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PARCO constantly works to strengthen its corporate governance,　recognizing that to enhance its corporate value it is essential for it to protect the rights and earnings of shareholders, build smooth relationships with stakeholders other than shareholders, preserve transparency in management and establish an effective management oversight structure. PARCO has adopted the “Company with Committees” system in order to make a clear distinction between supervision and execution in management, build a highly transparent corporate governance structure, and establish a means of quick decision-making and business execution.

As part of its measures for the compliance structure, PARCO has implemented an internal awareness program that includes formulation of the Basic Principles of Compliance, and a Code of Conduct, which all employees are expected to adhere to and follow, and distribution of the PARCO Employee Handbook incorporating management principles, ten action guidelines designed to ensure application of these principles, as well as compliance guidelines. Also, in consideration of compliancy and risk management, we have set up an internal reporting system to protect the persons providing information from any negative consequences that might arise from disclosure.

PARCO has established a Risk Management Committee chaired by the Administration Division general manager, to provide cross-organizational monitoring of various risks, company-wide response, and general control. We have also established a CSR Committee, chaired by the president and representative director, which coordinates activity with the Risk Management Committee as necessary, to control and efficiently implement risk management and other CSR activities, increasing the speed and effectiveness of conduct.

The Business Strategy Office and the Corporate Planning Office seek to increase the corporate value of the entire group, work to develop and foster businesses that provide new sources of earnings, and promote strengthening of corporate governance. Their roles are to oversee implementation of the Five-Year Medium-Term Management Plan at each of PARCO’s group companies, to coordinate public relations based on the management plan, and to increase the corporate value of the entire group as a management supervision audit organ. The Corporate Planning Office also provides administrative functions for the CSR Committee, and works to build a CSR structure in cooperation with affiliated departments.

PARCO believes that the decision whether or not to accept or decline a large-scale offer to purchase shares from a particular party should be left to the judgment of shareholders. However, we also feel that appropriate and sufficient disclosure from both the party making the offer and PARCO’s Board of Directors is essential to make a proper decision, and accordingly, have established rules for advance disclosure of information and other requirements. This policy was adopted upon approval by the General Meeting of Shareholders held on May 24, 2008. In principle, this policy will remain in effect until the conclusion of the General Meeting of Shareholders scheduled for May 2011.

PARCO will establish a special committee separate and independent from the Board of Directors in order to protect the objectivity and rationality of procedures taken in line with its rules governing large-scale share purchase offers. PARCO’s external directors will become members of this special committee. If the special committee recommends the activation of defensive measures to the Board of Directors in order to protect the interests of all shareholders, PARCO’s directors will ultimately determine whether or not defensive measures are required, giving maximum respect to the special committee’s recommendations.