Policy on the Management of Public Research Funds

At I’MSEP Co., Ltd. (hereinafter referred to as "the Company"), the management and audit system for all research expenses subjected to institutional accounting (hereinafter referred to as "public research funds") shall, in addition to matters separately prescribed, be implemented in accordance with this policy.

(Responsibility System)
Article 1 The responsibilities and authorities of those engaged in the operation and management of public research funds at the Company shall be as set forth below.

(Chief Compliance Officer)
Article 2 The Chief Compliance Officer shall be the Representative Director, who oversees the Company and bears ultimate responsibility for corporate management and for the operation and management of competitive funds, etc. The Chief Compliance Officer shall also provide guidance and support so that the General Compliance Manager and the Accounting Officer carry out the operation and management of competitive funds smoothly and responsibly, and shall, by taking the lead personally, implement the misconduct prevention plan.

(General Compliance Manager)
Article 3 The General Compliance Manager shall be the Director and General Manager of the Research and Development Department, and shall assist the Chief Compliance Officer. In the operation and management of competitive funds, etc., the General Compliance Manager shall have substantive responsibility and authority to oversee the Company.

(Procurement Compliance Manager)
Article 4 The Procurement Compliance Manager shall assist the Chief Compliance Officer and the General Compliance Manager, and shall, with respect to competitive funds, have substantive responsibility and authority for the implementation of research expenses.

(Development of the Environment for Operation and Management)
Article 5 On the premise that there is always a possibility that public research funds may be used improperly (hereinafter referred to as "misconduct"), the Chief Compliance Officer shall remove factors that induce misconduct and shall endeavor to build an environment and system equipped with sufficient deterrent functions.
2. Administrative procedures relating to public research funds shall be operated uniformly in accordance with the methods prescribed in the following items, and the Chief Compliance Officer shall ensure thoroughness through appropriate verification by persons with authority and through audits by auditors, etc.
3. Procedures for the purchase of goods, etc. shall be carried out in accordance with the Company's Procurement Operations Management Regulations.
4. Procedures for travel expenses shall be carried out in accordance with the Company's Domestic Business Travel Expenses Regulations.
5. The responsibility structure for accounting administrative processing relating to public research funds at the Company shall be as set forth in the Job Allocation Regulations for Employees Involved in Public Research Funds.
6. A contact desk for inquiries from inside and outside the Company concerning administrative procedures relating to public research funds (hereinafter referred to as the "Administrative Procedures Inquiry Desk") shall be established under the Planning Manager, who shall carry out the necessary duties.

(Clarification of Job Authority)
Article 6 With respect to the administrative processing of public research funds, the Chief Compliance Officer shall clearly define the authority and responsibility of those who conduct research using research funds granted to them (hereinafter referred to as "researchers") and of administrative staff.
2. Administrative processing operations at the Company shall be carried out in accordance with the Basic Procurement Policy, the Job Allocation Regulations for Employees Involved in Public Research Funds, the Procurement Operations Management Regulations, and the Domestic Business Travel Expenses Regulations.

(Raising Awareness of Persons Concerned Regarding Public Research Funds)
Article 7 In executing public research funds, the Chief Compliance Officer shall ensure that researchers and administrative staff understand that the funds are derived from public sources, and shall thoroughly disseminate the necessity of having the institution handle the accounting.
2. Public funds applied for and adopted at the initiative of an individual researcher, as well as donations and grants received by an individual researcher and intended to support the educational and research activities of that researcher in the course of their duties, shall be subject to institutional accounting.
3. In order to ensure the proper execution of public research funds, researchers and administrative staff shall endeavor to comply with the relevant rules, etc., and shall actively participate in training sessions and the like and endeavor to engage in self-improvement.
4. Researchers and administrative staff shall perform their duties in accordance with the Job Allocation Regulations for Employees Involved in Public Research Funds.

(Investigation of Misconduct and Disciplinary Action)
Article 8 The procedures, etc. for conducting investigations concerning misconduct at the Company shall be operated in accordance with the Company's Procurement Operations Management Regulations.
2. Based on the preceding paragraph, in the event that facts giving rise to disciplinary action are identified, the type of disciplinary action and the procedures, etc. necessary for its application shall be determined based on the decision of the Chief Compliance Officer.

(Formulation and Implementation of the Misconduct Prevention Plan)
Article 9 Taking into account the factors that give rise to the improper use of public research funds, the Chief Compliance Officer shall formulate and implement a concrete misconduct prevention plan for research activities.

(Promotion of the Misconduct Prevention Plan)
Article 10 A person in charge of promoting the Company's misconduct prevention plan shall be assigned, and shall carry out the necessary duties.
2. The Chief Compliance Officer shall disclose the response to misconduct prevention both inside and outside the Company, and shall endeavor to manage the progress of the misconduct prevention plan.
3. Auditors shall cooperate so that departments and other units can take the initiative in implementing the misconduct prevention plan.

(Proper Operation of Public Research Funds)
Article 11 Researchers and administrative staff shall execute the budget appropriately based on the misconduct prevention plan.
2. In cases where research, etc. is hindered because a subsidy, etc. has been informally awarded but has not yet been actually disbursed, the Company shall endeavor to carry out research, etc. smoothly while obtaining loans from financial institutions or the like.

(Proper Management Activities for Public Research Funds)
Article 12 Researchers and the Procurement Compliance Manager shall verify the status of budget execution, confirm whether it is in line with the execution plan, and, with respect to research where significant delays have arisen relative to the original execution plan or whose execution is expected to take place at the end of the fiscal year, ascertain the reasons therefor in advance.
2. In order to prevent collusion between researchers, etc. and vendors, arrangements such as meetings shall be made with transparency.
3. Ordering operations shall be carried out following consultation between researchers and purchasing personnel.
4. Acceptance inspection operations shall be carried out by both researchers and purchasing personnel.
5. With respect to vendors that have been involved in improper transactions, depending on the nature of their conduct, the Company shall impose measures such as suspension of transactions, and shall disclose the results thereof as necessary.
6. The status of execution of researchers' business trip plans, etc. shall be ascertained by the General Compliance Manager.

(Communication of Rules, etc.)
Article 13 In order to ensure that all employees understand the proper use of public research funds, the Chief Compliance Officer shall disseminate information through such means as in-house briefings, lectures, and training sessions, posting on the internet, written notifications, and various meetings.
2. A contact desk that accepts inquiries from inside and outside the Company concerning the handling of the use of public research funds (hereinafter referred to as the "Usage Rules Inquiry Desk") shall be established under the Planning Manager, who shall carry out the necessary duties.
3. A contact desk that accepts reports (whistleblowing) from inside and outside the Company (hereinafter referred to as the "Reporting Desk") shall be established.
4. The Chief Compliance Officer shall periodically (about once every two to three years) conduct surveys to assess the degree to which employees, etc. understand the code of conduct and the handling of public research funds.

(Audit System)
Article 14 Audits relating to the operation and management of public research funds at the Company and to the prevention, etc. of the improper use of public research funds (hereinafter referred to as "internal audits") shall be conducted by the whistleblowing inquiry desk and the Procurement Compliance Manager, or by external accountants, etc.
2. Internal audits shall be conducted periodically. In addition to audits of financial information such as the formal requirements of accounting documents, audits emphasizing improvement of the system development for the operation and management of public research funds shall be conducted from the perspective of the Company as a whole.
3. Auditors shall, in cooperation with the personnel in charge of promoting the misconduct prevention plan, conduct effective and substantive audits in accordance with the table for grasping the factors that give rise to misconduct.

End of Policy