Japan Exchange : Corporate Governance Report

(Translation)

Corporate Governance Report

Last Update: March 5, 2020

Osaka Gas Co., Ltd.

Takehiro Honjo, President

Contact: General Affairs Dept. (Tel. [phone])

Securities code: 9532

http://www.osakagas.co.jp/en/index.html

The corporate governance of Osaka Gas (the "Company") is described as follows.

1. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and

Other Basic Information

1. Basic Views

In March 2017, the Company formulated the 2030 Long-term Management Vision and 2020 Medium-term Management Plan, "Going Forward Beyond Borders."

To create opportunities amid the dramatic changes in the business environment portended by the overall liberalization of the energy industry, the Daigas Group (the "Group") will implement its triple "Going Beyond" policy, i.e., "Going Beyond Customer Expectations", "Going Beyond Business Framework", and "Going Beyond Corporate Framework" to contribute to the development of society, local communities and customers with the aim of becoming a revolutionary energy and services company that continues to win customers.

While striving to maintain the company policy of "Service First" and being a "Corporate Group that powers continuous advancement in consumer life and business", under its corporate philosophy which foremost seeks to create "Value for Customers", "Value for Society", "Value for Shareholders", and "Value for Employees", the Group will carry out activities towards attaining the 2030 Long-term Management Vision.

Towards realization of the 2030 Long-term Management Vision and 2020 Medium-term Management Plan, based on our code of conduct, the Daigas Group CSR Charter, and the Daigas Group Code of Conduct and the Daigas Group Environmental Code of Conduct, which are specific codes of conduct thereunder, the Company will strive to achieve sustainable growth and increase medium and long-term corporate value by engaging in transparent, fair, and decisive decision-making and efficient and proper business activities as well as continually enhancing and strengthening corporate governance to strive for global-standard management taking into account ESG (environmental, social, and governance) by responding appropriately to the exercising of shareholder rights, working toward maintaining and increasing a sense of trust by dialogue and cooperation with its stakeholders, and enhancing the level of the entire Group's corporate social responsibility (CSR), among other things.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]

For full compliance now

The Company complies with the principles of the Corporate Governance Code.

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[Disclosure Based on the Principles of the Corporate Governance Code]

[Principle 1.4] (Cross-shareholdings)

The Group has stipulated the following in its rules on the purchase and management of third-party stocks:

• That stocks may be held and only if sales/procurement transactions and cooperation with other companies through business alliances are necessary for promoting the Group's business and the purchase can be expected to contribute to the Group's business;
• That after the stock purchase, it will be regularly confirmed whether continued ownership makes sense, and reports will be made to the Board of Directors;
• That impact on the market is to be taken into account before any sale of stocks that no longer make much

sense to own.

Pursuant to these rules, [the Company] verifies that the distributions, profit from related transactions, and other related revenue from its investment targets for each individual issue exceed the target capital cost, and sells stocks that no longer make much sense to own sequentially after taking into account the impact on the market, the loss or gain on sale, funding needs, and other factors.The Company discusses various agenda by employing diverse methods including conversation with the company in which the Group has invested to determine taking into account whether exercising shareholder rights will contribute to sustainable growth of the target company and to raising its medium and long-term corporate value, or whether it will hurt the Group's corporate value.

[Principle 1.7] (Related Party Transactions)

The Group complies with the stipulations of the Companies Act, and if Directors engage in competitive transactions or conflict of interest transactions, the Board of Directors' rules stipulate that such transactions require approval of and report to the Board of Directors.

A briefing is given when Directors are appointed concerning competitive transactions or conflict of interest transactions. Subsequently, an opportunity is provided to the Directors every year to confirm whether there have been such transactions.

[Principle 2.6] (Performance of functions as corporate pension asset owner)

The Company allocates human resources possessing the necessary experience and quality for corporate pension investment. They gain knowledge of operations through participation in training and seminars and obtain support from pension investment consultants to increase their investment expertise.

Investment of reserve funds is entrusted to multiple investment management institutions after a comprehensive evaluation of their investment policies, experience and track record in pension investment, systems for compliance with laws and regulations, and other factors. The Company fully delegates selection of individual investment targets and voting to the investment management institutions to avoid any conflicts of interest between pension beneficiaries and companies.

[Principle 3-1] (Full Disclosure)

(1) Corporate Philosophy, Business Strategy and Business Plans

The Group has formulated and announced its Daigas Group Corporate Philosophy, and is striving to enhance its medium and long-term corporate value through fair and transparent business practices.

In formulating and announcing its business strategy and business plans, the Company discloses its earnings plans, capital policy, and basic policy as well as its goals on ROE (current net earnings ratio against capital), ROA (current net earnings ratio against total assets), EBITDA (*1), Shareholders' equity ratio, D (Dept)/E (Equity) ratio, its target dividend payout ratio, and SVA (earnings metric taking into account capital costs *2) to explain its efforts to continuously improve corporate value to its shareholders and investors.

(*1) Operating income +Depreciation cost +Amortization of goodwill +Equity in earnings/losses of affiliates

(*2) NOPAT - Invested capital × WACC

The Daigas Group Corporate Philosophy and business plans are provided at the following website: http://www.osakagas.co.jp/en/ir/index.html

(2) Basic Principles on Corporate Governance

The basic principles on corporate governance are as provided in "I1. Basic Views" of this report.

(3) Policy and Procedures for Deciding Officer Remuneration

The policy and procedures for deciding officer remuneration are as provided in "II 2. Matters on Functions of

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Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System), (4) Policies on Deciding Remuneration for Officers."

(4) Policy and Procedures concerning Selection etc. of Officer Candidates

The policy and procedures concerning selection of officer candidates are as provided in "II 2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System), (5) Policies on selecting candidates for Directors and on selecting and dismissing Representative Directors and other Executive Officers."

(5) Reasons for Selecting Officer Candidates

Explanations regarding the selection of Director and Audit & Supervisory Board Member candidates are provided in the reference documents of the shareholders meeting convocation notice.

[Supplementary Principle 4.1.1] (Overview of the scope of management delegation)

The Directors make up the Board of Directors and make important business decisions as well as monitor and supervise business operations.

The Board of Directors establishes its meeting rules, agenda standards for items to be discussed at the meetings, make resolutions and approve important business matters relating to the Group. Important business matters include making decisions on the Group's business plans, establishing important organizations, making important personnel decisions, making decisions on important investments exceeding a certain amount, concluding contracts the like. As for other matters, Executive Directors, Operating Officers, and organizational heads are delegated authority for operations in accordance with the Company's internal rules stipulating job responsibilities and job authorities. To supervise operations, the Executive Directors reports the status of operations at least once every three months to the Board of Directors.

[Principle 4.8] (Effective Utilization of Independent External Directors)

The Company has appointed 13 Directors, three of which are external Directors, and five Audit & Supervisory Board Members, three of which are outside Audit & Supervisory Board Members. The Company has filed notice of all six external Officers, constituting at least one-third of all Officers, as independent Officers with the securities exchange where the Company is listed. External Directors participate in decision making as members of the Board of Directors and are expected to monitor and supervise the performance of Executive Officers' work duties from an independent perspective on the basis of their knowledge and experience, and outside Audit & Supervisory Board Members are expected to strictly audit the performance of Directors' work duties from an independent perspective on the basis of their knowledge and experience.

[Principle 4.9] (Independence Standards and Qualification for Independent Directors)

Standards for judging the independence of the Company's external Directors are as provided in "II. 1. Organizational Composition and Operation [Independent Officers] Other Matters regarding Independent Officers" of this report.

[Supplementary Principle 4.11.1] (Point of view regarding overall balance of the Board of Directors, diversity and size)

The Company's Board of Directors makes important management decisions and supervises operations. In accordance with the Articles of Incorporation, the maximum number of Directors is 15 and the Board is comprised of internal Directors and multiple external Directors.

To attain sustainable growth and improve medium and long-term corporate value for the Group, candidates for Directors are in principle selected from a diverse group of people without regard to sex or nationality etc., taking their knowledge, experiences, abilities, and personalities etc. into account.

Based on this, when selecting, the Company takes into consideration expertise in managing the Group's energy business and other businesses for internal Director candidates and the individual's independent-mindedness for making objective judgments, and whether they have wide-ranging knowledge, wealth of experience, and expertise in their specialized fields for external Director candidates.

[Supplementary Principle 4.11.2] (Status of Directors and Audit & Supervisory Board Members holding concurrent positions)

There may be a case where the Company's Directors and Audit & Supervisory Board Members at times serve concurrently as an Officer for another listed company, however, the number thereof is within a reasonable

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range, and important concurrent positions held are disclosed annually in the business report as well as in the reference documents which are attached to the shareholders meeting convocation notice. Concurrent positions held by Directors are reported regularly to the Board of Directors to make sure that there are no problems with the Director fulfilling his/her duties to the Company.

[Supplementary Principle 4.11.3] (Analysis and Evaluation of Effectiveness of the Board of Directors as a Whole)

Each fiscal year, the Company analyzes and evaluates the effectiveness of the Board of Directors, centering on external Officers (external Directors and outside Audit & Supervisory Board Members).

Specifically, the Board of Directors Secretariat conducted questionnaires and interviews with all Directors and Audit & Supervisory Board Members individually on questions such as whether the operation and information provision of the Board of Directors were appropriate and sufficient, and whether the opinions received from external Officers during evaluation last year (e.g., enhancement of discussion relating to important management themes including business plans and continued provision of information for deeper understanding of Board of Directors resolutions) have been addressed, and in light of the results thereof, held discussions with all external Officers, and made its evaluations, which confirmed that such matters have been appropriately addressed.

The Company will take into consideration the opinions of external Officers, and take initiative to enhance discussions by further increasing the provision of information on important management challenges of the Group and otherwise further enhance the effectiveness of the Board of Director going forward.

[Supplementary Principle 4.14.2] (Training policy for Directors and Audit & Supervisory Board Members) When appointed, the Company provides internal Officers an opportunity to acquire knowledge regarding their roles, legal duties to be complied with, and responsibilities expected for a Director or Audit & Supervisory Board Member. Subsequently, the Company regularly provides opportunities internally or externally for Officers to receive training regarding legal affairs, risk management, compliance, and other matters to continue to acquire knowledge necessary for comprehension of legal revisions and other latest world trends. Further, as part of the succession plan for top management, human resources to oversee the Company's management are fostered through things like systematic rotation of the areas of responsibility of internal Directors and executive Officers.

As for external Officers, the Company explains the Group's businesses and offers an opportunity to the Officers upon appointment to deepen their understanding so that they can put to practice their expertise and experience in each of their fields for supervising and auditing the Company's business. Later, the Company also offers opportunities as necessary in which the business environment and business trends are explained accurately in a timely manner so that outside Officers can gain an understanding.

[Principle 5.1] (Policy for Constructive Dialogue with Shareholders)

The Company looks to build long-term relationships with its shareholders and investors based on trust by making timely and fair information disclosures regarding the Group's business and finances and by engaging in constructive dialogue with them.

Dialogue with the Company's shareholders and investors is led by the Representative Director, Executive Vice Presidents, Business Planning Headquarters Division General Manager, operated mainly by the IR team, and relevant divisions work in a coordinated manner to communicate effectively in accordance with the themes of the dialogue.

Specifically, the Company conducts quarterly briefings for analysts and institutional investors. In addition, the Company holds meetings in response to the needs of analysts and institutional investors.

For individual investors, the Company offers briefings as necessary and provides an explanation on the businesses and management plans on the Company website (*1). The Company also conducts inspection tours of its facilities, mainly for individual investors.

Moreover, the Company prepares and releases publications such as annual reports, fact books, and CSR reports.

The Company provides opportunities for management to communicate with shareholders and investors, and the IR team appropriately provides feedback from shareholders and investors to management.

The Company has established a disclosure policy (*2) concerning insider information (material information not yet made public) pursuant to its information disclosure rules and insider trading rules and has rules against transmitting insider information. The two-week period leading up to a results announcement is designated as a "quiet period" and no information is given out regarding the upcoming results announcement during this

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period.

(*1) URL:http://www.osakagas.co.jp/en/ir/index.html

(*2) URL:http://www.osakagas.co.jp/en/ir/disclosure-policy/index.html

2. Capital Structure

	Foreign Shareholding Ratio		From 20% to less than 30%
[Status of Major Shareholders]
	Name / Company Name			Number of Shares Owned	Percentage (%)
	The Master Trust Bank of Japan, Ltd. (trust account)	27,591,500	6.64
	Nippon Life Insurance Company			19,242,584	4.63
	Japan Trustee Services Bank, Ltd. (trust account)			18,758,400	4.51
	MUFG Bank, Ltd.			13,985,880	3.36
	Resona Bank, Limited			10,555,416	2.54
	Japan Trustee Services Bank, Ltd. (trust account 7)	9,381,500	2.26
	Japan Trustee Services Bank, Ltd. (trust account 5)	7,609,300	1.83
	Japan Trustee Services Bank, Ltd. (trust account 9)	6,296,000	1.51
	JP MORGAN CHASE BANK 385151			6,167,806	1.48
	STATE STREET BANK WEST CLIENT-TREATY	6,062,208	1.46
	505234
	Controlling Shareholder (except for Parent Company)		---
	Parent Company			None

Supplementary Explanation

• Above information on Status of Major Shareholders is based on the list as of March 31, 2019.
• The large shareholding report made available to public inspection on January 21, 2019 states that three companies: Sumitomo Mitsui Trust Bank, Ltd., Sumitomo Mitsui Trust Asset Management Co., Ltd., and Nikko Asset Management Co., Ltd. jointly owned 20,842,000 shares of the Company's stock as of January 15, 2019 (5.00% of the total number of outstanding shares), but the portion of the actual number of shares they held at the end of the fiscal year that the Company cannot confirm is not included in the above description of major shareholders.

3. Corporate Attributes

	Listed Stock Market and Market Section		Tokyo Stock Exchange First Section, Nagoya Stock
		Exchange First Section
	Fiscal Year-End	March
	Type of Business	Electric Power & Gas
	Number of Employees (consolidated) as of the	More than 1000
	End of the Previous Fiscal Year
	Sales (consolidated) as of the End of the		More than 1 trillion yen
	Previous Fiscal Year
	Number of Consolidated Subsidiaries as of the	From 100 to less than 300
	End of the Previous Fiscal Year
			- 5 -

1. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder
   --
2. Other Special Circumstances which may have Material Impact on Corporate Governance

--

II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management

1. Organizational Composition and Operation

Organization Form

Company with Audit & Supervisory Board

[Directors] (Updated)

Maximum Number of Directors Stipulated in

15

Articles of Incorporation

Term of Office Stipulated in Articles of

One year

Incorporation

Chairperson of the Board

Chairman of the Company (except when also serving as

President)

Number of Directors

12

Appointment of Outside Directors

Yes

Number of Outside Directors

2

Of the Outside Directors, Number Appointed as

2

Independent Officers

Outside Directors' Relationship with the Company (1)

(Updated)

Name

Attribute

Relationship with the Company*

a

b

c

d

e

f

g

h

i

j

k

Hideo Miyahara

Academic

Kazutoshi Murao

From another company

• Categories for "Relationship with the Company"
• "○" when the director presently falls or has recently fallen under the category; "△" when the director fell under the category in the past
• "●" when a close relative of the director presently falls or has recently fallen under the category; "▲" when a close relative of the director fell under the category in the past

1. Executive of the Company or its subsidiaries
2. Non-executivedirector or executive of a parent company of the Company
3. Executive of a fellow subsidiary company of the Company
4. A party whose major client or supplier is the Company or an executive thereof
5. Major client or supplier of the listed company or an executive thereof
6. • 6 -

f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as an officer

g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)

h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) (the director himself/herself only)

i. Executive of a company, between which and the Company outside directors are mutually appointed (the director himself/herself only)

j. Executive of a company or organization that receives a donation from the Company (the director himself/herself only)

k. Others

Outside Directors' Relationship with the Company (2) (Updated)

	Designation as	Supplementary
Name	Independent	Explanation of	Reasons for Appointment
	Director	the Relationship
Hideo Miyahara	○	None of a. through k.	The Company in principle selects
		above are applicable.	candidates for directors from a diverse
			group of people without regard to sex
			or nationality etc., taking their
			knowledge, experiences, abilities, and
			personalities etc. into account, and the
			individual's independent-mindedness
			for making objective judgments, and
			whether they have wide-ranging
			knowledge, wealth of experience, and
			expertise in their specialized fields for
			external Director candidates.
			Mr. Miyahara has notable achievements
			in information technology and
			considerable experience in
			organizational management as a former
			president of Osaka University, so the
			Company considers him qualified as an
			outside director and has appointed him
			to serve. Further, because the Company
			has specified criteria for determining
			independence of outside officers, i.e.,
			not having any special conflict of
			interest relationship with the Company
			impacting decision-making, and Mr.
			Miyahara satisfies those criteria, the
			Company judges that he is adequately
			independent and that there is no
			concern that there will be a conflict of
			interest with general shareholders.
Kazutoshi Murao	○	None of a. through k.	The Company in principle selects
		above are applicable.	candidates for directors from a diverse
			group of people without regard to sex
			or nationality etc., taking their
			knowledge, experiences, abilities, and
			personalities etc. into account, and the
			individual's independent-mindedness
			for making objective judgments, and
			whether they have wide-ranging
		- 7 -

knowledge, wealth of experience, and expertise in their specialized fields for external Director candidates.

Mr. Murao has considerable experience and wide-ranging business insight as a former President and Representative Director of Nippon Telegraph and Telephone West Corporation, so the Company considers him qualified and has appointed him as an outside director. Further, because the Company has specified criteria for determining independence of outside officers, i.e., not having any special conflict of interest relationship with the Company impacting decision-making, and Mr. Murao satisfies those criteria, the Company judges that he is adequately independent and that there is no concern that there will be a conflict of interest with general shareholders.

	Voluntary Establishment	of Committee(s)
	Corresponding to Nomination Committee or	Established
	Remuneration Committee
	Committee's Name, Composition, and Attributes of Chairperson	(Updated)
				Committee	Corresponding	to		Committee	Corresponding	to
				Nomination Committee			Remuneration Committee
	Committee's Name			Advisory Committee Relating	to		Advisory Committee on
			Officer Appointment etc.			Remuneration
	All Committee Members		6			7
	Full-time Members		0			0
	Inside Directors		1			2
	Outside Directors		2			2
	Outside Experts		0			0
	Other		3			3
	Chairperson			Mutual Election			Mutual Election
	Supplementary Explanation	(Updated)

The Company has established voluntarily advisory committees to discuss matters concerning the appointment of Directors/Audit & Supervisory Board Members, appointment and dismissal of Representative Director and Executive Officers, as well as Director remuneration.

The voluntary advisory committees are comprised of inside and outside members, with outside committee members being all of the outside officers (two outside Directors and the three outside Audit & Supervisory Board Members, all of whom satisfy the standards for determining independence specified by the Company). The inside committee members are the Company president or if necessary persons designated by the President (the President may designate up to two members who are Representative Directors). The committee members falling under "Other" in the above table are the three outside Audit & Supervisory Board Members. The committee chairperson is appointed by the committee members.

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The advisory committee meeting relating to appointment etc. of officers in the fiscal year ended March 31, 2019 was held in February 2019 attended by six committee members (including five outside officers) and deliberated on matters relating to the appointment of Directors and Audit & Supervisory Board Members, and appointment and dismissal etc. of Representative Directors and other Executive Officers. The advisory committee meeting relating to remuneration was held in May 2018 attended by seven committee members (including five outside officers) and deliberated on such matters as the appropriateness of the calculation method for the portion linked to business results, payment coefficient, and remuneration levels.

[Audit & Supervisory Board Members]

Establishment of Audit & Supervisory Board	Established
Maximum Number of Audit & Supervisory
Board Members Stipulated in the Articles of	5
Incorporation
Number of Audit & Supervisory Board Members	5

Cooperation among Audit & Supervisory Board Members, Accounting Auditors and Internal Audit Departments

The effectiveness and quality of auditing are improved through enhanced mutual cooperation by sharing information as necessary, including holding regular meetings concerning annual audit plans and audit reports. Further, the Head of the Audit Division and outside Officers (outside Audit & Supervisory Board Members and outside Directors) exchange opinions regarding the status of internal controls and risk management.

	Appointment of Outside Audit & Supervisory		Appointed
	Board Members
	Number of Outside Audit & Supervisory Board		3
	Members
	Number of Independent Audit & Supervisory		3
	Board Members

Outside Audit & Supervisory Board Members' Relationship with the Company (1)

Name

Attribute

Relationship with the Company*

a

b

c

d

e

f

g

h

i

j

k

l

m

Yoko Kimura

Other

Eiji Hatta

Academic

Shigemi Sasaki

Other

• Categories for "Relationship with the Company"
• "○" when the person presently falls or has recently fallen under the category; "△" when the person fell under the category in the past
• "●" when a close relative of the person presently falls or has recently fallen under the category; "▲" when a close relative of the person fell under the category in the past

1. Executive of the Company or its subsidiary
2. Non-executivedirector or accounting advisor of the Company or its subsidiaries
3. Non-executivedirector or executive of a parent company of the Company
4. • 9 -

d. Audit & Supervisory Board Member of a parent company of the Company e. Executive of a fellow subsidiary company of the Company

f. A party whose major client or supplier is the Company or an executive thereof g. Major client or supplier of the Company or an executive thereof

h. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as an officer

i. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)

j. Executive of a client or supplier company of the Company (which does not correspond to any of f, g, or h) (the Audit & Supervisory Board Member himself/herself only)

k. Executive of a company, between which and the Company outside directors/Audit & Supervisory Board Members are mutually appointed (the Audit & Supervisory Board Member himself/herself only)

l. Executive of a company or organization that receives a donation from the Company (the Audit & Supervisory Board Member himself/herself only)

m. Others

Outside Audit & Supervisory Board Members' Relationship with the Company (2)

				Designation as
	Name			Independent Audit			Supplementary Explanation of
			& Supervisory			the Relationship
				Board Member
	Yoko Kimura		○		None of a. through m. above are
					applicable.

Reasons of Appointment

The Company in principle selects candidates for Audit & Supervisory Board Members from a diverse group of people without regard to sex or nationality etc., taking their knowledge, experiences, abilities, and personalities etc. into account, and the individual's independent-mindedness for making objective judgments, and whether they have wide-ranging knowledge, wealth of experience, and expertise in their specialized fields for outside Audit & Supervisory Board Member candidates. Ms. Kimura has considerable experience and professional knowledge, having served as the Executive Director of CLAIR (Council of Local Authorities for International Relations) and a Trustee at Nara Women's University, so the Company considers her qualified as an outside Audit & Supervisory Board Member and she has been appointed to serve. Further, because the Company has specified criteria for determining independence of outside officers, i.e., not having

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			any special conflict of interest
			relationship with the Company
			impacting decision-making, and
			Ms. Kimura satisfies those
			criteria, the Company judges
			that she is adequately
			independent and that there is no
			concern that there will be a
			conflict of interest with general
			shareholders.
Eiji Hatta	○	None of a. through m. above are	The Company in principle
	applicable.	selects candidates for Audit &
			Supervisory Board Members
			from a diverse group of people
			without regard to sex or
			nationality etc., taking their
			knowledge, experiences,
			abilities, and personalities etc.
			into account, and the
			individual's
			independent-mindedness for
			making objective judgments,
			and whether they have
			wide-ranging knowledge, wealth
			of experience, and expertise in
			their specialized fields for
			outside Audit & Supervisory
			Board Member candidates. Mr.
			Hatta has an outstanding career
			as a Professor at Doshisha
			University (industrial
			organization theory and
			quantitative economics) and has
			considerable experience in
			organizational management as
			President of Doshisha
			University, so the Company
			considers him qualified as an
			outside Audit & Supervisory
			Board Member and has
			appointed him. Further, because
			the Company has specified
			criteria for determining
			independence of outside
			officers, i.e., not having any
			special conflict of interest
			relationship with the Company
			impacting decision-making, and
			Mr. Hatta satisfies those criteria,
			the Company judges that he is
			adequately independent and that
			there is no concern that there
			will be a conflict of interest with
			general shareholders.
Shigemi Sasaki	○	None of a. through m. above are	The Company in principle
	applicable.	selects candidates for Audit &
			Supervisory Board Members
		- 11 -

from a diverse group of people without regard to sex or nationality etc., taking their knowledge, experiences, abilities, and personalities etc. into account, and the individual's independent-mindedness for making objective judgments, and whether they have wide-ranging knowledge, wealth of experience, and expertise in their specialized fields for outside Audit & Supervisory Board Member candidates. Mr. Sasaki has considerable experience and professional knowledge in law as president of the Takamatsu High Court and president of the Osaka High Court, so the Company considers him qualified as an outside Audit & Supervisory Board Member and has appointed him. Further, because the Company has specified criteria for determining independence of outside officers, i.e., not having any special conflict of interest relationship with the Company impacting decision-making, and Mr. Sasaki satisfies those criteria, the Company judges that he is adequately independent and that there is no concern that there will be a conflict of interest with general shareholders.

[Independent Officers] (Updated)

Number of Independent Officers		5
Other Matters regarding Independent Officers	(Updated)

All outside officers of the Company (two outside Directors and three outside Audit & Supervisory Board Members) are appointed as independent officers.

The Company has established standards for determining the independence of its outside officers as follows.

1. The individual may not be an Executive Director, Director, Executive Officer, or employee ("business operator") of the Company or its affiliates ("Company Group") and may not have been a business operator of the Company Group for ten (10) years prior to being appointed.
2. The individual may not be a major vendor of the Company (*1) or an executive thereof, and may not have been a business operator of the same for three (3) years prior.
3. • 12 -

1. The Director/Audit & Supervisory Board Member may not be a major client of the Company (*2) or an executive thereof, and may not have been a business operator of the same for three (3) years prior.
2. The individual may not be a major shareholder (an individual or entity which owns 10% or more of the total voting rights of the Company, hereafter the same) or an executive thereof.
3. The individual may not be an executive of an entity for which the Company is a major shareholder.
4. The individual may not be receiving substantial donations (*3) from the Company or be an executive for an entity receiving such donations.
5. In addition to remuneration as an Officer, the individual may not receive substantial remuneration (*4) from the Company as a consultant, an accounting specialist such as a Certified Public Accountant, etc. or as a legal specialist such as an attorney, etc. (if the entity receiving the fees concerned is a corporation or a limited liability company, etc., any individual belonging to such an organization). The individual also may not be the Accounting Auditor of the Company Group.
6. If a business operator of the Company is an outside Officer of another company, the individual may not be an executive at the company concerned, the parent company or subsidiary of the company concerned.
7. The individual may not be a close relative (spouse or a relation in the second degree) of persons listed below:

1. Persons who are currently or have been a Director, Audit & Supervisory Board Member, Executive Officer or a key employee with an equivalent position ("Important Executive") for the Company Group within the past three years.
2. Of the persons in 2-6 above, those who are Important Executives.
3. Of the persons listed in 7 above, those who have professional licenses such as CPAs, attorneys, etc.

1. In addition to 1-9 above, individuals must not have issues that could cause constant and real conflicts of interest against the Company's general shareholders.

*1. Payment amount to vendor accounts for 2% of consolidated sales or more

*2. Received amount from client accounts for 2% of the Company Group's consolidated sales or more, or the loan balance outstanding is 2% of the Company Group's consolidated gross assets or more

*3. More than 10 million yen on average over the past three years

*4. The larger of more than 10 million yen on average over the past three years or an amount equivalent to 2% of total sales (total revenues) of the organization to which payment is made (three-year average)

Even if a person does not satisfy one of the criteria listed above in 1-10, if the individual otherwise qualifies as an independent Officer he/she may still become a Director/Audit & Supervisory Board Member by providing an explanation or disclosing the reasons why he/she does not fulfill a criterion.

[Incentives]

Incentive Policies for Directors	Performance-linked remuneration system established
Supplementary Explanation

To encourage officers' efforts to realize consistent growth and increase medium and long-term corporate value, about 40% of overall remuneration is linked to the business results of the Company, with the primary indicator being the current net profit (consolidated net profit) attributable to parent company shareholders in the past three years.

The voluntary advisory committee meeting in the fiscal year ended March 31, 2019 was held in May 2018 in accordance with rules specified by the Board of Directors attended by seven committee members (including five outside officers) and deliberated on such matters as the appropriateness of the calculation method for the portion linked to business results, payment coefficient, and remuneration levels, which were then decided by President Takehiro Honjo.

Recipients of Stock Options

Supplementary Explanation

- 13 -

[Director Remuneration]

Disclosure of Individual Directors' RemunerationNo Individual Disclosure

Supplementary Explanation

Remuneration paid to Directors in FY2018 reached 539 million yen (however, this includes remuneration for the four Directors who resigned as of the end of the 200th regularly scheduled Shareholders Meeting held on June 28, 2018).

Policy on Determining Remuneration AmountsEstablished and Calculation Methods

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods

The policy on determining remuneration amounts and calculation methods are as provided in "II 2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System), (4) Policies on Deciding Remuneration for Officers."

[Support System for Outside Directors and/or Audit & Supervisory Board Members]

Outside Directors are assisted by the Secretariat Department and outside Audit & Supervisory Board Members by the office of Audit & Supervisory Board. To deepen their overall knowledge of the Company, opportunities are provided so that information can be provided in a timely and appropriate manner to outside Directors and Audit & Supervisory Board Members.

[Those who Resign from President and Representative Director etc.]

Name etc. of SeniorAdvisor/Advisor who is a Former President and Representative Director etc.

Working

Date of

Name

Title /

Content of Operation

Form/Conditions

Retirement from

Term

Status

(Full-time/Part-time

President, etc.

, Paid/Unpaid, etc.)

Akio Nomura

Special

External activities with

Part Time/

June 26, 2009

Updated

Advisor

industry groups and

With Compensation

once per

business circles and

year

contributions to local

communities, among

other things

Shin-ichiro Ryoki

Special

External activities with

Part Time/

June 27, 2003

Updated

Advisor

industry groups and

With Compensation

once per

business circles and

year

contributions to local

communities, among

other things

Total number of counselors, advisors, etc., who

2

previously held positions such as President

- 14 -

Other Matters

The Company sometimes appoints consultants and special advisors. Presently, two special advisors have been appointed.

2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System) (Updated)

(1) Corporate Governance System of the Company

The Company has selected to be a company with Audit & Supervisory Board and adopted an executive officer system. The Corporate governance system of the Company is as follows.

a. Board of Directors, Directors of the Company

The Board of Directors consists of 12 directors (including two outside directors). Its mission is to formulate the Board of Directors rules and standards for voting on resolutions in the Board of Directors, make swift and appropriate decisions about important matters that affect the whole Group including subsidiaries and to enhance supervisory capabilities.

The Articles of Incorporation stipulate that there shall be no more than 15 Directors. They also direct that appointment of Directors is to take place with a quorum of shareholders possessing at least one-third of shareholder voting rights and by a majority of voting rights held by shareholders present, and that no cumulative voting may be used for appointing Directors.

13 Board of Directors meetings were held in the fiscal year ended March 31, 2019. Meetings discussed the Group's management plans, the establishment of important organizations, important human resources matters, execution of important investments and agreements greater than a certain amount, and operational status reports etc. from Executive Officers.

b. Executive Officers

The Company has adopted an executive officer system (executive officers are the Executive President, Executive Vice Presidents, Senior Executive Officers, and Executive Officers), which enables the Directors of the Company to focus on making business decision and monitoring and supervisory functions, and worked toward strengthening the business efficiency and the supervisory functions by vitalizing the Board of Directors. Executive officers perform duties determined by the Board of Directors, and some Representative Directors and Directors concurrently serve as executive officers to make management decision-making more accurate and efficient.

c. Management Meeting

The Company examines basic management policies and important management issues at the management meeting and fully deliberates the foregoing before decision-making. In accordance with internal regulations, the management meeting consists of the President, Executive Vice President, Senior Executive Officer, Head of Corporate Headquarters, and Head of Business Division. In principle, three times per year management meetings are held as "CSR Promotion Meetings", which deliberate on plans for CSR activities and make report on CSR activities.

d. Audit & Supervisory Board, Audit & Supervisory Board Members

The Audit & Supervisory Board consists of five Audit & Supervisory Board Members, of whom three are outside auditors and each Audit & Supervisory Board Member monitors the execution of work duties by the Directors.

e. Audit Division

The Company established the Audit Division as an internal audit division, and from an independent and objective standpoint based on annual audit plans and the like, it evaluates operational practices' compliance with standards and efficiency and the appropriateness of systems and standards and identifies issues to provide suggestions and follow-ups towards improved operations of audited bodies and shares audit results with the Management Meeting. The Audit Division aims to maintain and improve the quality of audit operations, such as by undergoing regular external evaluations.

- 15 -

f.Advisory Committee

To maintain objectivity and achieve transparency in the decision-making process, matters relating to appointment of Director and Audit & Supervisory Board Member candidates, appointment and dismissal of Representative Director and other Executive Officers, and matters relating to Directors' remuneration are deliberated at an advisory committee made up of a majority of external Officers before decision is made in light of such deliberations. The committee is comprised of inside and outside members, with outside committee members being all of the outside officers (the two outside Directors and the three outside Audit & Supervisory Board Members, all of whom satisfy the standards for determining independence specified by the Company). The inside committee members are the President and if necessary, persons appointed by the President (the President may appoint up to two members who are Representative Directors). The committee chairperson is appointed by the committee members.

g. CSR Committee

The Company has established the CSR Committee to coordinate and advance group-wide CSR activities, which is chaired by the "CSR Executive", who is the officer in charge of overseeing the Group's CSR activities, and is composed of the General Managers of relevant divisions. The CSR Committee promotes information security, risk management and other aspects of the Company's CSR activities.

h. Investment Evaluation Committee

The Company has established the Investment Evaluation Committee, which is chaired by the Head of the Corporate Planning Headquarters and composed of the General Managers of relevant divisions. The committee examines risk and return and makes an evaluation on investments exceeding a certain amount, and it reports findings to the management meeting and assists appropriate investment decisions.

(2) Matters relating to outside Directors (roles and functions of outside directors)

Based on their own experience and insights in their respective fields, each outside Director plays a role in decision-making as a member of the Board of Directors and monitors and supervises the execution of work duties of the executive Directors from an independent viewpoint.

(3) Initiatives for bolstering the functions of the Audit & Supervisory Board Members

The Company selects three outside Audit & Supervisory Board Members, who monitor the execution of work duties of the Directors from an independent viewpoint and strive to raise the effectiveness and quality of auditing by sharing information as necessary by holding regular meetings concerning annual audit plans and audit reports. Office of Audit & Supervisory Board with a dedicated full-time staff which is not under the direct control of the executive Directors has been established to support the Audit & Supervisory Board Members' auditing work and thus improve the auditing system.

The Audit Division, Audit & Supervisory Board Members, and accounting auditors share information from time to time as necessary, including regular meetings on annual audit plans and audit reports, among other things, thereby working to enhance coordination and ensure the efficacy and quality of audits. Further, the Head of the Audit Division and outside Officers (outside Audit & Supervisory Board Members and outside Directors) exchange opinions regarding the status of internal controls and risk management.

(4) Policies on Deciding Remuneration for Officers

To maintain objectivity and achieve transparency in the decision-making process, the remuneration for each Director shall be deliberated at an advisory committee made up of a majority of outside officers before decision is made by President Takehiro Honjo pursuant to delegation by a resolution of the Board of Directors, with such amounts being within the maximum amount approved at the Annual Meeting of Shareholders of June 28, 1990 (¥63 million per month (not including the portion of wages for employees who are also Directors); 27 persons). In deciding amounts of remuneration, the Company follows rules specified by a resolution of the Board of Directors, and refers to each Director's roles and responsibilities and levels of remuneration at other companies. To encourage officers' efforts to realize consistent growth and increase medium and long-term corporate value, about 40% of overall remuneration is linked to the business results of the Company. In order to contribute to short and medium-term share price growth, the performance-based amount is linked to the consolidated business results of the Company for the past three years. The amount of the remuneration for Outside Directors consists of a fixed portion only because they are in a position independent of the execution of the Company's businesses.

Directors, except Outside Directors, purchase the Company's shares through officers' shareholding

- 16 -

association, to which they contribute a certain amount of money from their monthly remuneration.

The advisory committee is comprised of inside and outside members, with outside committee members being all of the outside officers (the two outside Directors and the three outside Audit & Supervisory Board Members, all of whom satisfy the standards for determining independence specified by the Company). The inside committee members are the Company President and if necessary, persons appointed by the President (the President may appoint up to two other Representative Directors). The committee members elect the committee chairperson from amongst themselves. Voluntary advisory committee meetings deliberate on such matters as the appropriateness of the calculation method for the portion linked to business results, payment coefficient, and remuneration levels in accordance with rules specified by a resolution by the Board of Directors.

Remuneration for each Audit & Supervisory Board Member shall be determined through discussions among Audit & Supervisory Board Members within the amount of remuneration (up to ¥14 million per month; five persons) approved at the Annual Meeting of Shareholders of June 29, 1994, taking into consideration the position, etc. of each Audit &Supervisory Board Member. The amount of the remuneration for Audit & Supervisory Board Members (including Outside Audit & Supervisory Board Members) consists of a fixed portion only because they are in a position independent of the execution of the Company's businesses.

The system of paying retirement benefits to Directors and Audit & Supervisory Board Members has been abolished.

1. Policies on selecting candidates for Directors and on selecting and dismissing Representative Directors and other Executive Officers
   To attain sustainable growth and improve medium and long-term corporate value, candidates for Directors and Audit & Supervisory Board Members are in principle selected from a diverse group of people without regard to sex or nationality, taking their knowledge, experiences, abilities, and personalities etc. into account.
   Based on this, when selecting, the Company takes into consideration expertise in managing the Group's energy business and other businesses for internal Director candidates and the individual's independent-mindedness for making objective judgments, and whether they have wide-ranging knowledge, wealth of experience, and expertise in their specialized fields for external Director candidates. Further, the Company has heretofore ensured agile adaptation to changes in the management environment and clarification of management responsibilities by setting the term of appointment for Directors at one year.
   In selecting candidates for Directors and Audit & Supervisory Board Members and selecting and dismissing Representative Director and other Executive Officers, pursuant to the above policy, the Company makes a decision based on the deliberation of a voluntary advisory committee in which external Officers comprise a majority from the standpoint of securing objectivity and transparency of the decision-making process (the composition of the voluntary advisory committee is the same as the remuneration advisory committee.)

3. Reasons for Adoption of Current Corporate Governance System

The Company considers its current governance system best suited in order to respond swiftly to changes in the Group's business environment, make transparent, fair and decisive decisions, and implement efficient and appropriate actions. The reasons are as follows:

• The Company has adopted an executive officer system, which enables the Directors of the Company to focus on making business decision and monitoring and supervisory functions, and worked toward strengthening the business efficiency and the supervisory functions by vitalizing the Board of Directors.
• The Company has appointed several outside directors, who monitor and supervise the execution of work duties of the executive Directors from an independent viewpoint, and outside Audit & Supervisory Board Members, who monitor the execution of work duties of the Directors from an independent viewpoint.
• To maintain objectivity and achieve transparency, the matters relating to the nomination of Directors/Audit & Supervisory Board Members and the remuneration amounts for Directors are deliberated at a voluntary advisory committee made up of a majority of outside Officers before decision is made.
• • 17 -

III. Implementation of Measures for Shareholders and Other Stakeholders

1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting Rights In conjunction with full compliance

			Supplementary Explanations
Early Notification	of	General	To allow shareholders time to carefully consider proposed resolutions, the
Shareholder Meeting		Company sends out its shareholder meeting notifications early (about three
			weeks in advance of the meeting).
			Before sending out convocation notices, the Company discloses them on the
			website of the Tokyo Stock Exchange, on the electronic voting platform for
			institutional investors operated by ICJ, Inc., and on the Company's website.
Allowing Electronic	Exercise	The Company has adopted an electronic voting system in which voting
of Voting Rights			rights can be exercised electronically over the Internet, etc.
Participation in	Electronic	The Company participates in the electronic voting platform for institutional
Voting Platform			investors operated by ICJ, Inc.
Providing Convocation Notice	The Company prepares English translations of its convocation notices
in English			(entire text), and before sending out the notices, the Company discloses
			them on the website of the Tokyo Stock Exchange, on the electronic voting
			platform for institutional investors operated by ICJ, Inc., and on the
			Company's website.
Other			Convocation notices, resolution notices and extraordinary reports related to
			the exercise of voting rights (both in Japanese and English) are listed on the
			Company's website.

2. IR Activities

		Supplementary Explanations			Briefing
				given by
					President
Preparation and		The Company's Disclosure Policy has been prepared and can be
Publication of Disclosure		accessed on the Company's website
Policy		(http://www.osakagas.co.jp/en/ir/disclosure-policy/index.html).
Regular Investor Briefings		Briefings for individual investors are held as a part of the events		No
for Individual Investors		sponsored by securities companies, such as equities investment
		seminars.
Regular Investor Briefings		Briefings for analysts and institutional investors are held four		Yes
for Analysts and		times per year (quarterly). For two of the briefings (when
Institutional Investors		announcing financial results for the second and fourth quarters),
		a representative provides explanations.
Posting of IR Materials on		Earnings results, financial information, business reports,
Website		securities reports, annual reports, fact books, and other corporate
		data are accessible via the Internet
		(http://www.osakagas.co.jp/en/ir/index.html).
Establishment of		● Responsibility for IR: Planning Department, Corporate
Department and/or		Planning HQ
Manager in Charge of IR		● IR director: Takeshi Matsui (Representative Director,
		Executive Vice-President, President of Corporate Planning
		Headquarters)
		● IR liaison officer: Takenori Fujita (IR General Manager,
		Corporate Planning HQ)
Other		Regular briefing sessions are not held for overseas investors, but		Yes
		Representative Directors occasionally visit overseas investors to
		explain corporate strategies, etc.

- 18 -

3. Measures to Ensure Due Respect for Stakeholders Supplementary Explanation

Stipulation of Internal Rules for Respecting the Position of Stakeholders

In order to contribute to the sustainable growth of our society with the business partners in its domestic and overseas supply chain, the Daigas Group has formulated its management philosophy, the "Daigas Group CSR Charter" and "Daigas Group Code of Conduct" to improve the level of CSR of the entire group through communication with stakeholders.

(1) Daigas Group's Management Philosophy

The Group gives top priority to create value for customers by placing the Company's motto "Service comes first" as the core belief behind its business activities and by striving to become a useful in enhancing the lives and businesses of its customers. The Daigas Group pursues its management philosophy of "Creating Four Values" in which it endeavors to create value for its customers and thereby build social value, shareholder value and value for its employees. (Please refer to the Company's home page for details: http://www.osakagas.co.jp/en/ir/manage/brand/index.html)

(2) Daigas Group CSR Charter

The Daigas Group's business policy is to seek foremost to create value for its customers and thereby build social value, shareholder value and value for its employees. The Group believes that creating these Four Values by engaging in fair and transparent business activities results in fulfilling its CSR (corporate social responsibilities).

In order to fulfill its stakeholders' expectations, to fulfill its corporate social responsibility, and for Daigas Group to seek sustainable growth, the Group has established the "Daigas Group CSR Charter" as the action guideline for its Officers and employees.

Top management and each section's managers set an example and endeavor to implement the Charter. If any violation of laws and regulations or other problems occur, top management and section managers shall directly resolve such problems and take strict corrective actions.

The Charter consists of the following chapters.

Chapter I. Creating Value for Customers

The Daigas Group is to contribute to realization of higher levels of comfort and development of business activities for its customers through reliable and safe supply of natural gas and other energy services, securement of safety, and improvement of services. By providing socially useful products, we also challenge to create new value and seek to become a corporate group keep growing together with our customers.

Chapter II. Harmonizing with the Environment and Contributing to a Sustainable Society

Environmental preservation both at the regional and global levels is of paramount importance for the Daigas Group which is primarily engaged in energy services. The Daigas Group is aware that its activities are deeply involved in the environment and seeks contribute to the sustainable growth of our society by harmonizing its business activities with the environment and realizing efficient utilization of energy resources.

Chapter III. Communicating with Society and Contributing to Society

The Daigas Group proactively discloses information so that its business activities are correctly understood by society, and promotes communication as well as improved managerial transparency. In addition, the Group will strive to contribute to the communities it serves as a good corporate citizen.

Chapter IV. Promoting Compliance and Respect for Human Rights

The Daigas Group looks to be a trustworthy, upstanding industry group by having every Officer and employee carry out compliance without fail. The Group's perspective is that compliance goes beyond legal compliance, however, and includes decent conduct expected of all citizens. Accordingly, the Group intends to respect human rights and work to maintain equitable relationships with our customers, business partners, and other persons.

- 19 -

Chapter V. Corporate Management with the Goal of Human Growth

The Daigas Group strives to become an enterprise that can realize the personal growth of its employees through work by ensuring employment opportunities and by respecting employees' individuality and initiatives. In order to create new value for customers, shareholders and society, the Group intends to support its employees as they take on the challenge to carry out their work with a sense of purpose.

(Please refer to the Group's home page athttp://www.osakagas.co.jp/csr_e/beginning/csr_charter.html)

(3) Daigas Group Code of Conduct

The Daigas Group believes that implementing thorough compliance is the most important element of fulfilling its CSR and has thus formulated the Daigas Group Code of Conduct as a standard for all Group companies on the conduct that the Group's officers and employees must exhibit. The Code of Conduct is to be used as a basic template when Group companies create rules. As necessary, the main Code of Conduct is incorporated into the in-house rules and manuals so that the spirit of the Code becomes integrated with daily operations. The Code has also been revised to reflect the principles of global guidelines such as the UN Global Compact and ISO 26000. In addition to measures in conjunction with the introduction of the Daigas Group brand in March 2018, we have made efforts to make it clear that Compliance at the Daigas Group means not just compliance with laws and regulations, but also gaining the trust and understanding of employees, society, and shareholders, and continuing to meet their expectations.

(Please refer the Company website:http://www.osakagas.co.jp/csr_e/beginning/principles.html)

Reference: The Essence of the Daigas Group Code of Conduct

a. The Group will create a workplace where human rights are respected and employees can work in comfort and with peace of mind.

b. The Group will comply with the laws and regulations and exhibit decency while engaging in business activities.

c. In conducting global business activities, the Group will comply with all local laws and regulations, and will respect international norms including those concerning human rights.

d. The Group will consider the global environment in all of its actions.

e. The Group will engage in fair business transactions and fair competition.

f. The Group will provide safe and high-quality products/services at reasonable prices, with the aim of enhancing customer satisfaction.

g. The Group will act modestly and sensibly in its relationships with vendors and business partners with which it engages in business.

h. The Group will appropriately handle and disclose information with proper recognition of its value and importance.

i. The Group will refuse any relationship with anti-social forces.

j. The Group will make appropriate tax payments and properly handle its financial accounts.

The ethos of the above-mentioned Management Philosophy, CSR Charter, Code of Conduct is incorporated into the policies and rules of every aspect of the Group's business procedures and strictly enforced.

Implementation of Environmental Preservation Activities, CSR Activities, etc.

The Group aims to become a corporate group supporting further improvement in lives and businesses and reflect awareness of social impact throughout Daigas Group's value chain into its business activities.

The Group has established the CSR Promotion Council, consisting of Officers, which deliberates CSR plans and CSR activity reports under the supervision of the President of Osaka Gas and the CSR Committee, consisting of the heads of business units, coordinates and advances Group-wide CSR activities chaired by the CSR Officer governing Daigas Group's CSR activities to perform appropriate and active activities and also has created an opportunity for dialogue with internal and external stakeholders from time to time depending on the topic to enable flexible and appropriate responses to the demands of society.

(CSR Organization:http://www.osakagas.co.jp/csr_e/beginning/system.html)

The Daigas Group is promoting its CSR activities based on the CSR Charter, establishing policies, structures,

- 20 -

and indicators. The Dai gas Group identifies CSR activities that are important for stakeholders and the Company (materiality) in reference to the International Sustainability Reporting Guidelines issued by the Global Reporting Initiative (GRI) and manages the progress of efforts on the basis of important indicators (materiality indicators). Comprehensive information on those efforts is disclosed on our website. In the CSR report issued for the 2018 fiscal year, as one initiative for global management taking ESG into account as set forth in the 2030 Long-term Management Vision and 2020 Medium-term Management Plan, "Going Forward Beyond Borders", the Daigas group clearly identifies "risks and opportunities from climate change" and reports the results of its contributions to cutting CO2. "Risks and opportunities from climate change" has been added to the materiality indicators from the 2018 fiscal year.

(Daigas Group's CSR site:http://www.osakagas.co.jp/csr_e/index.html)

Major activities are as follows

CSR Overall

- Disclosure of CSR information referencing international guidelines; CSR efforts throughout the value chain

Handling of SDGs

• Contributions for sustainable development goals (SDGs): Resilient energy infrastructure and urban development, clean energy from utilization of natural resources, and optimizing energy usage together with customers, etc.

Materiality (priority initiatives)

• Up to 2017: Customer safety and health, safety indications for products and services, energy consumption and atmospheric emissions, waste water and waste products, local community, customer privacy, complaint-handling efforts, and supplier evaluation
• From 2018: Customer safety and health, atmospheric emissions, energy, local community, customer privacy, training and education, diversity and equal opportunities etc., supplier evaluation, and economic performance (risks and opportunities from climate change)

Chapter I

• Efforts for stable supply of raw materials, promoting safety measures for manufacturing and supply, outfitting a wide-ranging pipeline network, promoting widespread adoption of devices and services for safe use, efforts based on customer feedback, efforts toward multi-energy business, such as electricity business, and solar and wind power generation business.

Chapter II

• Risks and opportunities from climate change, evaluation method for CO2 emission reductions and actual results, business activities geared towards attaining a low-carbon society, and efforts geared towards contribution on the customer's side and recycling , addressing environmental risks, promoting green sales and green distribution, efforts toward new environmental technology, and preservation of biodiversity.

Chapter III

• Activities with "Chiisana Akari", collaborative activities with entrepreneurs and NPOs aiming to solve social issues, contribution to Kansai culture, and providing support to educators, the next generation and to parents through nutrition and fire safety education and disaster preparedness education.

Chapter IV

• Efforts for improvement of compliance awareness and understanding, appropriate operation of Compliance Desk (hotline), promotion of global compliance associated with overseas business development, human rights training and other efforts to increase human rights awareness, and efforts to protect personal information.

Chapter V

• Promoting diversity, promoting work-life balance, efforts in human resource development, prevention of work accidents, and promoting sustained health.

Details on stakeholders engagement efforts through volunteer activities, educational activities on nutrition and local development via sports, progress on efforts to improve business efficiency, efforts to improve customer

- 21 -

satisfaction, environmental efforts, safety and disaster prevention, and information on technical development are disclosed on the Group's various websites.

(Daigas Group's involvement:http://www.osakagas.co.jp/csr_e/index.html)

Formulation of Policies on Providing Information to Stakeholders

The Daigas Group Code of Conduct includes a provision concerning information disclosure, stating that the Group must work toward disclosing information in an appropriate and timely manner and that the Group must promote communication with society at large. "Rules for Information Disclosure" was formulated based on this article in the Code of Conduct and specify the organizations responsible for information disclosure, and requires improved transparency as well as active disclosure of information that must be disclosed.

Information that must be announced in a timely manner is accordingly disclosed via press release, while quarterly and annual reports are disclosed as booklets or on the Group's website.

The Daigas Group's CSR reports - created in reference to the International Sustainability Reporting Guidelines (GRI) and the Environmental Reporting Guidelines (Ministry of the Environment) - are disclosed on the website as well. The brochure version is accessible via an external distribution service so they can easily be obtained.

Other

1. Promotion of Diversity

To strive for improved corporate value, the Group's corporate and organizational structures are made up of members with diverse attributes such as gender, age, disability status, and nationality. The Group understands the indispensability of promoting diversity to build and environment where open and easy discourse is possible, and has established the Daigas Group Diversity Promotion Policy. We hope that each company of Daigas Group will provide our employees with rewarding workplace where everyone is respected and free of discrimination and prejudice.

a. Principle on Diversity

The Daigas Group is committed to promoting diversity within their organization to achieve creation of new corporate value through building strong organizations.

-We will seek to realize a group of enterprises with rewarding work environment where employees are respected, and without discrimination, their diversity is recognized, including gender, age, physical disabilities, nationalities, form of employment, lifestyles, religions, sexual orientation, and gender identity.

-As a basis for employees to pursue their career opportunities, the company implements policies to enhance work productivity and to realize suitable work-life balance for each employee.

b. Targets and Sustainable Actions

The Daigas Group intends to implement its activities for supporting, among others, females, the elderly, the physically challenged, and foreign nationals. A consideration will be given to building work environment for employees to achieve their higher career objectives. Minority workers should not be subjected to a disadvantage. As the touchstone of promoting diversity, Osaka Gas seeks to provide its female employees with greater professional opportunities. The company targets to achieve more than a 30% mark in recruiting females out of the total new recruits with professional qualifications and to realize a 5% target of female managers in the middle management by 2020. Female executives, likewise, should also be appointed in an expeditious manner. Osaka Gas intends to implement these actions in a sustainable manner and report its performance. Rate of female number in the management in the class including managers.

(3) Policy and efforts supporting female employees to play active roles

Since implementing its childcare leave and eldercare leave system in 1992, Osaka Gas has been making efforts to create a better working environment which promotes a work-life balance for its employees even before the Act on Advancement of Measures to Support Raising Next-Generation Children was implemented. The levels at the Company exceed the legal requirements, and in recognition of its efforts the Company was recognized by the Minister of Labour in 2001 as a "Family Friendly Company". The Company has submitted an action plan four times since 2007 in accordance with the Act on Advancement of Measures to Support Raising Next-Generation Children, and the Minister of Health, Labour and Welfare has certified Osaka Gas as a

- 22 -

company with "Kurumin Mark". With few female employees resigning due to childbirth or childrearing because of the Company's merit-based system and its initiatives to expand the work field for female employees, the average length of service for male and female employees in FY2018 are almost the same at 17.2 years and 20.8 years, respectively.

In 2010, Osaka Gas, with its six affiliated companies, endorsed and expressed their support for the objectives of the Women's Empowerment Principles (WEPs) and established the Diversity Promotion Team in the Human Resources Department in 2013. In March 2014, the Group has announced the Daigas Group Diversity Promotion Policy with its goal to aid female employees to achieve successful careers, the Team has been working to diversify the workforce, raising awareness and promoting its "Smart Work" initiatives to create a work environment in which a diverse workforce can achieve success. The Company's involvement in diversity issues have been recognized, as Osaka Gas was selected in 2014 as one of the "one hundred diversity promotion companies" (in which the Minister of Economy, Trade and Industry recognizes companies that promoted diversity while increasing corporate value). Osaka Gas also was selected as a "Nadeshiko stock" for five consecutive years since 2013.

The Company is aiming to maintain the ratio of career-path employees at above 30% for female employees, make female employees account for 5% of the managerial staff by 2020, and to appoint female Officers at an early date. The Company also formulated an action plan and is proceeding with efforts pursuant to the Act on Promotion of Women's Participation and Advancement in the Workplace. While 15% of female employees were career-track employees in FY2004, this figure reached 28% in FY2019 (30% on an average of five years from FY2015 to FY2019), and whereas women accounted for only 0.3% of management in FY2004, the figure reached 3.5% (including four division general managers) in FY2019. One female Officer has been appointed as an outside Audit & Supervisory Board Member.

(See the Company's website for details:http://www.osakagas.co.jp/csr_e/beginning/diversity_policy.html)

1. Creating a Work Environment for the Disabled a. Hiring the disabled
   Osaka Gas does all it can to hire disabled persons and creates a work environment conducive to the talents of each individual. As a result of these efforts, disabled persons accounted for 2.36% of our workforce as of June 2019, well above the legal minimum of 2.2%.

b. Reemployment scheme

Osaka Gas has a system known as the Reemployment Scheme to rehire employees who are 60 and older after retirement, under which applicants are placed in jobs that match their skills and desires. All Daigas Group companies have similar reemployment schemes.

*Of the 274 employees reaching retirement age in the fiscal year 2018, 225 are rehired (100% of requesting employees)

*There were 1,795 senior workers at the Daigas Group in the fiscal year 2018 (employees 60 years of age or older in domestic consolidated companies)

IV. Matters Related to the Internal Control System

1. Basic Views on Internal Control System and the Progress of System Development

(1)Description of Internal Control Systems

The Company establishes systems (internal control systems) to ensure that Directors of the Company execute the duties in compliance with the laws and regulations and the Articles of Incorporation and other systems necessary to ensure the properness of the Group's operations at meeting of the Board of Directors, and such systems are briefly described below.

(ⅰ) Systems to ensure that the execution of the duties complies with the laws and regulations and the Articles of Incorporation

a.Directors and employees of the Group shall sufficiently acquire and investigate information as the basis to execute the duties and through accurate understanding of the facts, make reasonable decisions in

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accordance with regulations on responsibilities and authorities.

b. For the Board of Directors to make appropriate decisions and enhance its supervisory role, executive directors shall retain independent outside officers. In addition, the executive officer system shall be adopted to enhance the Board of Directors' supervisory role and ensure efficiency in the execution of duties.

c. Executive directors shall hold management meetings to provide information to the president and the Board of Directors to assist in the decision-making process and discuss strategies and important matters concerning its management of the business.

d. Executive directors shall establish the "Daigas Group Code of Business Conduct" based on "Osaka Gas Group CSR Charter." By familiarizing the directors and employees with the Code, executive directors shall not only ensure the performance of duties in compliance with applicable laws and regulations and the Articles of Incorporation within the Group but also promote business activities in a fair and appropriate manner, which includes contributing to the preservation of the environment, promoting social contribution activities and dissociating from antisocial forces.

e. Executive directors shall make efforts to understand the status concerning compliance within the Group and promote compliance practices by establishing a consulting and reporting system as an internal reporting system and a CSR committee.

f. If any problems are discovered regarding compliance within the Group, Directors and employees of the Group are required to consult with or report to an executive director or other superior, or report the matter via the consulting and reporting system depending on the level of seriousness or urgency. Executive directors, General Manager of Compliance Dept. or other superiors shall investigate details of such matter and take necessary remedial measures.

(ⅱ) System concerning the maintenance and the management of information on execution of duties

a. Executive directors and employees of the Group shall prepare minutes of the meetings of the Board of Directors, approval documents or other similar documents specifying matters including matters affecting decisions and the process by which a decision was reached, in accordance with regulations on responsibilities and authorities.

b. Executive directors and employees of the Group shall properly store and manage the minutes of the meetings of the Board of Directors, approval documents or other information on execution of duties according to the nature thereof.

(ⅲ).Regulations and other systems to manage the risk of losses

a. Executive directors shall take all possible steps to ensure the safety and stability of gas supplies in gas businesses by establishing safety regulations on matters concerning the construction, maintenance and operation of production and supply facilities, and by promoting the improvement of the production and supply systems.

b. Executive directors of the Group and organizational heads of the Company (managers of basic organizations of the Company) shall take measures to prevent the occurrence of risks and minimize losses in the case of occurrence, and manage the risk of losses for each category of risk (risks due to external factors, internal factors, transactions with outside parties or other factors).

c. The risk of losses shall be managed at the level of each basic organization and each affiliated company. d. The emergencies that might have a material impact on the management of the Group shall be addressed according to the regulations on disaster countermeasures and business contingency plans.

(ⅳ) Systems to ensure the efficient execution of duties

a. Executive directors of the Group and organizational heads of the Company shall determine matters concerning the division of duties and decision-making within the Company and the Group in accordance with regulations on responsibilities and authorities. They shall also provide regulations regarding details of organizations and general matters to be observed during the execution of duties. By familiarizing employees with such regulations, they shall ensure the smooth management of organizations and the improvement of quality and efficiency of operations.

b. With the aim of maximizing corporate value, executive directors of the Group and organizational heads of the Company shall establish medium-term business plans and annual plans for the Company and the Group, monitor its attainment by means of performance indicators and focus on achieving these plans.

(ⅴ) Other systems to ensure the properness of business operations

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In addition to the above, executive directors shall take the following measures and make efforts to ensure proper operations.

a. Companies to play a central role in each business area of the Group (core companies) or basic organizations to supervise affiliated companies (management support organizations) shall be designated to be responsible for day-to-day management of affiliated companies.

b. Compliance with applicable laws and regulations and the Articles of Incorporation, the efficiency and other similar matters of the Group as a whole shall be audited internally by the head of the Auditing Department of the Company. If necessary in light of the results of such audit, remedial measures shall be taken promptly.

c. Internal control procedures shall be maintained, operated and evaluated in relation to financial reporting to ensure its credibility.

(ⅵ) Matters concerning employees assisting Audit & Supervisory Board Members in the performance of their duties

a. Executive directors, if requested by the Audit & Supervisory Board Members, shall appoint employees to assist the Audit & Supervisory Board Members in the performance of their duties and establish an office of Audit & Supervisory Board staffed by these Audit & Supervisory Board Members' assistants.

b. Audit & Supervisory Board Members' assistants shall be engaged solely in assisting the Audit & Supervisory Board Members in the performance of their duties.

(ⅶ) Matters concerning independence of Audit & Supervisory Board Members' assistants from Directors a. Executive directors cannot direct or give orders to Audit & Supervisory Board Members' assistants except where such directions or orders apply equally to all employees.

b. The opinions of the Audit & Supervisory Board Members regarding the evaluation, transfer, etc., of Audit & Supervisory Board Members' assistants shall be sought in advance and respected.

(ⅷ) Systems for reporting to the Audit & Supervisory Board Members

a. Directors shall report immediately to the Audit & Supervisory Board Members if a matter that is significantly detrimental to the Company is discovered.

b. Directors and employees of the Group or auditors of the affiliated companies shall report without delay matters that have a material impact on the business of the Group, the results of internal audits, the situation regarding the main reports under the consulting and reporting system and other important matters.

c. Directors of the Group and employees of the Company shall report without delay when requested by the Audit & Supervisory Board Members to report on matters concerning the execution of duties.

d. Executive directors and other supervisors of the Group shall not disadvantageously treat any person who reports to the Audit & Supervisory Board Members according to the preceding items for the reason that such report was made.

(ⅸ) Other systems to ensure effective auditing by the Audit & Supervisory Board Members

a. The Audit & Supervisory Board Members may exchange opinions periodically with the Representative Directors and the accounting auditor.

b. The Audit & Supervisory Board Members may attend management meetings and all company committee meetings. They may investigate as appropriate material information concerning the execution of duties, such as approval documents.

c. Executive directors shall ensure the Company provides the expenses or liabilities necessary for the execution of the duties of the Audit & Supervisory Board Members.

(ⅹ) Confirmation of operation status, etc.

a. Executive directors shall periodically confirm and assess the status of the operation of the internal control system and report the results to the Board of Directors.

b. Executive directors shall take necessary measures by taking into consideration the assessment results of internal control system and other situations.

(2) Operating Status of the Internal Control Systems

The Company confirms the operating status of the internal control systems on a periodic basis by identifying

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items to confirm for various matters and receiving reports from the organizational heads and other persons concerned. At the meeting of the Board of Directors held on April 24, 2019, it was reported that the internal control systems were operating in a proper manner.

The operating status of the internal control systems during the fiscal year under review is described in the following.

(ⅰ) Matters concerning compliance

The CSR Committee has been promoting CSR activities through the "Compliance Subcommittee," the "Environment Subcommittee," "Social Contribution Subcommittee," "Information Security

Subcommittee" and "Risk Management Subcommittee" during the fiscal year under review. Educational materials, including a guide to the "Daigas Group Code of Business Conduct," are posted on the intranet at all times to familiarize Directors and employees of the Group with said Code to promote and ensure its understanding thereof.

In addition, to promote further understanding and effective use of the consulting and reporting system for employees as an internal reporting system, a poster presentation is made to publicize the reporting system and detailed explanations on the system and the concept of compliance are provided via the intranet or other means.

(ⅱ) Matters concerning risk management

Organizational heads of the Company and presidents of the affiliated companies promote the management of the risk of losses and periodically conduct risk management assessments. Each basic organization or affiliated company identifies risk items, checks the status of management concerning the risk items and conducts follow-ups or other measures by using such means as the "G-RIMS (Gas Group Risk Management System)," which systematizes the self-assessment of risk management practices. Regarding the management of risks concerning security and disaster prevention which are common to the Group, the organization in charge is clearly specified, and the organization supports each basic organization and affiliated company to ensure risk management on a Group-wide basis.

To prepare for emergencies, regulations for disaster countermeasure and business continuity plans are prepared. During the fiscal year under review, the Company invited new gas retailers to join our company-widedisaster-prevention drills to confirm possible cooperation between gas retailers and gas pipeline operators in case of large-scale disasters.

(ⅲ) Matters concerning the management of businesses in the Group

The affiliated companies to be managed by the core companies or the management support organizations are designated and their managerial tasks are monitored by receiving reports on important issues from the affiliated companies. In addition, day-to-day management of those affiliated companies is performed by using the G-RIMS and/or conducting audits.

The Company's Auditing Department, which conducts internal audits, implements planned internal audits of the Company's organizations and the affiliated companies and provides follow-up audits after a certain period of time.

(ⅳ) Matters concerning the effectiveness of audits by Audit & Supervisory Board Members Full-time Audit & Supervisory Board Members have periodic exchanges of opinion with the Representative Director and Chairman, the Representative Director and President and the accounting auditor, in which Outside Audit & Supervisory Board Members also participate as necessary. Partly through the opportunity to exchange opinions with the accounting auditor, Audit & Supervisory Board Members evaluate the qualifications, expertise and independence of the accounting auditor.

Full-time Audit & Supervisory Board Members attend important meetings such as the Management Meeting, the CSR Promotion Meeting, the Investment Evaluation Committee, etc., and read approval documents and other important documents. Through a Board of Directors' resolution on the internal control systems, they also clarify important matters to be reported to Audit & Supervisory Board Members and disseminate information thereof.

Four assistants to Audit & Supervisory Board Members are in place to engage solely in assisting Audit & Supervisory Board Members in the performance of their duties.

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2. Basic Views on Eliminating Anti-Social Forces

The Company sets forth a principle in its Daigas Group Code of Conducts that any business transaction with or supply of profits to anti-social forces, for any reason, is unjustifiable and absolutely forbidden and shall cause officers and employees to comply with such principle by making them thoroughly aware each year on a regular basis. The following is a list of those measures structures implemented.

1. • The General Affairs Dept. is responsible as the supervisory department, and a person in charge of preventing undue claims is appointed in every relevant organization.
   • Preparing for emergencies, the Company cooperates with outside agencies specializing in anti-social forces (including police departments) and engages in information exchange.
   • Information regarding anti-social forces are collected and appropriately shared within the Company.
   • The Company is appropriately implementing awareness-raising efforts including preparing manuals and conducting in-house training.
2. Other

1. Adoption of Anti-Takeover Measures

Adoption of Anti-Takeover Measures	Not Adopted
Supplementary Explanation

-

2. Other Matters Concerning Corporate Governance System

Following is an outline of the Company's structure for timely information disclosure.

(1) Basic policy on disclosure of corporate information

The Group's management philosophy calls for the Company to work toward achieving fairness and transparency in its business activities and to improve its system for disclosing corporate information.

(2) Increasing awareness and enforcing rules on handling and disclosing information

The Company has established information handling and disclosure standards which the Group's Directors and employees must follow. Also, internal rules are in place for handling important business information related to insider trading regulations. The Company moreover has internal rules regarding information management and disclosure, and is working to strictly manage and make timely and appropriate disclosure of information concerning the Company's business, operations, and performance which may have a material effect on equities investment decisions.

(3) Comprehending and managing corporate information

Each head of the organizational unit (the chief executive if an affiliate company) appropriately comprehends and manages corporate information. The status of information management is inspected regularly by each organizational head (chief executive if an affiliate company).

(4) Disclosure of corporate information

The head of each organizational unit (the head of the affiliate's business support organization or the core affiliated company's president if an affiliated company) that manages corporate information shall make decisions on disclosing information by considering the safety and interests of customers, vendors, employees, interests of shareholders, and social demands for disclosure and after consulting with the General Manager of the Corporate Communications Department. Regarding important information of the corporate information, disclosure decisions shall be made by the Director, Headquarters General Manager or Business Division General Manager responsible for the organizations (in case of affiliates, the Director, Headquarters General Manager or Business Division General Manager in charge or the President presidents of the core affiliate). For especially important information including resolutions of the Board of Directors, the

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President/Representative Director of the Company shall make the decisions on disclosure.

(5) Voluntary audits examining the status of corporate information disclosure

The heads of organizational units who manage corporate information (for affiliates, the head of the business support organization or the core affiliate company's President to which the business support organization belongs) conducts periodic evaluations and inspections on the status of information disclosure. The General Manager of the Public Affairs Department, who is responsible for planning and promoting corporate information disclosure requests the heads concerned to report the results of the voluntary audits and requests that improvements be made based on the results.

(6) Decision-making system for timely information disclosure

Decisions on timely disclosure of corporate information are made by the head of the relevant organizational unit (for affiliates, the head of the business support organization or the core affiliate company's President to which the business support organization belongs) in consultation with the General Manager of the Public Affairs Department as needed. For corporate information required to be disclosed, the General Manager of the Public Affairs Department issues a press release and simultaneously gives directions to the General Manager of the General Affairs Department to immediately notify the stock exchanges in Tokyo and Nagoya where the Company's shares are listed.

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Corporate Governance System (Updated)

Executive

General Meeting of Shareholders

Making Important Decisions; Monitoring and

Audit

Appointment

Proposal and

Supervisory Function

Functin

Appointment

Report

Report

Report

Appointment

agency

Directors (Board of Directors)（*1）

Audit & Supervisory Board

Accounting

Members (Meetings) (*3)

（including outside Directors）

Audit

Cooperation

Auditor

(incl. outside Members)

etc.

（sharing

information

Proposal

etc.）

and Report

Office of

Audit &

Supervisory

Cooperation

Cooperation

Advisory

Making important decisions;

Board

Consult

Committee

supervision

(*2)

(nomination

Delegating

sharing（

sharing（

and remu-

Business execution

authority

neration)

Function

Representative Director and

Executive

）.etcinformation

）.etcinformation

President (Executive

Approval of audit plans etc. / Report audit results

President)

Report

etc.

Corporate committee

・CSR Committee

Delegating

Submission

Board (*4)

・Investment Evaluation

authority

and Report

Committee

Audit

Proposal

Coordination,

etc.

facilitation,

etc.

Executive Directors (Executive Vice Presidents, Senior Executive Officers)

Executive Directors (Executive Vice

Presidents, Senior Executive Officers)

Internal audit

Osaka Gas: Basic Organization

Auditing Dept.

Affiliates

Internal audit

agency Audit

(*1) Board of Directors ：12 directors (10 internal directors and 2 outside directors)

(*2) Advisory Committee：2 outside directors, 3 outside Audit & Supervisory Board Members, Representative Director and President and persons appointed by the President (up to two members who are Representative Directors)

(*3) Audit & Supervisory Board：5 Audit & Supervisory Board Members (2 full-time Audit & Supervisory Board Members (internal) and 3 outside Audit & Supervisory Board Members)

(*4) Executive Board：1 Executive President, 3 Executive Vice Presidents and 6 Senior Executive Officers

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