of specialized services (lawyer, certified public accountant, consultant, etc.)

1)The individual is not an employee or a partner of the Daito Group’s certified public accountant’s firm or of an auditing firm that acts as the independent auditor.

2)The individual does not receive \10 million or more a year from the Daito Group (apart from director or board member compensation) for his/her services as a lawyer, certified public accountant, tax accountant, or consultant.

5Others

1)The individual is not a relative within two degrees of kinship of people falling under the Categories 1 to 4 above.

2)The individual is not an executive or employee of a company that has one or more directors holding a post in the Daito Group.

3)The individual is not an executive or employee of a company that holds shares in the Daito Group.