P.58 Corporate Governance (Cross-shareholdings)

58 02. Foundations for Accelerating Transformation

▶ Corporate Governance Report｜ https://sumitomocorp.disclosure.site/pdf/37/CGR_e_HP.pdf

Corporate Governance (5) Cooperation with internal control/internal audit organizations

The Audit & Supervisory Committee Members regularly exchanged information with the internal control/ internal audit organizations and attended the Presidentʼs briefing sessions conducted by the Internal Audit Department (held monthly). In addition, by receiving reports on the results of internal audits at meetings of the Audit & Supervisory Committee and utilizing such internal audit results, they enhanced the effectiveness of the audit functions of the Audit & Supervisory Committee.

(6) Cooperation with accounting auditor

Regular meetings were held with the accounting auditor to ensure that audit-related reports could be received in a timely and as-needed manner. In addition, proactive exchanges of views and information were conducted on audit-related matters, including key audit issues concerning major subsidiaries and issues related to audits of internal controls.

Our approach to holding listed Group companies

Benefits of being a listed Group company include establishing a solid financial basis including better financing capacity; enhancing credibility through the establishment and operation of a governance system, including the transparency of business management and internal control; increasing the corporate presence; increasing brand strength in hiring employees; further developing trust with business partners as well as the higher credibility of its services and businesses; and enhancing motivation among the officers and employees of the Group company. We believe that by dispatching executives, etc., to each Group company through equity participation, we will be able to have more effective dialogue and collaboration, which will increase each otherʼs corporate value, generate synergies, and ultimately maximize the corporate value of our Group. The significance of holding shares of each listed Group company in our business strategies is disclosed in our Corporate Governance Report. Going forward, the Company will continue to review the significance of holding these shares and the significance of listing them, taking into account changes in the business environment surrounding each listed Group company and the nature of collaboration and cooperation with the Company.

• Note: The Group has three listed affiliates: WELLNEO SUGAR (Prime Market, Tokyo Stock Exchange), Mammy Mart (Standard Market,

Tokyo Stock Exchange), and Japan Process Development (Standard Market, Tokyo Stock Exchange). The Group has no listed subsidiaries.

Message from Outside Audit & Supervisory Committee Member

Nobuo Inada Outside Audit & Supervisory Committee Member Even before the Company transitioned to its current governance structure, we conducted extensive interviews with various internal groups, domestic and overseas offices, and Group companies under the former Audit & Supervisory Board system. The detailed findings were shared among all Audit & Supervisory Board members and have been utilized in our audit activities. Following our transition to a Company with an Audit & Supervisory Committee, we have expanded these initiatives by inviting senior executives from each business group to meet with the full Committee for active exchanges of views. Through these initiatives, we strive to identify issues facing each business group in a timely manner and further enhance the effectiveness of our audit activities. Beginning this fiscal year, we will also invite senior executives from the Corporate Group to participate in these discussions. We are also enhancing our information sharing and dialogue with the Internal Audit Department and the independent auditor, with the aim of making audit activities across the Group more effective and efficient.

Cross-shareholdings

As a general rule, the Company will neither acquire nor hold shares in other listed companies for purposes other than pure investment. However, the Company might decide to hold shares in listed companies in some exceptional cases when the Company determines that it is appropriate. For such determination, the Company will comprehensively assess and verify the cost of capital of individual stocks and economic rationality and the significance of holding the stocks in light of the necessity of partnering or other business needs. Each year, the Board of Directors reviews whether the Companyʼs holding of listed shares is appropriate. If such annual review concludes that specific shareholdings are of little significance, the Company will push ahead with the sale of the shares. In FY2025, the Company sold shares of 11 listed stocks (either in whole or in part), amounting to ¥42.0 billion in total. As of the end of March 2026, the Companyʼs shareholdings in listed companies covered 39 stocks, with a total balance of ¥179.0 billion. The Company also takes various considerations into account under the internal guidelines when making decisions in exercising its voting rights. Having fully considered issues from both quantitative and qualitative standpoints, it adequately exercises voting rights for each agenda item based on whether exercising voting rights will lead to enhanced medium- to long-term corporate value at the investee company and the Company and to enhanced value for its own shareholders. When a company holding the Companyʼs stock for purposes other than pure investment indicates intent to dispose of its holdings, the Company respects the decision in principle and ensures that their business relationship will not be influenced.

• ■ Number of holdings ー Ratio to shareholdersʼ equity
• 120 100 80 60 40 20 0
• 2018 2019 2020 2021 2022 2023 2024 2025
• 12.0％ 10.0％ 8.0％ 6.0％ 4.0％ 2.0 ％ 0.0％