This document has been translated from the Japanese original (as submitted to Tokyo Stock Exchange) for
reference purposes only. In the event of any discrepancy between this translated document and the Japaneseoriginal, the original shall prevail. CERES INC. assumes no responsibility for this translation or for direct,
indirect, or any other forms of damages arising from the translation.

Corporate Governance Report
CORPORATE GOVERNANCECERES INC.

Last Update:

March 28, 2024
CERES INC.

Satoshi Takagi, President and Representative Director
Contact: +81 3 6455 3756
Securities code: 3696
https://ceres-inc.jp/csr/English/
The corporate governance of CERES (the “Company”) is described below.

I.

Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other
Basic Information

1.

Basic Views
As a listed company, the Company has set the establishment of a system to maximize corporate value from a long-term
perspective as a basic goal of corporate governance, and is enhancing its management and administrative organization to promote"management efficiency" and "strengthen compliance.
The Company belongs to an internet-related industry where the market landscape is changing rapidly. We recognize t that one ofour most important management tasks is to ensure the mobility, transparency, and soundness of management and to secure thetrust of our stakeholders, including shareholders, customers, users, and employees. We are committed to thorough information
management and to ensuring that all necessary information is properly managed. We will fulfill our accountability to stakeholders
by ensuring thorough information management and disclosing necessary information without delay and in an appropriate manner.
In addition, in order to strengthen compliance, we are proactively addressing such issues as enhancement of the internal audit
system and improvement of service quality leveraged by strict adherence to rules under the Privacy Mark, and we will continue totake a sincere approach to improving our internal systems.

Reasons for Non-compliance with the Principles of the Corporate Governance Code
The Company implemented all of the principles of the Corporate Governance Code.

Disclosure Based on the Principles of the Corporate Governance Code[Principle 1-4: so-called cross shareholding]
The Company's basic policy is to hold only a limited number of policy stock holdings after careful consideration of the synergies
to be gained from business collaboration and information sharing with the target company. The Company will review its decision1

to continue to hold such shares as appropriate, and will reduce the number of shares it holds if the significance of such holdings isinsufficient. With regard to the exercise of voting rights in relation to shares held by the Company, decisions are made after
considering (1) whether the target company has an appropriate governance structure and (2) whether the synergy effects describedabove will be maximized and the Company's corporate value will increase.

[Principle 1-7: Transactions between related parties]
The Company requires prior approval from the Board of Directors in accordance with the Companies Act and the rules of theBoard of Directors when any transaction may be competitive or cause a conflict of interest (between related parties) with ourofficers or a corporation substantially controlled by our officers.

[Supplementary Principle 2-4-1: Securing diversity in the promotion of core human resources]
As of the end of December 2023, woman employees in our group accounted for 27.8% of our total employees and 13.8% of ourmanagement positions. Until now, we have recruited the necessary human resources regardless of gender or nationality. We havealso adopted a policy of recruiting capable human resources regardless of gender, nationality or career stage.
Please refer to our website (https://ceres-inc.jp/csr/English/policies/social/diversity/) for details of our policy on human resource
development and internal environmental improvement, as well as the status of implementation.

[Principle 2-6: Functioning as an asset owner of the corporate pension plan]
We have not introduced a corporate pension plan.

[Principle 3-1: Enhancement of information disclosure](1)

Our management philosophy is posted on our website (https://ceres-inc.jp/company/vision/).

(2)

Our basic philosophy and basic policies on corporate governance are described in "1. Basic Concept" of “I. Basic

Concept on Corporate Governance, Capital Structure, Corporate Attributes, and Other Basic Information" in this report as well as
in our website (https://ceres-inc.jp/ir/governance/) and in the securities report.
(3)

Our policies and procedures for determining director remuneration are described in “II.1. Directors' Remuneration

Relations” of this report.
(4)

The selection of director candidates (excluding directors serving as members of the Audit and Supervisory

Committee) is decided by the Board of Directors based on the recommendations of the Nomination and Remuneration Advisory
Committee and the following standards.
1) Have the knowledge and experience to manage the Company appropriately, fairly and effectively.
2) Have the ability to objectively analyze and judge the business environment.
3) Have a thorough insight into compliance with laws and corporate ethics.
The Company selects candidates for directors from Audit and Supervisory Committee members after obtaining the consent of the
Audit and Supervisory Committee. Candidates must possess a high level of expertise and a wide range of knowledge regarding
law and finance. They must also be capable of contributing to sound management by conducting audits from an objective andneutral standpoint based on reports from the Nomination and Remuneration Advisory Committee.
Proposals for the dismissal of directors will be decided by the Board of Directors based on the recommendations of the2Nomination and Compensation Advisory Committee in the following cases.
1) When there is an act contrary to public order and morality
2) When health issues make it difficult to continue assigned duties
3) When qualifications set forth in the selection criteria are not met(5) Reasons for the appointment of candidates for outside directors are disclosed in the notice of convocation of the General
Meeting of Shareholders.

【Supplementary Principle 3-1-3. Initiatives for Sustainability】
The Company’s management philosophy is to "Enrich the world through internet marketing." In our mid-term business plan
released on December 23, 2021, we outlined our goal to create a "token economy (alternative currency economy)" built from apoint ecosystem and blockchain. We will strive to become a platform that breathes new life into socio economic activities. To
meet these goals in the medium to long term, we understand the importance of taking on sustainability related challenges such asaddressing global environmental problems (climate change, etc.) and considering employee health as well as employee working
conditions. These are important business challenges to overcome that not only reduce risks but also lead to profit opportunities.
The Company has established a Sustainability Promotion Committee chaired by the President and it will continue to promotesustainability in a cross-sectoral and flexible manner.

The Sustainability Promotion Committee has selected the following materialities.

[Materiality]
・Contribute to creating a prosperous society through proprietary services
・Contribute to resolving social issues and economic development through open innovation
・Contribute to fair operation of digital advertising and healthy development of the industry
・Provide environmentally-conscious products and services
・Promote diverse workforce
・Ensure information security and privacy
・Reinforce corporate governance
For an analysis of our sustainability efforts and the impact of climate change-related risks and opportunities on our businessactivities, earnings, please refer to our website (https://ceres-inc.jp/csr/English/).

[Supplementary Principle 4-1-1: Scope of Management and its Summary]
The Company's internal regulations clearly define the authority of the Board of Directors and the management team. In addition
to the matters stipulated by law and the Articles of Incorporation, the Board of Directors grants discretionary authority to the
executive body in consideration of the size of the amount and the importance of management strategies, thereby ensuringflexibility and speed in the execution of operations.

[Principle 4-9: Criteria and Qualifications for Independence of Independent Outside Directors]

3

When appointing outside directors, we consider the requirements for outside directors stipulated by the Companies Act and the
independence standards stipulated by the Tokyo Stock Exchange in accordance with the following independence criteria.
< Criteria for Independence >We judge that outside directors are independent if they do not fall under any of the following items.
(1) Those involved with the Ceres Group- Persons who are members of the Ceres Group- Persons with a family member who has been a director, executive officer, corporate auditor, or senior manager of the Ceres
Group in the past five years(2) Key business partners
Directors, executive officers, and employees of important business partners who have accounted for 3% or more of theconsolidated sales of the Ceres Group over the past three years(3) Professional service providers (lawyers, accountants, tax accountants, judicial scriveners, etc.) who received remuneration of
30 million yen or more from the Ceres Group in the past five years(4) Others- Persons from companies that have a member of Ceres on their Board of Directors and have a member of their company on the
Ceres Board of Directors.
- Persons with other material conflicts of interest with the Ceres Group[Supplementary Principle 4-10-1: Mechanism for Utilization of Voluntary Committees]
The Company has established the Nomination and Compensation Advisory Committee, the majority of whose members are
independent outside directors, as a voluntary advisory body to the Board of Directors for the purpose of enhancing the corporate
governance system by strengthening the independence, objectivity and accountability of the Board of Directors' functions
regarding director nominations, compensation, and other matters. The Nomination and Compensation Advisory Committee
deliberates on the election and dismissal of directors, the election and dismissal of representative directors (including succession
planning), executive compensation, and other matters based on consultations with the Board of Directors, and reports the resultsof its deliberations to the Board of Directors.

[Supplementary Principle 4-11-1: Approach to Board Balance, Diversity and Scale]
Our Board of Directors is composed of directors with diverse knowledge, experience and abilities. It includes outside directors
with management experience at other companies and deep knowledge of finance, accounting, and legal affairs. The Board of
Directors makes decisions on director candidates after deliberation by the Nomination and Remuneration Advisory Committee, inwhich a majority of members are independent outside directors. The Company prepares a skill matrix that lists the knowledge,
experience, and abilities of directors and discloses it in the notice of the general meeting of shareholders.

[Supplementary Principles 4-11-2: Status of Concurrent Directorships]
Our directors devote sufficient time and effort to their work to properly fulfill their roles and responsibilities. The status ofconcurrent positions held by important directors is disclosed in the annual securities report.

4

[Supplementary Principle 4-11-3: Outline of Analysis and Evaluation of the Effectiveness of the Board of Directors]
Our Board of Directors conducts a questionnaire-based evaluation of the effectiveness of each director and established a systemfor evaluating and analyzing the results. An outline of the assessment results for fiscal 2023 is available on our website(https://ssl4.eir-parts.net/doc/3696/ir_material4/226871/00.pdf).

[Supplementary Principle 4-14-2: Training Policy for Directors]
As part of our training for directors, we have a policy of helping newly appointed directors (including outside directors) acquire
knowledge about the Company in briefings and business study sessions. We also help deepen directors’ understanding of theirroles and responsibilities by paying expenses for external education and training to learn the basic knowledge necessary to
perform their duties.

[Principle 5-1: Policy on Constructive Dialogue with Shareholders]
For sustainable growth and medium- to long-term improvement of corporate value, the Company recognizes the importance ofactive dialogue with investors, including shareholders, and appropriately reflecting the knowledge gained in the management of
the Company. The President and Representative Director and Administrative Headquarters established an IR system and are
actively responding to inquiries from shareholders and having interviews with investors.

2. Capital Structure
Foreign Shareholding Ratio

Less than 10%

Status of Major Shareholders
Name or Company Name

Number of Shares Owned

Percentage (%)

Juno&Co.,Inc

1,180,000

10.33

Custody Bank of Japan, Ltd. (Trust Account)

1,128,900

9.89

The Master Trust Bank of Japan ,Ltd. (Trust Account)939,700

8.23

Satoshi Takagi

683,400

5.98

CyberAgent, Inc.

500,000

4.38

Toru Akaura

330,000

2.89

Tetsuya Nozaki

218,900

1.91

Nozomi Yachidate

212,400

1.86

Hideaki Takahashi

200,100

1.75

Yasuhiro Kobayashi

199,400

1.74

Name of Controlling Shareholder, if applicable―(excluding Parent Company)
Name of Parent Company, if applicable―5Supplementary Explanation―

3. Corporate Attributes
Listed Stock Exchange and Market Segment

Prime Market

Fiscal Year-End

DecemberBusiness Sector

Information & Communication

Number of Employees (Consolidated) as of the End
500 or more and fewer than 1000of the Previous Fiscal YearNet Sales (Consolidated) as of the End of the¥10 billion or more and less than ¥100 billion
Previous Fiscal Year
Number of Consolidated Subsidiaries as of the End
Fewer than 10of the Previous Fiscal Year

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling
Shareholder―

5. 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
Corporate Governance System

Company with Supervisory Committee

Directors
Number of Directors Stipulated in Articles of
No upper limit
Incorporation
Directors' Term of Office Stipulated in Articles of
1 year
Incorporation

6

Chairperson of the Board

President

Number of Directors

8Election of Outside Directors

ElectedNumber of Outside Directors

3

Number of Independent Directors

3Outside Directors’ Relationship with the Company (1)Relationship with the Company*
Name

AttributesaHitoshi Tada

From another company

Yoshindo Takahashi

From another company

Masataka Uesugi

Lawyer

b

c

d

e

f

g

h

i

j

k

○

*Categories for “Relationship with the Company”.
(Use “○” 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; and “▲” when a close
relative of the director fell under the category in the past.)
a. Person who executes business of the Company or a subsidiary
b. Person who executes business or a non-executive director of a parent company
c. Person who executes business of a fellow subsidiaryd. Person/entity for which the Company is a major client or a person who executes business for such person/entity
e. Major client of the Company or a person who executes business for such clientf. Consultant, accounting expert, or legal expert who receives large amounts of cash or other assets in addition to director/Audit
and Supervisory Board Member compensation from the Company
g. Major shareholder of the Company (in cases where the shareholder is a corporation, a person who executes business of thecorporation)h. Person who executes business for a client of the Company (excluding persons categorized as any of d, e, or f above) (applies
to self only)
i. Person who executes business for another company holding cross-directorships/cross-auditorships with the Company (applies
to self only)
j. Person who executes business for an entity receiving contributions from the Company (applies to self only)
k. OtherOutside Directors’ Relationship with the Company (2)Name
Hitoshi Tada

Membership ofSupervisory
Committee

Designation as
Independent
Director○

Supplementary Explanation of
the Applicable Relationship―

Reasons for Appointment
Mr.

Tada

has

servedasarepresentative and officer mainly
at financial institutions. He hasabundant experience and insightincorporate

management

practices. We have elected him as
an Outside Director because webelieve that he will utilize his
qualifications

7

tostrengthen

Ceres's management supervisionabilities. In addition, because hehas no special relationship withCeres and has no conflicts ofinterest with our management, it
has been concluded that he has ahigh degree of independence andwe have designated him as anindependent director who is not
likely to cause conflicts of interest
with general shareholders.
Yoshindo○○

Takahashi

Mr. Takahashi is an advisor at

Mr. Takahashi is appointed as an

Executive Partners Inc., which

Outsideprovides management consulting

Supervisory Committee Member)services to Ceres. Still, we havebased on our judgment that he candetermined that there is noobjectively

problem in designating him as an

relevance of management based

independent director since he ison his experience and broad

not the consultant in charge of

insight,

Ceres,

institutions,

and

the

transaction

Director(Auditsupervise

mainly

at

and

the

financialutilize

to

&

his

amount is insignificant, so hequalifications

does not fall under the category

Ceres'sof our major business partners.

addition, since he has no conflicts

auditing

strengthen
abilities.

Inof interest with our Management,
it has been judged that he has ahigh degree of independence andwe have designated him as our
independent director who is not
likely to cause conflicts of interest
with general shareholders.
Masataka○○―

Mr. Uesugi is appointed as an

Uesugi

OutsideDirector(Audit&Supervisory Committee Member)based on our judgment that he canobjectively

supervisetherelevance of management basedon his experience and broad
insight,

8

mainlyatfinancialinstitutions,
qualifications
Ceres'sandtoauditing

utilizehisstrengthen
abilities.

In

addition, he has established a law
firm, but it has no special
relationship with Ceres and has
no conflicts of interest with its
management, so it has been
judged that he has a high degreeof independence and we havedesignated

him

as

our

independent director who is not
likely to cause conflicts of interest
with general shareholders.

Supervisory Committee
Composition of Supervisory Committee and Attributes of the Chairperson
All Committee
Members
Supervisory
Committee

Full-time Members
3

Inside Directors

1

Outside Directors
1

2Committee Chair
Inside Director

Appointment of Directors and/or Staff to Support the
Appointed
Supervisory Committee

Matters Concerning Independence of Said Directors and/or Employees from Executive Officers
The Company has established the Audit Committee Secretariat in accordance with the "Audit Committee Regulations" to assist
the Audit and Supervisory Committee in its duties, and employees engaged in internal control operations, etc. are appointed as
assistants.
In order to ensure the independence of such assistants from executive directors, etc., the Audit and Supervisory Committee's
Audit Standards stipulate the following- The Audit and Supervisory Committee shall endeavor to ensure the independence of assistants from the person conducting thebusiness.
- The Audit and Supervisory Committee shall have the right to direct and instruct the assistant employees.
- The Audit and Supervisory Committee shall have the authority to consent to personnel changes, personnel evaluation, anddisciplinary action against the assistant employees.

Status of Coordination between Supervisory Committee, Accounting Auditor, and Internal Audit Department

9

The accounting audit of the Company is conducted by Deloitte Touche Tohmatsu LLC. The Audit and Supervisory Committee
meets regularly with the accounting auditor to receive reports on audit plans and the methods and results of audits, and to
exchange opinions as needed to strengthen cooperation.
Internal audits are conducted by a dedicated internal audit group in accordance with an internal audit plan formulated in advance,
and the results are reported to the President and Representative Director and the Board of Directors, and shared with the Audit
Committee.
The Audit and Supervisory Committee, accounting auditor and internal audit group also regularly exchange opinions. By
strengthening mutual collaboration, we created an environment in which appropriate audits can be conducted.

Voluntary Established Committee(s)Voluntary Establishment of Committee(s) equivalent toEstablished
Nomination Committee or Remuneration Committee

Status of Voluntarily Established Committee(s), Attributes of Members Constituting the Committee and the Committee
Chair (Chairperson)
Committee’s
Name
Voluntarily
Established
Committee
Equivalent toNomination
Committee

Nomination andVoluntarily
Established
Committee
Equivalent toRemuneration
Committee

Nomination andAll
Members

Full-timeMembers

InsideDirectors

OutsideDirectors

OutsideExperts

3

0

1

2

0

0

Inside Director

3

0

1

2

0

0

Inside Director

Other

Chairperson

Compensation
Advisory
Committee,

Compensation
Advisory
Committee,

Supplementary Explanation
The Nomination and Compensation Advisory Committee, a voluntary advisory body to the Board of Directors, has been
established. The purpose of this committee is to enhance the corporate governance system by strengthening the independence,
objectivity, and accountability of the Board of Directors' functions regarding director nominations, compensation, and othermatters.

Matters Concerning Independent Directors
Number of Independent Directors

3

Other Matters Concerning Independent Directors
The Company designates all outside directors as independent directors who fulfill the qualifications of independent directors.

10Incentives
Implementation Status of Measures related toIntroduction of Stock Options Scheme / Other
Incentives Granted to Directors

Supplementary Explanation for Applicable Items
The stock option scheme has been introduced to motivate and boost the morale of the Company's employees to improve its
business performance. The Company has also introduced a restricted stock compensation, a medium- to long-term incentive, anda bonus system, a short-term incentive, for the purpose of sustainable improvements in the Company's corporate value andsharing shareholder value.

Persons Eligible for Stock Options

Inside Directors / Employees

Supplementary Explanation for Applicable Items
The purpose of this program is to motivate and boost the morale of the Company's employees to improve the Company's
performance.

Director Remuneration
Status of Disclosure of Individual Directors’

No Disclosure for any Directors

Remuneration

Supplementary Explanation for Applicable Items
The amount of remuneration for directors for the 19th fiscal year (ending December 31, 2023) is as follows.
Directors (excluding Audit & Supervisory Board Members): 6 persons 203,021 thousand yen (including 1 outside director) (6,000
thousand yen)
Directors (Audit & Supervisory Board Members): 4 persons 15,330 thousand yen (including 3 outside directors) (9,300 thousandyen)
The amount of remuneration above includes the remuneration paid for during the term of office of one Outside Director (Audit &Supervisory Board Member) who retired at the conclusion of the 18th Ordinary General Meeting of Shareholders held on March
29, 2023.

Policy on Determining Remuneration Amounts andEstablished
the Calculation Methods Thereof

Disclosure of Policy on Determining Remuneration Amounts and the Calculation Methods Thereof
At the Board of Directors meeting held on February 19, 2021, we established the Directors' Remuneration Policy, which includes
a policy for determining the details of compensation, etc. for individual directors (excluding Directors who are Audit &11Supervisory Committee Members). For Outside Directors, only a basic salary as a form of fixed remuneration is paid in light of
their roles and independence. The outline of the policy is as follows.

Directors' remuneration policy
1. Basic policy on directors' remuneration policy
・ Decisions shall be made in accordance with the career, work experience, duties, responsibilities, etc. of each Director, taking
into consideration Ceres’s business performance and business environment, etc.
・ Directors shall increase their motivation to continuously improve business performance over the medium to long-term in order
to meet the expectations of shareholders, and to contribute to the improved value of the entire Group.
・ Aim for competitive compensation levels in order to secure diverse and talented staff who can put our corporate philosophy
into practice.
・ Objectivity and transparency shall be ensured not only for the remuneration system for Directors but also for individual
remuneration for each Director through deliberation and supervision of the Nomination and Compensation Advisory Committee,
a voluntary advisory body which is composed of a majority of Outside Directors.

2. Basic structure of directors' remuneration
From the perspective of maintaining and improving corporate governance and putting basic policies into practice, remuneration
for Ceres's Directors (excluding Directors who are Audit & Supervisory Committee Members and Outside Directors) consists ofthree types: (1) basic salary as fixed remuneration, (2) bonuses as short-term incentive remuneration, and (3) stock remuneration(pre-delivery type restricted stock) as medium- to long-term incentive remuneration. The ratio, etc. shall correspond to theposition of the Director. Remuneration for Outside Directors shall be limited to basic salaries, which is a kind of fixed
remuneration, in light of their expected roles.

3. Policy for determining the amount of each type of remuneration, etc.
(1) Basic remuneration (Fixed remuneration)
Decisions shall be based on comprehensive consideration of the position, full-time or part-time status, career, past salary andremuneration levels, areas of responsibility and duties, and remuneration levels in the same industry, etc.
(2) Bonuses
In light of the nature of short-term incentive remuneration and commonality with the interests of shareholders, the amount ofbasic remuneration for each director shall be determined according to the achievement status of the amount of consolidated net
income (meaning net income attributable to shareholders of the parent company as shown in the consolidated statements ofincome, hereafter referred to as "consolidated net income"), which is resolved by the Board of Directors and announced aroundFebruary each year as a performance forecast, taking into consideration the position of each director (excluding Directors who are
Audit & Supervisory Committee Members and Outside Directors), the amount of basic remuneration for the applicable fiscal
year, his/her contribution in the relevant fiscal year, the performance and growth rate of the business division in charge, and otherfactors.
(3) Stock remuneration (Pre-delivery type restricted stock)
In addition to providing incentives for the sustainable improvement of Ceres’s corporate value, monetary claims are paid as12

remuneration to grant restricted stock for the purpose of further sharing value with shareholders.
The total amount of such stock remuneration shall be determined on the assumption that it does not exceed 20,000 shares and
200,000 thousand yen per year, taking into consideration the amount of consolidated net income of the group for the applicablefiscal year. In addition, the number of stock compensation grants for each individual and the amount of monetary claims to be
paid for such grants shall be determined in consideration of the basic remuneration amount for eligible Directors (excluding
Directors who are Audit & Supervisory Committee Members and Outside Directors. Hereinafter referred to as "eligible
Directors") for the applicable fiscal year, the contribution of each eligible Director during the fiscal year, the performance andgrowth rate of the business department in charge, and trends in the price of Ceres's common stock.

4. Process of determining directors' remuneration, etc.
The amount of basic remuneration and bonuses among the directors' remuneration (excluding Directors who are Audit &Supervisory Committee Members) shall be determined individually by the President and Representative Director, who isdelegated by the Board of Directors, after mutual evaluation of individual Directors, deliberation and formulation of draft
proposals by the Nomination and Remuneration Advisory Committee, and determination of the total amount of each remuneration
at the Board of Directors. With regard to stock remuneration (pre-delivery type restricted stock), the amount and the number ofshares to be granted to each individual shall be determined by the Board of Directors after deliberation and formulation of a draft
proposal by the Nomination and Remuneration Advisory Committee.

Support System for Outside Directors
Support for outside directors is provided by the Corporate Planning Office. Specifically, when a meeting of the Board of Directors
is to be held, the Office provides advance explanations of the agenda. When necessary, information is shared via e-mail or
telephone, as appropriate.

2.

Matters Concerning Functions of Business Execution, Auditing and Supervision, Nomination, andRemuneration Decisions (Overview of Current Corporate Governance System)(1) Board of Directors
Our Board of Directors consists of eight directors (three of whom are outside directors), including three directors who aremembers of the Audit and Supervisory Committee as of the date of the filing of this report. In addition to the regular monthly
meeting of the Board of Directors, extraordinary meetings are held as necessary. The Board of Directors makes importantmanagement decisions based on discussions at management meetings and supervises the execution of business by each director.
The members of our Board of Directors are as follows.
Chairman: President and Representative Director Satoshi Takagi; Members : Senior Executive Vice President Tetsuya Nozaki,
Managing Director Yasuhiro Kobayashi, Director Yusuke Shiga, Outside Director Hitoshi Tada, Director (Full-time Audit andSupervisory Committee Member) Kana Chitose, Outside Directors (Audit and Supervisory Committee Members) Yoshindo
Takahashi, and Masataka Uesugi(2) Audit and Supervisory Committee

13

The Audit and Supervisory Committee is composed of three directors (including two outside directors) as of the date of thisreport. In addition to the regular meeting of Audit and Supervisory Committee, which meets monthly, extraordinary meetings areheld as necessary. Directors serving as members of the Audit and Supervisory Committee conduct efficient and reasonablesupervision while coordinating opinions with the internal auditor and accounting auditor.
The members of our Audit and Supervisory Committee are as follows. Chairman: Director (Full-time Audit and Supervisory
Committee Member) Kana Chitose; Members: Outside Directors (Audit and Supervisory Committee Members) Yoshindo
Takahashi and Masataka Uesugi(3) Nomination and Remuneration Advisory Committee
The Company has established the Nomination and Remuneration Advisory Committee as a voluntary advisory body to the Boardof Directors, with a majority of its members being independent outside directors.
The purpose of the Nomination and Remuneration Advisory Committee is to enhance the corporate governance system bystrengthening the independence, objectivity, and accountability of the Board of Directors' functions related to the nomination andcompensation of directors. The Committee discusses the following matters in consultation with the Board of Directors andprovides reports to the Board of Directors regarding the outcomes of these discussions.
(1)

Draft proposal for the general meeting of shareholders regarding the appointment and dismissal of directors(2)

Draft proposal for the appointment and dismissal of Representative directors and executive directors with specifictitles(3)

Other matters deemed necessary by the Board of Directors regarding the appointment and dismissal of directors, theappointment and dismissal of representative directors and executive directors with specific titles(4)

Draft proposal for the general meeting of shareholders regarding remuneration for directors, etc.

(5)

Draft policy for determining the details of cash remuneration and non-cash remuneration for individual directors(excluding Directors who are Audit & Supervisory Committee Members)(6)

Other matters deemed necessary by the Board of Directors regarding remuneration for directors, etc. The members of
the Ceres Nomination and Compensation Advisory Committee are as follows. Chairman: Satoshi Takagi, President
and Representative Director; Committee Members: Hitoshi Tada, Outside Director; Yoshindo Takahashi, Outside
Director (Audit & Supervisory Committee Member)(4) Management Meeting
The Company holds a management meeting once a week, chaired by Satoshi Takagi, President and Representative Director. In
principle, the meeting is attended by full-time directors and the responsible persons of each department. The management meetingexamines business plans and business performance and makes decisions on important business matters in accordance with therules of Administrative Authority and Management Meeting. The status of each division's execution of operations is reported, andwhile sharing information, sufficient discussion is held.

(5) Risk Management Committee
Based on the risk management rules, the Risk Management Committee, chaired by the director in charge of the Administrative
Headquarters, oversees risk management. The Risk Management Committee analyzes and evaluates risks in our group,14continuously monitors perceived risks, and regularly reports to the board of directors on the status of activities. In the event of arisk that may have a significant impact on management, the Risk Management Committee considers countermeasures and makes
recommendations to the Board of Directors. In the event of an emergency, the Risk Management Committee establishes a systemfor promptly communicating information and giving directions.
The Risk Management Committee also serves as the body responsible for overseeing compliance as set forth in the compliancerules. The committee formulates, develops, and checks the status of compliance measures and policies to minimize the risk ofdamage to the Company.
The members of our Risk Management Committee are as follows.
Chairman: Managing Director Yasuhiro Kobayashi; Members: Director (Full-time Audit and Supervisory Committee Member)
Kana Chitose, and the head of the corporate planning office(6) Sustainability Promotion Committee
The Company recognizes that addressing global environmental issues such as climate change, employee health and work
environment, and other sustainability-related issues is an important management priority that not only reduces risk but also leads
to profit-earning opportunities. The Company has established a Sustainability Promotion Committee, chaired by Satoshi Takagi,
President and Representative Director, for the purpose of responding to these issues in a more cross-functional and flexible
manner.
Committee Chair:

Satoshi Takagi, President and Representative Director

Committee member:

Tetsuya Nozaki, Vice President and Director
Yasuhiro Kobayashi, Managing Director
Yusuke Shiga Director
5 Executive Officers
1 Representative Director of Major Subsidiary

3. Reasons for Adoption of Current Corporate Governance System
At the General Meeting of Shareholders held on March 24, 2021, a resolution was approved to amend the Company's Articles ofIncorporation in order to transition to a company with an Audit & Supervisory Committee. Accordingly, the Company effectivelytransitioned from a company with a board of corporate auditors to a company with an Audit & Supervisory Committee, startingfrom the same date.
The purpose of this transition is to strengthen the auditing and supervisory functions of the Board of Directors by allowing
directors who are Audit & Supervisory Committee members to have voting rights at Board of Directors meetings. At the sametime, this transition is intended to further enhance the corporate governance system and promote a sustainable increase in thecorporate value of the Company's group.

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III.

Implementation of Measures for Shareholders and Other Stakeholders

1. Measures to Vitalize the General Shareholder Meetings and Facilitate Exercise of Voting Rights
Supplementary Explanation
The Company strives to send the convocation notice as early as possible.
Early Posting of Notice of the General
Moreover, before dispatching the convocation notice, the Company discloses
Shareholders Meeting
the information on TDnet and publishes it on the Company's website.
Scheduling

of

the

GeneralShareholders

Meeting During Non-Peak Days

Due to the fiscal year ending in December, the General Meeting of
Shareholders is held on a date separate from the consolidated date.
A system for executing voting rights through the Internet has been in place

Electronic Exercise of Voting Rights
since 2019.
Participation in a Platform for the Electronic

The Company has Participated in the Electronic Exercised of Voting Platform

Exercise of Voting Rights and Other Initiatives

for institutional and other investors since 2022.

to Enhance Environment for Institutional
Investors to Exercise Voting Rights
To facilitate overseas investors in exercising their voting rights effectively, theProvision of Notice (or Summary of Notice) of

Company has prepared a concise English version of the Notice of Convocation

the General Shareholders Meeting in English

for the General Meeting of Shareholders. This English version is disclosed on
TDnet and posted on the Company's website.
At the Annual General Meeting of Shareholders, the Company uses video

Other

footage and narration to report on its operations to help shareholders better
understand the results of operations and the status of its businesses

2.

Status of IR-related Activities
Explanation by arepresentative
director or arepresentative
executive officer

Supplementary Explanation

The Company regularly holds briefings and seminars forretail investors, at which the President and Representative
Regular Investor Briefings held for Retail
Director or the Managing Director and General Manager

Held

Investorsof the Administration Division explains the Company's
business performance and management policies.
The

Companyholds

semiannual

earnings

results

briefings for analysts and institutional investors at theRegular Investor Briefings held for Analysts

announcement of its full-year and second-quarterand Institutional Investors

financial results. The President and Representative

Held
Director explains the earnings results and management
strategy.
Online Disclosure of IR Information

Financial results, timely disclosure materials, various

16

explanatory materials, annual securities reports andquarterly reports are posted on the IR site of theCompany's website. We are also actively translating IR
materials into English for the benefit of foreign investors.
IR group is in the Administration Division.
Establishment of Department and/or Placement

Person responsible for handling information: Yasuhiro

of a Manager in Charge of IR

Kobayashi, Managing Director & General Manager of
Administration Division3.

Status of Measures to Ensure Due Respect for Stakeholders
Supplementary Explanation
Implementation of Environmental Preservation

Based on our management philosophy of "Enrich the world through internet

Activities and CSR Activities, etc.

marketing", the Company has been promoting contributions to environmental
measures, such as tree-planting activities in Inner Mongolia, China since 2009.
The Company has achieved carbon neutrality by offsetting 100% of our CO2
emissions from electricity usage as part of our commitment to realizing adecarbonized society since January 2021. Additionally, the Company is amember of the “Japan Climate Leaders' Partnership” and have joined the“100% Renewable Energy Pledge, RE Action”.

Formulation of Policies, etc. on Provision of

The Company acknowledges the significance of delivering timely and relevant

Information to Stakeholders

corporate information to its stakeholders. It is our policy to disseminate
information through our website and company briefings as deemed
appropriate.

Other

In order to promote the success of female employees, the Company has been
actively working towards creating a supportive and inclusive workplaceenvironment that enables women to achieve a harmonious work-life balance,
especially with regards to child-rearing responsibilities. The Company has
observed a rise in the number of requests for maternity and childcare leave. It
is developing a system that supports working women by integrating feedback
from individuals with firsthand experience in childbirth and childcare.

IV. Matters Concerning the Internal Control System
1. Basic Views on Internal Control System and Status of Development
The Company's Board of Directors has established the "Basic Policy for Establishment of Internal Control System" and based on
this policy, the Company has established a system for the effective functioning of the internal control system. The outline of thepolicy is as follows.

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[Basic policy for establishment an internal control system](1) System to Ensure that the Execution of Duties by Directors and Employees Complies with Laws, Regulations, and the
Articles of Incorporation
We will set forth the management philosophy, risk management rules, compliance rules, and other rules concerning thecompliance system as standards for our directors and employees to follow in compliance with laws, regulations, and social norms.
In addition, the Board of Directors shall endeavor to establish an internal control system and a system for legal compliance by us
and our subsidiaries to ensure the execution of business by us and our subsidiaries is carried out properly.

(2) System to maintain and manage information relating to directors in the execution of their duties
The storage and management of information relating to the execution of duties by directors shall be kept in an appropriate mannerand for an appropriate period of time in accordance with the document management rules and shall be maintained in a condition
that can be accessed by directors.

(3) Regulations for managing risks of loss and relevant internal systems
The Risk Management Committee, chaired by the director in charge of the Administrative Headquarters, shall supervise the risk
management of the Company and its subsidiaries in accordance with the risk management rules. The Risk Management
Committee analyzes and evaluates risks to us and our subsidiaries, continuously monitors perceived risks, and regularly reports to
the Board of Directors on the status of activities. In addition, in the event of a risk that may have a significant impact onmanagement, the Risk Management Committee shall consider countermeasures and make recommendations to the Board of
Directors. In the event of an emergency, the Risk Management Committee shall establish a system for promptly communicating
information and giving directions.

(4) System for ensuring efficient execution of directors' duties
Regular meetings of the Board of Directors shall be held every month, and extraordinary meetings of the Board of Directors shallbe held as necessary to make important management decisions and supervise the execution of business by the directors. In
addition, management meetings composed of executive directors and division general managers are held weekly to conduct
preliminary deliberations on matters to be discussed by the Board of Directors. In addition, matters to be decided by the Board of
Directors are communicated to each division, and the status of business execution by each executive director and division generalmanager is monitored.

(5) System ensuring that the operations of the Company and its subsidiaries are adequate
The internal auditor group, who report directly to the President and Representative Director, shall, in accordance with the rules forinternal audits, audit the status of business execution by employees of the Company and its subsidiaries and ensure theappropriateness of business operations.
The Board of Directors shall dispatch our officers and employees as directors of subsidiaries to establish a group governancesystem.
In addition, based on the rules governing the management of affiliated companies, the Corporate Planning Office, which is mainly
supervising the subsidiaries, shall develop a system for receiving reports on important management matters from subsidiaries.

18

(6) Matters concerning employees requested by the Audit and Supervisory Committee to assist in their duties
The Audit and Supervisory Committee may request necessary assistance for audit operations from an employee in charge ofinternal audit group or the Administrative Headquarters. When assisting the duties of the Audit and Supervisory Committee, said
employees shall comply with the instructions and orders of the Audit and Supervisory Committee and shall not be directed by the
directors. In addition, the Audit and Supervisory Committee shall conduct personnel evaluations of the said employees (limited tothose related to audit assistance operations) and the approval of the Audit and Supervisory Committee shall be required for
personnel changes.

(7) System for directors (excluding directors who are Audit and Supervisory Committee Members), employees of the Company,
as well as directors, auditors, and employees of subsidiaries to report to the Audit and Supervisory Committee
Directors (excluding directors who are Audit and Supervisory Committee Members), auditors, and employees of the Company
and its subsidiaries shall promptly and appropriately report to the Audit and Supervisory Committee or directors who are Audit
and Supervisory Committee Members not only statutory matters, but also matters that may have a material impact on the Group,
the status of the implementation of internal audits, and other matters.
The Audit and Supervisory Committee may, whenever it deems necessary, request reports from the directors (excluding directors
who are Audit and Supervisory Committee Members), auditors, and employees of the Company and its subsidiaries.

(8) System ensuring that persons who make reports as set forth in the preceding item are not treated disadvantageously as aresult
The Company stipulates protection of whistleblowers in the rules for internal reporting and prohibits directors, auditors, andemployees of the Company and its subsidiaries from giving unfavorable treatment on the grounds of the report set forth in thepreceding paragraph.

(9) System ensuring that audits by the Audit and Supervisory Committee are conducted effectively
Directors who are Audit and Supervisory Committee members may attend meetings of the Board of Directors and other important
meetings as necessary to grasp the process of important decision-making and the status of business execution of the Company,and may inspect documents related to business execution and request explanations from executive directors and important
employees. In addition, the Audit and Supervisory Committee may utilize experts such as attorneys at law and tax accountants if
necessary for conducting audits, and the Company shall bear the costs thereof. If a director who is an Audit and Supervisory
Committee Member requests advance payment of expenses with regard to the execution of his/her duties, we shall promptly
respond except in cases where it can be proved that the expenses, etc. pertaining to such a request are not necessary for the
execution of the duties of the director who is an Audit and Supervisory Committee Member.

(10) System ensuring the appropriateness and reliability of financial reporting by the corporate group consisting of us and our
subsidiaries
To ensure the appropriateness and reliability of financial reporting, necessary systems shall be established at the Administrative
Headquarters, the effective functioning of control over operational processes pertaining to financial reporting shall be regularly

19assessed, and any deficiencies shall be corrected as necessary. The process and results of the evaluation and the state of
improvement shall be supervised by the Board of Directors.

(11) Basic approach to elimination of anti-social forces and its system
We and our subsidiaries shall always maintain an awareness of risk management and take a resolute stance as an organization
against antisocial forces that pose a threat to social order and safety. In responding to anti-social forces, we will cooperate withexternal specialist organizations, such as police-related organizations and attorneys, to collect information, and the entire
organization will respond to ensure the safety of employees.

2. Basic Views on Measures for Eliminating Anti-Social Forces and Status of Development
Our basic stance and progress toward eliminating anti-social forces are as described in (11) Basic Concepts Toward the
Elimination of Anti-Social Forces and its Structure, 1. Basic Concepts Concerning Internal Control Systems and the Status ofDevelopment of the Internal Control System, IV Matters related to internal control system, etc.

V. Other
1. Adoption of Anti-Takeover Measures
Adoption of Anti-Takeover Measures

Not Adopted

Supplementary Explanation for Applicable Items―

20

2. Other Matters Concerning the Corporate Governance System【Overview of the Timely Disclosure System ( Diagram)】

END

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