Message from the Chair of the Board of Directors

In the ten years since we published our Corporate Governance Code, Joshin has continuously worked to bolster our governance structure. Regretfully, these structural enhancement efforts have not always been adequately successful; because we have not fully lived up to the expectations of all of our stakeholders, a resolution was passed at the June 2025 General Meeting of Shareholders to transition to a company with an Audit and Supervisory Committee.

Aiming to achieve sustained growth and enhanced corporate value over the medium to long term, Joshin has implemented a variety of initiatives including ensuring diversity on the Board of Directors, carrying out nomination and compensation system reforms based on the recommendations of outside directors, and bolstering the supervisory functions of the Board of Directors. (See “History of Enhancing Corporate Governance” on p. 42)

     However, the previous medium-term management plan (JT-2023 Management Plan) failed to meet targets, and in FY2024, the Company has also been forced to drastically cut performance estimates in the current medium-term management plan (JT-2025 Management Plan) due to sluggish results in the home appliances category, a major driver at the Company. It is clear that the Company’s growth strategy, needed to enhance corporate value, is not being fulfilled. Based on this state of affairs, it is my view as the Chair of the Board of Directors that the Company’s governance structure is facing the following issues.

• The Board of Directors makes decisions on most matters related to business execution, which slows down the decision-making process.
• Although there is diversity on the Board of Directors, the outside directors’ viewpoints are not being fully utilized in discussions on growth strategy.
• Insufficient coordination between the Board of Directors and the business-executing departments results in a bias towards shortterm business execution in Board of Directors deliberations and an inability to focus discussion on medium- to long-term growth strategy.

     The FY2024 evaluation of Board of Directors effectiveness (see “Evaluation of the Effectiveness of the Board of Directors” on p. 51) also stated that strengthening Board of Directors functions is an urgent priority issue.

The Board of Directors established the following policies to tackle these
issues.

• Largely delegating decision-making authority over business execution to speed up decision-making and bolster supervisory functions
• The Board of Directors will prioritize key items that contribute to improving corporate value, e.g. medium- to long-term management strategy and capital strategy.

     company with a Board of Auditors to a company with an Audit and
Supervisory Committee, and the Board of Directors will focus on the
following two initiatives.

1. Deeper medium- to long-term growth strategy with promotion of capital-cost-conscious efficient management (ongoing initiative)
2. Enhance the Board of Directors’ monitoring functions and ability to respond flexibly and quickly (new initiative)

     Along with the transition to being a company with an Audit and Supervisory Committee, the Board of Directors is now made up of 75.0% outside directors and 50.0% female directors, which represents major changes to Board composition. However, it will not be possible to improve the effectiveness of the Board of Directors through formal changes alone.

     The issue is less that the previous Board of Directors did not function properly and more that this major delegation of authority by the Board of Directors has created a clear separation between the business execution and supervisory functions. On this present Board, my duty as the Chair is to administer the Board in accordance with those essential functions with the aim of making Joshin a company trusted by all stakeholders and vital to society.

     Moving forward, the business-executing departments will bolster their policy-making and implementation capabilities, while the Board of Directors strengthens our monitoring functions and engages in intensive discussions on medium- to long-term growth strategy that fully draws on the expertise of outside directors. To achieve this, the Board of Directors formulated an annual agenda for meeting topics and is systematically and steadily pushing forward with implementation.

     Moving forward, I am unwavering in my commitment as the Chair of the Board of Directors to have the Board engage in intensive discussions about key issues that contribute to sustained improvement of corporate value, thereby further enhancing the Board’s effectiveness on an ongoing basis.