Basic policies regarding internal control and measures adopted to improve internal control

At its meeting of May 19, 2006, the Board of Directors adopted the following basic eight-point policy related to the development of internal systems as prescribed under Articles 362-4-6 and 362-5 of the Corporation Law. These articles of the Corporation Law require companies to establish systems to ensure that the directors, in executing their duties, act in compliance with the relevant laws and ordinances and in compliance with their Articles of Incorporation. The eight-point policy has also been developed in accordance with ministerial ordinances of the Ministry of Justice, which aim to ensure the appropriateness of other activities by joint stock corporations.

1. Preparation of a Compliance Manual and other regulations to ensure the development of, and widespread adherence to, a system of compliance; the directors and employees closely follow the provisions of this manual and these regulations.
2. Establishment of a Compliance Committee headed by the President with the participation of outside attorneys
   1. The committee decides on all important policies regarding training, education and other compliance-related programs.
   2. It reports all required information to the Board of Directors.
3. Establishment of compliance consultation offices both within and outside the Company, where any employee of the Sakata Group can go to consult about and/or report on actions that appear questionable from the standpoint of legal or ethical compliance
   1. The Company strictly protects the secrecy of such reports and/or consultations.
   2. It does not treat whistleblowers in any way that violates the Whistleblower Protection Act or other laws or ordinances, or in any way that violates the Company's internal regulations.

1. Preservation of all documents and related materials that bear on the execution of duties by directors (including documents recorded on electronic media)
   1. Preservation for periods prescribed under the Company's Regulations on the Management of Documents, and preservation in the departments or sections indicated by such regulations
   2. Ensuring that such documents are available for inspection on an as-needed basis
2. Management of documents is carried out in accordance with the following:
   1. Standards for Establishing Information Security Measures
   2. Regulations on the Management of Personal Information

1. The Company recognizes and evaluates a number of specific risks, including the following:
   1. Weather-related risks
   2. Risks associated with geopolitical and societal changes in regions where it does business
   3. R&D-related risks
   4. Risks related to infringements of intellectual property rights
   5. Risks related to safety
   6. Foreign exchange risks
2. Each division (responsible for research, production and distribution, quality control, domestic sales, and international sales or management) identifies and manages the risks specific to its particular area of operations.
   1. When necessary, manuals are created and operating regulations established.
   2. Weather-related risks have a special bearing on agricultural enterprises; since weather cannot be predicted or controlled, the Company deals with these risks through diversification; i.e., by establishing production areas in different countries around the world.
   3. In an emergency, the Company implements solutions by following procedures spelled out in its Risk Management Manual:
      • - Establishment of a Crisis Management Headquarters headed by the President
      • - Construction of an information-conveyance mechanism

1. The directors execute their duties in a manner stipulated under the Company's Regulations Concerning the Division of Duties and its Table of Standards Related to Personal Authority.
2. To enable the directors to carry out their duties efficiently, the Company permits collaboration with other directors and employees through committees and project teams.
3. The Company also promotes efficiency through the rationalization and computerization of operations.
4. When the Company meets the conditions specified under Article 370 of the Corporation Law, it permits resolutions of the Board of Directors to be adopted though written communications.

1. Operations of subsidiaries managed and overseen by the Office of Management and Planning.
2. In accordance with its Regulations Concerning the Management of Subsidiaries, the Company takes steps such as the following to ensure sound, effective operation of the Corporate Group:
   1. Promotion of information exchange
   2. Establishment of a system of collaboration, including personnel exchanges
   3. Provision of appropriate levels of management guidance for subsidiaries

1. When requested to do so by a corporate auditor, the Company shall establish a position to be filled by employees with responsibility for assisting the corporate auditors with their duties.
2. The directors shall consult with the Board of Corporate Auditors regarding each of the following matters:
   1. The numbers and ranks of such employees
   2. The lines of authority under which they operate
   3. Compensation
   4. Personnel transfers

1. When they discover facts that could cause significant harm to the Company, directors shall report such facts to the corporate auditors.
2. Directors shall also report all dishonest activities by directors and all activities by directors that are in violation of laws or ordinances or the Articles of Incorporation.
3. To enable the corporate auditors to execute their duties smoothly and effectively, directors and employees shall report important management-related matters to the corporate auditors; they shall also provide the corporate auditors with status reports on operations.
4. The corporate auditors shall be allowed to participate in the following:
   1. Senior management meetings and other important management meetings
   2. Compliance Committee meetings, where they shall receive reports on the operations of the Compliance Consultation Offices; the kinds of issues under consultation at these offices; and the improvements being made as a result of such consultations

1. The directors and corporate auditors shall endeavor to meet regularly and to improve their mutual communication.
2. When the corporate auditors deem it necessary for reasons concerning operations, they shall receive reports on audits and the status of operations from the following and shall exchange information on such matters with them:
   1. Persons responsible for the Internal Auditing Division
   2. Corporate auditors of subsidiaries
   3. Other persons in equivalent positions
3. When they deem it necessary, the corporate auditors shall have the authority to appoint attorneys, CPAs or other outside experts independently for the purpose of auditing operations.