Independence Standards for Outside Directors and Outside Auditors

The Board of Directors of Komatsu Ltd. ("the Company") has determined the independence standards for Outside Directors and Outside Auditors (collectively, "Outside Executives") as follows.

1. Basic stance:

Independent Executives are defined as independent executives who have no potential conflict of interest with ordinary shareholders of the Company.

In the event that they are critically controlled by top management of the Company or they can critically control top management of the Company, they are deemed to have a conflict of interest with ordinary shareholders of the Company. Therefore, the Board of Directors determines that they have no independence from the Company.

2. Independence standards:

Based on 1. Basic stance above, the Board of Directors determines a concerned Outside Executive has no independence from the Company.

1) Person engaged in transactions or execution of business with the Company or its subsidiary as his/her major business partner

This is applicable to a business partner or a person engaged in business execution with the Company or its subsidiary, and the Company or its subsidiary can give significant influence on decision making of the concerned partner or person.

Through its departments engaged in business transactions with the companies where candidates for Outside Executives are concurrently employed (or execute business thereof), the Company investigates the business relationship of these companies by making direct inquiries to the concerned companies and implementing other means and evaluates their independence from the Company.

2) Main business partner of the Company or person engaged in business execution thereof

This is applicable to a business partner or a person engaged in business execution with the Company, and the concerned business partner or person engaged in business execution thereof can give significant influence on the Company's decision making. Specifically, in the event that the Company generates sales, revenues, etc. from its business with the concerned business partner, which account for a considerable portion of total sales, revenues, etc. of the Company, the Board of Directors of the Company determines the concerned business partner or person has no independence from the Company.

The Company discusses with its departments engaging in business with the companies where candidates for Outside Executives are concurrently employed (or execute business thereof), and evaluates their independence from the Company.

3) Consultant, certified public accountant, lawyer or other professional obtaining large amounts of money or other financial benefits, other than remunerations of Outside Executives of the Company (when such financial benefits are obtained by an incorporated entity, this matter applies to a person belonging to such organization)

With respect to large amounts of money or other financial benefits, the Company determines independence in accordance with "large amounts of money or financial benefits" stipulated in Item 4, Paragraph 4 of Japan's Order for Enforcement of the Companies Act.

In the case that the concerned professional who obtains large amounts of money or other financial benefits belongs to an incorporated entity and that such organization depends heavily on fees paid by the Company, the Board of Directors determines the concerned professional has no independence from the Company.

4) Person who is applicable to any of 1) through 3) above for last one year

5) Spouse or a relative in second degree of an important person among the following persons

a. Person for whom 1) through 4) above are applicable
b. Person engaged in business execution of subsidiaries of the Company
c. Director engaged in non-business execution of subsidiaries of the Company (limited to determining Outside Auditors)
d. Person for whom b or c above is applicable for the past one year
e. Person who engaged in business execution of the Company for the past one year
f. Director of the Company engaged in non-business execution for the past one year (limited to determining Outside Auditors)
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