Corporate Governance
Avant Group Corporation

January 31, 2023
Avant Group Corporation
Tetsuji Morikawa, President and Representative Director
For inquiries

Investor Relation Office 03-6864-0100 (main)

The status of the Company's corporate governance is as follows

I. Basic Information on Corporate Governance and Capital Structure
Basic Policy on Corporate Governance, Capital Structure, Corporate
Attributes and Other Basic Information
1. Basic concept(1) Corporate Philosophy
Since our founding, our corporate philosophy has been to respect the Japanese management view of thecompany as a public institution of society and to develop as an organization that exists for the benefit of society.
We believe that the fundamental management perspective based on Japanese culture is to regard the company
as a "public institution" of society. Even in a globalized society, we respect this management perspective as acultural asset and strive to develop as an organization that exists for the benefit of society.
We describe our corporate activities based on this Japanese management perspective as "creating a 100-yearcompany" and have positioned it as our corporate philosophy since our founding. It is not simply sustaining acompany or brand. It is a 100-year company as a result of the management view as a public institution that ispassed down from generation to generation, and all members of the company burn to provide value to society in afree and creative manner. To achieve this, we practice group management that fosters organizational
independence and group synergy.
For group management that contributes to the growth of people and organizations, we place great emphasis on
highly honed corporate governance. By continuing to learn and engage in dialogue with various stakeholders, we
aim to develop our business with an open perspective so that we can provide value to society without being
biased toward any particular stakeholder.

(2) Approach to Corporate Governance
Based on this corporate philosophy, we have established the "Avant Group Basic Policies on Corporate
Governance" and are striving to enhance the transparency and soundness of management and to build amanagement system that enables prompt business execution based on accurate decision-making and appropriatemonitoring of these activities. We are striving to enhance corporate governance.
URL:
https://www.avantgroup.com/en/sustainability/governance/main/0/teaserItems1/01/linkList/0/link/CG_en.pdf

1Corporate Governance
Avant Group Corporation[Reasons for not implementing each principle of the Corporate Governance Code]To realize our management philosophy, all of our employees share the values of (1) customer orientation, (2)high profit orientation, and (3) single-mindedness. These are values that lead to a virtuous cycle that supports
such growth: putting the customer first, growing as a person through creative conversations with various
stakeholders in order to meet the needs and expectations of customers amid various changes in the environment,
creating new value that is second to none, and earning a high reputation. Diversity is an important issue for ourcompany, as it is important to form an organization that transcends differences in age, gender, race, religion,
hobbies and interests in order to share such values. However, in the fiscal year ending June 30, 2022, 7.7% of ourmanagers were women, 5.4% were foreign nationals, and 80.8% were mid-career hires. We have people fromvarious backgrounds working in our leadership positions.
We believe that the development of diversity will (1) enable employees to exchange opinions from a broader
perspective, (2) enable us to make high-quality proposals to our customers, and (3) enhance our customers'
evaluation of us, thereby improving employee job satisfaction. For this reason, the Group as a whole is a Great
Place to Work.
Supplementary Principle 4-1(iii): Succession Planning
We recognize that the succession of the Chief Executive Officer(CEO) is an important management issue for
the Company, and the Board of Directors began discussing it in the fiscal year ending June 30, 2018. In the fiscal
year ending June 30, 2019, we will further incorporate the knowledge of an outside consulting firm and study thedevelopment of a comprehensive succession plan.
In September 2021, the Articles of Incorporation were amended to change the clause that the CEO is naturally
the chairman of the Board of Directors to a system in which the CEO is selected from among the directors. In
October 2022, the CEO, who was the founder of the company, was no longer concurrently serving as president ofa business subsidiary.
Although no progress has been made on the CEO succession plan itself, we believe that progress is being madein separating the role of the founder and developing an environment for succession planning.

[Disclosure based on each principle of the Corporate Governance Code]Principle 1-4: So-called "policy shareholdings" (Comply)
The Company has no so-called policy shareholdings. The purpose of the policy shareholdings is to maintainand strengthen inter-company transactions, and if acquired, the director in charge of finance will report regularly
to the board of directors on the risks and returns, and approval by the board of directors is required in accordancewith the "Fund Management Regulations" and other relevant regulations. The basic criterion for determining
whether or not to exercise voting rights in relation to policy shareholdings is whether or not it is in line with the2

Corporate Governance
Avant Group Corporation

enhancement of the corporate value of both the Company and the investee company.
Principle 1-7 Related Party Transactions] (Comply)
The Company's Board of Directors deliberates and resolves on any competing transactions or
conflict-of-interest transactions by directors. At the end of each fiscal year, each Director, Audit Committee
member, and Corporate Officer is asked to complete a questionnaire regarding transactions with related parties toensure that they do not harm the company or the common interests of shareholders. There are no related party
transactions.
Principle 2-6: Exercise your function as an asset owner of a corporate pension plan] (Comply)
Although we do not have a corporate pension plan, we will function as an asset owner of a corporate pension
plan if such a plan is introduced.
Principle 3-1: Enhance disclosure of information] (Comply)(1)

We have established a philosophy system that includes the management philosophy of the Avant Group,and have published management strategies and a medium-term management plan to realize ourmanagement philosophy. The Management Philosophy is described in this report, but please refer to thedetails of the Management Philosophy, as well as the Management Strategy and Mid-term Management
Plan, which are available on the Company's website.

(2)

Our basic approach to corporate governance, based on each of the principles of this Code, is described in"I.1 Basic Approach" of this report.

(3)

In determining the remuneration, etc. of directors and corporate auditors, our basic policy is to make it
function effectively as compensation for their contribution to the enhancement of the Company's corporate
value. Within the limit of the amount of remuneration, etc., resolved at the General Meeting of
Shareholders, the distribution of such remuneration is determined by taking into consideration factors suchas position, performance and results during the term of office. For details on the remuneration system fordirectors and corporate auditors, please refer to II. Matters Related to Organizational Structure,
Organization and Operation, etc. [Related to Directors' Remuneration] "Disclosed Details of Policy for
Determining Amount of Remuneration or Calculation Method" for the remuneration system for directors
and corporate auditors. Details are explained in "Disclosed Details of Policy for Determining Amounts andCalculation Methods of Compensation.

(4)

In appointing senior management and nominating candidates for directors, the Company selects, byresolution of the Board of Directors, the most suitable candidates, taking into consideration theirpersonalities, professional experience and abilities, and wide-ranging insight that will enhance corporate
value, as well as their abundant experience and broad knowledge of the Company's business. The Board of
Directors selects the most suitable person for the position by resolution of the Board of Directors. In
addition, we also consider whether outside directors can fulfill their management oversight function from a3

Corporate Governance
Avant Group Corporation

neutral, fair, and objective standpoint.
(5)

Reasons for the appointment of candidates for Outside Directors and Outside Audit & Supervisory Board
Members and their expected roles are disclosed in the Notice of Convocation of the General Meeting of
Shareholders.

Supplemental Principle 3-1(iii): Sustainability Initiatives, etc.] (Comply)
As pointed out by the United Nations Intergovernmental Panel on Climate Change, global warming is
progressing at a faster pace than expected, and we recognize that the impact of climate change on economic
activities can no longer be ignored.
Our founding management philosophy of "creating a 100-year company" reflects our sustainability concept ofrealizing continuous business growth through a self-sustaining organization that is highly adaptable to a rapidlychanging market environment. The company does not only need to pursue profits, but always considers how torealize sustainable corporate value creation in balance with society and the environment. We signed the UN
Global Compact on August 25, 2020 and endorsed the recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD) on December 22, 2021. We will take this opportunity to consider and implement
measures that can be taken as a group while conducting risk assessments to achieve sustainability.
As part of our environmental efforts, we will purchase "Green Power Certificates" issued by Japan Natural
Energy Company, Limited for all electricity consumption at the offices of our group companies from July 1,
2021, based on the electricity consumption in the fiscal year ending June 30, 2020 (approximately 1.5 million
kwh). We will purchase "Green Power Certificates" issued by Japan Natural Energy Company, Ltd. from July 1,
2021 for the entire power consumption at the offices of our group companies to reduce CO2 emissions byapproximately 660 tons-CO₂ per year and to promote the efficient use of electricity and the spread of power
generation using natural energy to help prevent global warming. We will continue to make such efforts in the
future, aiming to reduce greenhouse gas emissions by 50% by the fiscal year ending June 30, 2030, compared to
the fiscal year ended June 30, 2005.
Please refer to our website for more information on our sustainability initiatives.
https://www.avantgroup.com/en/sustainability.html

Supplementary Principle 4-1 (i) Scope of Delegation to Management] (Comply)
We have established a separation of management decision-making and supervision from business execution
through the Board of Directors as a management decision-making and supervisory body and the Corporate
Officer System as a business execution system based on such decision-making. A summary of this information isdisclosed on the Company's website and in the Corporate Governance Report. The Board of Directors, while
deciding on matters stipulated by law and the Articles of Incorporation, as well as important matters concerning
the Company and its subsidiaries in the Group, will transfer part of its authority to make business execution
decisions to the executive directors in accordance with the transition to a company with an Audit Committee
System in September 2022.. In October 2022, the Board of Directors transferred authority for the appointment of4

Corporate Governance
Avant Group Corporation

Executive Officers to Representative Director and President (Group CEO). In addition, a director or key memberof the Board of Directors of Avant Group attends the Board of Directors meetings of the Company's subsidiaries
as an officer or observer, and keeps abreast of the management situation. Although the boards of directors of theCompany's subsidiaries make decisions on important matters, the Group's holding company, Avant Group, must
approve the following three matters that have a significant impact on the Group: (a) investments, (b) executive
appointments, and (c) financing, including capital policies. The Company has entered into a management
guidance and business management agreement with its subsidiaries, under which the Company receives reports
on important matters related to the execution of duties by directors, the results of which are reported to theCompany's Board of Directors. The Company's Group Legal Office confirms that the Board of Directors of theCompany's subsidiary convenes monthly.
Principle 4-2 Roles and Responsibilities of the Board of Directors] (Comply)
The Board of Directors receives proposals from the Group CEO or Group CxO delegated by the Group CEOfrom time to time, and thoroughly examines them from various perspectives to ensure that they are in line withthe management philosophy, annual business plan, and medium-term business plan, etc. Proposals that areapproved by the Board of Directors are implemented by the Group CEO or Group CxO. For its smooth
execution, the Board of Directors will provide personnel, financial, and other necessary support.
Supplementary Principle 4-2 (i) Compensation of sound management for sustainable growth] (Comply)
The Company's remuneration for directors and corporate auditors is divided into "basic remuneration based on
the director's function" and "a remuneration system to achieve sustainable growth through a combination of
bonuses linked to short-term and medium- to long-term business performance" and is determined within the
remuneration limit resolved at the General Meeting of Shareholders. In order to reflect the medium-term businessperformance and risks of the Company and to encourage incentivization that contributes to the exercise of soundentrepreneurial spirit, "Establishment of Remuneration Amount for Directors (excluding Directors who are Audit
Committee Members) and Remuneration Related to Performance-Linked Stock Compensation" was submitted as
Proposal 5 and "Establishment of Remuneration Amount for Directors who are Audit Committee Members" as
Proposal 6 at the 26th Ordinary General Shareholders Meeting held on September 27, 2022. The proposal wasapproved and adopted, and the system has been introduced as a system. For details on the remuneration systemfor directors and corporate auditors, please refer to II. Matters Related to Organizational Structure, Organization
and Operation, etc. [Related to Directors' Remuneration] "Disclosed Details of Policy for Determining Amount of
Remuneration or Calculation Method" for the remuneration system for Directors and Corporate Auditors. Details
are explained in "Disclosed Details of Policy for Determining Amounts and Calculation Methods ofCompensation.
Supplementary Principle 4-8 (ii) Effective Use of Independent Outside Directors] (Comply)
The Board of Directors has appointed the lead independent outside director since May 2018. the Board of5

Corporate Governance
Avant Group Corporation

Directors appointed Mr. Naohisa Fukutani as the lead independent outside director on September 27, 2022, andhe has held this position from May 2018 to the present.
Principle 4-9: Criteria and Qualifications for Independence of Independent Outside Directors] (Comply)
The following independence criteria have been established for independent outside directors, based on the
independence criteria stipulated by the Companies Act and financial instruments exchanges, and with a focus on
ensuring the independence of those who serve as independent outside directors in terms of their substance. At
Board of Directors meetings, outside directors actively provide opinions and advice from an objective and neutral
standpoint, contributing sufficiently to constructive deliberations.
Independence Criteria for Outside Directors of the Avant GroupAn outside director shall be considered to be independent if, as a result of an investigation to the extent
reasonably possible by the Company, it is determined that none of the following items apply(1)

Those who are currently, or have been for the past 10 years, an executive officer (executive director,
executive officer, corporate officer, employee, or servant) of the Company or its subsidiaries or affiliates(collectively, the "Company Group").

(2)

A person who directly or indirectly holds 10% or more of the total voting rights of the Company or its
executive person(3)

A person with whom our Group has a major transaction (Note 1) or with whom our Group has a majortransaction (Note 1), or a person who executes the business of such a person(4)

A person who receives a large amount of money or other financial benefits (Note 2) other than remuneration
for directors and corporate auditors as compensation for providing professional services such as
consultants, lawyers, certified public accountants, and certified tax accountants to our Group, or a person
who executes the duties of such a person.

(5)

Persons who receive donations or grants exceeding 15 million yen per year from our group or their
executive officers(6)

A person who belongs to an auditing firm that is the accounting auditor of the Group(7)

Executives of companies to which the Group's executives are appointed as directors(8)

Those who have met 2 to 7 above in the past 3 years.

(9)

Spouse or relative up to the second degree of kinship of a person falling under 1-8 above(Note 1) Major transactions are defined as transactions involving the transfer of more than 2% of annual consolidated net sales or loans exceeding 2% of total
consolidated assets.
(Note 2) "Large amount" means that, in the case of an individual who provides professional services, the annual profit received from the Group, excluding director's
remuneration, exceeds 15 million yen in the most recent fiscal year. In the case of an organization such as a corporation, partnership, etc., the amount of profits
received from the Group exceeds 2% of the annual gross income of the organization or 15 million yen, whichever is higher, in the most recent fiscal year.

[Supplementary Principle 4-10 (i) Use of Voluntary Mechanisms] (Comply)
The Company's Board of Directors consists of four directors who are not Audit Committee Members (including
two outside and independent directors and one foreign national) and three Audit Committee Members (including
two outside and independent directors and one female director). We believe that the independence, objectivity,

6

Corporate Governance
Avant Group Corporation

and accountability of the decision-making process have been ensured. In order to strengthen the policy regarding
the method of determining the content of remuneration, etc. and the content of determined remuneration, etc., theCompany resolved to establish the Remuneration Advisory Committee as a voluntary advisory body at the Boardof Directors meeting held on March 17, 2021. The Compensation Advisory Committee shall consist of at least
three members, a majority of whom shall be independent directors, and the chairperson of the committee shall beselected from among the independent outside directors. We strive to ensure objectivity by, for example, taking
advice from outside experts and considering market-wide or industry-wide standards. The Compensation
Advisory Committee's deliberations are as follows(1)

Policy for determining remuneration, etc. of directors and corporate officers,(2)

Draft proposals on remuneration, etc. for directors, audit committee members and corporate officers to besubmitted to the General Meeting of Shareholders,(3)

Proposed policy regarding the determination of the content of compensation for individual directors andcorporate officers to be submitted to the Board of Directors,(4)

Proposed details of remuneration, etc. of individual directors and corporate officers to be proposed to theBoard of Directors, and(5)

Other matters deemed necessary by the Board of Directors with respect to each of the preceding items

The Board of Directors has confirmed, through the report of the Compensation Advisory Committee, that themethod of determining the details of executive compensation and other compensation for the fiscal year ending
June 30, 2022, and the details of the determined compensation are in line with such determination policy.
Supplementary Principle 4-11 (i) Diversity and Size of the Board of Directors as a Whole] (Comply)
With the aim of enhancing corporate value, the Company's directors are selected from among candidates withdiverse and specialized knowledge and experience in management, legal and compliance, finance andaccounting, M&A and finance, IT business, global, governance, human resources and organization, etc. The
Company's Board of Directors consists of four directors who are not Audit & Supervisory Committee members(including two outside and independent directors and one foreign national) and three directors who are Audit &Supervisory Committee members (including two outside and independent directors and one foreign national). Asa Board of Directors, we believe that the diversity of personnel and the balance of knowledge, experience, andabilities are well considered and at a level that maintains a high level of decision-making ability. The reasons forthe appointment of outside directors are disclosed in the Notice of Convocation of the General Meeting of
Shareholders.

Director
TetsujiMorikawa
Management●

Hisayoshi
KasugaDirectors who are Audit Committee Members

Naohisa
Fukutani

Jon Robertson●●

Legal Affairs
ComplianceTsuyoshi
Noshiro

MakotoNakano●●7

Chie Goto●Corporate Governance
Avant Group Corporation●

Finance & Accounting
M&A & Finance

●

●

●

●

Global

●
&

●

●

●

●

●

●

●

●

●

●

●

●

●

●
●

●

IT BusinessGovernance
Human
Resources
Organization

●

●

●

●
●

Supplementary Principle 4-11 (ii) Concurrent Directorships] (Comply)
The status of concurrent positions held by outside directors at other companies is disclosed annually in the
Notice of Convocation of the General Meeting of Shareholders, Annual Securities Report, and Report on
Corporate Governance. Regarding concurrent appointments at other companies, we confirm that there isabsolutely no obstacle to the execution of business as a director of the Company before appointing the director.
Supplementary Principle 4-11 (iii) Analysis and evaluation of the effectiveness of the board of directors as awhole and disclosure of the results] (Comply)
With the aim of realizing sustainable enhancement of corporate value, we recognize the issues related to the
responsibilities, composition, and operation of the Board of Directors, and are committed to continuous
improvement. The Board of Directors conducts an annual analysis and evaluation of the effectiveness of theBoard of Directors based on each director's self-evaluation and other factors.
<Evaluation Method
However, the Board of Directors pointed out that it was difficult to clarify issues due to the focus on
quantitative evaluation, and therefore, from the fiscal year ending June 30, 2020 onward, the Company will focus
on its own questionnaire survey and conduct interviews with third-party directors as appropriate. However, theBoard of Directors pointed out that the focus of the evaluation was mainly on quantitative evaluation and that it
was difficult to clarify issues.
In order to identify issues more clearly after June 2021, we have created and implemented our own
questionnaire form to allow participants to evaluate the issues and describe their opinions on how to respond tothem. The survey was administered to all directors and auditors in July 2022, and the report was presented to theBoard of Directors on August 5, 2022.
<Summary of evaluation results
Summarizing the survey responses, the effectiveness of the Board of Directors was generally highly rated andevaluated as being properly operated. On the other hand, some have pointed out that the discussion of various
issues that were previously recognized as challenges has not progressed, and that more time should be spent on
broader issues such as management strategies and mid-term management plans.

(1) Organization of the Board of Directors
As for the organization of the Board of Directors, the following opinions and issues were noted

Establishment of a nominating committee is not necessary, and the board of directors should thoroughly8Corporate Governance
Avant Group Corporation

discuss the nomination process and fulfill its oversight responsibilities.


Diversity of each director and expected roles need to be clarified.

The system under which monitoring functions should be organized with a view to the Conpany’s current
and future vision.

(2) Agenda for the Board of Directors Meeting
While it was recognized that progress has been made in discussions on the Corporate Officer personnel andexecutive compensation systems, it was pointed out that there has been no progress in discussions on the issues
that had been pointed out as requiring continued discussion (Succession Plan, criteria for appointment anddismissal of directors). It was also noted that capital policy and investor feedback need to be actively discussed.

(3) Operation of the Board of Directors
More problems than ever were identified with the reporting system. An increasing number of participants
pointed out that the points of resolution and report items were unclear and that they were not distributed or
explained sufficiently in advance. It was also pointed out that periodic reporting projects, etc., should be
simplified by focusing on key points, while at the same time providing opportunities to gain a deeper
understanding of the strategies and actual conditions of operating companies.

< Future actions >In light of the above remarks, we report that we will push for the following actions in the operation of theBoard of Directors for the fiscal year ending June 30, 2023.
(1)

Identify matters that need to be discussed and reported on throughout the year

(2)

The materials should be accompanied by an executive summary, so that the principles can be explained by
it.

(3)

Streamline discussion time by distributing materials a week in advance, or by explaining in advance.

(4)

Regularize off-site meetings and business briefings.

Supplementary Principle 4-14 (ii) Training Policy for Directors] (Comply)
In selecting candidates for the Board of Directors, the Company considers whether they have character,
experience, expertise and broad insight, and also places importance on their experience and knowledge of theGroup's business activities. We provide compliance education and other training by attorneys and others to enable
them to acquire the knowledge necessary to perform their duties. The training policy is stipulated in the "Basic
Corporate Governance Policy" disclosed on the Company's website.
https://www.avantgroup.com/en/sustainability/governance/main/0/teaserItems1/01/linkList/0/link/CG_en.pdf
Principle 5-1: Policy on constructive dialogue with shareholders] (Comply)
The Company recognizes that active dialogue with shareholders and reflecting their opinions and requests in

9

Corporate Governance
Avant Group Corporation

the management of the Company will contribute to the sustainable enhancement of the Company's corporate
value. For this reason, starting in July 2019, we have established a system in which a director in charge ofinvestor relations is assigned under the director in charge of finance, and we have established a dialogue with ourshareholders and investors to gain their understanding of our management strategy and plans.

2. Capital Structure
Foreign Shareholding Ratio

More than 10% but less than 20[Status of Major Shareholders]Name or Designation

Number ofPercentage

shares held(%)

(shares)
Tetsuji Morikawa

9,764,000

25.94

The Master Trust Bank of Japan, Ltd.

3,162,800

8.15

Avant Group Employee Stock Ownership Plan

2,101,800

5.58

Tsuyoshi Noshiro

1,868,800

4.96

The Custody Bank of Japan, Ltd.

1,664,200

4.42

OBIC Business Consultant Co.

1,600,000

4.25

SSBTC CLIENT OMNIBUS ACCOUNT

1,138,091

3.02

JP MORGAN CHASE BANK

975,300

2.59

PCA Corporation

778,400

2.07

Tatsuru Nakayama

653,508

1.74

Name of controlling shareholder (excluding parent

nashi (Pyrus pyrifolia, esp. var. culta)

company)

Parent Company Namenashi (Pyrus pyrifolia, esp. var. culta)

Supplementary explanation
Not applicable.

3. Company attributes
Scheduled Listing Market Classification

prime (lending) market

10Corporate Governance
Avant Group Corporationaccounting periodJunetype of industry

Information and communication industry

Number of (consolidated) employees as of the end ofMore than 1,000

the immediately preceding fiscal year
(Consolidated) sales in the immediately preceding

10 billion yen or more but less than 100 billion yen

fiscal year
Number of consolidated subsidiaries as of the end ofLess than 10 companies

the immediately preceding fiscal year

4. Guidelines Concerning Minority Shareholders Protection Policy in Transactions with Controlling
Shareholders
Not applicable.

5. Other special circumstances that could materially affect corporate governanceNot applicable.

11

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Avant Group Corporation

II. Status of management decision-making, execution, and supervisionorganizations and other corporate governance systems
1. Matters pertaining to the composition and operation of the organization
Organizational structure

Company with Audit Committee

Directors
Number of Directors under the Articles of Incorporation

9

Term of directors under the Articles of Incorporation

1 yearChairman of the Board of Directors

President

Number of directors

7

Appointment of Outside Directors

Appointed

Number of Outside Directors

4

Number of outside directors designated as independent directors

4

Relationship with the company (1)Name

Relationship with the Company (*1)

Attribute

a

b

c

d

e

f

g

indecent

I

J

K

Naohisa Fukutani

Coming from another company*

John Robertson

Coming from another company*

Chie Goto

Coming from another company*

Makoto Nakano

Coming from another company*

1 Selected items regarding relationship with the company
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.

An executive person of a listed company or its subsidiary
Executive or non-executive directors of the parent company of the listed company
Executive officers of the listed company's sibling companies
A person whose main business partner is a listed company or a person who executes the business of a listed company.
A major business partner of the listed company or a person who executes the business of the listed company
Consultants, accounting professionals, or legal professionals who receive a large amount of money or other assets from alisted company other than director's remuneration.
A major shareholder of the listed company (if such major shareholder is a corporation, an executive person of suchcorporation)
An executive person (only the person himself/herself) of a business partner of a listed company (not falling under any of d, e,
and f).
Executives of the party with whom the outside officers have a relationship of mutual appointment (the person himself/herself
only)
Executive officers of the recipient to whom the listed company has made a donation (in person only)
Others12

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Avant Group Corporation

Relationship with company (2)Name

Independent

Supplemental Explanation of

officer

Conforming Items

Naohisa Fukutani

YesJohn Robertson

Yes

Chie Goto

Yes

Makoto Nakano

Yes-

a wholly-owned subsidiary of theCompany, has concluded a solution
partnership agreement with GEAL
Corporation,awholly-owned
subsidiary of the Company, and has abusiness relationship with Snowflake,Inc. However, the amount is less than
0.01% of consolidated net sales, which
is within the 2% range of theCompany's independence criteria foroutside directors, and there is no risk ofinfluencing
theCompany's
decision-making process.
-

-

13

Reason for Appointment
In addition to his experience in commercial
and investment banking, his many years ofexperience in managing independent M&A
advisory firms and providing management
guidance to a wide variety of companies
have provided him with valuable advice on
formulating and executing management
strategies and strengthening governance, andhe has also served as the largest independent
outside director and chairman of theCompensation Advisory Committee. He has
also served as the first independent outside
director and chairman of the Compensation
Advisory Committee. We believe that he willcontinue to contribute to the supervision ofmanagement and the strengthening ofcorporate governance, and we respectfully
request his continued appointment.
He has 30 years of experience leading highlyinternational organizations in Japan and theAsia-Pacific region, and has excellent
management, leadership, and communication
skills. He has a deep knowledge of the latest
IT technologies, including the cloud-native
field, and has demonstrated his leadershipskills with enthusiasm in the rapidlychanging IT industry. We are seeking his
continued appointment in the expectationthat he will contribute to the achievement ofour vision BE GLOBAL and our mid-term
management plan to create corporate value
through cloud computing.
In addition to his work experience at generalbusiness companies, he is a licensed attorneyand certified public accountant and has been
involved in various companies as a legal andfinancial accounting expert, including M&A,
tax compliance, and harassment cases. He iscurrently fulfilling his responsibilities as an
outside corporate auditor of the Company,
and we believe that he will continue toprovide useful advice in the process ofmanagement judgment and decision-making
as a member of the Audit Committee,
utilizing his extensive knowledge as a legal
and accounting expert in the Company,
thereby strengthening the functions of theBoard of Directors of the Company.
He has deep knowledge in a wide range offields, including business administration,accounting, and corporate finance, and has
established a broad research network in bothbusiness and academic fields on the theme ofcorporate value, which is also ourmateriality. He has conducted numerous
financial and corporate value training
programs for senior management of listedcompanies, and we believe that he will beable to appropriately perform his duties as an
outside director of the Company as amember of the Audit Committee. In addition
to advising us on how to improve thecorporate value of our company and ourclients, we expect him to play an active rolein the development of our next generation
management team.

Corporate Governance
Avant Group Corporation

Audit Committee
Composition of Committee Members and Attributes of the Chairperson
Total members(full-time)

in-houseof thecommittee

directorcommittee

memberAudit Committee

Existenceor3

non-existenceof1

directors

andemployees to assist the Audit Committee in its duties

Outside Director

Committee
chairman

1

2

None

None

Matters concerning the independence of such directors and employees from the executive directors
Two of the Company's three Directors who are Audit Committee members consist of independent Outside
Directors, and they fulfill their responsibilities as Audit Committee members independently of the Executive
Directors.

Collaboration among the Audit Committee, Accounting Auditor, and Internal Audit Department
The Audit Committee attends the accounting audit reporting meetings, receives reports from the audit firm, andhas opportunities to listen to and discuss with each other to confirm the status of internal controls in operations
and finances, thereby promoting cooperation.
The Audit Committee and internal audit staff work together to ensure efficient audits by coordinating operational
audits and by providing opportunities for mutual listening and discussion to confirm that management andbusiness execution are appropriate and efficient.

[Voluntary Committee]
Existence or non-existence of a voluntary committee
equivalent

toanominating

committee

Yesorcompensation committee

Status of establishment of any committees, composition of members and attributes of the chair (chairman)
A voluntary committee equivalent to the Compensation Committee
Committee Name

Compensation Advisory Committee

Total(full-time)

in-house

Outsidein-house

members ofcommittee

director

Director

expertthememberOther

committee
chairmancommittee
3

1

1

2

0

0

OutsideDirector

14

Corporate Governance
Avant Group Corporation

Supplementary explanation
Not applicable.

Relationship with Independent Directors and Independent Corporate Auditors
Number of independent directors

4 persons

Other Matters Concerning Independent Directors
Not applicable.
Incentive-related
Status of Implementation of Measures to Provide

Introduction of performance-based compensation system

Incentives to Directors
Supplemental Explanation for Applicable Items
The Company has introduced a performance-linked compensation system with the aim of clarifying thedirectors' responsibility for performance. The Company pays performance-linked bonuses to directors based on
profits in the consolidated statements of income in accordance with the degree of achievement of the businessplan. A performance-linked stock compensation plan was introduced at the 22nd Annual General Meeting of
Shareholders held on September 19, 2018. This is a system that allows the flexible use of compensation in theform of shares rather than cash and performance-linked compensation, so that management can be given
incentives to extract medium- and long-term corporate value creation.

Persons to whom stock options are granted

Not applicable.

Supplemental Explanation for Applicable Items
Not applicable.
Director's remuneration
Disclosure Status

Individual compensation is not disclosed.

Supplemental Explanation of Applicable Items
The ratio of fixed remuneration and performance-linked remuneration for directors is as follows, using theachievement of performance targets as a guide (based on a short-term performance incentive coefficient of100%).
Composition of Directors' Remuneration

Director

Fixed remuneration

Short-term
performance-linked
compensation

Long-term
performance-linked
compensation

50-55% (50-55% of thetotal)

15%-2030%.

The amounts of remuneration paid to directors and corporate auditors for the fiscal year ended March 31, 2012were as follows With respect to individual remuneration, etc. of these directors, the Board of Directors confirmsthat the method of determining the details of remuneration, etc. and the details of the determined remuneration,etc. are in line with the relevant determination policy, by receiving explanations of the calculation processdescribed in (1) and (2) above, and by other means. (2) above.

15

Corporate Governance
Avant Group Corporation

Amount of remuneration, etc. paid to directors and corporate auditors
Total amount of remuneration, etc. by type

Total amount ofcompensation, etc.

Classification

Number of eligible
directors and officers

basic remuneration

performance-based
bonus

125 million yen

83 million yen

42 million yen

2 persons

11 million yen

11 million yen-

1 person

Outside Director

43 million yen

43 million yen-

3 personsOutside Corporate Auditor

10 million yen

10 million yen-

3 persons

Director(Excluding outside directors)
Auditor(Excluding Outside Corporate
Auditors)(Note) 1. The amount paid to directors does not include the amount of employee salaries of directors who concurrently serve as
employees.
The above includes one corporate auditor who retired at the conclusion of the 25th Annual General Meeting of Shareholders
held on September 28, 2021.

Existenceor

non-existenceofapolicyfor

Yes

determining the amount of remuneration or its
calculation method
Details of disclosure of policy for determining the amount of compensation or its calculation method
Remuneration for the Company's directors is divided into two categories: fixed remuneration (fixed periodic
remuneration of the same amount) and performance-linked remuneration.
Fixed remuneration is paid in a standard amount by position, taking into consideration the level commensuratewith the required abilities and responsibilities. As for the maximum amount, the 26th Annual General Meeting of
Shareholders held on September 27, 2022, approved the annual amount of fixed remuneration to the Company's
directors as 150,000 thousand yen or less (the number of directors immediately after the said meeting is four).
Performance-linked remuneration consists of (1) short-term performance-linked remuneration, which is a bonus
linked to business performance for each fiscal year, and (2) medium- to long-term performance-linked
remuneration, which is linked to changes in indices over a target period of three years (Note). The medium- tolong-term performance-linked bonuses are stock-based compensation in the form of common shares of theCompany, with the aim of providing Directors with incentives to enhance the Company's corporate value over the
longer term and to promote further value sharing between Directors and shareholders. The introduction of
performance-linked remuneration was approved at the 26th Ordinary General Meeting of Shareholders held on
September 26, 2022, and the maximum amount is 41,250 thousand yen per director per year (the number of
directors immediately after the said meeting is 4 (including 2 outside directors)). In addition, at the 26th Ordinary
General Meeting of Shareholders held on September 27, 2022, the introduction of medium- to long-term
performance-linked compensation as stock-based compensation was approved, with the maximum amount ofcompensation being 100,000 thousand yen per subject period and the number of shares to be delivered by theCompany to subject directors under this plan being The maximum amount of compensation is 100,000,000 yen per
subject period, and the number of shares to be issued to each director under the plan is limited to 60,000 shares per

16

Corporate Governance
Avant Group Corporation

year and 100,000 shares in total per year for all directors (four directors (including two outside directors)
immediately after the said shareholders' meeting).
If any of the events (determined by the Board of Directors) that are necessary for the achievement of the
purpose of the stock compensation plan, such as the subject director's resignation from the post of director of theCompany without justifiable reason or certain acts of misconduct, occur, the monetary compensation under theplan will not be paid to the subject director and no shares of the Company will be delivered to him.
In addition, with respect to the President and Representative Director among the eligible directors, if the annual
growth rate (CAGR) of adjusted earnings per share for the three-year period ending at the end of the eligible
period) is less than 18%, no monetary compensation will be paid to the President and Representative Director
under this plan and no shares of the Company will be delivered to him.
Since outside directors are independent from the execution of business, performance-linked remuneration is notapplied to them, and the above fixed remuneration is paid to them.
(Note) Three years from the month containing the date of the Company's annual general meeting of shareholders for each year.
The initial coverage period will run from September 2018 through September 2021, and thereafter from September of each year
through September of the three years following that year.

3. Remuneration for Directors who are Audit Committee Members
The amount of remuneration for Directors who are members of the Audit Committee is also fixed and isdetermined by consultation between the Audit Committee members, taking into consideration the division ofduties between Directors and Audit Committee members, within the maximum amount of remuneration resolved
at the General Meeting of Shareholders. The maximum amount of remuneration was resolved at the 26th Ordinary
General Meeting of Shareholders held on September 27, 2022 to be no more than 55,000 thousand yen per year(the number of directors who are members of the Audit Committee immediately after the said meeting is three).

(ii) Purpose of performance-linked compensation and performance-linked stock compensation, basis forindicators, and specific calculation methods
Short-term performance-linked compensation
Short-term performance-linked compensation is a compensation system in which compensation is paid in cash
and is linked to the year-on-year increase or decrease in consolidated operating income, which is consistently
emphasized in the Company's medium- to long-term management strategy, medium-term management plan, andannual performance. The amount is calculated by multiplying the base amount, which is determined according toposition, by the short-term incentive coefficient, which ranges from 0% to 200% depending on the change inconsolidated operating income from the previous year. Previously, the Company's stock price was also considered
as a coefficient, but since the rate of increase in the Company's stock price is reflected in the mid- to long-term
performance-linked compensation, the Board of Directors resolved on August 19, 2020 to use the rate of increasein consolidated operating income as the coefficient from the 25th fiscal year onward. Specifically, it is calculated

17

Corporate Governance
Avant Group Corporationby the following formula

Short-term performance= Short-term performance base amount ×compensation

Short-term incentive coefficient

Short-term incentive coefficient
Rate is calculated under the following formula where (a) represent consolidated operating profit
for the current year and (b) represents consolidated operating profit of previous fiscal year(i) When (a) is (b) or less:
0(ii) If (a) exceeds (b) and is less than (b) × 112%:
0.5×{1+((a)-(b))÷((b)×112%)}(iii) When (a) is 112% or more of (b):1+0.5×((a)-(b)×112%)÷((b)×6%)※ The short-term incentive coefficient is limited to 2.0.

Consolidated operating income for the current fiscal year, which serves as a performance indicator, was 3,247
million yen, a 115% change from the consolidated operating income of the previous fiscal year (2,826 million yen(note)). As a result of applying this to the formula in (3) above, the short-term incentive coefficient was 1.24 asshown below, and 124% of the short-term performance-linked remuneration base amount was paid as short-term
performance-linked remuneration.

Short-term incentive coefficient = 1 + 0.5 x (Consolidated operating income for the current period: 3,247 million
yen - (Consolidated operating income for the previous period: 2,826 million yen x 112%)) / (Consolidated
operating income for the previous period: 2,826 million yen x 6%) = 1.24
(Note) The "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29, March 31, 2020) and others
have been applied from the beginning of the current consolidated fiscal year, but operating income for the previous
consolidated fiscal year has been restated after the application of the said accounting standard and others whencalculating performance-linked compensation.

2. medium- to long-term performance-linked compensation
This is a performance share unit plan under which the Company's common stock is paid as a performance-linked
stock compensation plan in order to provide directors with incentives to improve the Company's corporate value
over the long term and to promote further value sharing between directors and shareholders. The number of shares
will be determined by multiplying the number of shares determined by our board of directors (the base number ofshares to be delivered) by the share delivery ratio determined according to our stock growth rate, which is a
representative indicator of our company's corporate value. The Company's stock growth rate is calculated by
dividing the Company's Total Shareholder Return (TSR) during the subject period by the growth rate of the Tokyo
Stock Exchange Stock Price Index (TOPIX) during the subject period.

After the end of the subject period,

monetary compensation claims will be paid to the subject directors, and upon the issuance of shares or disposal oftreasury stock by the Company, the Company shares will be delivered by having all such monetary compensation
claims contributed in kind.

18

Corporate Governance
Avant Group Corporation

Medium-to long-term compensation = Standard number of shares × stock compensation ratio(number of shares delivered)

Share issuance ratio(i) If our equity growth rate (A) is less than 100%(ii) When A is between 100% and 112%(iii) When A is 112% to 150%
(iv) When A exceeds 150%

:0
: 33% × (A-100%) ÷ 12%: 33% + 67% × (A-112%) ÷ 38%: 100%

Our Total Shareholder Return/ total stockholder return (TSR)
A Our stock price growth rate

TSR during the period
Rate of increase in TOPIX

Simple average of the closing prices of our shares for the month of the end of the applicable period (September in 3
years) plus the total amount of dividends per share related to dividends of surplus during the applicable period
Simple average of the closing prices of our shares in the month of the beginning of the period covered (September)

TOPIX Growth Rate
Simple mean of TOPIX at the end of the period (September after 3 years)
Simple averages of TOPIX for the beginning month (September of the year)

With regard to the stock-based compensation for the President and Representative Director, the Company's
medium- to long-term management strategy calls for an annual growth rate of 18% in operating income, andtherefore, the Company received approval at the 25th Annual General Meeting of Shareholders held on September
28, 2021 to limit the grant of such stock-based compensation if the adjusted net income per share for the three-year
period up to the end of the subject period (CAGR) is less than 18%.
Our total shareholder return for the period covered from September 2018 to September 2021 was 204.1% and
TOPIX growth rate was 118.1%, resulting in our equity growth rate of 172.8% in A above. Since this corresponds
to (4): 100% of the above share delivery ratio, 100% of the 8,705 shares, which is the standard number of sharesdelivered, were delivered.

Support system for outside directors
Currently, there is no dedicated person to assist outside officers (including directors who are members of the
Audit and Supervisory Committee), but administrative and other duties, including liaison, are assisted by the
person in charge of the Administrative Division.
The Company makes every effort to provide information on necessary matters, such as materials for Board of
Directors meetings, etc., to outside directors through explanations, guidance, etc., in advance as much as
possible, from the person in charge of administrative support, and to outside audit committee members throughfull-time audit committee members or a person in charge of administrative support.

2. Items related to functions such as business execution, auditing and supervision, nomination, andcompensation decisions (overview of current corporate governance system)(1) Board of Directors
The Company's Board of Directors currently consists of four directors who are not Audit Committee Members(including two outside directors) and three Audit Committee Members (including two outside directors). In
principle, the regular meeting of the Board of Directors is held on the second business day following the third
Monday of each month, and extraordinary meetings of the Board of Directors are held as necessary to make19

Corporate Governance
Avant Group Corporation

important management decisions.

(2) Execution system
The Representative Director and the Director in charge of finance, appointed by the Board of Directors, leadthe business execution as Group CEO and Group CFO, respectively, and the Executive Officers appointed by the
Representative Director and President (Group CEO) share the responsibility for business execution. The GroupManagement Committee, chaired by the Group CEO and attended by the following executive officers and GroupCxOs, discusses strategically important issues with the aim of achieving sustainable growth and increasing
corporate value through Group management, and important matters are referred to the Board of Directors by theGroup CEO and Group CFO.

Chief Executive Officer,
Chief Finance Officer,
Chief Operating Officer,
Chief Business development Officer,
Chief Digital transformation Officer,
Chief Risk Management Officer,
Chief Legal Officer,
Chief Human Resources Officer

In addition, the representative directors and directors in charge of business management of each group company,as executive officers of the Company, execute business operations while keeping the overall group strategy inmind, and the group CEO and other group CxOs participate in the board meetings of each group company as
directors or observers to appropriately monitor the execution status.

(3) Auditing and supervision
The Company has adopted an Audit Committee system, and the Audit Committee consists of three members:
one full-time director and two outside directors.
The Audit Committee assigns an Audit Committee member, selected in accordance with the Companies Act, toattend meetings of the Board of Directors and other important meetings. In addition, the Audit Committee shallhear reports from directors on the status of business operations, inspect important approval documents, etc.,
examine the status of operations and assets at each department, and exchange information with internal audits. At
the end of the fiscal year, the Audit Committee prepares an audit report after reviewing the business report,
financial statements, and supplementary schedules based on the results of the accounting audit.
We have also entered into an audit contract with Deloitte Touche Tohmatsu LLC to ensure the accuracy offinancial figures and to strengthen information disclosure by establishing an appropriate financial reporting20

Corporate Governance
Avant Group Corporation

system.

(4) Policy on Determination of Directors' Remuneration
The remuneration system for directors is explained in detail in [Relationships with Remuneration for
Directors] (Details of Disclosure of Policy for Determining Amount of Remuneration or Calculation Method of
Remuneration).

3. Reasons for selecting the current corporate governance structure
On October 1, 2013, the Company was established as a holding company with a business support function to
support the growth of the Group's operating companies, with the aim of developing the Group throughconsolidated management. The directors of the group operating companies, who are familiar with the businessand organization of the group, will make decisions and execute operations promptly, while the Company willassume governance and control functions for each company, aiming for an organizational structure that clarifies
the functions, authority and responsibilities of each group company.
Accordingly, at the annual meeting of the Board of Directors held in September 2013, the composition of theBoard of Directors was changed from six executive directors to three executive directors and one outside director
to allow the Company's Board of Directors to focus on management functions and to establish a structure thatallows the Board of Directors to objectively determine the status of governance and control of the Group from afair and neutral standpoint and to ensure transparency in decision-making and its process, thereby strengthening
the supervisory function of the Board of Directors. Subsequently, the number of outside directors was increased
to two at the Annual General Meeting of Shareholders in September 2014, and by the Annual General Meeting of
Shareholders in September 2020, the number of outside directors was increased to three, making outside directors
a majority on the Board of Directors. In addition, at the Annual General Meeting of Shareholders held in
September 2022, the Company changed to a company with an Audit Committee System and delegated a part of
the authority to make business execution decisions to the executive directors. In order to accommodate changes
in the diversity of the Board of Directors and changes in the Group CEO, the Board of Directors' Regulations
stipulate that the authority to make business execution decisions to be delegated is to be reviewed and decided by
the Board of Directors immediately after each Annual General Meeting of Shareholders.
From the perspective of creating a 100-year company, we have chosen the current corporate governancestructure in our exploration of the above-mentioned ideal forms of governance.
In March 2021, the Company established the Compensation Advisory Committee. The Audit Committee, whichis in charge of auditing, consists of one full-time director and two outside directors, and we believe that theobjectivity and neutrality of the management oversight system are fully functioning. The committee on
nominations regarding director candidates is currently not established because the total number of directors of theCompany is seven and the majority of the directors are independent outside directors, and the Company has

21Corporate Governance
Avant Group Corporation

determined that discussion of the composition of the Board of Directors should be conducted by all directors.

22

Corporate Governance
Avant Group Corporation

III. Implementation Status of Measures Concerning Shareholders and Other
Stakeholders
1. Efforts to revitalize the General Meeting of Shareholders and facilitate the exercise of voting rights
supplementary explanation
Early dispatch of notices of convocation of

As a rule, we try to ship 3 weeks prior to the event date.

general meetings of shareholders
Setupshareholder

meetings

to

avoid

concentration days

After confirming with the trust bank regarding the date ofconcentration of shareholders' meetings, the date of themeeting is set to avoid the concentration date.

Exercise of voting rights by electromagnetic

You can exercise your voting rights via the Internet. The

means"Smart Exercise" voting website for smartphones has been
adopted starting with the 24th Ordinary General Meeting of
Shareholders to be held in September 2020.

Participation in electronic voting platforms and

The Company joined the voting platform starting with theother efforts to improve the environment for25th Annual General Meeting of Shareholders to be held in

institutional investors to exercise their voting

September 2021.

rightsProvisionofthenotice(summary) in Englishof

convocation

The convocation notices, with some exceptions, are alsotranslated into English and posted on the Company's and theTokyo Stock Exchange's websites.

Other

We have continued to use PowerPoint to provide
easy-to-understand explanations of matters explained at theGeneral Meeting of Shareholders and to devise ways tomanage the proceedings, etc. We also began live andarchived video distribution of the General Meeting of
Shareholders from the 24th Ordinary General Meeting of
Shareholders to be held in September 2020. The Company's
website contains notices of convocation, shareholder
communications, notices of resolutions, and extraordinary
reports of voting results in Japanese and English.

2. Status of IR-related activities
Explanation by the
supplementary explanation

representative
himself/herself

Prepare and publish

The disclosure policy is published on our website (IR page) as

23

Corporate Governance
Avant Group Corporation

disclosure policy"Information Disclosure Policy".

Regular information

Although the timing is irregular, we will consider holding

meetings

briefings for individual investors as needed.

for

No

individual investors
Regular briefings for

The Company holds financial results briefings twice a year, once

analysts

in the second quarter and once after the announcement of theseandinstitutional investors

financial results.

Holding

regularIn the fiscal year ended June 30, 2017, we held our first

briefings for overseas

presentation for international investors. We are continuing toinvestors

strengthen our information dissemination to overseas investors

Yes

No

and are actively responding to their needs through individual
meetings, etc. However, we do not plan to hold regular
information meetings at this time.
IR materials posted

We have opened an IR site on our website, where we post timely

on website

disclosure materials, financial results presentation materials,
financial reports, etc. on a quarterly basis, as well as video
recordings of financial results briefings.

Establishment of a

Beginning in July 2019, a structure has been put in place to assign

department (person ina director of investor relations under the director in charge ofcharge) for IR

finance, which is carried out in cooperation and collaboration
with the personnel in charge of each relevant department.

Other

Not applicable.

3. Status of efforts to respect the position of stakeholders
supplementary explanation
Respect for the position of stakeholders is
stipulated in internal rules and regulations.

The Company has established "Insider Information
Management Regulations" for the purpose of promoting
caution in the handling of information and preventing
information leaks and insider trading.
In addition, we have established a regulation concerning
standards of conduct for members of the entire Group inorder to ensure thorough awareness of corporate ethics andcompliance among all members to set forth our basic
compliancepolicyandthe"Compliance

and

Risk

Management Regulations" to ensure thorough complianceand risk management. In order to realize the Group's

24Corporate Governance
Avant Group Corporation

philosophy of "Creating a 100-Year Company," we believe it
is important for each and every employee to be aware of
their relationship with society and the environment, and toact accordingly. These policies were approved by the Boardof Directors on July 22, 2020.
Implementation of environmental preservation
activities, CSR activities, etc.

With reference to the amount of electricity used in thefiscal year ending June 30, 2020 (approximately 1.5 millionkwh), from July 1, 2021, we will purchase "Green Power
Certificates" issued by Japan Natural Energy Company, Ltd.
We will purchase "Green Power Certificates" issued by
Japan Natural Energy Company, Ltd. to reduce CO2
emissions by approximately 660 tons-CO₂ per year andpromote efficient use of electricity and the spread of power
generation from natural energy sources to help prevent
global warming.
Since the fiscal year ending June 30, 2017, as part of ourmecenat activities, we have participated in the MOMATSupport Circle, a corporate program of the National Museumof Modern Art, Tokyo, to support the Museum's activities.
On August 25, 2020, Avant Group also signed the United
Nations Global Compact, which is highly compatible with
the Group's philosophy system. We also joined the Global
Compact Network Japan, a local network in Japan. The
Avant Group supports the ten principles of the United
Nations Global Compact, which are "human rights," "labor,""environment," and "anti-corruption," and is actively
working to resolve social issues in order to realize asustainable society. We will actively work to solve social
issues in order to realize a sustainable society.

Establishment of policies, etc. related to the provision

The Company has prepared an "Information Disclosureof information to stakeholders

Policy" which is available on the Company's website (IRpage).
(https://www.avantgroup.com/en/ir/policy.htmll)

Other

Based on the Group's Code of Conduct, we are committed
to a highly transparent organization and to activities andactions that respect all stakeholders involved in the Group's

25

Corporate Governance
Avant Group Corporation

business by always striving to create new value through athorough customer orientation and by enjoying our own
growth.

26

Corporate Governance
Avant Group Corporation

IV. Matters Concerning Internal Control Systems, etc.
1. Basic Policy and Status of Internal Control System
In order to fulfill the responsibilities of corporate organization and activities as a public organ of society and toensure the growth of business and the continuous and efficient operation of the corporate organization, theCompany has established the General Meeting of Shareholders as the highest organ of the Company and has
established the following organizational design and internal control system.
⚫

Accurate decision-making and prompt execution of operations by establishing a board of directors andselecting a representative director.

⚫

Establishment of an Audit Committee to improve the soundness of management and strengthen themonitoring and supervisory functions of the Audit Committee.
(Full-time directors' function to audit operations, outside directors' function to monitor directors andsupervise decision-making)⚫

Establish an accounting auditor to ensure the appropriateness of financial reporting and internal controls
through accounting audits and improve disclosure and information provision functions.

⚫

Compliance and Risk Management Committee (Hereafter, “CRM Committee”), chaired by the President,
and Information Security Committee to ensure compliance with laws, regulations, and rules and to addresssignificant risks.
In addition, the Board of Directors has adopted the following basic policy regarding the development ofinternal control systems.

(1) Compliance System of Directors(i) Compliance System of Directors(1) System to ensure that the execution of duties by directors complies with laws and regulations and the Articles
of Incorporation⚫

Directors shall comply with the Group's Code of Conduct and properly execute their duties inaccordance with laws and regulations, the Articles of Incorporation, the Board of Directors
Regulations, and other internal regulations.

⚫

In executing business operations, directors make decisions after comprehensive review atmeetings of the Board of Directors and various cross-organizational meetings.

⚫

The CRM managers of each Group company, appointed by the CRM Committee Chairman,
shall deliberate and review important issues and responses concerning corporate ethics,
compliance and risk management at the CRM Committee and promptly report them to theBoard of Directors.

⚫

A reporting system for violations of laws and regulations and other legally questionable acts,
etc., shall be established and operated with a contact person who is a legal advisor and a
director who is a member of the Audit and Supervisory Committee.

27Corporate Governance
Avant Group Corporation⚫

Under the audit policy determined by the Audit Committee, Audit Committee members audit
the execution of duties by directors by attending meetings of the Board of Directors and otherimportant meetings and by investigating the status of business execution.

(2) Systems to ensure the efficient execution of duties by directors⚫

The Company's Board of Directors basically meets once a month on a regular basis, and asnecessary, the Board of Directors meets as needed to make decisions and promptly execute
operations, as well as to supervise the status of important management decisions and businessexecution by directors.

⚫

Various meetings and committees, of which directors are in charge or members, deliberate anddecide on business execution within the scope of their authority.

⚫

Promote decentralization of management through organization based on management policies
and business plans.

⚫

In order to clarify management responsibility and respond to changes in the businessenvironment, the term of office of directors is set at one year.

(3) System for the storage and management of information related to the execution of duties by directors
Information related to the execution of duties by directors shall be properly stored and managed by thedepartment in charge in accordance with laws and regulations, the Board of Directors Regulations, Document
Management Regulations, and other related regulations.

(2) System to ensure the appropriateness of the company's operations(1) Regulations and other systems for managing risk of loss⚫

We will implement a rolling forecasting management cycle to monitor the progress of businessperformance and expense management, in accordance with the business environment, in order toproperly manage operations and funds and to prevent risks.

⚫

We manage risks related to compliance, information assets, and other business matters by preparing
and disseminating necessary rules, manuals, etc.

⚫

In addition, the CRM Committee will strengthen the management and response to ensure compliance.

⚫

In addition, the Information Security Committee will strengthen the management of and response to
the management of information assets.

⚫

We shall consult with and receive advice and guidance from third parties with expertise, such as
lawyers, accounting auditors, and tax accountants, as necessary in the performance of our business.

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

28

Corporate Governance
Avant Group Corporation⚫

Employees shall comply with the Group's Code of Conduct and perform their duties in accordancewith laws, the Articles of Incorporation, and internal regulations.

⚫

In order to raise employees' awareness of compliance and promote socially responsible behavior, theCompany will promote the development of internal rules and regulations and conduct internal audits
under the direction of the President.

⚫

When an employee becomes aware of a violation of laws and regulations, the Articles ofIncorporation or internal rules, or an act contrary to socially accepted norms, the employee shallreport or consult with the Internal Reporting Desk.

⚫

In the event that a member of the Audit Committee expresses an opinion or request for improvement
regarding the employee compliance system or the whistle-blowing system, the Director shallpromptly respond or make improvements at the CRM Committee.

(3) System to ensure the appropriateness of operations of the corporate group consisting of the Company and its
subsidiaries⚫

Our subsidiaries shall comply with our management policy and the Group's Code of Conduct
to contribute to the enhancement of the Group's corporate value.

⚫

While respecting the autonomy of its subsidiaries, the Company will support the development
and improvement of internal control systems and promote them in cooperation with its
subsidiaries.

⚫

The Company's subsidiaries have entered into a management guidance and business
management agreement, under which the Company receives reports on important mattersrelated to the execution of duties by directors and others. The Board of Directors of theCompany's subsidiary makes decisions on important matters, but the Company's regulations andoperations require approval from the Company with respect to (a) investment, (b) personnel of
directors and officers, and (c) finance, including capital policy, which have a significant impact
on the Group.

⚫

The Company's subsidiaries hold regular monthly meetings of the Board of Directors as a basic
rule and hold meetings as needed for decision-making and prompt business execution, with theCompany's Group Legal Office confirming the status of the meetings.

⚫

As part of the establishment of the Group's overall compliance system, employees of theCompany's subsidiaries are required to report or consult with the internal reporting system
office when they become aware of any violation of laws, the Articles of Incorporation, internal
rules, or any act that is contrary to socially accepted norms.

⚫

The CRM Committee will provide support for violations of laws and regulations and othercompliance-related issues at subsidiaries.

⚫

With respect to the progress of business performance of our subsidiaries and thorough29Corporate Governance
Avant Group Corporation

management of expenses, we will implement risk prevention through appropriate managementof operations and funds and reporting to the Company by monitoring the status of businessperformance through rolling forecast management in accordance with the budget management
regulations and in a cycle appropriate to the business environment.
⚫

The Internal Audit Group of the Group Risk Management Office conducts periodic internal
audits of the appropriateness of the operations of the Company's subsidiaries and reports theresults to the Company's Directors and Audit Committee for necessary control.

(4) System to ensure the appropriateness of financial reporting
Under the direction of the Board of Directors, the Company shall establish a maintenance and operation
system to ensure the legality and appropriateness of financial reporting and shall periodically conduct
self-assessments and independent evaluations of internal control over financial reporting, as well as have themaudited by an accounting auditor.

2. Basic Policy on Elimination of Antisocial Forces and Status of Improvement
With regard to the exclusion of antisocial forces, in addition to the basic policy regarding the internal control
system, the Company will make efforts to improve the system as follows.
(1)

In the Group's Code of Conduct, we declare the exclusion of antisocial forces and the prohibition ofantisocial activities. In addition, we receive written pledges from directors and employees every year
regarding the "Code of Conduct and Management of Confidential Information," and confirm that they are
well informed about compliance, including the elimination of antisocial forces.

(2)

General Affairs Office, Group Human Resources Management Department, as the department in charge,
has appointed a person in charge of preventing unjustified demands, and is to cooperate with the competentpolice to eliminate antisocial forces, etc. In addition, we confirm the antisocial forces of our business
partners at the time of signing the basic agreement and strive to thoroughly inform and strengthen our
response to the exclusion of antisocial forces.

30

Corporate Governance
Avant Group Corporation

V. Other Other
1. introduction of anti-takeover measures
Introduction of anti-takeover measures

Not applicable.

Supplemental Explanation for Applicable Items
Not applicable.

2. Other matters related to corporate governance structure, etc.
The status of the Company's internal system for the timely disclosure of corporate information is as follows.
(1) Basic Policy on Timely Disclosure of Corporate Information
We recognize that the timely disclosure of corporate information is the only means by which the Company
can be widely understood in fulfilling its social responsibilities, and that it is an important function that plays arole in coordinating with the Company's stakeholders and in forming corporate governance. We will provide
such information in a timely, appropriate, and fair manner.
(2) Status of Internal System for Timely Disclosure
Material facts concerning the Company's business operations, etc. are managed by the director in charge,
who is responsible for handling information, and the Group Corporate Management Office, the division in
charge, is responsible for timely disclosure, and is working to strengthen and improve the timely disclosuresystem.
Since we handle our customers' financial information, we make every effort to thoroughly familiarize ourcustomers with the Financial Instruments and Exchange Law, securities exchange regulations, and internal"Insider Information Management Regulations," and conduct training as part of our internal education
curriculum.
In light of the social climate and impact of information management, we have also established an
Information Security Committee, which is currently formulating a security policy and related rules andregulations to strengthen our company-wide information management system.
(3) Timely Disclosure Flow
Important matters related to business operations, etc. are communicated and shared at each meeting and inreports, and matters subject to timely disclosure are subject to the prescribed disclosure procedures under thesupervision of the person in charge of information handling.
Information on urgent matters, decisions on other important matters, and information on financial results aregathered by the Information Management Manager, who scrutinizes and confirms the contents, andinformation deemed subject to timely disclosure is disclosed by means of release distribution and posting on
the Company's website after the prescribed disclosure procedures are completed.
(4) Monitoring of Timely Disclosure System
1) Audit Committee
Audit committee members appointed by the Audit Committee attend meetings of the Board of Directors and31

Corporate Governance
Avant Group Corporation

other important meetings to report important occurrences and audit the status of decisions related to corporate
information, and comprehensively monitor the operation of internal systems related to timely disclosure,including confirmation of financial statements and financial status.
2) Board of Directors regarding timely disclosure
The Company's Board of Directors, including certified public accountants, confirms the appropriateness ofthe preparation of timely disclosure documents and securities reports to be resolved by the Board of Directors
with respect to financial information and other matters that are subject to timely disclosure.

Schematic diagram (reference material)]

General Meeting of Shareholders
Appoint Dismiss

Appoint Dismiss

Outside Experts(legal counsel, etc.)

AdviceRemuneration
Advisory Committee
3 (2 independents,
chaired byindependent)

Inquiry

AdviceReportBoard of Directors
Directors (excluding Audit
Committee Members)
4 (2 independent)

Audit

Oversight

Appoint Dismiss

Audit Committee

Directors who are Audit Committee
Members
3 (2 independent)

Cooperation

Reappoint
ment
decision

Representative
director

Appointment anddismissal of Avant
Group Corporate
Officers anddirectors of Group
companies

Compliance and Risk
Management Committee

Group Risk
Management Office

Report[Report]Internal Audit Group

Group Management Meeting[Report]Chief Executive Officer
Chief Risk-management Officer
Chief Financial Officer
Chief Digital transformation Officer
Chief Operation Officer
Chief Legal Officer
Chief Business development Officer Chief Human Resources Officer

Information
Security
Committee

Audit

Avant Group departments and Group Companies
Audit

32

Cooperation

AuditorCorporate Governance
Avant Group Corporation

Outline of Timely Disclosure System (schematic diagram)[Occurrence of material fact][Company resolution, financial results]

Company,

Company,

department

department(Related parties )(Related parties )Management

Compliance & Risk

Meeting, Dept.

Management Committee

Managers ’ Meeting

Information management officer &officeAnalysis, evaluation & management

Director, corporate officer(financial results )President CEO(Decision for timely
disclosure )Board of Directors

Kanto Local
Finance Bureau

Information management officer & office(Timely disclosure )Tokyo Stock Exchange(TDnet)Corporate
Homepage

Press
ReleaseEnds

33