The management of Daiwa House positions corporate governance as an issue of the utmost importance. From the viewpoint of earning the confidence of all our stakeholders — notably our shareholders, customers, and employees — it is vital that we put in place a system ensuring swift and accurate decision-making so as to produce a management system characterized by a high degree of efficiency and transparency. 1. In June 1999, the Company adopted an executive officer system as part of an overall program aimed at strengthening the whole corporation through increased management efficiency. This was followed in June 2002 by the shortening of the term of office of members of the Board of Directors to one year. These two measures both facilitate faster management decision-making and clarify individual responsibilities. 2. To ensure transparent and fair conduct of management, with effect from June 2003 we have increased the number of outside auditors from 2 to 3, giving us a board of corporate auditors of 5 members in all. This measure both strengthens the management´s auditing functions and facilitates the provision of objective advice to our top management. 3. To secure greater public trust through enhanced transparency via the prompt and appropriate disclosure of management information, we will continue to reexamine and refine our disclosure methods. 4. As an important part of our compliance efforts, we recognize it as our duty to take preemptive steps to minimize the risks inherent in our business operations, and in the event of the materialization of risks, to take prompt and effective remedial action. To facilitate these objectives, in April 2002 we set up the Risk Management Committee. By ensuring that all management and staff are thoroughly acquainted with the risks attendant on the Company´s business operations and the means of avoiding and minimizing the said risks, we aim to ensure the smooth operation of our business as a prerequisite to the vigorous and financially sound development of our group.