MAX established the MAX Group Code of Conduct, which outlines the values, ethics, and actions that all individuals working at the MAX Group should share.
The MAX Group Code of Conduct promotes understanding of its contents by consistently referring its items in employee self-checks. Furthermore, it has been translated into multiple languages to share its content across the entire Group, both in Japan and overseas.
By adhering to this Code of Conduct, we aim for sustainable development of the MAX Group, while fulfilling our corporate social responsibilities and meeting the trust and expectations of our stakeholders.

MAX conducts the following compliance education in order to spread compliance within the Company. Additionally, since December 2020, we have distributed the monthly Compliance Newsletter on our intranet.

MAX has established an in-house consultation desk and an external consultation desk as contact points for whistleblowing. In accordance with the contents of whistleblowing reports, we consider matters and take necessary measures. We also report the number of received whistleblowing reports to the Corporate Governance Committee, which meets quarterly.

MAX acquired certification for business continuity management systems (ISO 22301) in 2016. We are working to increase the number of manufacturing bases and suppliers for priority product groups in case of risks such as natural disasters and infectious diseases. For our supply chain, we ascertain the production location of secondary suppliers. When a risk occurs, we forecast the impact on our company and take swift action according to predefined procedures.
In terms of risk associated with natural disasters, we assume earthquakes and flood damage due to rivers overflowing. Although we assume that there is little risk of large-scale earthquakes occurring in Gunma Prefecture, where our main production bases are located, we assume occurrence in Tokyo, Osaka, Nagoya, and Sendai, where our head office and branch offices are located. Therefore, in those locations, we are taking measures such as carrying out seismic retrofitting and formulating business continuity plans centered on systems.

Based on our Information Security Basic Policy, MAX acquired certification for information security management systems (ISO 27001) in 2004. We acquired this certification for the purpose of protecting customer information, information related to orders and shipping, and technical drawing information. In addition to constructing an information security system that covers all bases in Japan and overseas, the Integrated Digital Innovation Department is responsible for training all employees, conducting internal audits, and constructing a system that prevents information from being removed from the Company. Moreover, if a security incident occurs, we ensure swift reporting and respond in accordance with procedures.
Reports on information security education, the status of internal audits, and new security measures and related progress are given at the Information Security Committee, which is held quarterly with all officers as members.

At MAX, "MAX Group Employee Code of Conduct" prohibits the giving and receiving of private interests, prohibits excessive gifts, entertainment, and bribery, and requires compliance with the Antimonopoly Act and the Unfair Competition Prevention Act. We also conduct internal audits of domestic and overseas bases.
There were no serious compliance violations in fiscal 2024.

MAX responds resolutely and systematically to anti-social forces that pose a threat to social order and healthy corporate activities and maintains no relationship including business relationships with antisocial forces.We ask all business partners to sign a Memorandum of Understanding on the Exclusion of Anti-social Forces, ensuring that our entire supply chain addresses the exclusion of anti-social forces.

i. Organization
By resolution of the Board of Directors, we have defined the Management-related Meeting Rules and established the Corporate Governance Committee that meets regularly to identify, assess, and respond to companywide risks.
Furthermore, to ensure a swift response in the event of anemergency, the Board of Directors has set the Crisis Management Response Rules, establishing an initial response system under the leadership of the President.

ii. Risk management process
As part of the risk management process, the internal audit divisions assess the individual risk management status of each division during audits and regularly report to the Corporate Governance Committee. The committee’s assessment of risk management is then reported to the Board of Directors, and improvements and progress regarding risk management in each division are implemented throughout the Company. The Corporate Governance Committee also monitors key topics, as appropriate, from the perspective of preventing potential risks.
To prevent delays in the initial response in the event of an emergency, a separate reporting channel using the information system has been established, in addition to the hierarchical reporting lines. Information reported through this system is used to determine, according to the seriousness of the event, whether to convene a Crisis Management Subcommittee or a Crisis Management Committee, enabling a swift and appropriate response.

The following are the principal factors that may affect the Group’s business performance and financial position and have a material influence on investors’ decisions. However, these do not represent an exhaustive list of all risks associated with the Group.
Possible scenarios and corresponding responses are provided within each individual risk item. The “likelihood of occurrence” is assessed from both short-term and medium- to long-term perspectives, while the “impact” is evaluated based on the effect on net sales, profit attributable to owners of parent, and net assets, in the event of occurrence.
The future outlooks described below are based on the forecasts of the MAX Group made as of the end of fiscal 2024.

Among the Group’s businesses, the main products of the Industrial Equipment segment include nailers used in wooden house construction, pneumatic machinery including air compressors, consumables such as nails and screws, and home environment equipment including heater-ventilator-dryers installed in residential bathrooms and 24-hour ventilation systems. As such, a decrease in the number of new housing starts in Japan may adversely affect demand for such products and the business performance of the Industrial Equipment segment, while an increase may have a positive impact. However, over the medium to long term, the number of new housing starts in Japan is expected to decline due to the low birthrate and population aging. Should this trend accelerate faster than anticipated, demand for these products and the business performance of the Industrial Equipment segment could be adversely affected.
The main products of the Office Equipment segment include staplers, staples, auto staplers, and other items closely associated with paper consumption in offices and similar settings. As such, a decrease in paper consumption in offices and other facilities may adversely affect demand for such products and the business performance of the Office Equipment segment, while an increase may have a positive impact. However, if the global shift toward paperless operations and the decline in Japan’s working-age population, both of which are
expected over the medium to long term, progress faster than anticipated, demand for these products and the business performance of the Office Equipment segment could be adversely affected.
[Response]
To mitigate these risks, the Group is taking the following measures to build a portfolio less affected by macro-environmental factors such as new housing starts in Japan and paper consumption.
a) Expanding the lineup of tools for concrete structures in addition to those for wooden structures
b) Focusing on replacement demand for heater-ventilator-dryers for bathrooms (replacement of existing units)
c) Strengthening the labelling and signage business in the Office Equipment segment
d) Promoting operational efficiency in domestic businesses

The Group’s sales to overseas and procurement from overseas include transactions denominated in foreign currencies. The main transaction currencies are the U.S. dollar and euro for sales, and the U.S. dollar, Chinese yuan, and Thai baht for procurement and related activities. Sharp fluctuations in exchange rates may affect net sales, cost of sales, non-operating income and expenses, and net assets, which in turn could affect the Group’s business performance and financial position.
Foreign exchange sensitivity (annual conversion, based on the plan for fiscal 2025) is as follows. The calculations assume that Asian currencies move in line with the U.S. dollar.
• Foreign exchange sensitivity in sales: ¥200 million to USD; ¥80 million to EUR
• Foreign exchange sensitivity in operating profit: ¥60 million to USD; ¥80 million to EUR
[Response]
The Group mitigates exchange rate fluctuation risks through offsetting sales and procurement denominated in foreign currencies.

The Company invests surplus funds mainly in yen-denominated corporate and local government bonds, which are recorded on the balance sheet under available-for-sale securities. As these are fixed-rate bonds, their market value decreases when interest rates rise, creating a risk of reduced net assets.
In addition, the Company’s retirement benefit expenses and obligations are calculated based on actuarial assumptions such as the discount rate and the expected rate of return on pension assets, and the discount rate set in consideration of the market yield on Japanese government bonds. If the actual results differ from the actuarial assumptions, or if the assumptions are altered, the effect is accumulated and will be recognized regularly in the future, which generally affects the expenses recognized and the obligations recorded in future periods. Changes in the discount rate or investment yield may affect business performance and financial position.
[Response]
In principle, bonds purchased for investment have maturities of five years or less to reduce exposure to rising interest rates.
With regard to risks related to retirement benefits, the Company reviews and revises its human resources system as appropriate, taking into account legal frameworks, the funding status of pension plans, and other factors.

The Group conducts a large portion of its procurement, production, and sales activities overseas. Overseas business activities are subject to risks arising from political and diplomatic issues as well as unforeseen changes in policies, laws, and regulations. Changes in trade policies resulting from economic security measures or trade frictions in various countries, and the deterioration of international relations due to terrorism, war, and other factors, may hinder overseas business activities and affect the Group’s business
performance and future plans.
[Response]
The Group closely monitors political and economic situations as well as trends in laws and regulations, incorporating relevant information into its management strategies and operating result forecasts.
The Group also strives to strengthen its BCP framework to ensure responsiveness in times of uncertainty.

The Group’s manufacturing and development bases in Japan are concentrated in Gunma Prefecture. Japan generally experiences a higher frequency of earthquakes than other regions of the world and is therefore more susceptible to earthquake-related damage. The occurrence of natural disasters such as earthquakes and storm or flood damage, accidents at business locations, or infectious diseases on a larger-than-expected scale may adversely affect business, mainly as a result of causing damage to the Company’s assets and making it difficult for employees to maintain the business operation structure.
[Response]
As a measure against major earthquakes, the Group has carried out seismic retrofitting work on its buildings as necessary. In addition, the Group acquired certification for business continuity management systems (BCMS) (ISO 22301) on March 25, 2016, and has enhanced its BCP by establishing a framework that enables manufacturing of key products at multiple bases. The Group has also worked to minimize the impact on business operations during activity restrictions caused by infectious diseases and other disruptions through initiatives to reform workstyles, among other things.
In response to such risks, the Group will devise various preventive measures while controlling risks mainly by making flexible responses to particular situations

The Group recognizes potential environmental risks such as rapid climate change, exposure to hazardous chemicals, and water pollution. The Group is also subject to environmental regulations both in Japan and overseas. The manifestation of any of these risks may result in the Group incurring additional costs, which could affect its business performance.
[Response]
In addition to obtaining certification of environmental management system (ISO 14001), the Group has set up an EMS Committee, chaired by the General Manager of the Environment and Quality Assurance Department, on the basis of the MAX Group Environmental Declaration and Basic Environmental Guidelines. Environmental committees promote activities to reduce the environmental burden at each manufacturing site, where relevant laws and regulations are clearly identified and necessary requirements are observed.
In procurement, the Group has established standards such as the MAX Green Procurement Standards regarding chemical substances and ensures strict compliance by both the Group and
its suppliers.

In fiscal 2024, net sales of tools for concrete structures totaled ¥34.8 billion, accounting for approximately 40% of the Groupwide net sales.
Among tools for concrete structures, rebar tying tools and their consumables such as TIE WIRE (hereinafter “rebar tying tools, etc.”), drive growth in this product category and for the Group as a whole.
The Group’s rebar tying tools, etc., maintain technological superiority backed by intellectual property rights. However, if the Group were to lose its technological advantage, if alternative tying methods to wire tying were to emerge, or if construction methods that do not use rebar were to gain rapid adoption, demand for the Group’s rebar tying tools, etc., could decline, adversely affecting its business performance and future plans.
[Response]
The Group continues to invest in strengthening cost competitiveness and maintaining sustainable technological advantages, enabling it to monitor market trends and provide products and services that keep pace with market changes.

Among the Group’s products, consumables such as staples, nails, and screws, as well as wires for rebar tying tools use common steel wires as raw materials. Prices of such wires may fluctuate as a result of shortages of raw materials such as iron ore, coal, and oil and trends in demand in other countries. Sharp increases in raw material prices may adversely affect the Group’s business performance.
Furthermore, defects or shortages in raw materials and parts used in the Group’s products could adversely affect their reliability and reputation.
[Response]
The Group continuously works to reduce the cost of raw materials and other inputs it purchases and reviews selling prices as needed in response to sharp increases in raw material prices.
To prevent defects or shortages of raw materials and parts, the Group conducts supplier evaluations and audits at the start of business relationships.

If quality issues or product liability problems arise with the products or services provided by the Group, costs may be incurred for customer notification and product inspection or recall, which may adversely affect business performance. Furthermore, such issues could lead to a loss of trust from customers and society, resulting in deterioration of the brand image, customer attrition, and other adverse effects on the Group’s business, business performance, and financial position.
[Response]
The Group has established the quality management system tailored to the laws, regulations, and business characteristics of each country and region based on ISO 9001,and implements thorough quality control. In addition to the safety standards required by laws and regulations, the Group has established safety standards from the customer’s perspective for its quality of products and services.
The Group has also established quality assurance processes at each stage, from design through production and shipment, to minimize the risk of quality issues.
In the unlikely event that a quality issue arises, or signs of one are detected, the Group promptly gathers information from customers and other stakeholders and quickly implements measures, including identifying the root cause.

The Group recognizes the importance of intellectual property it has developed through the accumulation of unparalleled technologies and know-how as well as the development of products that meet customer needs, and takes steps to protect such property. However, if the Group’s intellectual property is not granted legal protection, is inadequately protected in certain countries or regions, or is unable to prevent third parties from manufacturing similar products, this could adversely affect the Group’s market competitiveness and have an impact on its business performance and future plans.
[Response]
As part of its efforts to protect its business through intellectual property rights, the Group takes measures against counterfeit products. Specifically, each sales division monitors markets for potential infringements. If a product suspected of infringing the Group’s intellectual property rights is identified during monitoring activities, the Group obtains the product, identifies the seller and manufacturer, and engages local patent attorneys or lawyers to assess the infringement before taking appropriate action.
The Group also conducts thorough investigations to ensure that it does not infringe on intellectual property held by third parties.

The Group believes that by respecting people, the development of people will result in growth for the company, and that securing talented human resources is essential for sustainable growth. However, particularly in Japan, the low birthrate and population aging have led to a shrinking labor force, intensifying competition to continuously hire
and retain talented personnel. A failure to secure such human resources may result in overreliance on individual employees, reduced operational efficiency over the long term, and hinder the Group’s sustainable growth.
[Response]
The Group set the MAX Fundamental Management Policy: “We aim to become a group in which everyone can grow together by creating a lively and fun atmosphere.” All employees are encouraged to take the lead in working toward their own growth.
The Group promotes initiatives to create a workplace where employees can experience personal growth and take pride in their work, while monitoring their motivation levels through engagement surveys and other tools.
In securing talented human resources, the Group focuses on training new graduates while carrying out skilled-specialist hires, including those with specialized expertise, in line with its strategic and organizational needs. It also considers workforce age balance as part of its efforts to strengthen organizational capability.

The Group’s operations, including those managed by third parties, rely on computer systems and the communication networks that connect them (collectively, “information infrastructure”). The Group also sells products that utilize information infrastructure.
Cyberattacks or other disruptions to the information infrastructure could impair the Group’s operations or the functionality of its products and services. Preventing such risks requires the allocation of significant resources. However, there is an inherent risk that the level of resources devoted to the Group’s products and services may become excessive relative to sales volume.
Furthermore, the Group handles confidential and personal information, including customer data. In the event of an unforeseen information leakage, the Group could lose the trust of customers and society, resulting in deterioration of the brand image, customer attrition, and other adverse effects on the Group’s business, business performance, and financial position.
[Response]
Regarding the information infrastructure related to the Group’s operations, the Group aims to maintain and improve information security through initiatives such as obtaining information security management system (ISMS) certification (obtained ISO/IEC 27001 on April 27, 2004).
In addition, the Group has drawn up an ISMS risk response plan, including establishing a basic policy on information security, and has implemented measures to prevent confidential and personal information leakages from the personnel, organizational, physical, and technological perspectives, and has formulated business continuity plans.
The Group is also working to establish a PSIRT for its products and services, taking into account the relevant laws and regulations of each country and region.

In conducting business across many countries and regions, the Group must respect human rights and comply with various laws, regulations, and social norms.
Various laws and regulations may be newly enacted or amended in response to changing social conditions, which could result in additional cost burdens.
In addition, in the event that any legal or regulatory violations arise as a result of governance failures or deficiencies in internal controls, the Group could lose the trust of customers and society, resulting in deterioration of the brand image, customer attrition, and other adverse effects on the Group’s business, business performance, and financial position.
[Response]
The Group strives to obtain information on amendments to various laws and regulations and considers appropriate responses, thereby reducing the risk of non-compliance due to lack of awareness and mitigating the impact of any additional cost burdens.
The Group also promotes compliance awareness by providing various compliance education programs for employees and distributing a monthly Compliance Newsletter on its intranet