Non-financial Information(ESG)

Initiatives to Comply with the Code

Reasons for not implementing each principle of the Corporate Governance Code

[Principle 2-4. Ensuring diversity within the Company, including an increased presence of female workers]

Supplementary Principle 2-4-1
At the Company, we believe that it is essential to be a company that allows all employees to actively work and exercise their talents to the maximum degree. In the Guidelines to the Code of Ethics for Makita, which serves as a code of conduct for all officers and employees of the Makita Group, we have included a statement to the effect that we respect the diversity of individuals and are, in fact, working to ensure that diverse human resources can play active roles. To this end, we seek to actively develop human resources and ensure a work environment where diverse human resources can work actively with peace of mind. The details are disclosed in our integrated report, the Makita Report.
Currently, our goal is to increase the number of women in management positions. We do not set targets for foreign nationals and mid-career hires, but we ensure a fair personnel policy that includes women, and make no distinction in terms of hiring, placement, promotion, or any other personnel operations, and we believe that we have an environment where motivated people can play active roles. Meanwhile, the Makita Group has an overseas sales ratio of over 80%, and employees of foreign nationalities are active in the entire Group, which operates globally. This is evidenced by the fact that employees from overseas subsidiaries have been promoted to corporate officer positions at the Company. In addition, more than 190 women have been appointed to management positions overseas. We will continue our efforts to become a company where diverse human resources can play active roles.

[Principle 4-11 Preconditions for Ensuring the Effectiveness of the Board of Directors and the Audit & Supervisory Board]

Directors of the Company, regardless of age, gender, or nationality, shall be appointed from among those who can contribute to the enhancement of its corporate value. Currently, the Company has no female Directors. We have appointed Internal Directors (excluding Director who is Audit & Supervisory Committee Member) who have the ability to formulate and execute management strategies based on their own experience and insight, Outside Directors (excluding Directors who are Audit & Supervisory Committee Members) who have a wealth of experience and broad insight in corporate management, and Directors who are Audit & Supervisory Committee Members who have internal and external work experience and a wealth of experience and insight in various fields, including finance, accounting and legal affairs. Moreover, a number of Directors with overseas experience are in office. We, therefore, believe that the Board of Directors as a whole is functioning as an effective organization that ensures an appropriate balance and diversity of knowledge, experience and ability. However, we will positively consider appointing female Directors and increase the number of female workers in management positions who will be candidates for Directors in the future. We also believe that the current Board of Directors is of an appropriate size to enable prompt decision-making.

Disclosures Based on Each Principle of the Corporate Governance Code

[Principle 1-4 Strategic Shareholding]

The Company holds shares of various companies, including clients and associates in business relationships, for strategic purposes from a medium- to long-term perspective, based on the criteria of whether or not the shares are beneficial for business execution, such as strengthening relationships with clients and business partners. In addition, the Board of Directors regularly examines the economic rationality and other factors of each individual stock based on the significance of holding the stock and the capital cost, and verifies the appropriateness of such holding from a medium- to long-term perspective. As a result of the verification, we will consider selling stocks for which the appropriateness of holding is not recognized, and work to reduce the amount.
We will make decisions on the exercise of voting rights from a comprehensive perspective, based on such factors as the improvement of corporate value at the investee company and the strengthening of the relationship with the Company.

[Principle 1-7 Transactions with Related Parties]

Regarding transactions involving conflicts of interest between the Company and its Directors, the Company shall obtain the approval of the Board of Directors in accordance with laws and regulations and the Regulations of the Board of Directors, as well as the approval of the Audit & Supervisory Committee, in principle. With regard to other related party transactions, procedures shall be established in accordance with the importance and nature of the transaction. In addition, we conduct an annual survey of Directors and personnel responsible for subsidiaries to confirm whether or not there are any related party transactions.

[Principle 2-6 Fulfilling the Function as Corporate Pension Asset Owner]

The Company’s corporate pension fund is managed by the Makita Corporate Pension Fund.
For the Fund, decisions on investment policies and strategic asset composition ratios for safe and efficient management are deliberated by the Asset Management Committee (including labor union representatives), which consists of personnel with sufficient experience and appropriate qualifications in finance, human resources and other fields. After the deliberation, such decisions are made by the Board of Delegates, the highest decision-making body consisting of representatives of both the Company and its employees.
Management of funds is entrusted to major trust banks, life insurance companies and investment management companies in Japan. The Fund regularly monitors the management status by receiving monthly reports on the investment results from all the investment institutions as well as quarterly direct reports from them.

[Principle 3-1 Enhancement of Information Disclosure]

• (1) Makita’s objectives (management philosophy, etc.), management strategies, and management plans Management Policy / Quality Policy
  1) Makita strives to exist in harmony with society (a company that observes laws and regulations, acts ethically and never allows the intervention of anti-social organizations).
  2) Makita values its customers (a market-driven company).
  3) Makita is managed in a consistent and proactive manner (a company that strives to exist in perpetuity by adhering to a sound profit structure).
  4) Valuing a stalwart corporate culture, Makita encourages each individual to perform to his highest level (a happy company).
  

• (2) Basic Philosophy and Policy for Corporate Governance The Company believes that the most important issue is to achieve unending development together with its various stakeholders. In order to achieve this, we have established a management policy/quality policy and are working to strengthen and enhance our corporate governance. From this perspective, we will work to maintain and improve the fairness and transparency of our management by striving to enhance management transparency and management checking functions, as well as proactively and promptly disclosing information.

• (3) Determination of Compensation for Management Executives and Directors Please refer to "Decision-Making Policy on Compensation for Directors" of Corporate Governance page.
  

• (4)Dismissal of Management Executives and Nomination of Candidates for Directors and Audit & Supervisory Board Members The Board of Directors of the Company strives to have a well-balanced mix of knowledge, experience, and ability as a whole, to achieve both diversity and appropriate size, and to have a ratio of Independent Outside Directors of at least one-third.
  We believe that it is necessary to appoint as Internal Directors (excluding Directors who are Audit & Supervisory Committee Members) those who have the ability to formulate and execute management strategies based on their own experience and insight, including a wealth of experience in the Company’s operations, and as Outside Directors (excluding Directors who are Audit & Supervisory Committee Members) those who have a wealth of experience and broad insight in corporate management. We also believe that it is necessary for Directors who are Audit & Supervisory Committee Members to be appointed from among those who have internal and external work experience and a wealth of experience and insight in various fields, including finance, accounting and legal affairs, and that at least one of them is required to have a wealth of experience and insight in finance, accounting and other fields.
  The Company has established the Nomination and Compensation Committee for the purpose of ensuring objectivity, transparency, and fairness in procedures related to the nomination and other matters concerning Directors, etc. (excluding Directors who are Audit & Supervisory Committee Members), as well as further enhancing the corporate governance system, by obtaining appropriate involvement and advice from Independent Outside Directors. The Board of Directors consults with the Nomination and Compensation Committee regarding the policy on the nomination of Directors, etc. (excluding Directors who are Audit & Supervisory Committee Members) and matters related to the appointment of Directors, etc. (excluding Directors who are Audit & Supervisory Committee Members), and decides on candidates based on the advice from the Nomination and Compensation Committee. With respect to Directors who are Audit & Supervisory Committee Members, candidates are determined by a resolution of the Board of Directors after obtaining the consent of the Audit & Supervisory Committee.
  In the event that a Director (excluding a Director who is an Audit & Supervisory Committee Member) violates the criteria for dismissal set by the Board of Directors, such as an act that is suspected to be unfair, unjust or treacherous, the Board of Directors will consult with the Nomination and Compensation Committee regarding the dismissal of the relevant Director. Based on the advice from the Nomination and Compensation Committee, the Board of Directors will decide to submit a proposal for the dismissal of the relevant Director to the General Meeting of Shareholders.

• (5) Explanation of Dismissal and Nomination The Company appoints and nominates the most suitable candidates for Directors in accordance with the policy described in (4) above. The reasons for nominating Directors, their backgrounds, and other matters are disclosed in the reference documents of the Notice of the General Meeting of Shareholders.

Supplementary Principle 3-1-3
As a global supplier of a comprehensive range of tools for creating comfortable homes and living environments, Makita places great importance on contributing to realizing a sustainable society. In 2021, Makita established the new Sustainability Committee, chaired by the President, to further promote sustainability throughout the Company. Our sustainability initiatives are disclosed in our integrated report, the Makita Report, which refer to international frameworks such as the International Integrated Reporting Council (IIRC). We have already expressed our support for the TCFD recommendations and are currently working on its disclosure.
In terms of investments in human capital and intellectual property, in order to evolve into a supplier of a comprehensive range of cordless products, we are actively hiring and training personnel with an eye to expanding our sales and also strengthening research and development to expand our lineup of cordless products. These efforts are also disclosed in the Makita Report.

[Principle 4-1 Roles and Responsibilities of the Board of Directors (1)]

Supplementary Principle 4-1-1
The Board of Directors of the Company decides on important management matters, including decisions on management policies and business plans, the conclusion of important agreements, and the establishment of subsidiaries in accordance with the Regulations of the Board of Directors, in addition to matters stipulated by laws and regulations and the Articles of Incorporation.
For other matters related to the execution of operations below a certain scale, judgments and decisions are delegated to the Representative Directors and the respective Directors in charge in accordance with internal regulations.

[Principle 4-9 Criteria on Independence and Qualifications as Independent Outside Directors]

In determining independence, the Company follows the independence criteria stipulated by financial instruments exchanges as well as the standard that he or she has not held office in the Company as an Independent Officer for a long period of time.

[Principle 4-10: Use of Optional Approach]

Supplementary Principle 4-10-1
Makita has established the Nomination and Compensation Committee to ensure the objectivity, transparency, and fairness of procedures relating to the nomination, etc. and compensation, etc. of Directors (excluding Directors who are Audit & Supervisory Committee Members), etc., and to further enhance its corporate governance system by obtaining the appropriate involvement and advice of Independent Outside Directors. Please refer to "Nomination and Compensation Committee" of Corporate Governance page for details.

[Principle 4-11 Preconditions for Securing the Effectiveness of the Board of Directors and the Audit & Supervisory Board]

Supplementary Principle 4-11-1
For policies and procedures regarding the election of Directors, please refer to [Principle 3-1: Enhancement of Information Disclosure] (4) above. The skill matrix that lists the knowledge, experience, abilities, and other aspects of the Directors is disclosed in the reference documents of the Notice of Convocation of the General Meeting of Shareholders. In addition, the Company has decided to appoint persons with a wealth of experience and broad insights in the field of corporate management to the position of Outside Director (excluding Directors who are Audit & Supervisory Committee Members), and has appointed persons who have management experience at other companies.

Supplementary Principle 4-11-2
The Company believes that the status of its Directors holding concurrent positions as officers at other listed companies is within a reasonable range. The status of concurrent positions of Directors is disclosed in the Notice of Convocation of the General Meeting of Shareholders and the securities reports.

Supplementary Principle 4-11-3
Every year, the Company conducts a self-evaluation of the effectiveness of the Board of Directors by each Director in the form of a questionnaire.
As a result of analyzing the effectiveness evaluation for FYE2021, the Company assessed that its Board of Directors is generally functioning appropriately and that the effectiveness of the Board of Directors is ensured in terms of its composition, operation, supervisory function, and response to shareholders and stakeholders.

[Principle 4-14 Training for Directors and Audit & Supervisory Board Members]

Supplementary Principle 4-14-2
In order for Directors to appropriately fulfill their expected roles and responsibilities, lectures and briefing sessions on the Companies Act, corporate governance, compliance and other topics are held by lawyers and other outside experts. In addition, opportunities are provided for Directors to participate in outside seminars as necessary.
Furthermore, when new Outside Directors assume office, the Company strives to create an environment in which they can effectively fulfill their roles and responsibilities by providing explanations of its management policies, business operations, management environment and other matters.

[Principle 5-1 Policy for Constructive Dialogue with Shareholders]

The Company has adopted the following frameworks and policies to facilitate constructive dialogue with shareholders.

• (1) The Director, Corporate Officer and General Manager of Administration Headquarters oversees overall dialogue with shareholders.

• (2) The accounting & finance, legal, and internal audit departments, led by the department in charge of IR, work together to promote constructive dialogue with shareholders by reviewing and sharing disclosure information and preparing disclosure materials. In addition, we have established the Disclosure Committee consisting of the General Managers of each department to deliberate on the content of disclosure, thereby striving to disclose information in an appropriate and responsible manner.

• (3) In order to promote understanding of the Company, we hold financial results presentations, conference calls and other meetings for analysts and institutional investors.

• (4) The opinions of shareholders and other information obtained through dialogue will be fed back to the management team, as necessary.

• (5) We comply with internal regulations for the management of insider information and strive to engage in appropriate dialogue with shareholders. In addition, we restrict dialogue with investors and securities analysts for a certain period as a silent period prior to the announcement of financial results.

[For reference] Measures for Stakeholders

The Status of Initiatives for Revitalizing the General Meeting of Shareholders and Facilitating the Exercising of Voting Rights

	Supplementary explanations
Early Dispatch of Convocation Notice of General Meeting of Shareholders	Notices are sent out approximately three weeks prior to the date of the General Meeting of Shareholders. The information is posted on the Company’s website and on the voting rights exercise platform provided by ICJ, Inc. prior to the date of dispatch.
Allowing Electronic Exercise of Voting Rights	The Company has adopted the exercise of voting rights via the Internet.
Participation in Electronic Voting Platforms and Other Measures to Improve the Environment for Institutional Investors to Exercise Voting Rights	The Company has adopted the electronic voting rights exercise platform for institutional investors operated by ICJ Inc.
Providing Convocation Notice (Summary) in English	The Company prepares the convocation notice in English and posts it on its website and the voting rights exercise platform provided by ICJ, Inc. prior to the date of dispatch.
Other	For the convenience of shareholders, the Articles of Incorporation and Share Handling Regulations are posted on the Company’s website. In addition, the full texts of convocation notices for 10 periods are posted on the website together with the English texts.

Status of IR-Related Activities

	Supplementary explanations	Explanations by Representative
Regular Investor Briefings for Analysts and Institutional Investors	The President, who is at the top of the management team, personally gives explanations at the financial results briefing held twice a year (at the end of the fiscal year and the end of the interim period). At the time of the announcement of the first and third quarter financial results, the Director, Corporate Officer and General Manager of Administration Headquarters (the officer in charge of IR) conducts a briefing session via conference call.	Yes
Posting of IR Materials on Website	In addition to the immediate disclosure of financial results, securities reports, extraordinary reports, materials for financial results briefings, press release materials and others on its website, the Company posts corporate governance reports, notices of convocation, business reports for shareholders, Makita Report (Integrated Report), and other such materials. (https://www.makita.co.jp/) Financial results information, press releases, and corporate governance reports are translated into English and simultaneously disclosed on the website. Furthermore, in addition to the consolidated financial statements and notes, major items in the securities reports, such as “Risk Factors,” are translated into English and posted as “Additional Information” to provide information to overseas investors.	-
Establishment of Department (Person in Charge) of IR	Officer in charge of IR: Yukihiro Otsu, Director, Corporate Officer, General Manager of Administration Headquarters Department in charge of IR: General Affairs Department (TEL: +81-566-97-1717)	-

The Status of Initiatives Relating to Respecting the Position of Stakeholders

	Supplementary explanations
Stipulation of Internal Regulations for Respecting the Position of Stakeholders	The Company has established the “Code of Ethics” as the principles for officers and employees, which stipulates conducts in accordance with ethics, prohibition of conflicts of interest, compliance with relevant laws and regulations, and appropriate information disclosure. In addition, as a measure to ensure corporate ethics and compliance, we have established the Internal Reporting Regulations and contact points (help lines) to collect opinions and information from inside and outside the Company.
Implementation of Environmental Conservation Activities, CSR Activities, etc.	The Company prepares environmental reports, corporate profile, and Makita Report (Integrated Report) to introduce its environmental conservation activities and CSR activities. These are posted on its website.