Corporate Governance

Board of Corporate Auditors

As permitted under the Companies Act of Japan, (hereinafter the “Companies Act”), we have elected to structure our corporate governance system as a company with a separate board of corporate auditors instead of an audit committee of our board of directors. The composition of the board of corporate auditors and the qualification of the members are as follows:

• Our articles of incorporation provide for no less than three corporate auditors;
• Corporate auditors are elected at general meetings of shareholders;
• The term of office of a corporate auditor is approximately four years (may serve any number of consecutive terms);
• At least one-half of the corporate auditors of a company must be persons who satisfy the requirements for an outside corporate auditor; and
• At least one of the corporate auditors must be a full-time corporate auditor.

Each corporate auditor has a statutory duty to supervise the administration by the directors of our affairs, to examine our financial statements and business reports to be submitted by a representative director at the general meetings of shareholders, and to prepare an audit report. Our corporate auditors are obligated to participate in meetings of our board of directors and, if necessary, to express their opinion at such meetings, but are not entitled to vote. If a corporate auditor finds a violation of statutory regulations or our articles of incorporation, or another significant improper matter, such auditor must report those findings to the shareholders at the shareholders’ meeting.

Furthermore, if a corporate auditor believes that a director has engaged in, or is likely to engage in, misconduct or acts that are significantly improper, or that there has been a violation of statutory regulations or our articles of incorporation, the corporate auditor: (i) must report that fact to our board of directors; (ii) can demand that a director convene a meeting of our board of directors; and (iii) if no such meeting is convened in response to the demand, can convene the meeting under the corporate auditor’s own authority.

Nominating and Compensation Committee

While we will not have a compensation committee or a nominating and corporate governance committee that satisfies the requirements set out under Part 8 of the NYSE American LLC Company Guide because we are a “foreign private issuer” and a “controlled company” within the meaning of the corporate governance standards of NYSE American, our board of directors has opted to establish an advisory nominating and compensation committee to advise the board of director on the matters regarding:

• the election and dismissal of our directors;
• the appointment and dismissal of our executive officers; and
• the compensation of our directors and executive officers.

Under the charter of the Nominating and Compensation Committee, the Nominating and Compensation Committee shall consist of at least three directors with a majority of independent directors and the members shall be appointed by the board of directors.

Governance

LogProstyle has established a basic policy for the internal control system as part of strengthening corporate governance, and in addition to steadily implementing this basic policy, we will strive to further strengthen corporate governance by sending messages from the top management, strengthening compliance education, and expanding the reporting system.