Corporate Governance
Avant Group Corporation

December28, 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.
https://www.avantgroup.com/en/sustainability/governance/main/0/teaserItems1/01/linkList/0/link/AvantCorpPoli
cyonCorporateGovernance20220927.pdf

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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, 2023, 8.8% of ourmanagers were women, 4.3% were foreign nationals, and 82.3% 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 theenhancement of the corporate value of both the Company and the investee company.

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Avant Group Corporation

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 Annual General Shareholders’Meeting, the distribution of such remuneration is determined by taking into consideration factors such as
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 aneutral, fair, and objective standpoint.

(5)

Reasons for the appointment of candidates for Outside Directors and Outside Audit & Supervisory Board

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Avant Group Corporation

Members and their expected roles are disclosed in the Notice of Convocation of the Annual General
Shareholders’ Meeting.
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, aiming to
reduce greenhouse gas emissions by 50% in Scope 2 and 30% in Scope 3 by the fiscal year ending June 30, 2030,
compared to the fiscal year ending June 30, 2018.
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 of
Executive Officers to Representative Director and President (Group CEO). In addition, a director or key member

4Corporate Governance
Avant Group Corporationof 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 time to time from the Group CEO and Group CFO, who are
directors, or the Group CxO, who is an executive officer delegated by the Group CEO, and thoroughly examines
them from various perspectives to ensure that they are in line with the management philosophy, annual businessplan, and medium-term business plan, etc. Proposals that are approved 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 Annual General Shareholders’ Meeting. In order to reflect the medium-termbusiness performance and risks of the Company and to encourage incentivization that contributes to the exercise
of sound entrepreneurial spirit, "Establishment of Remuneration Amount for Directors (excluding Directors who
are Audit Committee Members) and Remuneration Related to Performance-Linked Stock Compensation" wassubmitted as Proposal 5 and "Establishment of Remuneration Amount for Directors who are Audit Committee
Members" as Proposal 6 at the 26th Annual Annual General Shareholders’ Meeting held on September 27, 2022.
The proposal was approved and adopted, and the system has been introduced as a system. In addition, in order tofurther share value with shareholders in conjunction with the start of the new medium-term management plan,"Revision of the Performance-Based Stock Compensation Plan for Directors (excluding Directors who aremembers of the Audit Committee and Outside Directors)" was submitted as Proposal 3 to the 27th Annual
General Shareholders’ MeetingAnnual Annual General Shareholders’ Meeting held on September 27, 2023,
which was approved and adopted, and as a result, the plan has been revised. For details on the remuneration
system for 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 and5Corporate Governance
Avant Group Corporation

Corporate Auditors. Details are explained in "Disclosed Details of Policy for Determining Amounts andCalculation Methods of Compensation.
Supplementary Principle 4-8 (ii) Effective Use of Independent Outside Directors] (Comply)
The Company has appointed the lead independent outside director since May 2018. The Board of Directors
was reported on September 27, 2023 that Ms. Chie Goto was appointed as the Lead Independent Outside Director
by mutual election among the Independent Outside Directors.
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

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Avant Group Corporation

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,
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 Annual General Shareholders’ Meeting,(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, 2023, 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)
The Company’s board of directors appoint directors among the candidates who have diverse and professional
experiences and insights including leadership (experience as management), experience in IT industry/SaaS,
insights of corporate value, experience in global business, insights of organizations and human resources,finance/accounting, legal and compliance with improvement of the corporate value as the purpose, and “Proposal
2: Election of four directors (except directors who are audit committee members)” is approved and passes as theoriginal proposal, the Company’s board of directors shall be composed of the following skill matrix.

Inaddition, the Company’s board of directors shall consist of 4 directors who are not audit committee members (2outside and independent directors, 1 foreign resident) and 3 directors who are audit committee members. (2outside and independent directors, 1 female), where the board of directors believe that diversity and balance ofknowledge, experiences and skills of the human resources are fully considered and at the level to have advanced

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Avant Group Corporation

decision-making skill. The reasons for the appointment of outside directors are disclosed in the Notice ofConvocation of the Annual General Shareholders’ Meeting.

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 Annual General Shareholders’ Meeting, 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)
The Company has recognized the issue concerning duties, structure and operation, etc. of the board of directors
and has been working on continuous improvement for the purpose of achieving improvement of continuous
corporate value.

The board of directors conducts analysis and evaluation every year concerning effectivity ofitself in consideration of self-evaluations, etc. of each director.
<Evaluation Method>
We conducted evaluations by a third-party institution in view of enhancing independence and objectivity of theanalysis and evaluation for the term ending June 2018 and the term ending June 2019, but there was an input
from the board of directors that such evaluations focused on quantitative evaluation which makes the issues
unclear.

Therefore, we decided to conduct interviews for directors and auditors by a third-party institution asnecessary mainly by our original surveys after the term ending June 2020.
Since June 2021, we have conducted the evaluations by independently preparing the survey form where
evaluations of issues and opinions about the responding measures can be described in order to more clearly
understand the issues. The survey was conducted for all directors including the audit committee members. in8Corporate Governance
Avant Group Corporation

June 2023 and such result was reported to the board of directors on July 19, 2023.
<Overview of evaluation result>
To summarize the survey responses, most of them mentioned that the monitoring function was enhanced bytransforming to the company with the committee of audit, etc., and also that sufficient discussion was held on the
management strategies and mid-term management plan which were the issues in the previous survey, resulting inhigh evaluation overall on effectivity of the board of directions, mentioning proper operation thereof.

On theother hand, the timing to provide information to the outside directors and necessity of prior opinion exchange
were pointed out, where we consider the need of specific measures.

(1) Organization of the Board of Directors
As organization of the board of directors, the following opinions and issues were pointed out.
・A committee of nomination is not necessary, but succession of Group CEO should be discussed at the boardof directors’meeting.
・Information for discussion of KPI, etc. to be monitored in view of mid-and long term should be straightenedfor improvement of the corporate value.
・Training for the outside directors should be further enhanced.
(2) Agenda for the Board of Directors Meeting
There was an input that the case (succession plan of Group CEO) said to be necessary to be continuously
discussed for a long time needs to be further discussed.

Necessity of discussion on human investment andexploration and development of human resources was also pointed out.

(3) Operation of the Board of Directors
As for the reporting system, insufficiency in prior distribution and prior explanation was also pointed out as
mentioned in the previous suggestion. There was some improvement in regard to the previous suggestion that
there should be an opportunity to more deeply understand the strategies and actual situations of the company
operating the business due to the offsite meeting.

< Future actions >In consideration of the above suggestions, we have reported that we shall promote the following measures for
operation of the board of directors in the term ending June 2024.
(1)

Reconsideration of the scheduled time in consideration of reorganization of the annual agenda andimportance of the agenda(2)

Thorough distribution of the materials with sufficient lead time or streamlining of discussion time by priorexplanation(3)

Understanding the needs of the outside directors to enhance the training contents for them

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Corporate Governance
Avant Group Corporation(4)

Straightening of information for discussion on KPI to be monitored in view of mid-and long term

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 inthe 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.

[Actions to realize management conscious of cost of capital and share price] [English language disclosure
available].
An overview is given in the 'Measures to realize management conscious of cost of capital and share price'
disclosed on 28 December 2023. Please refer to.
URL: https://www.avantgroup.com/en/ir/irnews/auto_20231227509936/pdfFile.pdf

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Avant Group Corporation

2. Capital Structure
Foreign Shareholding Ratio

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

Number of shares

Percentage

held (shares)(%)

Tetsuji Morikawa

9,764,000

25.94

The Master Trust Bank of Japan, Ltd.

3,197,300

8.49

Tsuyoshi Noshiro

1,868,800

4.96

The Custody Bank of Japan, Ltd.

1,801,800

4.79

OBIC Business Consultant Co.

1,600,000

4.25

Avant Group Employee Stock Ownership Plan

1,436,700

3.82

SSBTC CLIENT OMNIBUS ACCOUNT

1,262,502

3.35

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

None

company)

Parent Company Name

None

Supplementary explanation
Not applicable.

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Avant Group Corporation

3. Company attributes
Scheduled Listing Market Classification

prime (lending) market

accounting 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.

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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

John Robertson

Coming from another company*

Tatsuya Kamoi

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)
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Avant Group Corporation

Relationship with company (2)Name

Independent

Supplemental Explanation of

officer

Conforming Items

John Robertson

Yes

Tatsuya Kamoi

Yes

Chie Goto

Yes

Makoto Nakano

Yes

Snowflake Inc. where Mr. Jon
Robertson is the president of Asia
Pacific and Japan Region and theCompany’s wholly owned subisidiary,
ZEAL Corporation have entered thesolution partner agreement, where they
are in the transactional relationship forthe products provided by Snowflake
Inc., but such amount is under 0.2% of
the consolidated sales amount which iswithin 2% designated by the Company
as the standard of independence, whichshall not possibly cause an influence on
the Company’s decision making.awholly-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.
-

-

-

14

Reason for Appointment
With over 30 years of experience leading
globally diverse organizations in Japan and
the Asia-Pacific region, Mr. Robertson has
demonstrated
exceptional
managerial,
leadership, and communication skills. He
possesses an in-depth understanding of
cutting-edge IT technologies, including thecloud-native sector, and has consistently
exhibited enthusiastic leadership in the
fast-evolving IT industry. We anticipate that
he will continue to contribute meaningfully,
especially in achieving our vision of BE
GLOBAL and in executing our mid-termbusiness strategy through cloud technology.

He brings over two decades of experience in
consulting and IT strategy implementation
for both domestic and global enterprises.
Furthermore, his leadership roles at Mercer
Japan Ltd. and ABeam Consulting Ltd.,
coupled with his extensive background in
human resources, make him an ideal
candidate for contributing to our businessoversight and the successful execution of our
new mid-term business strategy "BE
GLOBAL 2028."
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 ourCorporate Governance
Avant Group Corporationclients, we expect him to play an active rolein the development of our next generation
management team.

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

in-houseof thecommittee

directorcommittee

memberAudit Committee

Existenceor

non-existence

3

of

1

directors

andemployees to assist the Audit Committee in its duties

Outside Director

Committee
chairman

1

2

None

None
The Company's Board of Directors has resolved thefollowing in its "Basic Policy for the Development ofInternal Control Systems," and when requested by Audit
Committee members to assist them in their duties, asecretariat is promptly set up in accordance with the said
policy.

■Matters related to employees assisting the duties of
Audit Committee members and matters related toensuring the effectiveness of instructions to such
employees
・In the event that the Audit Committee requests theBoard of Directors to establish a secretariat to assist it in
its duties, the secretariat shall be established byappointing appropriate personnel from inside and outside
the Company. In the case of employees, they shall be
notified that they are subject to the direction and ordersof the Audit Committee.
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, and15

Corporate Governance
Avant Group Corporation

has 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

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 Annual General16Corporate Governance
Avant Group Corporation

Shareholders’ Meeting held on September 19, 2018. This is a system that allows the flexible use of compensationin the form 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 Directors (excluding Directors who are Audit Committee Members) andDirectors who are Audit Committee Members for the previous fiscal year are as follows. The Board of Directors
confirms that the method of determining the details of remuneration and the details of the determined
remuneration are in line with the relevant decision-making policy by receiving explanations of the calculation
process for individual remuneration of directors.
Remuneration for Directors who are members of the Audit Committee is fixed remuneration only, in
consideration of their responsibilities and roles in supervising and auditing the execution of business operations.
The amount not exceeding 55,000 thousand yen per year will be determined through discussions among the
Directors who are members of the Audit Committee.
Amount of remuneration, etc. paid to directors and corporate auditors
Total amount of remuneration, etc. by typeClassification

Directors (excluding Audit
Committee members andoutside directors)
Audit Committee Members(excluding outside directors)

Total amount ofcompensation, etc.

basic remuneration

Non-monetary
performance-based
compensation, etc.
bonusof the left column,
2 million yen

Number of eligible
directors andofficers

106 million yen

86 million yen

19 million yen

2 persons

13 million yen

13 million yen-

1 person

Corporate Auditors(excluding outside auditors)

3 million yen

3 million yen-

1 person

Outside Corporate Directors

48 million yen

48 million yen-

7 persons(Note) 1. Effective September 27, 2022, the Company transitioned from a company with a board of corporate auditors to a company
with an audit committee.
2. The breakdown of the total amount of non-monetary compensation to directors (excluding Audit Committee Members andoutside directors) is 2 million yen in medium- to long-term performance-linked compensation.
3. The above includes one director and one corporate auditor who resigned at the closing of the 26th Annual General
Shareholders' Meeting held on September 27, 2022.

Existenceor

non-existenceofapolicy

for

Yes

17

Corporate Governance
Avant Group Corporation

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-based 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 Annual General
Shareholders’ Meeting held on September 27, 2022, approved the annual amount of fixed remuneration to theCompany's directors as 150,000 thousand yen or less (This does not include the employee's salary of directors who
also serve as employees.).
Performance-linked remuneration consists of (1) short-term performance-linked remuneration, which is linked tobusiness performance for each fiscal year, and (2) medium- to long-term performance-linked remuneration, which
is linked to changes in indicators during the subject period. The medium- to long-term performance-linked
bonuses are stock-based compensation in the form of common shares of the Company, with the aim of providing
Directors with incentives to enhance the Company's corporate value over the long term and to promote further
value sharing between Directors and shareholders. As a result of the approval of the revision of the medium- tolong-term performance-linked remuneration at the 27th Annual General Shareholders' Meeting held on September
27, 2023, the maximum amount of short-term performance-linked remuneration is 41,250 thousand yen per
director per year, and the medium- to long-term performance-linked remuneration consists of two parts: a part inwhich the Company's common stock is delivered on condition that the Company's stock price increases in value
from the beginning of the subject period, and a part in which the Company's common stock is delivered in a
number calculated according to the Company's stock growth rate during the subject period. The maximum amountof such compensation is 100,000 thousand yen per subject period, and the number of shares to be delivered to each
Director under this plan is 60,000 thousand yen per year per Director. The maximum number of shares to be issued
to each director is 60,000 shares per year, and the total number of shares to be issued to all directors is 100,000
shares per year.
If any of the events of forfeiture of rights (as determined by the Board of Directors) necessary to achieve thepurpose of the stock compensation plan, such as the subject director's resignation from the post of director of theCompany without just cause and certain acts of misconduct, is found to have occurred, the monetary compensation
will not be paid to the subject director and no shares of the Company's stock will be delivered.
The amount of remuneration for directors who are members of the Audit Committee is also fixed, and isdetermined through consultation between the Audit Committee members, taking into consideration the division ofduties between directors and Audit Committee members, within the limit of the amount of remuneration resolved
at the General Shareholders' Meeting. The maximum amount of remuneration was resolved at the 26th Annual
General Shareholders' Meeting held on September 27, 2022 to be within 55,000 thousand yen per year.
■ Purpose of performance-linked compensation and performance-linked stock compensation, basis for18

Corporate Governance
Avant Group Corporation

indicators, and specific calculation methods
1. Short-term performance-linked remuneration
This is a remuneration system in which a monetary amount calculated in conjunction with the year-on-yearchange in consolidated net income, which is consistently emphasized in the Company's medium- to long-term
management strategy, new medium-term management plan, and annual business results, is paid. The amount iscalculated by multiplying the base amount (performance-linked bonus base amount), which is determinedaccording to position and other factors, by the short-term incentive coefficient, which is set in the range of 0% to150% according to the change in consolidated net income from the previous fiscal year. The following details wereresolved at the Board of Directors meeting held on August 23, 2023.

Short-term performance-linked remuneration = Short-term performance remuneration standard amount ×
Short-term incentive coefficient

If consolidated net income after tax for the current period is "a" and consolidated net income after tax for theprevious period is "b", the coefficient shall be the value calculated by the following formula.

①If "a" is less than or equal to "b":0②When "a" exceeds "b" and is less than "b" x 137.5%: ("a"÷"b"-1) / 0.375 x 1.5③When "a" is greater than 137.5% of "b": 1.5

2. Medium- to long-term performance-linked remuneration
The Company has introduced this plan to the subject directors for the purpose of further sharing value between
the subject directors and shareholders through a sustainable increase in the share price, and to give the subject
directors an incentive to continuously improve the Company's corporate value. The plan consists of two parts: apart in which shares of the Company's common stock are delivered at the end of the subject period on thecondition that the Company's stock price has increased in value from the beginning of the subject period ("Part I");and a part in which the Company's common stock is delivered in a number calculated based on the Company's
stock growth rate during the subject period ("Part II"). The subject period for both parts is from September of eachyear to September of the following year, and the outline of each part is as follows.
For any Part, upon the issuance of shares or disposal of treasury stock by the Company, shares of common stockof the Company will be delivered to the Subject Directors after the end of the Subject Period by way of paymentof monetary compensation claims and having all such monetary compensation claims contributed in kind.
(1) Part I
In Part I, the Company’s ordinary shares shall be issued in the number determined by the Company’s board of
directors under the following condition; when comparing average of the closing share value of the Company’s
ordinary shares at Tokyo Stock Exchange in the month when the Subject Period starts (September of every year)

19Corporate Governance
Avant Group Corporation

with average of the closing share value of the Company’s ordinary shares at Tokyo Stock Exchange in the monthwhen the Subject Period ends (September of the following year), the latter exceeds the former.
(2) Part II
In Part II, the number of shares of the Company's common stock to be delivered to each eligible director after
the end of the applicable period will be determined by multiplying the base number of shares to be delivered by
the share delivery ratio determined by the Company's share growth rate, which is a representative indicator of theCompany's corporate value. The Company's stock growth rate will be calculated by dividing the Company's TSR(Total Shareholder Return) during the subject period by the growth rate of the TOPIX (Tokyo Stock Exchange
Stock Price Index) during the subject period. The specific calculation method is as follows.

If the simple average of the closing price of the Company's common stock on the Tokyo Stock Exchange in themonth ending the subject period (September of one year later) is less than the simple average of the closing priceof the Company's common stock on the Tokyo Stock Exchange in the month beginning the subject period(September of the current year), no monetary compensation claims will be paid under Part II to the subject director
for the relevant subject period, nor will any common stock be 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

20

Corporate Governance
Avant Group Corporation

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 makeimportant management decisions.

(2) Execution system
Business execution is conducted by representative directors and directors in charge of finance appointed by the
Board of Directors, and by executive officers. The Group Management Committee is chaired by the Group CEO
and attended by the Group CFO, who is the director in charge of finance, and the Group COO, Group CBO,
Group CRO, Group CDO, Group CPO, Group CSO, Group CHRO, and Group CLO, who are the executive
officers, with the aim of achieving sustainable growth and increasing corporate value through groupmanagement. The members of the Group Management Committee report to the Board of Directors on importantmatters concerning the execution of group management. The official name of each CxO is as follows.

Chief Executive Officer、
Chief Financial Officer、
Chief Operating Officer、
Chief Business development Officer、
Chief Risk management Officer、
Chief Digital transformation Officer、
Chief Product Officer、
Chief Strategic Officer、
Chief Human Resources Officer、
Chief Legal Officer

In addition, all members of the Group Management Committee participate in the Board of Directors meetings ofeach major group company to monitor the execution status of each company and to manage risks.

(3) Auditing and supervision21

Corporate Governance
Avant Group Corporation

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 reporting
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 monthly 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 Shareholders’ Meeting in September 2014, and by the Annual General
Shareholders’ Meeting 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 Shareholders’ Meeting
held in September 2022, the Company changed to a company with an Audit Committee System and delegated apart of the authority to make business execution decisions to the executive directors. In order to accommodate

22Corporate Governance
Avant Group Corporation

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

23

Corporate Governance
Avant Group Corporation

III. Implementation Status of Measures Concerning Shareholders and Other
Stakeholders
1. Efforts to revitalize the Annual General Shareholders’ Meeting 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 Annual General Shareholders’MeetingAnnual Annual General Shareholders’ Meeting to beheld 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 Annual General Shareholders’ Meeting to beinstitutional investors to exercise their voting

held in 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 theAnnual General Shareholders’ Meeting and to devise ways
to manage the proceedings, etc. We also began live andarchived

video

distribution

of

the

AnnualGeneralShareholders’ Meeting from the 24th Annual General
Shareholders’ Meeting to be held in September 2020. The
Company's website contains notices of convocation,
shareholder communications, notices of resolutions, andextraordinary reports of voting results in Japanese andEnglish.

2. Status of IR-related activities
supplementary explanation

24

Explanation by the
representative

Corporate Governance
Avant Group Corporation

himself/herself
Prepare and publish

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

disclosure policy"Information Disclosure Policy".

Regular information

Although the timing is irregular, we will consider holding

meetings

briefings for individual investors as needed.

for

Yes

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
compliance25

policyandthe"Compliance

and

Risk

Corporate Governance
Avant Group Corporation

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

26

Corporate Governance
Avant Group Corporation

to a highly transparent organization and to activities andactions that respect all stakeholders involved in the Group'sbusiness by always striving to create new value through athorough customer orientation and by enjoying our own
growth.

27

Corporate Governance
Avant Group Corporation

IV. Matters Concerning Internal Control Systems, etc.
1. Basic Policy and Status of Internal Control System(1) Basic Concepts on Internal Control Systems
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 Annual General Shareholders’ Meeting as the highest organ of the Company andhas 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.

⚫

Establish an Audit Committee and audit Directors' execution of their duties by the Audit Committee. In
addition, determining the details of proposals concerning the appointment and dismissal of the accounting
auditors and the non-reappointment of the accounting auditors.

⚫

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

⚫

The Risk Management Committee, Compliance Committee, and Information Security Committee, chairedby the President and Representative Director, are responsible for responding to important risks, ensuring
compliance with laws and regulations, and ensuring information security.

(2) Status of Internal Control System
The following basic policy regarding the development of internal control systems has been resolved by the
Board of Directors and is in operation.

(i) Basic policy regarding the development of internal control systems(a) System to ensure that execution of duties by the directors and staff complies with the laws and Articles ofIncorporation
・The directors shall comply with the Group’s standards of conduct, conform to the laws/Articles ofIncorporation and rules of board of directors and other internal rules, etc., appropriately execute theoperations by taking the initiative as the model and thoroughly have the staff informed.
・The person responsible for risk management of each Group company, appointed by the chairman of the
Risk Management Committee, shall deliberate and review the important issues and responses at theCommittee and promptly report them to the Board of Directors.
・The compliance managers of each Group company, appointed by the chairman of the Compliance
Committee, shall deliberate and review the important issues and responses at the Committee andpromptly report them to the Board of Directors.
・For breach of the laws and other legally doubtful conducts, etc., the whistle-blowing system of whichcontact is an external lawyer and the director who is committee member of audit, etc. shall be28

Corporate Governance
Avant Group Corporation

established and operated.
・The audit committee members shall audit execution of duties by the directors through attendance for theboard of directors as well as important meetings and investigation, etc. of status of execution ofoperations under the audit policy stipulated by the committee of audit, etc.
(b) System in regard to storage and management of information related to execution of duties by directors
・Information concerning execution of duties by the directors shall be appropriately stored and managed
under the laws, rules of board of directors, document management rules and other related rules.
(c) Rules concerning management of risk of loss and other system
・Properly manage the operations and funds as well as preventing risks from occurring by assessing theperformance status by rolling forecast management in the cycle suitable to the management
environment for performance progress and thorough expense management.
・Manage the risks of compliance, information asset and matters concerning the business by preparing
rules and manuals, etc. and announcing the same.
・Enhance management and responses of compliance at the Compliance Committee for thoroughcompliance.
・Enhance management and responses of information asset at the information security committee formanagement thereof.
・Consult and receive advices and instructions from a layer, accounting auditor, tax accountant, etc. asnecessary for performance of the operations.
(d) System to ensure efficient execution of duties by directors
・The Company’s board of directors’ meetings shall basically hold ordinary board of directors’
meetings monthly, and shall hold the extraordinary board of directors’ meetings as necessary to makedecisions and promptly execute operations as well as supervising important decisions by the directors
in management and the status of execution of the operations.
・The meeting bodies and committees of which responsible persons or members are the directors shallhave discussions and make decisions, etc. of executive of operations within the scope of authorities
stipulated in the rules.
・Promote decentralization of management by organization according to the management policy andbusiness plans.
・Term of directors who are not audit committee members shall be one year to clarify the management
responsibilities and respond to change in the management environment.
(e) System to ensure appropriateness of operations in corporate groups consisting of the Company andsubsidiaries
・The Company respects autonomy of the subsidiaries as well as supporting preparation and improvementof the internal control system and promoting the same in cooperation with the subsidiaries.
・The Company’s subsidiaries shall enter into management instruction and management control

29

Corporate Governance
Avant Group Corporationagreements for the system where we receive reports on important matters concerning execution ofoperations by directors, etc.

Although the board of directors of the Company’s subsidiaries decide on

important matters, they shall obtain the Company’s approval for three matters of (i) investment, (ii)
officer allocation and (iii) capital policy which have an important impact on the Group.
・The Company’s subsidiaries shall basically have the ordinary board of directors’ meetings monthly
and shall hold the extraordinary board of directors’ meetings as necessary to make decisions andpromptly execute operations, and the Company’s Group legal department shall review the status of
how the board of directors’ meetings are held.
・Employees of the Company’s subsidiaries shall report to or consult the contact of the whistle-blowing
system in the event they come to know ay breach of the laws, Article or Incorporation and internal
rules or any act against the social norm.
・Compliance with the laws and other issues concerning compliance of the subsidiaries shall be supportedby the Compliance Committee.
・Prevent risks from occurring by assessing the performance status by rolling forecast management in thecycle suitable to the management environment for performance progress and thorough expense
management in accordance with the budget management rules and by properly managing theoperations and funds and reporting to the Company.
・Periodically conduct the internal audit by the internal audit group and report such result to theCompany’s directors and committee of audit, etc. for necessary management to ensure appropriatenessof the operations of the Company’s subsidiaries.
(f) Matters concerning staff to assist the duties of audit committee members and matters concerningachievement of effectivity of instructions for such staff・If the committee of audit, etc. requests the board of directors for installation of the secretarial office toassist their duties, install the secretarial office by appointing appropriate human resources internallyand externally.

In case of staff, thoroughly make them informed to follow the instructions and ordersof the committee of audit, etc.
(g) System for directors who are not audit committee members and staff to report to the committee of audit,
etc. and system for directors, auditors or staff of the subsidiaries or those who receive reports therefrom
to report to audit committee・Committee members may attend the board of directors’ meetings and other important meetings, browse
documents necessary for audit and ask the directors and staff for such explanation.
・Directors, auditors and staff of the Company and the Company’s subsidiaries shall report to theCompany’s committee of audit, etc. the matters that cause a significant impact on the Company’s
operations and performance, etc.
・It is prohibited to treat those who have make report in a disadvantageous manner for the reason ofreporting to the committee of audit, etc.

30

Corporate Governance
Avant Group Corporation(h) Other system to ensure effectiveness of audit by Audit Committee
・The Audit Committee shall periodically hold a meeting with the president as the representative director
to exchange opinions on the policy of execution of operations, risks and issues to be resolved andimportant issues in audit, etc.
・The Audit Committee shall periodically exchange opinions with the accounting auditor.
・In the case that audit committee members claims advance payment or reimbursement of the cost
incurred for execution of the duties, such cost shall be incurred by the Company unless considered
unnecessary.
(ⅱ) Operational status of internal control systems
The Company conducts ongoing investigations into the status of the development and operation of its internal
control system and reports the results of these investigations to the Board of Directors. For any issues identified
as a result of the investigations, corrective measures are taken, and efforts are made to establish and operate more
appropriate internal control systems. A summary of the current operational status is as follows.
・The Risk Management Committee meets regularly to review risks and consider countermeasures in
response to the changing business environment across the Group, and the Board of Directors receives
reports from the Group CRO to monitor the status of risk management.
・The Compliance Committee meets regularly to review the compliance status of the Group, and theBoard of Directors receives reports from the Group CLO to ascertain the status of compliance.
・Board of Directors meetings are held on a regular basis to focus on the new mid-term management planand strengthen governance agenda for oversight.
・Audit committee members attend meetings of the Board of Directors, the Group Management
Committee, and other important meetings such as the Board of Directors of subsidiaries, and regularly
exchange opinions with the President and Representative Director and the accounting auditor to ensure
the effectiveness of audits.
・Under the direction of the Board of Directors, the Company conducts self-assessments and independent
evaluations of internal control over financial reporting and is audited by an independent 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, as the department in charge, has appointed a person in charge of preventing

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Corporate Governance
Avant Group Corporation

unjustified demands, and is to cooperate with the competent police 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.

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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 and33

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)]

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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)

Risk Management Committee,

Management Meeting,Compliance Committee

General Managers Meeting

Information Handling Manager andManagement Department
Analysis, 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

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