Corporate Governance

The Board of Directors reflected on Ricoh's founding principles and discussed the ideas and principles of the Board of Directors and the Directors, which are the basis for deliberations, decisions, and actions that contribute to enhancing corporate value. It accordingly established the “Board Culture,” which should be maintained and cultivated by itself explicitly as follows.

The Board of Directors shall:

1. Honor the Spirit of Three Loves, engaging with and respecting the interests of shareholders, customers, employees, partner companies, communities and society, and other stakeholders while overseeing management strategies and plans that help resolve social issues.
2. The chairperson shall objectively lead diverse and highly independent Board members in engaging and constructive deliberations that value a diversity of open and free viewpoints. Management shall faithfully reflect the results of deliberations.
3. Board members shall understand their social responsibilities, make robust decisions for the future, and oversee management's implementation of decisions, so Ricoh can enhance medium- and long-term corporate value by delivering exceptional business growth, capital profitability, and ESG performances.

As the business climate and management structure changing, the Board will constantly refer back to the culture described above in deliberating, making decisions, choosing directors, and engaging with shareholders and other stakeholders.

On April 1, 2021, the Ricoh Group shifted to a business unit structure in order to transform our business structure into a digital services company and further improve returns on capital. Each business unit and headquarters focus on the following functions to improve the Group's overall corporate value.

Business Units:

Autonomous business operations led by the business unit president

Group headquarters:

Planning of medium- to long-term strategies for the entire Group and capital allocation to each business unit Strict business management based on growth potential and return on capital Optimization of cross-functional, expertise, and company-wide perspectives

Based on the adoption of the business unit structure, we are proceeding with the following governance-related initiatives from the perspectives of oversight, execution, and audit:

1. Oversight

   a)

   Oversight of each organization's top management

   • The Board of Directors and the Nomination Committee have carried out performance evaluations of business unit presidents and headquarters function's executive managers.

   b)

   Oversight of business performance

   • The Board of Directors deliberates on the performance status of each business unit on a quarterly basis and monitors invested capital and return on capital.

   c)

   Strengthening of group governance and risk management

   • The Board of Directors is strengthening its monitoring to ensure that internal controls and risk management are functioning properly after transition to a business unit structure, including the delegation of authority to each business unit and the review of affiliate management.

2. Execution

   a)

   Monitoring by CEO/general managers of Group headquarters

   • The CEO and general managers of Group headquarters monitor the status of each business unit's achievement of targets (return on capital, etc.), share timely topics, and discuss issues and countermeasures at monthly business unit management meetings.

   b)

   Conducting portfolio management meetings^* (annually)

   • Profits earned by each business unit will be first consolidated on a Group basis. Resource reallocation policy will be decided at the business portfolio management meeting, which is part of the management meeting (Group Management Committee (GMC)).
   • Each business is analyzed based on the three evaluation criteria of finance, marketability, and compatibility with digital services, and GMC members agree on a business category that establishes resource priorities.
     * Directors attend the portfolio management meeting on a voluntary basis.

   c)

   Internal control/risk management

   Each business unit

   • Planning and implementation of autonomous internal control and each business domain's specific risk management
   • Addressing the Ricoh Group managerial risks in cooperation with the risk management division of Group headquarters

   Group headquarters

   • Initiatives to enhance the sensitivity to risk and strengthen risk management capabilities for risk management promoters in each organization
   • Regular exchanges of information with each business unit and provision of support to resolve individual issues of internal control and risk management identified there
   • Identification of Ricoh Group managerial risks and promotion of risk management

3. Audit

   a)

   Governance by Directors

   • Confirmation of issue recognition and exchanges of opinions through Board of Directors meetings, Outside Executive Meetings, governance review meetings, etc.

   b)

   Headquarters functions

   • Cross-sectional reviews of headquarters functions (HR, general affairs, and legal affairs) distributed across business units
   • Focus on governance of headquarters functions under the business unit structure through regular meetings with the headquarter functions division head

   c)

   Internal control system

   • Monitoring and verification of autonomous internal control, risk management development, operation status, and subsidiary management systems in business units through review of each of the business units and subsidiaries as well as meetings with business unit heads
   • Checking the management structure of subsidiaries and business sites that handle business for multiple business units
   • Confirmation of internal control initiatives by the management team through attendance at the Internal Control Committee
   • Strengthening of audits through collaboration between Audit & Supervisory Board members, the internal audit division and the Independent Auditor (three-way audit)

   d)

   Portfolio management

   • Checking decision-making processes for policies and strategies of each business unit, as well as their progress, through attendance to business portfolio management meetings and each business unit's business management meetings

The Board of Directors is responsible for the supervision of management and making important management decisions for the Group.

With regards to the composition and operation of the Board of Directors, the Company ensures that Independent Outside Directors on the Board of Directors constitute a majority, and the Board of Directors is chaired by an Independent Outside Director, taking into account the principles and attitudes outlined in our Board Culture. Thus, the Company aims to secure transparency in its management and further improve fair decision-making. In fiscal 2023, five (5) of the eight (8) Directors were Independent Outside Directors. In addition, the Company appoints a Lead Independent Director to enable Outside Directors to better fulfill their roles and functions on the Board of Directors. The Lead Independent Director will be responsible for improving and enhancing governance in collaboration with the Chairperson of the Board of Directors, and will serve as the leader of Independent Outside Directors at the Company. The appointment of the Lead Independent Director will be made as necessary based on the judgment of the Board of Directors considering the Company's management situation and the appointment of the Chairperson of the Board of Directors and the Directors. Appropriate collaboration and division of roles by the Chairperson of the Board of Directors and the Lead Independent Director will ensure the smooth operation of the Board of Directors and the fulfillment of its functions.

In terms of deliberations of the Board of Directors, by leveraging the expertise and experience of each Director who is not concurrently serving as Executive Officer, centered around Independent Outside Directors and Executive Directors in holding serious discussion on important issues, the Company encourages appropriate decision-making aimed at corporate value improvement, creating a structure that allows for management oversight from the viewpoints of various stakeholders, including shareholders. As a general rule, all Directors must attend at least 80% of meetings of the Board of Directors, and are required to provide an effective supervisory function for corporate management.

The Audit & Supervisory Board discusses and decides on audit policies and assignment of duties, audits the execution of duties by Directors, plays a supervisory function on management through cooperating with the Company's Independent Auditor and the internal audit division, and auditing internal departments and subsidiaries. In addition to the Board of Directors and its advisory committee meetings, Audit & Supervisory Board Members attend other important meetings and regularly exchange information with the Representative Director and Outside Directors.

The Company has five Audit & Supervisory Board Members, comprising two (2) full-time members who are familiar with internal circumstances and three outside members who meet the requirements for independent Audit & Supervisory Board Member set by the Company, and the majority of the members are independent Outside Audit & Supervisory Board Members. In addition, the Audit & Supervisory Board is required to secure necessary knowledge, experience, and specialized abilities in a well-balanced manner in forming the Audit & Supervisory Board. We have built a system that enables deep discussions from an independent and objective perspective, capitalizing on a wealth of experience and wide-ranging insight in the specialized fields of each Audit & Supervisory Board Member.

Decisions regarding the nomination of the CEO and other senior executives, and their compensation, etc. are one of the most important matters for management supervision by the Board of Directors. The Company ensures transparency and objectivity in the appointment and dismissal, and compensation of Directors and Executive Officers, etc. by establishing the “Nomination Committee,” which is chaired by an Independent Outside Director, with Independent Outside Directors making up the majority; and the “Compensation Committee.” In addition, one (1) Outside Audit & Supervisory Board Member attends the deliberations of the Nomination Committee and Compensation Committee as an observer at each meeting.

For fiscal 2023, the Nomination Committee and Compensation Committee each consisted of four (4) Independent Outside Directors and one (1) Internal Director.

Directors' review meetings are held to provide an opportunity for prior discussions by Directors and Audit & Supervisory Board Members to resolve important company issues (such as the mid-term management strategy) at Board of Directors meetings.

Governance review meetings are held to provide a forum for comprehensive discussions on the Ricoh Group's direction of governance and related issues by Directors, Audit & Supervisory Board Members and other relevant parties. The outline of the review meetings held is disclosed in the Corporate Governance Report and other documents.

Aiming to facilitate information exchange and shared understanding based on an independent and objective perspective, from the viewpoint of active contribution to discussions at meetings of the Board of Directors, the Outside Executive Meeting serves as a forum to share information and exchange opinions among Outside Directors and Outside Audit & Supervisory Board Members, as well as between Outside Directors and Audit & Supervisory Board Members and other executives.

The Internal Control Committee is an organization established under the President and CEO of the Company to deliberate and make decisions on internal control for the entire Ricoh Group. The committee is chaired by the CEO and comprises GMC members including Internal Directors, and business unit presidents^*. As a general rule, it meets once every quarter, but depending on situation, extraordinary or emergency meetings may be held.

In the event of serious incidents that could impact the entire Ricoh Group, the Internal Control Committee confirms details including the background, cause, and measures to prevent recurrence. Where uncertainty remains regarding the validity of measures to prevent recurrence, or issues remain regarding the possibility of recurrence of that incident in the Group, the committee promptly determines appropriate countermeasures, and ensures that these are implemented top-down. In addition, taking into consideration internal control issues reported by internal audits and risk management and compliance activities, the GMC discusses and decides on measures to be taken to prevent recurrence.

• *
  Full-time Audit & Supervisory Board Members participate as observers.

The ESG Committee is a decision-making body that aims to respond promptly and appropriately to the expectations and requests of stakeholders by continuously discussing environmental, social, and governance issues faced by the Ricoh Group at a management-level and leading the discussions to the quality enhancement of the entire Group.
The ESG Committee plays the following specific roles:

1. Supervise and advise on ESG strategy formulation, material issues, and progress in KPIs for each business division throughout the entire Group
2. Identify medium- to long-term ESG risks and opportunities as well as material issues faced by the entire Group
3. Identify ESG issues to be submitted for discussion at the Board of Directors and report them to the Board of Directors

The committee is chaired by the CEO and consists of GMC members including Internal Directors, and business unit presidents^*1. The committee, which meets quarterly, has established a system to examine and discuss ESG issues across the Company by inviting representatives of the relevant business divisions according to the theme to be discussed, and other means.

The Information Security Committee was newly established as a body under the President and CEO to make decisions regarding the security of the Ricoh Group. The committee is chaired by the CEO and comprises GMC members including Internal Directors, and business unit presidents^*1 and will meet quarterly beginning in fiscal 2023 as a general rule. The committee mainly reports and deliberates on the Ricoh Group's security strategy, security governance, security operations, and geopolitical risks. It also identifies security issues requiring review by the Board of Directors and submits them to the Board for consideration.

The risks to information security have been increasing rapidly in recent years. The scope of response by companies is also expanding due to the frequency of cyber-attacks, the diversification and sophistication of malware technologies (ransomware^*2, etc.), the tightening and diversification of laws and regulations in various countries, and the emergence of geopolitical risks. In addition, as we aim to transform ourselves into a digital services company, we must not only mitigate security risks in our digital services but also view them as investments for business growth in order to further solidify profitability in our existing businesses. Recently, while companies are aiming to improve their competitiveness through DX, there are also security issues that need to be resolved. To this end, a security department was established under the direct control of the CEO, who is in charge of security management, to plan and implement security and privacy protection strategies for the Ricoh Group as a whole. The department supports the operation of the committee by making prompt management decisions on security and clarifying strategies to comply with the laws and regulations of various countries.

From fiscal 2023, we have established divisional security committees in each business unit and division, strengthening our company-wide security governance structure. Additionally, we actively communicated our information security initiatives through our annual securities report and information security report. As a result, we received a Special Award at the Cyber Index Awards 2023 (hosted by Nikkei Inc.), which recognizes corporate best practices. Going forward, we will further enhance global governance, strengthen supply chain risk management, and bolster our workforce through the development of an education system.

The Risk Management Committee is an advisory body to the GMC that was established to strengthen risk management processes across the entire Ricoh Group. The committee is chaired by the corporate officer in charge of risk management and has experts from each organization as members to ensure comprehensive coverage of risks and substantial discussions, and to propose to the GMC specific risks requiring response or focus in relation to the management of the Ricoh Group.

The committee will review and restructure the risk management system in Figure 1 as necessary, in order to strengthen the effectiveness of risk management across the Ricoh Group. In addition, in order to establish a more effective and integrated risk management system through coordination between management and each organization, we have appointed risk management managers and promoters from each organization of the Company and have established an autonomous risk management system for each organization, including affiliates that we manage and supervise.

The Group Risk Management Collaboration Reinforcement Conference, which is mainly aimed for risk management promoters, holds study sessions and information sharing related to risk management and makes continuous efforts to become an organization that can be more responsive to risks.

The Investment Committee, as an advisory committee to the GMC, verifies investment plans based on financial considerations including capital costs, and strategic considerations such as profitability and growth risks, etc. Members representing different functional organizations perform prior reviews and discussion on diversifying investment and divestment projects to external entities in order to ensure consistency with management strategies and raise the effectiveness of investments while improving the speed and accuracy of investment decisions.

The committee mainly discusses investments from the perspective of strategies, finance, and risks. Its members include a chairperson appointed by the President and CEO, representatives from the business planning, accounting, legal, and internal control functions as specialists for each functional organization, as well as experts with relevant expertise depending on the project. The committee receives prior inquiries from planning departments to provide evaluations and advice after performing comprehensive discussion on the investment value of a project. The committee is not authorized to approve or disapprove any investment project. The Committee's deliberations will be reported by the chairperson of the Investment Committee to the GMC or the Board of Directors, depending on the project, to assist the decision-maker in making objective decisions.

In order to improve the accuracy of external investment decisions for the Company as a whole, the committee can also deliberate on projects below the GMC's standard amount for approval, and provides advice on investment decisions and considerations made by the planning department as well as on project negotiations, as necessary.

The Disclosure Committee appropriately discloses information that may influence the decisions of investors to promote dialogue with shareholders and capital markets by proactively disclosing corporate information that contributes to investment decisions, and thereby seeks to develop relationships of trust with shareholders and capital markets as well as to achieve an appropriate recognition of the Ricoh Group.

This committee is chaired by the CFO, who is responsible for information disclosure, and composed of representatives from different organizations, including the disclosure management department, accounting department, legal department, business planning department, Board of Directors operating department, public relations department, and internal control department.

This committee conducts deliberation on active disclosure and monitoring of disclosing procedures regarding company information that contributes to investors' investment decisions, along with judgments on the appropriateness and accuracy of annual report documents and timely disclosure documents, and judgments on the necessity of information disclosure in disclosure procedures. During fiscal 2023, in addition to conducting this deliberation and monitoring, we reviewed the operational status of the disclosure processes that were improved in the previous fiscal year to enhance effectiveness.

Furthermore, the internal control division regularly evaluates the timeliness of information disclosure, the accuracy and validity of disclosure statements, and the validity of disclosure decisions, etc., and reports its findings to the Board of Directors and the Internal Control Committee.

In addition to the election criteria for Internal Directors stated above, the election criteria for Outside Directors include having excellence in areas such as expertise in different fields, issue spotting and solving capabilities, insight, strategic thinking capabilities, risk management capabilities, and leadership. Outside Directors must also meet the Company's standards for independence applicable to Outside Directors and Outside Audit & Supervisory Board Members.

We believe that the Board of Directors of the Company should be composed of directors with management ability and a rich sense of humanity in addition to reflecting various viewpoints and backgrounds, on top of multidimensional sophisticated skills.

In addition, it is our policy to select candidates based on their character and knowledge with no distinction made on the basis of race, ethnicity, gender, or nationality or similar attributes, thus ensuring diversity in such attributes.

The Company is making ongoing efforts to strengthen and enhance corporate governance for the Company's sustainable growth and improvement of shareholder value and corporate value.

To secure objectivity, transparency, and timeliness for procedures to appoint, dismiss, and evaluate Directors, the CEO, and other members of the management team, the Board of Directors has established the Nomination Committee, which is an advisory body to the Board of Directors.

To increase objectivity and independence, the Nomination Committee is comprised of a majority of Independent Outside Directors, and is chaired by an Independent Outside Director. In addition, one Outside Audit & Supervisory Board Member attends meetings of the committee so as to ensure transparency in deliberation.

The Nomination Committee deliberates on the following matters and reports on the deliberation and conclusions to the Board of Directors.

Executive Directors are evaluated annually in two steps by the Nomination Committee, in consultation with the Board of Directors. The Nomination Committee's deliberations and conclusions on the evaluation of Directors are reported to the Board of Directors to comprehensively oversee whether the Director in question is suitable to continue in office.

Furthermore, evaluations are based on standards such as “Management oversight status as Director,” “Financial aspects including key management indicators regarding business results, return on capital, etc.;” and “Contribution to shareholders and evaluation by capital markets.”

TSR, which is used as one of the criteria for “contribution to shareholders and capital market evaluation perspectives” to evaluate Directors concurrently serving as Executive Officers, is calculated based on the average share price for the fiscal year (see table below) to avoid the impact of sudden share price fluctuations.

CEO Oyama, who took office on April 1, 2023, was evaluated over a period of approximately nine months from his date of appointment to the second evaluation date during fiscal 2023. The details of this evaluation were reported to the Board of Directors by the Chairperson of the Nomination Committee, and then feedback was provided to Mr. Oyama.

Executive compensation is used as a concrete incentive to improve the Ricoh Group's corporate earnings and achieve sustainable growth in shareholder value over the medium- to long-term. In addition, from the perspective of strengthening corporate governance, measures are taken to secure objectivity, transparency, and appropriateness in setting up compensation levels and determining individual compensation. The Company determines executive compensation based on the following basic policies:

The policy is determined by the Board of Directors taking into consideration the deliberation and recommendation of the Compensation Committee, which is an advisory body to the Board of Directors.

In addition, the Compensation Committee deliberates on the appropriateness of individual bonus payment amounts based on the results calculated by the formula for calculating Directors' bonuses below, including the results of the evaluation of Directors by the Nomination Committee, and make recommendations to the Board of Directors, which then decides whether or not to submit a proposal for the payment of bonuses to Directors to the General Meeting of Shareholders.

With regard to bonuses for fiscal 2023, the Compensation Committee's deliberations determined that the results calculated according to the formula for calculating Directors' bonuses are appropriate, and the total amount to be paid is ¥63.85 million.

Compensation that reflects the stock price consists of the following “compensation for acquiring stock,” and “performance-linked stock-based compensation” for the purpose of further strengthening Directors' commitment to improving the Company's corporate value over the medium- to long-term.

The number of points to be granted for fiscal year X is determined on a single fiscal year basis after the evaluation over a performance evaluation period of three fiscal years, including fiscal year X and two subsequent fiscal years (X+1 year and X+2 years) and three years (X+3 years) after the end of the performance evaluation period (three fiscal years), and shares are issued accordingly. Similarly, the number of points to be granted for fiscal year X+1 is determined on a single year basis after the evaluation over a performance evaluation period of three fiscal years, including fiscal year X+1 and two subsequent fiscal years (X+2 years and X+3 years) and three years (X+4 years) after the end of the performance evaluation period (three fiscal years), and shares are issued accordingly.

In order to clarify responsibility for performance for each role and function, the ratio of fixed compensation (basic compensation) to variable compensation (performance-linked bonus, compensation for acquiring stock, and performance-linked stock-based compensation) is designed so that those with more management responsibility will receive a greater proportion of variable compensation. For the highest-ranking position of President and CEO, the fixed/variable compensation ratio will be approximately 5:5 when the standard performance target for fiscal 2023 is achieved (Operating profit of ¥70.0 billion and ROE of 5.3%), and 3:7 when the maximum performance target is achieved (Operating profit of ¥84.0 billion or more and ROE of 7.95% or higher).

The Company will continue to emphasize the enhancement of shareholder value and corporate value over the medium to long term. It will further increase the ratio of variable compensation linked to shareholder value and business performance. Additionally, it will continue to evaluate the appropriate amount of compensation for each compensation type.

In determining individual compensation for Directors in fiscal 2023, the Compensation Committee conducted a multifaceted examination including consistency with the above policy for determining compensation, and the Board of Directors deliberated and made decisions, respecting the recommendation made by the Compensation Committee. On this basis, we have determined that the individual compensation for Directors in fiscal 2023 was consistent with the above policy for determining compensation.

Compensation for Audit & Supervisory Board Members consists only of basic compensation for their role of appropriately performing audits. Compensation levels are discussed by the Audit & Supervisory Board based on objective data by external specialized agencies and are determined within the remuneration framework for Audit & Supervisory Board Members approved at the 84th Ordinary General Meeting of Shareholders.

The evaluation continued to include how the Nomination Committee and Compensation Committee as well as the response of the business executives to Board of Directors, along with the effectiveness of the Board of Directors. A third-party evaluation was also implemented as well in order to ensure objectivity.

The evaluation was carried out at a discussion attended by all Directors and Audit & Supervisory Board Members, after sharing written evaluations by the Directors and the Audit & Supervisory Board Members, as well as the results of questionnaires' analysis by the third-party anonymous survey. Through discussions, participants reviewed and evaluated the performance of the Board of Directors during fiscal 2023, in terms of effectiveness in implementing the basic policies governing operation of the Board of Directors and the three action items outlined below, which were set forth by the Company's Board of Directors in the last evaluation.

In fiscal 2023, under the new management structure, we devoted considerable time to deliberations aimed at improving corporate value, deepening discussions from a shareholder perspective, and ensuring the steady implementation of measures through the operation of the Board of Directors. Additionally, as the first year of the 21st Mid-Term Management Strategy, we deliberated and decided on establishing a joint venture, mergers and acquisitions, and the sale of business to accelerate the transformation of our business structure into a digital services company.

Furthermore, we continuously conducted on-site inspections by Outside Directors and Outside Audit & Supervisory Board Members, roundtable discussions with local employees, and participation in management meetings as observers to gain understanding of the Company's actual situation. In addition, we enhanced information sharing with Directors and Audit &: Supervisory Board Members through prior briefings, aiming to improve the quality of discussions at Board of Directors meetings and to exercise effective supervisory functions. The allocation of time to agenda items at meetings of the Company's Board of Directors held in fiscal 2023 is disclosed as follows, for the purpose of ensuring the transparency in the status of deliberations of the Board of Directors.

The following is a summary of the results of discussions among the members of the Board of Directors regarding written evaluations by the Directors and the Audit & Supervisory Board Members, as well as thirdparty evaluations.

• It was concluded that the composition of the Company's Board of Directors, with a majority of Outside Directors possessing diverse expertise, was appropriate under the new structure both in terms of oversight and execution. With appropriate agenda setting and neutral meeting management by the Chairperson of the Board, who was an Outside Director, supervision and decision-making were carried out through free and vigorous discussions from multiple perspectives. The execution team took the Board's discussions seriously as well, reflecting them in management without obscuring issues. Therefore, it was concluded that the effectiveness of the Board of Directors continued to be ensured.
• At the Nomination Committee, the evaluation of the new executive structure, including the CEO, was conducted fairly and rigorously. At the Compensation Committee, after clarifying pending issues, repeated deliberations were conducted on the compensation system aimed at improving corporate value. Both committees, which are chaired by an Outside Director and consist of a majority of Outside Directors, carried out deliberations from a shareholder perspective and were evaluated as effectively functioning as advisory bodies to the Board of Directors.
• On the other hand, it was pointed out that “implementing measures to improve corporate value and generating positive results,” which have been subjects of discussion by the Board of Directors, remain the Company's most critical issue and need to be strictly supervised from the perspective of stakeholders, including shareholders.
• In addition, it was pointed out that it is necessary to enhance deliberations in order to meet stakeholder expectations for growth, further clarifying the future vision of a company that has achieved a transformation in business and revenue structures as well as the ideal management capital that supports this vision.

Based on the above evaluation, the Company's Board of Directors will operate in accordance with the following basic policies and work to improve the effectiveness of the Board of Directors based on three specific action items.

Candidates for Audit & Supervisory Board Members are selected for a balance of knowledge, experience, and specialized abilities required of the Audit & Supervisory Board taken into consideration, such as, in particular, the appointment of at least one person with sufficient knowledge of finance and accounting, in addition to the candidate's ability to contribute to the sound and sustained growth of the Company and the medium- to long-term enhancement of its corporate value through the performance of duties as Audit & Supervisory Board Member. In selecting candidates for Audit & Supervisory Board Members, the Audit & Supervisory Board has established the following criteria and makes a comprehensive judgment based on these criteria.

In addition to the criteria above, Outside Audit & Supervisory Board Members are elected based on their high degree of specialist insight in the fields of corporate management, finance, accounting and law, and their extensive experience. The absence of any issues of independence regarding their relationships with the Company, its Representative Director, other Directors and important employees, with reference to the Company's Standards for Independence of Outside Directors and Outside Audit & Supervisory Board Members, is an additional criterion.

In appointing Audit & Supervisory Board Members, the Company believes that the Audit & Supervisory Board should be composed of Audit & Supervisory Board Members with diverse experiences and perspectives, in addition to the above-mentioned auditing abilities, backgrounds, and personalities.

In addition, no distinction is made on the basis of race, ethnicity, gender, nationality or similar attributes, and candidates are selected based on their character and knowledge, thus ensuring diversity in such attributes.

“Recommendation of candidates” and “candidate nomination/proposal” for Audit & Supervisory Board Members are conducted primarily by the Audit & Supervisory Board, with an emphasis on ensuring the independence of Audit & Supervisory Board Members in accordance with the process shown below.

Audit & Supervisory Board Members draw up a list of candidates for Audit & Supervisory Board Members based on the election criteria for Audit & Supervisory Board Members in deliberation with the CEO as necessary. Audit & Supervisory Board deliberates, nominates and proposes candidates to the Board of Directors after confirmation by the Nomination Committee.

The Board of Directors passes a resolution for a proposal for the election of Audit & Supervisory Board Members submitted to the General Meeting of Shareholders based on the nomination/proposal of the Audit & Supervisory Board.

1. In principle, Outside Directors and Outside Audit & Supervisory Board Members of the Company should be independent from the Company and should satisfy all of the items set out below.
   1. A person who is not a shareholder holding 10% or more of the total voting rights of the Company (a “major shareholder”), or a person who is not a director, audit and supervisory board member, accounting advisor, executive officer, executive director, corporate officer, manager or any other employee of the major shareholder of the Company.
   2. A person who is not a director, audit and supervisory board member, accounting advisor, executive officer, executive director, corporate officer, manager or any other employee of a company of which the Ricoh Group is a major shareholder.
   3. A person who is not a director, audit and supervisory board member, accounting advisor, executive officer, executive director, corporate officer, manager or any other employee of the Ricoh Group, or a person who was not a director, audit and supervisory board member, accounting advisor, executive officer, executive director, corporate officer, manager or any other employee of the Ricoh Group within 10 years preceding the assumption of the office of Outside Directors and Outside Audit & Supervisory Board Members.
   4. A person of which the Ricoh Group was not a major business partner (whose sales to the Ricoh Group accounted for 2% or more of its consolidated net sales) in the immediately preceding fiscal year or any of the three fiscal years prior to such fiscal year, or a person who is not a director (excluding outside directors who are independent), executive officer, executive director, corporate officer, manager or any other employee thereof (including its parent company and subsidiaries).
   5. A person who was not a major business partner of the Ricoh Group (to which sales of the Ricoh Group accounted for 2% or more of consolidated net sales of the Ricoh Group) in the immediately preceding fiscal year or any of the three fiscal years prior to such fiscal year, or a person who is not a director (excluding outside directors who are independent), executive officer, executive director, corporate officer, manager or any other employee thereof (including its parent company and subsidiaries).
   6. A person who is not a consultant, certified public accountant, certified tax accountant, lawyer or any other professional who received money or other property other than executive compensation, either directly or indirectly, from the Ricoh Group in an amount of ¥10 million or more in the immediately preceding fiscal year or per year in average over the past three fiscal years.
   7. A person who does not belong to an organization, such as a law firm, auditing firm, tax accounting firm, consulting firm or any other professional advisory firm, that received money or other property, either directly or indirectly, from the Ricoh Group in an amount equivalent to 2% or more of its total revenue in the immediately preceding fiscal year or per year in average over the past three fiscal years.
   8. A person who is not a spouse, a relative within the second degree of kinship or a relative who lives in the same household of a person who falls under the items (1) through (7).
   9. A person who is not a director, audit and supervisory board member, accounting advisor, executive officer, executive director, corporate officer, manager or any other important employee of a company, its parent company or subsidiary that has directors dispatched from the Ricoh Group.
   10. A person who is unlikely to cause a substantial conflict of interests with the Company.
2. The Company may appoint a person as Outside Director or Outside Audit and Supervisory Board Member if it determines that the person is qualified for the post, even though he/she fails to satisfy any of the above items (1) and (4) through (9) in the preceding paragraph, provided that the Company explains to external parties the reason for its determination that the person qualifies for the post.

From the viewpoint of streamlining and strengthening of business alliance and development of collaborative businesses, the Company shall be able to hold shares of the related partners only when such holding of shares is deemed necessary and effective for the future development of the Ricoh Group, while taking the returns suchas dividends into consideration.Specifically, the Board of Directors will verify, for each issue, whether the benefits and risks of holding shares are worth the capital cost, and if holding shares loses significance in the medium- to long-term, they will be reduced accordingly.

The Company will exercise voting rights attached to cross-shareholdings upon examining each agenda whether it enhances the corporate value of the investee in the medium- to long-term, or whether it impairs shareholder value, and will determine approval or disapproval.

The Company's information dissemination and dialogue results for the current fiscal year are as follows.