May 30, 2023
To All It May Concern,
Japan Securities Finance Co., Ltd.
Petition by Strategic Capital, Inc. for the Appointment of Inspector of Execution ofOperations pursuant to Article 358 of the Companies Act, and the Status ofDialogue with that Company
Japan Securities Finance Co., Ltd. (hereinafter, “JSF”) today announced that it has been
notified by the Tokyo District Court that a Petition for the Appointment of Inspector ofExecution of Operations (hereinafter, the “Petition”) has been filed by Strategic Capital, Inc.
(hereinafter, “SC”) pursuant to Article 358 of the Companies Act.
According to SC’s Petition for Appointment of Inspector of Execution of Operations provided
by the Tokyo District Court, in essence, JSF’s accounting procedures are claimed to beerroneous and the performance-linked remuneration of the Company’s executive officers isclaimed to be excessive. Therefore, SC has requested that the Tokyo District Court appoint
an inspector to investigate the details of the accounting procedures adopted in cases where
JSF recognizes gains on the sale of shares held by the Company (hereinafter, the“Accounting Procedures”).
Prior to this Petition, SC has exercised its shareholder rights against JSF in a manner thathas differed from other shareholders, such as by making certain shareholder proposals andrequesting an extraordinary General Meeting of Shareholders pursuant to Article 316,
Paragraph 2 of the Companies Act for the purpose of appointing an investigator. SC has
stated that it plans to continue to so exercise its shareholder rights in the future as well. In
addition, SC has unilaterally and negatively manipulated our reputation on a website
specially established by SC, in advertisements in the media, and in social networking posts,by omitting context and by selectively quoting only a portion of discussions held with JSF.
JSF has worked diligently to engage in constructive dialogue with its investors, including
SC, with the aim of achieving sustainable growth and increasing corporate value over themedium to long term, but unfortunately, the dialogue with SC has not been constructive. Also,
shareholders other than SC, one after another, both domestic and foreign, have commented
that they feel that the above-mentioned exercise of shareholder rights and manipulation of
our reputation is damaging JSF's shareholder value, and have asked why shareholder
proposals that are not considered to improve corporate value are repeatedly being put
forward, to which we have struggled to provide an explanation.
Originally, instead of disclosing individual dialogues with shareholders, JSF adopted afundamental policy of disclosing the overall picture of its dialogues with shareholders in theMay 15, 2023 press release entitled “Company’s Efforts to Respond to the Tokyo Stock
Exchange's Request to Listed Companies, etc.” However, in light of the above1

circumstances, JSF has determined that disclosure of the status of our dialogue with SC has
become unavoidable, and that it would be appropriate to organize and disclose as follows theinformation regarding the same.
We kindly request the understanding of all shareholders regarding this situation, and thankyou in advance for your understanding.
JSF believes that dialogue with institutional investors is conducted with the aim of achieving
sustainable growth and increasing corporate value over the medium to long term, inaccordance with Basic Principle 5 of the Corporate Governance Code. Therefore, thequestion of what forms they would like such medium to long term vision to take, including theCompany's business environment, management strategy, and sustainability, should be themost important theme in the dialogue conducted with investors. Based on this, JSF also hasmade every effort to achieve a constructive dialogue with SC, it has met with SC far more
frequently than with other shareholders, and it has provided explanations regarding theCompany’s sustained growth and increase in corporate value over the medium to long term,
as well as our track record, such as our sustained increases in ROE and total shareholder
return, although there matters are still in progress.
However, SC has shown no interest in these explanations, and their discussions havefocused on the so-called “amakudari” issue, resulting in a great deal of relentlessconversation concerning the biographies and qualifications of each of the Company'sofficers. Based on their attitude regarding this dialogue, it appears that SC is not interested in
the sustainable growth of the Company or the increase of our corporate value over themedium to long term, and it even seems that their sole interest is in eliminating managementclass employees who come from the public sector, especially former employees of the Bankof Japan. Also, despite our statement that we would like to refrain from commenting on theissue of the Accounting Procedures because the matter is still pending before the court, they
have repeatedly asked questions that appear to be for the purpose of gathering suchinformation.
During the discussions, they repeatedly made statements that attacked the character of
JSF’s President, including his biography, and have damaged his social credibility. They havealso frequently raised their voices loudly to interrupt the explanations provided by aCompany’s Executive Officer, they have demanded that the President remove the Executive
Officer from the discussions, and their threatening behavior has otherwise been conspicuousand confrontational. Furthermore, they have made repeated requests for discussions that
include all Executive Officers other than the President and the Executive Officer in charge, as
well as with all outside directors.
In addition, SC has set up a special page on its website regarding the Company and posted
on social media sites about the Company, selectively quoting statements made by theCompany’s management, including its outside directors and the President, to makeunsubstantiated and definitive statements regarding the qualifications of management, and2

has manipulated the Company’s reputation by emphasizing these negative statements. We
believe that these methods are intimidating and do not constitute a constructive dialogue.
Under these circumstances, we kindly request that investors understand that, despite theCompany's efforts, it is extremely difficult to have a constructive dialogue with SC, and wefurther request that you make a well-balanced decision not solely based on the claims of SC,
but also on the information communicated by the Company. Your support is greatlyappreciated.
End.

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