ARDEPRO : Notice Concerning Formulation Policy for Improvement Plans 154KB

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News Release: ARDEPRO Co., Ltd.

(8925 TSE Standard)

December 15, 2023

Notice Concerning Formulation Policy for Improvement Plans

As detailed in the release titled "Notice Concerning Designation of Security on Alert, Imposition of Listing Agreement Violation Penalty, and Postponement of the Announcement of Recurrence Prevention Measure" issued on November 30, 2023, due to Tokyo Stock Exchange, Inc. ("TSE") determining that the internal management system of ARDEPRO Co., Ltd. ("the Company") was in severe need of improvement, the Company was designated as Security on Alert on the aforementioned date, with measures such as internal management system investigation by TSE to be carried out at a later date.

Working toward removal of the designation of Security on Alert, the Company has determined to establish improvement measures to improve its fundamental problems such as those related to the internal control system and submit the applicable plan measures and improvement plan document. The details are as follows.

1. Formulation Policy for Improvement Plans

Within the Outside Investigative Committee investigation report (hereinafter: "the Investigation Report") received by the Company on September 22, 2023, the content includes the truthfulness of the investigation target matters, presence or absence of similar cases, causal analysis, and comments regarding recurrence prevention. Also, the Company has revised its financial statements for the previous fiscal year based on the content of the Investigation Report. The causes for these problems were indicated to be generally related to issues with the Company's governance and insufficient awareness of compliance among the management ranks.

In response to this report, TSE determined that the Company's internal control system was in severe need of improvement and designated the Company as Security on Alert effective November 30, 2023.

Through discussion with external experts, the Company is revising its recurrence prevention strategy and working to complete an improvement plan and condition report. In the course of establishing these documents, the Company is not limiting itself to the comments from the Outside Investigative Committee but instead carrying out its own consideration of causal analysis and recurrence prevention until January 2024, and after extracting recurrence prevention items which should be implemented and carrying out deliberation on specific handling measures and operation methods, intends to release its improvement plan in late February.

The details of the process of improvement plan formulation and announcement are scheduled to be implemented as follows.

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	Implementation Content	Implementation Date (Planned)
1	Causal analysis by the Company based on	September 22 to November 30, 2023
	the Investigation Report	(Partially completed)
2	Consideration of recurrence prevention	September 22 to November 30, 2023
	measures based on causal analysis	(Partially completed)
3	Secondary consideration of causal	November 30, 2023 to early January
	analysis and recurrence prevention	2024 (planned)
	measures related to the designation of
	Security on Alert, with outside expert
	involvement
4	Consideration and draft approval of the	Mid-January 2024 (planned)
	improvement plan for the designation of
	Security on Alert
5	Submission of the improvement plan draft	Mid-January 2024 (planned)
	to the Japan Exchange Regulation
	organization
6	Official announcement of improvement	Late-February 2024 (planned)
	plan and condition report

In addition, although the initial plan was to establish and announce recurrence prevention measures by the end of November this year, the Company postponed the announcement due to the determination that the highest priority is establishing effective recurrence prevention measures as mentioned in the release titled "Notice Concerning Designation of Security on Alert, Imposition of Listing Agreement Violation Penalty, and Postponement of the Announcement of Recurrence Prevention Measure" issued November 30, 2023.

The Company is planning to disclose its recurrence prevention measures as improvement policy for recurrence prevention within the improvement plan and improvement conditions report, which will be disclosed at a later date.

2. Future Revisions

The Company will engage in initiatives for the establishment of the improvement plan above, as well as further improvement measures.

If changes or delays in the schedule disclosed in this release occur, notifications will be issued promptly.

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