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Matters Regarding Governance of Investment Corporation

The Investment Corporation will have one or more executive directors and two or more supervisory directors (the number of the supervisory directors will be the number of the executive directors plus 1 or more) (Article 33 of the Articles of Incorporation).

As of the date of this Report, the organization of the Investment Corporation consists of the general meeting of unitholders, composed of unitholders, and one executive director, two supervisory directors, the board of directors, and one accounting auditor.

1. General Meeting of Unitholders
   

   Certain matters regarding the Investment Corporation set forth in the Investment Trust Law or the Articles of Incorporation will be determined at the general meetings of unitholders, which are composed of unitholders. Although the resolutions at the Investment Corporation’s general meetings of unitholders will, in principle, be adopted by a majority of the voting rights of the unitholders present (Article 47 of the Articles of Incorporation), amendments to the Articles of Incorporation (Article 140 of the Investment Trust Law) and other resolutions set out in Article 93-2, Paragraph 2 of the Investment Trust Law will be adopted by a majority of two-thirds or more of the voting rights of the unitholders present, who hold a majority of outstanding units (special resolution). However, in the event any unitholder fails to attend the general meeting of unitholders and does not exercise its voting right, the Investment Corporation will deem that such unitholder approves any agenda item presented to the general meeting of unitholders (excluding any agenda items proposed that have conflicting purposes) (Article 93, Paragraph 1 of the Investment Trust Law and Article 48 of the Articles of Incorporation).

   The Investment Corporation’s investment policies and criteria are provided in the Articles of Incorporation. Any amendment to the investment policies or criteria stipulated in the Articles of Incorporation is required to be made by amendment to the Articles of Incorporation by special resolution at the general meetings of unitholders, as described above.

   The Investment Corporation has entered into the Asset Management Agreement with the Asset Manager and has delegated business regarding the management of the Investment Corporation’s assets. The Asset Manager is required to obtain consent from the Investment Corporation to terminate the Asset Management Agreement and the executive director is, in principle, required to obtain approval from the general meeting of unitholders in order to give such consent to the Asset Manager (Article 205 of the Investment Trust Law). The Investment Corporation is also, in principle, required to have a resolution at the general meetings of unitholders to terminate the Asset Management Agreement (Article 206, Paragraph 1 of the Investment Trust Law).

2. Executive Director, Supervisory Director and Board of Directors
   

   The executive director has the authority to conduct any of the Investment Corporation’s business and perform in or outside of court any act regarding any of the Investment Corporation’s business as a representative of the Investment Corporation (Article 109, Paragraph 1 and Paragraph 5 of the Investment Trust Law and Article 349, Paragraph 4 of the Company Law (Law No. 86 of 2005, as amended) (the “Company Law”)). However, the executive director is required to obtain approval from the board of directors to give consent to the termination of the Asset Management Agreement by the Asset Manager, to convene general meetings of unitholders, to delegate administrative business to the General Administrator, to execute asset management agreements or asset custody agreements, or to conduct certain other business set forth in the Investment Trust Law (Article 109, Paragraph 2 of the Investment Trust Law). The supervisory director has the authority to supervise the executive director’s performance of its duties (Article 111, Paragraph 1 of the Investment Trust Law). The board of directors consists of the executive director and the supervisory directors. The board of directors has the authority to give the approval set forth above regarding the executive director’s performance of certain duties (Article 109, Paragraph 2 of the Investment Trust Law) as well as the authority set forth in the Investment Trust Law and the Articles of Incorporation, and the authority to supervise the executive director’s performance of its duties (Article 114, Paragraph 1 of the Investment Trust Law). The resolutions of the board of directors will be adopted by a majority of the members present, which constitute a majority of all the members entitled to vote (Article 115, Paragraph 1 of the Investment Trust Law, Article 369, Paragraph 1 of the Company Law, and Article 37 of the Articles of Incorporation). Any executive director or supervisory director who has special interest in a resolution may not participate in such resolution and in that case such executive director or supervisory director will not be included in the number of officers present (Article 115, Paragraph 1 of the Investment Trust Law and Article 369, Paragraph 2 of the Company Law).

3. Accounting Auditor
   

   The Investment Corporation has appointed PricewaterhouseCoopers Aarata as the accounting auditor. The accounting auditor will audit the accounts and other financial documents of the Investment Corporation (Article 115-2, Paragraph 1 of the Investment Trust Law), report to the supervisory directors if it discovers any fraudulent act or material fact constituting a breach of any law, ordinance, or the Articles of Incorporation in relation to any executive director’s performance of its duties, and will perform any other duties set out in laws and ordinances (Article 115-3, Paragraph 1 of the Investment Trust Law).

1. The Investment Corporation is operated by the board of directors, consisting of one executive director and two supervisory directors. The board of directors will prepare a schedule for six months at the beginning of the fiscal year and secure the dates so that all members may be present at the meetings of the board of directors which will in principle be held twice each month. The Investment Corporation requests that the consultant law firm attends every meeting of the board of directors, in principle, in order to strengthen the supervisory function regarding compliance with laws and ordinances, holding sufficient discussions regarding the situation of compliance with laws and ordinances and the internal management system. As of the date of this Report, one attorney and one certified public accountant have been appointed as the supervisory directors of the Investment Corporation and each supervisory director fulfills its supervisory function regarding the executive director’s performance of its duties from their respective expert perspectives.

1. Each supervisory director receives the reports regarding the status of the business and assets of the Investment Corporation from the executive director and the Asset Manager at the meetings of the board of directors and conducts the supervisory business regarding the executive director’s performance of its duties by carrying out the business audit led by the supervisory directors using outside professionals in order to improve effectiveness of the supervisory function.
2. In addition, the accounting auditor not only audits the Investment Corporation’s accounts and other financial documents, reports to the supervisory directors if it discovers any executive officer’s fraudulent act or material fact constituting a breach of any law, ordinance, or the Articles of Incorporation, and performs any other duties set out in laws and ordinances, but also attempts to construct mutual cooperation with the supervisory directors by attending the meetings of the board of directors concerning resolutions of approval of financial statements.

1. The Investment Corporation requests from the Asset Manager reports on the management situation and an explanation of each item on the agenda relating to asset management from the Asset Manager and confirms the situation regarding the asset management business conducted by the Asset Manager at the meetings of the board of directors. As stated above, the Investment Corporation requests that the consultant law firm attends every meeting of the board of directors, in principle, in order to strengthen the supervisory function regarding compliance with laws and ordinances and also requests that the accounting auditor, as well as the consultant law firm, attends meetings of the board of directors held to approve financial documents, holding sufficient discussions regarding the situation of compliance with laws and ordinances and the internal management system.
2. In addition, the Investment Corporation causes the General Administrator and the Custodian to periodically report the situation regarding performance, compliance with laws and ordinances, and the internal management system once every six months.
3. The Investment Corporation conducts the business audit, as set out above, (which applies to the Asset Manager, the General Administrator, and the Custodian) led by the supervisory directors using outside professionals in order to improve effectiveness of their supervisory function.