[Translation]

Corporate Governance Report

Digital Garage, Inc.

Last updated on June 30, 2023
Digital Garage, Inc.
Kaoru Hayashi
Representative Director, President Executive Officer and Group CEO
Contact: 03-6367-1111
Securities Code: 4819
https://www.garage.co.jp/en/
The corporate governance of Digital Garage, Inc. (the “Company”) is as follows:

I.

Basic Views on Corporate Governance, Capital Structure, Corporate Profile andOther Basic Information

1. Basic Views
In accordance with the following "Principle" and "Credo," the Company is working to enhance and strengthen
its corporate governance to realize transparent, fair, rapid and decisive decision-making in order to live up to
the trust of its shareholders and other stakeholders, as well as to achieve sustainable growth and increase
corporate value over the medium- to long- term.
<Principle>
Think for yourself and question authority.
<Credo (Behavioral Philosophy) >・TENACITY
Have a strong will
・OPENNESS Question your common sense
・INTEGRITY Stay straight・AGILITY
Be agile
・COURAGE
Be brave
Based on these "Principle" and "Credo," we have created a number of first-of-its-kind Internet businesses inJapan by incubating businesses with investments, etc. by utilizing our two revenue bases, namely, marketing
technology, which anticipates the trends of the world, and the provision of highly reliable financial technology.
In particular, our mission is to create new contexts at the interface between real space and cyberspace.
The Company’s mission is “Integrating Technology × ESG × Incubation with the First Penguin Spirit, andcontinuously creating sustainable “business context” from an earth-centric perspective.”
Group's basic approach and policy on corporate governance is described in the "Corporate Governance Basic
Policy" on the Company's website (https://www.garage.co.jp/en/company/corporate-governance/).

[Reasons for not Implementing the Principles of the Corporate Governance Code]
The Company implements all of the principles of the Corporate Governance Code.

[Disclosure in Accordance with the Principles of the Corporate Governance Code] Updated[Principle 1-4: Strategic Holdings]
As a company that creates useful "contexts" for the world, we sometimes hold our shares for the purpose ofcollaborating with various companies based on long-term, stable strategic alliances. In examining ourstrategic shareholdings, we examine them in detail to determine whether or not they will contribute to theenhancement of our corporate value over the medium to long term through the strengthening of relationships
and the creation of synergies, and we consult with the Board of Directors when necessary, including the saleof shares. When exercising the voting rights of our policy-holding shares, we exercise them in an appropriatemanner after comprehensively considering whether or not they will contribute to improving the medium- tolong-term corporate value of the issuing company and the Company.

1[Translation]
The Company has sold some stocks during the fiscal year ended March 31, 2023 and has determined that it
is appropriate to hold all shares held by the Company as of the end of the fiscal year ended March 31, 2023,
based on a comprehensive judgment from the perspectives of improving corporate value and maintaining
and strengthening relationships with investees over the medium- to long-term.
[Principle 1-7: Related Party Transactions]
The Company appropriately monitors transactions with related parties by approving and reporting on thetransactions at the Board of Directors' meeting to ensure that such transactions do not harm the Company or
the common interests of shareholders.
[Principle 2-4: Ensuring Diversity for Promotion in Core Human Resources](1) Human Resource Development Policy
The Company considers “Human Resource” as an intangible asset for business growth of the Group.
Systematical development of talent pool to drive business growth will improve the probability of leading tobusiness success. In particular, the Company strives to create human resources who can embody thebusiness with technology. The Company is operating “DG25,” a selective human resource development
program for the middle management layer, who are potential executive leadership with promoting awarenessof its purpose in the employees.
Aiming for “enhancement of human resource education,” the Company has established various educational
and training programs for all employees, providing the opportunities for self-understanding and learning, andself-growth. Recently, to strengthen the relationships between the Company and individuals, and between
managers and members, the Company focuses on the development and operation of the programs forenhancement of management skills based on “psychological safety.”
Through personnel transfers across the Company and its businesses, the Company strives to acquire newabilities for human resources and the organization and take the initiatives to continuously provide “new growth
opportunities and creation of challenges.” Specifically, through centralized-management of skills andexperiences of the employees with a talent management tool, the Company strategically allocates its humanresources, formulates development plans, and operates programs such as “Raise Your Hand,” an internal
recruitment system, to create the opportunities for proactive challenges for the next generation leaders and“Career Shift,” a system for matching-type personnel transfers, to seek for important businesses and new
growth opportunities.
Accepting people with various strengths openly, developing and promoting them, the Company aims to further
enhance its creativity and continue to grow.
(2) Diversity of Human Resources
The Company has been implementing talent recruitment based on their abilities and expertise regardless ofsuch factors as gender, nationality, or career, etc. since its establishment. And the Company fosters diversity
by hiring human resources with different cultures, values, and skills as its core personnel. As a result, “Career
Recruitment” accounts for 89.7% of the entire recruitment. Also, “the percentage of female employees” hasreached 39.5%, and the Company will proactively promote the active participation of female employees in theworkplace, improve the work environment and implement supportive policies.
The Company operates on a global base with “foreign national employees” (3.3%) as well as bilingual humanresources (25.3%) and the personnel “who were brought up in foreign countries or have studied abroad”(13.8%). The Company will strengthen investment in foreign venture capitals or entrepreneurs to implement
new technologies on a global scale as well as dialogue and relationships with stakeholders through regional
development and revitalization of local communities in Japan.
To achieve the Group’s new medium-term plan, collaboration among its Group companies, segments, andemployees is important. The Company has conducted the engagement surveys since the fiscal year of 2022
in the entire Group. The Company aims to visualize its challenges for the employees in terms of diversity ofhuman resources from the fiscal year of 2023 and further enhance internal communication within the Group.
(3) Improvement of Internal Working Environment
For “creating a comfortable working environment,” the Group takes initiatives to improve discretionary working
style and work-life balance by leveraging remote and flextime work systems and enhancement of welfare
benefits and various systems. With the end of COVID-19 pandemic, working on-site is attempted to acceleratecommunication, collaboration and co-creation among the employees and the percentage of remote working
is 53.8%, switching to hybrid-type working styles of remote and on-site. In the perspective of “achieving QQL(Quality of Life) through work,” the Company conducts people analytics using data from talent management,
monitoring working hours, health management, and employer engagement surveys to prevent accidents ordiseases.

2

[Translation]
The Company periodically monitors the employees’ engagement to their work, the workplace and theCompany through conducting engagement surveys to understand the organizational conditions. The
Company reviews if individual characteristics are fully leveraged, the working environment and organization
system are well-established, the employees can receive proper support from their supervisors, there is aproper level of trust with top management, the system for human resources is properly operated, and theburden on work or human relationship is not excessive and utilizes the results to improve organization andcorporate management. Also, the Company will promote organizational development toward an idealorganizational image with “Management Policy of Human Resources,” outlining what the Company commits
to the individuals (the employees) and what the Company asks them to do, to strengthen the relationshipbetween the employees and the organization.
[Principle 2-6: Exercising the Function of an Asset Owner of a Corporate Pension Plan]
We do not have a corporate pension fund system. In order to ensure stable asset formation for our
employees, we have introduced a corporate defined contribution pension plan.
[Principle 3-1: Enhance Information Disclosure](1) Management Philosophy, Management Strategy and Management Plan
The Company's management philosophy, management strategy and management plan are available on
the Company's website (https://www.garage.co.jp/en/) and in its annual securities report.
The Group announced on May, 2023, the medium-term plan, starting from the fiscal year ending March, 2024.
Having set a key word of “Recurring Shift” as Phase II of the Group strategy, “DG FinTech Shift,” which
integrates payments and data, the Company aims for social implementation of “NEW CONTEXT” by
consolidating the Group’s business assets centered on the payment platform and collaborating with strategic
partners and investees.
(2) Basic Policy on Corporate Governance
Please refer to "I. 1. Basic Views" in this report.
(3) Policies and Procedures for Determining Directors' Remuneration
Please refer to “II. 1. Items Related to Organizational Structure and Management, [Directors] Disclosure of
Policy for Determining Remuneration Amounts of Calculation Methods Thereof” in this report.
(4) Policies and Procedures for Determining Candidates for Election and Dismissal as Directors
Candidates for the election of directors (excluding members of the Board of Corporate Auditors and outside
directors) should be of excellent character and insight and should have knowledge and experience that will
enable them to execute the Company's management accurately, fairly and efficiently. President Executive
Officer shall draft and submit a proposal to the Nomination and Renumeration Advisory Committee from theperspective of whether or not the candidate is capable of providing advice on all aspects of the company's
operations and appropriately reflecting the opinions of stakeholders, including minority shareholders, from an
independent standpoint at the Board of Directors, and President Executive Officer shall consult with theNomination and Remuneration Advisory Committee on the candidate's proposal based on the Committee's
report. This decision is made by a resolution of the Board of Directors. Candidates for the appointment of
directors as Audit and Supervisory Committee members shall be drafted by President Executive Officer andreferred to the Nomination and Remuneration Advisory Committee from the viewpoint of whether or not they
have excellent character and insight, as well as the knowledge and experience to accurately, fairly andefficiently audit the execution of duties by directors. The Board of Directors will decide on this proposal by aresolution of the Board of Directors, after obtaining the consent of the Audit and Supervisory Committee.
In the event of a serious violation of law or the Articles of Incorporation, significant lack of eligibility, or otherreasons for dismissal under the Director's Regulations, the Board of Directors shall decide whether or not
to submit a proposal for the dismissal of a Director to the General Meeting of Shareholders.
(5) Explanation of Individual Elections, Dismissals and Nominations of Senior Management andNominations of Director Candidates
Reasons for the election and dismissal of individual director candidates will be disclosed in the notice of
the General Meeting of Shareholders.
[Supplementary Principle 3-1(3): Disclosure of Sustainability Initiatives, etc.][Basic Policy on Sustainability]3

[Translation]
The Group’s has a purpose of “Designing ‘New Context’ for a sustainable society with technology.” Inaccordance with emergence of various social problems and transformation of stakeholders’ values, theCompany recognizes the necessity of sustainability management and promotes social implementationof “New Context” from an ESG and sustainability perspective.
The Group has declared “Earthshot” based on the idea, “There are no boundaries on the earth as seenfrom space and all human beings are parts of the ecosystems,” and has started the initiatives for ESG.
Also, the Company invests in and incubates ESG related startups through “Earthshot Fund,” consideringsocial, technical and environmental changes that are occurring on a global scale.
To realize sustainability management, the Company believes that the engagement with various
stakeholders including shareholders and investors as well as employees, investees, alliance partners,
business partners and local community is significantly important. The Group will strive to contribute torealization of a sustainable society and enhance its corporate value over the medium- to long-term.
[Investment in Human Capital]
In order for the Company to accomplish sustainable growth in the future while external environment continues
to change, it is essential to develop a global organizational structure that is capable of change and to secureand educate talented and diverse human resources. Openly accepting and training human resources withvarious strengths allow the Company to expand the field width of its growth and to improve creativity. Basedon these ideas, the Company has promoted employees' deeper understanding of its purpose as well as thehuman resources training program "DG 25" for employees in middle managerial positions, started from 2021.
[Investment in Intellectual Property]
The Company recognizes intellectual properties as significant management resources that support growth
for the maximization of its corporate value. Intellectual properties include infrastructure facilities like software
for payment services, know-how of digital ads operation, the Company's own global incubation network andknow-how, algorithms developed by DG Lab, insights gained through demonstration testing, other businessmodel patents, trademark rights, and so on.
The Company believes its mission as the Context Company is to organically connect these intellectual
properties with various companies, people, information, and cutting-edge technologies through new contexts
and create new businesses that are useful to society.
[Addressing Climate Change (Disclosure in accordance with the TCFD Framework)]
The Company recognizes that climate change, which will have a significant impact on the earth, human beings,
and corporate activities, poses both risks and new business opportunities for the Company Group.
The Company aims to realize a sustainable society through collaboration with each business segment,
investees and strategic partners and taking appropriate responses to climate change.
Based on the TCFD framework, the Company discloses "Governance," "Strategy," "Risk Management," and"Metrics and Targets" on the Company's website.
https://www.garage.co.jp/en/sustainability/environment[Supplementary Principle 4-1(1): Scope of Delegation to Management]
The Board of Directors decides on matters stipulated by laws and regulations and the Articles of Incorporation,
as well as matters stipulated in the Regulations of the Board of Directors. Other decisions on businessexecution are delegated to the Management Committee and full-time directors and corporate officers,
and the details of these decisions are defined in the internal rules of the Executive Committee and theRules for Internal Approval.
[Principle 4-8: Effective Use of Independent Outside Directors]
The Company has appointed six independent outside directors, who provide appropriate supervision
and advice to the Company's overall management based on their own knowledge and experience froman independent perspective.
[Principle 4-9: Criteria for Judging the Independence of Independent Outside Directors and their
Qualifications]
The Company appoints the Company's independent outside directors from among those who have no conflictsof interest with the Company and who do not have any conflicts of interest with general shareholders, referringto the requirements of the Companies Act and the criteria for determining independence established by the
Tokyo Stock Exchange and other bodies, while noting that they are expected to play an objective andappropriate supervisory or auditing role based on their own knowledge and experience.

4

[Translation][Supplementary Principle 4-10(1): Structure of Voluntary Nomination and Remuneration Advisory Committee]
Please refer to “II. 1. Items Related to Organizational Structure and Management, [Voluntary committee]
Committee’s Name, Composition, and Chairperson’s Attributes, and Supplementary Explanation.
[Supplementary Principle 4-11(1): Views on Balance Between Knowledge, Experience, and Skills of theBoard as a Whole, Diversity and Board Size]
The number of directors (excluding directors who are Audit and Supervisory Committee members) is 10 or
less, and the number of directors who are Audit and Supervisory Committee members is 5 or less. In order
to effectively fulfill the roles and responsibilities of the Board of Directors, the Board of Directors not only has
a well-balanced level of knowledge, experience, and competence as a whole, but also recognizes that diverse
perspectives, such as those of women and foreign nationals, contribute to the promotion of business andsupervision of management, and the Board of Directors appoints women and people from companies andorganizations with international operations as directors. We strive to be composed of human resources. Skill
matrix that summarizes each board member's expertise and experiences is shown on “V. Other Matters” inthis report.
[Supplementary Principle 4-11(2): Directors' Concurrent Positions as Officers of Other Listed
Companies]
The status of directors' concurrent positions as officers of other listed companies is disclosed in the Notice ofGeneral Meeting of Shareholders and the Annual Securities Report. Some of the Company's directors serve
concurrently as outside directors, outside auditors, and other officers of listed companies other than the
Company, but we believe that their service is limited to a reasonable degree.
[Supplementary Principle 4-11(3): Analysis, Evaluation and Disclosure of the Effectiveness of the Boardof Directors as a Whole]
Based on each director's self-evaluation, the Board of Directors analyzes and evaluates the effectiveness of
the Board of Directors in terms of its composition and operation, deliberations, roles and responsibilities, theroles and responsibilities of the Nomination and Remuneration Advisory Committee, and the status ofcompliance with the Corporate Governance Code. As a result of the evaluation for the fiscal year ended
March 31, 2023, we confirmed that the effectiveness of the Board of Directors as a whole has been sufficiently
ensured. In particular, we evaluated that active discussions were held toward the realization of the Company's
group strategy, "DG FinTech Shift," and in the area of human resource development, the "DG 25" training
program for middle management was promoted.
We will continue to discuss succession planning and supervision of human resource development as issues
to be considered in order to further enhance the effectiveness of the Board of Directors. In addition, we willcontinue to practice management with an awareness of cost of capital and cash flow, enhance monitoring ofbusiness execution, and deepen discussions on management foundations, including group management,
business portfolio management, company-wide risk management system, DX strategy, and sustainability.
[Supplementary Principle 4-14(2): Training Policy for Directors]
Directors are committed to acquiring and honing the knowledge necessary to properly fulfill their expectedroles and responsibilities. To this end, the Company provides directors with training opportunities from time
to time at the Company's expense that are useful for the acquisition of necessary knowledge.
[Principle 5-1: Policy on Constructive Dialogue with Shareholders]
In order to promote constructive dialogue with our shareholders, we are working to develop systems andinitiatives in accordance with the following basic policy.
1. The officer in charge of information disclosure shall be the officer who oversees all dialogue withshareholders and, to the extent reasonable, the directors shall handle dialogue with shareholders. In
addition, the officer in charge of information disclosure shall be in charge of the relevant departments
within the Company and shall coordinate with other departments on a daily basis.
2. We will strive to understand the structure of our shareholders and enhance the means of dialogue (e.g.,holding individual interviews in Japan and abroad, holding financial results and individual investor
briefings, etc.).
3. Opinions received in dialogue with shareholders are fed back to the Board of Directors and are used
to enhance corporate value.
4. When engaging in dialogue with shareholders, the Company shall strive to prevent the leakage of
undisclosed material facts in accordance with the internal rules for preventing insider trading.

5

[Translation]

2．Capital Structure
Foreign shareholder ratio

30% or more

[Major Shareholders] Updated
Name
The Master Trust Bank of Japan (Trust Accounts)
Kaoru Hayashi
JCB Co., Ltd.
Dentsu Group Inc.
BNP
PARIBASLONDON
BRANCHFOR
PRIME
BROKERAGE SEGREGATION ACC FOR THIRD PARTY
Custody Bank of Japan, Ltd. (Trust Accounts)
GOLDMAN SACHS INTERNATIONAL
Resona Holdings, Inc.
Toshiba Tec Corporation
MLI FOR CLIENT GENERAL OMNI NON COLLATERAL NON
TREATY-PB
Controlling shareholders (excluding parent company)-

Parent company

None

Supplementary Explanation

Number of shares
held (shares)
7,414,700
6,851,700
2,364,500
2,348,000

Ratio (%)
16.09
14.87
5.13
5.10

1,950,000

4.23

1,809,366
980,208
952,000
949,500

3.93
2.13
2.07
2.06

837,009

1.82

UpdatedSchroder Investment Management (Japan) Limited and the following three co-owners written below held
the following shares as of May 31, 2022 according to the large-volume holding report, which became available
for public inspection on June 6, 2022. However, since the Company cannot confirm the actual number ofshares owned as of March 31, 2023, it is not included in the above list of major shareholders. The details of
the large-volume holding report are as follows.
・ Schroder Investment Management (Japan) Limited Number of shares held: 1,360,200 (2.86%)
・ Schroder Investment Management North America Limited Number of shares held: 355,900 (0.75%)
・ Schroder Investment Management (Switzerland) AG Number of shares held: 251,311 (0.53%)
・ Schroder Investment Management Limited Number of shares held: 644,400 (1.36%)
JPMorgan Asset Management (Japan) Limited and the following three co-owners written below held thefollowing shares as of November 15, 2022 according to the large-volume holding report, which became
available for public inspection on November 18, 2022. However, since the Company cannot confirm the actual
number of shares owned as of March 31, 2023, it is not included in the above list of major shareholders. The
details of the large-volume holding report are as follows.
・JPMorgan Asset Management (Japan) Limited Number of shares held: 637,200 (1.34%)
・JPMorgan Securities Japan Co., Ltd. Number of shares held: 9,622 (0.02%)
・J.P. Morgan Securities plc Number of shares held: 337,740 (0.71%)
・J.P. Morgan Securities LLC Number of shares held: 76,620 (0.16%)
Lazard Asset Management LLC held the following shares as of November 15, 2022 according to the largevolume holding report, which became available for public inspection on November 22, 2022. However, since
the Company cannot confirm the actual number of shares owned as of March 31, 2023, it is not included in
the above list of major shareholders. The details of the large-volume holding report are as follows.

6[Translation]・Lazard Asset Management LLC

Number of shares held: 2,296,800 (4.83%)

Mizuho Securities Co., Ltd. and the following two co-owners written below held the following shares as ofNovember 30, 2022 according to the large-volume holding report, which became available for public
inspection on December 7, 2022. However, since the Company cannot confirm the actual number of shares
owned as of March 31, 2023, it is not included in the above list of major shareholders. The details of the largevolume holding report are as follows.
・Mizuho Securities Co., Ltd. Number of shares held: 649,752 (1.34%)
・Asset Management One Co., Ltd. Number of shares held: 1,950,000 (4.02%)
・Mizuho Securities International plc Number of shares held: 0 (0.00%)
Oasis Management Company Ltd. held the following shares as of December 16, 2022 according to the largevolume holding report, which became available for public inspection on December 21, 2022. However, since
the Company cannot confirm the actual number of shares owned as of March 31, 2023, it is not included in
the above list of major shareholders. The details of the large-volume holding report are as follows.
・Oasis Management Company Ltd.

Number of shares held: 4,456,341 (9.26%)

Nomura Securities Co., Ltd. and the two co-owners written below held the following shares as of December
30, 2022 according to the large-volume holding report, which became available for public inspection on
January 10, 2023. However, since the Company cannot confirm the actual number of shares owned as ofMarch 31, 2023, it is not included in the above list of major shareholders. The details of the large-volume
holding report are as follows.
・Nomura Securities Co., Ltd. Number of shares held: 2,285,471 (4.58%)
・Nomura International plc Number of shares held: 492,493 (0.98%)
・Nomura Asset Management Co., Ltd. Number of shares held: 1,278,700 (2.69%)
Fidelity Investments (Japan) Limited held the following shares as of February 28, 2023 according to the largevolume holding report, which became available for public inspection on March 7, 2023. However, since theCompany cannot confirm the actual number of shares owned as of March 31, 2023, it is not included in theabove list of major shareholders. The details of the large-volume holding report are as follows.
・Fidelity Investments (Japan) Limited Number of shares held: 2,500,100 (5.25%)

3. Company Attributes
Listed stock market and market section

Tokyo Stock Exchange, Prime Market

Fiscal Year-End

March

Industry

Information & Communication

Number of employees (consolidated) as ofthe end of the previous fiscal year

More than 500 persons, less than 1000 persons(Consolidated) sales in the previous fiscal
year

More than 10 billion yen and less than 100 billion
yen

Number of consolidated subsidiaries as ofthe end of the previous fiscal year

More than 10 companies and less than 50
companies

7

[Translation]

4. Guidelines for Measures to Protect Minority Shareholders in Transactions, etc. with
Controlling Shareholders―

5. Other Special Circumstances that Could Have a Significant Impact on Corporate
GovernanceNot applicable.

II. Status of Management Organization for Management Decision-Making, Execution
and Supervision, and Other Corporate Governance Systems
1. Items Related to Organizational Structure and Management
Organizational form

Company with Audit and Supervisory Committee[Directors]
Maximum number of directors stipulated in articles of incorporation

15

Term of office of directors in articles of incorporation

1 yearChairperson of the board of directors

President

Number of directors

13

Appointment of outside directors

Appointed

Number of outside directors

6

Number of outside directors designated as independent directors

6

Relationship with the Company (1) Updated
Name

AttributeaRelationship with the company(*)
b
c
d
e
f
g
h

i
j
k
Makoto Sakai
Attorney at law
Emi Omura
Attorney at law
Hiromi Ozaki
From another company
Junji Inoue
From another company
Koji Makino
Certified public accountant
Shuma Uchino
From another company*
Selections about relationship with the company*“○” 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“▲” when a close relative of the Director fell under the category in the pasta. Executive of a listed company or its subsidiaries
b. Executive or non-executive director of the parent company of a listed company
c. Executive of sibling companies of listed companies

8[Translation]
d.
e.
f.
g.
h.
i.
j.
k.

A person who does business with a listed company as a principal customer or an executorof such business
Major clients of the listed company or its executive officers
Consultants, accounting and legal professionals who have received significant money orother assets from a listed company in addition to directors' remuneration
Major shareholders of the listed company (or, if such major shareholder is a corporation, theperson who executes the business of such corporation)
Executive of the listed company's counterparties (who do not fall under any of d, e and f) (inperson only)
Executive of companies with which outside directors and corporate auditors have a mutual
appointment relationship (for the individual only)
Executive of the company to which the listed company is donating (in person only)
OthersRelationship with the Company (2) Updated

Name

Makoto
Sakai

Emi
Omura

Audit andSuperIndepenvisory
dent
Commitdirectorteemember○○

Supplementary explanation ofcompliance items

Reasons for appointment

Makoto Sakai serves concurrently as
Representative of the Sakai Makoto
Law Office. Although the Company hasentered into an advisory agreementwith the Sakai Makoto Law Office,the remuneration paid by the Company
to the Sakai Makoto Law Office foradvisory services in the fiscal year
ended March 2023 was less than
4million yen (less than 0.01% of theconsolidated revenue of the Company)
and as low as approximately 5% ofannual revenue of the Sakai Makoto
Law Office.

Although Makoto Sakai has not been involvedin corporate management other than having
served as an outside officer, he has
considerable experience and expertise as
attorney-at-law. As Outside Auditor andOutside Director who is an Audit andSupervisory Committee Member of theCompany, he has provided us with valuable
opinions and suggestions concerning business
management of the Company from the legal
perspective. The Company therefore expects
him to continue contributing to appropriate
oversight of business operation of theCompany and ensuring its sound business
management. He is designated as anindependent director because he has noconflicts of interest with the Company, is highly
independent, and has been judged to have norisk of conflict of interest with generalshareholders.
Although Emi Omura has not been involved incorporate management other than having
served as an outside officer, she has
experience in global work environment throughher post at an international institution in
addition to her wealth of experience andexpertise as attorney-at-law. As Outside
Director of the Company, she has provided us
with valuable opinions and suggestions
concerning business management of theCompany from a broader perspective. The
Company therefore expects her to continue
contributing to appropriate oversight ofbusiness operation of the Company andensuring its sound business management. She
is designated as an independent director
because she has no conflicts of interest with
the Company, is highly independent, and has
been judged to have no risk of conflict ofinterest with general shareholders.

---9[Translation]

Hiromi
Ozaki

Junji
Inoue

Koji
Makino

○

○

○

○

○

---

Hiromi Ozaki has profound expertise andexperience in art, design, technology, diversity
and inclusion, etc. Deeming that she has
provided valuable opinions and suggestions
from her expert perspectives, especially in thecontext of the web3 movement and ESG, theCompany therefore expects her to continue
contributing to appropriate oversight ofbusiness operation for promoting sustainable
management of the Company and ensuring its
sound business management.
She is designated as an independent director
because she has no conflicts of interest with
the Company, is highly independent, and has
been judged to have no risk of conflict ofinterest with general shareholders.

---Junji Inoue has a wealth of overseas businessexperience, and as Outside Auditor andOutside Director who is an Audit andSupervisory Committee Member of theCompany, he has provided us with valuable
opinions and suggestions concerning business
management of the Company from a global
perspective. Deeming that he can continue toprovide oversight and advice concerning thebusiness execution of the Board of Directors
from his specialist perspective, and that he canbe expected to contribute to appropriate
oversight of business operation of theCompany and ensure its sound business
management. He is designated as anindependent director because he has noconflicts of interest with the Company, is highly
independent, and has been judged to have norisk of conflict of interest with generalshareholders.
Although Koji Makino has not been involved incorporate management other than having
served as an outside officer, he has a wealth ofexperience and expertise as certified public
accountant and consultant. In addition, as
Outside Auditor and Outside Director who is an
Audit and Supervisory Committee Member of
the Company, he has provided us with valuable
opinions and suggestions concerning business
management of the Company from an
accounting perspective. Deeming that he cancontinue to provide oversight and advice
concerning the business execution of Directors
from specialist perspectives, and that he canbe expected to contribute to appropriate
oversight of business operation of theCompany and ensure its sound business
management. He is designated as anindependent director because he has noconflicts of interest with the Company, is highly
independent, and has been judged to have norisk of conflict of interest with generalshareholders.

---

10

[Translation]

Shuma
Uchino○○Shuma Uchino has extensive insightconcerning corporate management andfinancial accounting. Deeming that he can usethat insight to provide oversight and advice
concerning the business execution of Directors
from his specialist perspectives pertaining
particularly to management and administration,and that he can be expected to contribute toappropriate oversight of business operation of
the Company and ensure its sound business
management, the Company nominated him asa candidate for Outside Director who is an
Audit and Supervisory Committee Member.
He is designated as an independent director
because he has no conflicts of interest with theCompany, is highly independent, and has been
judged to have no risk of conflict of interest withgeneral shareholders.

---[Audit and Supervisory Committee]
Committee Composition and Attributes of Chairperson
Totalcommittee
members

Full-timemembers

4

1

Audit andSupervisory
Committee

Existence of directors and employees to assist
the Audit and Supervisory Committee in its duties

Internal
directors

Outsidedirectors
1

The Chair
3Internal
director

None

Supplementary Explanation
Although the Company does not have full-time staff to assist the Audit and Supervisory Committee membersin their duties, the internal directors who are also Audit and Supervisory Committee members collaborate with
the Internal Audit Office to audit and supervise the Company, so the Company believes it is functioning wellunder its current system.

Coordination among the Audit and Supervisory Committee, Accounting Auditor and Internal
Audit Department Updated
The Audit and Supervisory Committee and the accounting auditors aim to improve the effectiveness andefficiency of the audit by exchanging information and opinions. Specifically, the Audit and Supervisory
Committee and the accounting auditors meet regularly once a quarter to exchange opinions on whether there
are any audit-related issues or not and to discuss future issues. In addition, the Company has a system
whereby meetings are held as needed.
The Company has established an Internal Audit Office (5 people) to audit the Company and its groupcompanies. The Internal Audit Office reports the results of internal audits to the Audit and Supervisory
Committee on a regular basis and maintains a close relationship with the Audit and Supervisory Committee.
In addition, the Internal Audit Office and the accounting auditors aim to improve the effectiveness andefficiency of audits by exchanging information and opinions.

11[Translation][Voluntary committee]
Establishment of a discretionary committee
equivalent to a Nomination Committee orRemuneration Committee

Established

Committee’s Name, Composition, and Chairperson’s Attributes
Name oftheCommittee
A voluntarycommittee
equivalent
to aNominating
Committee
A voluntarycommittee
equivalent
to theRemuneration
CommitteeAllcomitteemembers

Standing
committee

Internal
director

Outsidedirector

External
expert

Other

3

0

1

2

0

0

Outsidedirector

3

0

1

2

0

0

Outsidedirector

Nomination andRemuneration
Advisory
Committee
Nomination andRemuneration
Advisory
Committee

The
Chair

Supplementary Explanation Updated
For the purpose of strengthening the independence and objectivity of the Board of Directors' functions inrelation to the nomination and remuneration of directors, and to further strengthen corporate governance, theCompany has established the Nomination and Remuneration Advisory Committee, a voluntary advisorycommittee of the Board of Directors, consisting of at least three members who are directors and a majority ofwhom are independent outside directors. The Committee is composed of three members: Representative
Director, Kaoru Hayashi, Independent Outside Director, Junji Inoue, and Independent Outside Director, Koji
Makino. The Committee deliberates and submits its report on the election of directors and thecompensation of directors (excluding Audit and Supervisory Committee members) in consultation with
President Executive Officer.
Chairperson is to be selected from the committee member who is an Independent Outside Director by
the resolution of the Nomination and Remuneration Advisory Committee.

[Independent Directors]
Number of independent directors

6

Matters Related to Independent Directors
The Company designates all outside directors who meet the qualifications of independent directors as
independent officers.

12

[Translation][Incentives]
Implementation of measures toprovide incentives to directors

Introduction of a stock option system, others

Supplementary Explanation
Regarding incentives for the Company's directors (excluding directors who are Audit and Supervisory
Committee members and outside directors), the 21st Annual General Meeting of Shareholders, held on
September 29, 2016, resolved to increase the linkage between director compensation and the Company's
stock price, and to share with shareholders not only the benefits of a rise in the stock price but also the risksof a decline in the stock price, thereby encouraging them to contribute to improving business performanceand corporate value over the medium to long term. The Company has received approval to allot stockacquisition rights as stock options for stock-based compensation in order to raise the total number ofstock acquisition rights to be issued within 250 million yen per year and the total number of stockacquisition rights to be issued shall not exceed 100,000.
In addition, in order to provide incentives for the sustained enhancement of the Company's corporate value
and to further promote the sharing of value between the directors and shareholders, the Company has
obtained the approval for the payment of restricted stock compensation of up to 100 million yen per fiscal
year in effect with a maximum limit of 40,000 shares per year.
Recipients of stock options

Internal directors, employees, directors of subsidiaries,
corporate officers of subsidiaries, employees ofsubsidiaries

Supplementary Explanation
The reason why directors (excluding Audit and Supervisory Committee members and outside directors) are
eligible for this grant is to increase the linkage between directors' compensation and the Company's stock
price, and to share with shareholders not only the benefits of a rise in the stock price but also the risks of adecline in the stock price, thereby further motivating directors to contribute to improving businessperformance and corporate value over the medium- to long-term.
The reason why corporate officers and employees of the Company, as well as directors and employees of
the Company's subsidiaries, are eligible for the grants is to increase their willingness to contribute to themedium- to long-term improvement of the Group's business performance and corporate value by linking theCompany's business performance to the benefits received by the Company's corporate officers andemployees, as well as directors and employees of the Company's subsidiaries.

[Director's Remuneration]
Disclosure of (individual directors') remuneration

Some of them are disclosed individually.

Supplementary Explanation Updated
Remuneration to Directors (Fiscal Year Ended March 31, 2023)
Total remuneration to Directors: 709 million yen• Of the above, remuneration for Directors (excluding Audit and Supervisory Committee members andoutside directors) is 618 million yen (Number of directors: 7)• Of the above, remuneration for directors (Audit and Supervisory Committee members but excluding
outside directors) is 38 million yen (Number of directors: 1)• Of the above, remuneration for outside directors is 54 million yen (Number of directors: 7)13

[Translation]
There were six directors (excluding Audit and Supervisory Committee members and outside directors), one
director (Audit and Supervisory Committee members but excluding outside directors), and six outside
directors as of the fiscal year ended March 31, 2023.
Those whose total amount of consolidated remuneration, etc. is 100 million yen or more are separately
disclosed in the 28th Annual Securities Report.
Policy for determining remuneration amounts or
calculation methods thereof

Established

Disclosure of Policy for Determining Remuneration Amounts of Calculation Methods Thereof
The maximum amount of remuneration, etc. for the Company's directors, as resolved at the 21st Annual
General Meeting of Shareholders held on September 29, 2016, is not more than 500 million yen per year for
directors (excluding Audit and Supervisory Committee members), of which 50 million yen for outside directors,
excluding the employees’ salaries. Apart from this amount of remuneration, the amount of remuneration forstock acquisition rights allocated to directors (excluding Audit and Supervisory Committee members andoutside directors) as stock options for stock-linked compensation is not more than 250 million yen per year,
and the amount of remuneration for granting restricted stock allocated to directors (excluding Audit andSupervisory Committee members and outside directors) is not more than 100 million yen per fiscal year ineffect.
The maximum amount of remuneration for the Company's directors (Audit and Supervisory Committee
members), as resolved at the 21st Annual General Meeting of Shareholders held on September 29, 2016, is
not more than 100 million yen per year.
The Company’s Board of Directors resolved the Company’s determination policy for the details of
remuneration, etc. for each director (excluding Audit and Supervisory Committee members) based on the
Company’s past operation of remuneration, etc.
The amount and details of remuneration of the directors who are Audit and Supervisory Committee members
are determined by the Audit and Supervisory Committee through consultation, within the limits of the total
amount resolved at the General Meeting of Shareholders.
The following is an overview of the Company's Remuneration Regulations regarding the determination ofdetails of the amount of remuneration, etc. for each director.
i. Significant Matters Regarding the Determination of Details of Remuneration, etc. for Each Director
The basic determination policy of the remuneration, etc. for each director is to set the ratio of stock-based
compensation relatively higher in order to increase the linkage between director compensation and theCompany's stock price, and to share with shareholders not only the benefits of a rise in the stock price but
also the risks of a decline in the stock price, thereby encouraging them to contribute to improving businessperformance and corporate value over the short-, medium-, and long-term.
ii. Matters Regarding the Determination of Remuneration, etc. for Each Director
A. Base Remuneration (Remuneration, etc. Excluding Performance-linked Compensation, etc., Nonmonetary Compensation, etc.)
The following is a determination policy of the Company’s base remuneration excluding performancelinked compensation, non-monetary compensation, etc. (hereinafter referred to as "baseremuneration”).
a. The total amount of base remuneration shall be resolved at the General Meeting of Shareholders
and decided within the limits of the resolved amount.
b. The base remuneration of the Company’s directors is monetary-compensation. Ranks ofdirectors and compensation amount and its composition for each rank are established, and theamount is decided within the limits of the compensation amount and its composition establishedfor each rank of directors.
B. Performance-linked Compensation, etc.
The Company does not grant performance-linked compensation, etc.

14[Translation]

C. Non-monetary Compensation, etc.
The following is a determination policy of the Company’s non-monetary compensation, etc.
(hereinafter referred to as "stock compensation”).
a. Stock compensation is composed of stock options (hereinafter referred to as "SO”) that are thesame value as the monetary claim of remuneration-type stock options (stock acquisition rights)
in which the exercise price per share is set at 1 yen, and restricted stock (hereinafter referred toas “RS”), that are the same value as the monetary claim of restricted stock. Directors receive
the stock acquisition rights and restricted stock by compensating with the monetary claim of SO
or RO. The gross amount of each SO and RS are to be resolved at the General Meeting of
Shareholders, and decided within the limits of compensation amount and its composition
established for each rank of directors fixed by the resolution of the Company’s Board of Directors.
b. The remuneration amount of SO for each individual shall be estimated by multiplying the fairvalue of 1 stock acquisition right calculated based on stock price, exercise price on the allotment
date, and other conditions by the total number of allotted stock acquisition rights.
c.

The remuneration amount of RS for each individual shall be estimated by multiplying themonetary claim for 1 stock, that is not too advantageous to a directors who receive RS, decided
by the Company’s Board of Directors, by the number of allotted RS shares. The monetary claim
for 1 stock is to be based on the closing price of the Company’s common stock on the Tokyo
Stock Exchange on the previous business day of the resolution of RS grants by the Company’s
Board of Directors (apply the last closing price if not decided on the market on the same day).

d. RS owes transfer restrictions for the fixed-period of 1 to 5 years decided by the Company’s Boardof Directors, and directors shall not transfer, set up a guarantee, or execute other dispositions of
RS during the period.
iii. Determination Policy of the Ratio of Base Remuneration, Performance-linked Remuneration, Nonmonetary Remuneration, etc.
A. Directors Expect for Outside Directors
Ratio of base remuneration and stock compensation shall be largely 60% base remuneration and
40% stock compensation (of which, 30% SO, 10% RS)
B. Outside Directors
Only base remuneration is provided.
iv. Timing to Grant Remunerations, etc. or the Determination Policy of Terms
A. Base Remuneration
Compensation amount and number of grant stocks for each individual will be resolved at theCompany’s Board of Directors right after the resolution of election of directors at the General
Meeting of Shareholders, and remuneration amount divided the annual remuneration by 12 will be
paid on a monthly basis from the next month of installation or reappointment.
B. Stock Compensation
Compensation amount and number of grant stocks for each individual will be resolved at theCompany’s Board of Directors right after the resolution of election of directors at the General
Meeting of Shareholders.
v. If the Determination of Remuneration, etc. for Each Individual is Entrusted to a Third Party (Including Reentrusting to the Representative Director)
A. Name or position entrusted to determine remuneration, etc.: President Executive Officer
B. Rights to be entrusted: For the decision of remuneration, etc. for each individual, President Executive
Officer shall draft and submit a proposal, within the limits of the total amount of remuneration, etc. resolved
at the General Meeting of Shareholders, to the Nomination and Renumeration Advisory Committee.

15[Translation]
If it is resolved by the Company’s Board of Directors to entrust the determination of remuneration to the
President Executive Officer with the proposal based on the advice given by the Nomination and Renumeration
Advisory Committee, the President Executive Officer will decide the remuneration, etc. for each individual.
C. If measures for the exercise of authority by the person in charge are to be taken, their contents
a. President Executive Officer shall draft and submit a proposal of remuneration, etc. for eachindividual, within the limits of the total remuneration, etc. resolved at the General Meeting of
Shareholders, to the Nomination and Renumeration Advisory Committee, and theRenumeration Advisory Committee will give advice to the President Executive officer.
b. The Nomination and Renumeration Advisory Committee shall be composed of three committee
members, of which outside directors take the majority. Chairperson is decided from thoseoutside directors by the resolution of the Nomination and Renumeration Advisory Committee.
vi. Determination Method of Remuneration, etc. for Each Individual
President Executive Officer shall draft and submit a proposal of remuneration, etc. for each individual to theNomination and Renumeration Advisory Committee within the limits of the total remuneration, etc. resolved
at the General Meeting of Shareholders, utilizing the external data, etc. President Executive Officer will
decide the contents of remunerations, etc. based on the advice given by the Nomination and Renumeration
Advisory Committee.

[Support System for Outside Directors]
Support for the Company's outside directors is provided by the Corporate Division. Specifically, the Corporate
Division is responsible for notifying the Board of Directors of meetings, confirming attendance, and circulating
and sealing the minutes of the meetings. In addition, as a system for communicating information to outside
directors, in the event that an agenda item requiring a resolution or report is to be presented to the Board of
Directors, the gist of the item is individually explained to the outside directors in advance to enable them toexchange opinions and make a resolution at a Board of Directors meeting. In addition, when it is deemednecessary to report or discuss other matters, the Board of Directors basically meets with the outside directors,
and when this is not possible, reports and consultations are made individually by e-mail or telephone.

2. Items Related to Functions of Business Execution, Auditing and Supervision, Nomination,
and Determination of Remuneration (Overview of the Current Corporate Governance System)
UpdatedThe Board of Directors makes important management decisions and supervises the directors in the executionof their duties, and the Audit and Supervisory Committee audits the directors' performance of their duties. In
addition, the Management Committee, consisting of full-time directors and corporate officers, meetsregularly to ensure that decisions are made quickly in the execution of operations.
The following is an overview of the Company's management decision-making, execution and supervisionsystem.
•Board of Directors
The Company's Board of Directors consists of nine directors (excluding directors who are Audit andSupervisory Committee members), three of whom are outside directors, and four directors who are Audit andSupervisory Committee members (including three outside directors). In addition to regular monthly meetings,
extraordinary meetings of the Board of Directors are held flexibly when necessary to make importantmanagement decisions and supervise the directors' execution of their duties. In addition, the outside directors
are responsible for monitoring management from an objective standpoint by utilizing their extensive
management experience and broad-based insights.

•

Audit and Supervisory Committee
The Company's Audit and Supervisory Committee consists of four directors (including three outside directors),
and in principle, the Audit and Supervisory Committee meets once a month after the regular Board of Directors
meeting, and attends meetings of the Board of Directors and other important meetings to express its
opinions in an effort to improve the effectiveness of corporate governance.

16

[Translation]•

Management Committee
The Company's management committee, which consists of President Executive Officer and directors andcorporate officers, etc. appointed by President Executive Officer, meets weekly. Through these meetings,
the Company aims to confirm the day-to-day execution of business operations, speed up decisionmaking, and improve its corporate value.

•

Accounting Auditors
The Company has entered into an audit contract with Ernst & Young ShinNihon LLC and has been audited
in accordance with the Financial Instruments and Exchange Law and the Companies Act, and appropriate
audits have been conducted as necessary. The names of the certified public accountants who performed
the audit work for the Company are as follows
Names of the certified public accountants who conducted the work
Designated and Engagement Partner Junichiro Tsuruta
Designated and Engagement Partner Hayato Kobayashi•

Nomination and Remuneration Advisory Committee
For the purpose of strengthening the independence and objectivity of the Board of Directors' functions inrelation to the nomination and remuneration of directors, and to further strengthen corporate governance, theCompany has established the Nomination and Remuneration Advisory Committee, a voluntary advisorycommittee of the Board of Directors, consisting of at least three members who are directors and a majority ofwhom are independent outside directors. The Committee is composed of three members: Representative
Director, Kaoru Hayashi, Independent Outside Director, Junji Inoue, and Independent Outside Director, Koji
Makino. The Committee deliberates and submits its report on the election of directors and thecompensation of directors (excluding Audit and Supervisory Committee members) in consultation with
President Executive Officer.

•

Overview of Contents of the Contract for Limitation of Liability
In accordance with paragraph 1, Article 427 of Companies Act, the Company has entered into a contract with
the Company’s Non-executive Directors for limited liability stipulated in paragraph 1, Article 423. Limit of liability
for damages is the minimum liability amount provided in the Companies Act. This limited liability is applicable
only when the Company’s Non-executive Directors perform their duties in good faith and do not cause serious
negligence.

•

Overview of Contents of the Directors' and Officers' Liability Insurance Contracts
The Company has concluded a directors' and officers' liability insurance contract with an insurance company
as stipulated in Article 430-3, Paragraph 1 of the Companies Act. The outline of the contents of the policy, etc.
are as follows.
i. Scope of insured Scope of insured
Directors, auditors, corporate officers, etc. of the Company and its consolidated subsidiaries
ii. Outline of the contents of the insurance contract
The insurance policy shall cover legal damages and costs of litigation to be incurred by the insured under thesaid insurance policy. However, as a measure to ensure that the insured's performance of his/her duties is
not compromised, coverage is not provided for claims for damages arising from illegal provision of personal
benefits or favors, claims for damages arising from criminal acts of the insured, or claims for damages arisingfrom acts committed by the insured that the insured knew were in violation of laws and regulations. The
premiums are borne entirely by the Company, and there is virtually no premium burden on the insured.

3. Reasons for Choosing the Current Corporate Governance System
The Company has positioned the strengthening of its corporate governance system as one of its key
management issues.
In order to increase the effectiveness of management oversight by the Board of Directors, the ratio of outside
directors to the Board of Directors will be at least one-third, thereby further strengthening corporate
governance. In addition, we are reviewing the corporate officer system to clarify the separation ofmanagement decision-making and supervisory functions from business execution functions andpromoting the delegation of business execution authority in order to speed up and improve the efficiencyof business execution.

17

[Translation]

III. Status of implementation of Measures Concerning Shareholders and Other
Stakeholders
1. Efforts to Revitalize the General Meeting of Shareholders and Facilitate the Exercise of
Voting Rights Updated
Supplementary explanation
Early dispatch of Notice of General
Meeting of Shareholders

The notice of the 28th Ordinary General Meeting of Shareholders is sent out
21 days prior to the date of the General Meeting of Shareholders. It is also
posted on the Tokyo Stock Exchange and the Company's website 23 days
prior to the date of the General Meeting of Shareholders.

Setting up a shareholder meeting to
avoid a concentrated date

The 28th Ordinary General Meeting of Shareholders was held on June 23,
2023, a date that avoids the so-called concentrated date for shareholders'meetings.

Exercise of Voting Rights by
Electromagnetic Means

In order to improve convenience for shareholders, from the 21st Annual
General Meeting of Shareholders, voting rights can be exercised byelectromagnetic means.

Participation in an electronic voting
platform and other efforts to improvethe voting environment for
institutional investors

In order to improve the voting environment for institutional investors in Japanand abroad, we have been participating in the electronic voting platform
since the 21st Annual General Meeting of Shareholders.

Provision of the notice ofconvocation (summary) in English

An English version of the convocation notice is prepared and posted on
the Company's website.

2. Status of IR activities
Supplementary explanation

Creation and publication ofDisclosure Policy

The Company has established a disclosure policy andpublishes it on its website.

Regular briefings for individual
investors

In principle, the Company plans to hold a briefing session
for individual investors once a year.

Periodic briefings for analysts andinstitutional investors

Holding regular briefings foroverseas investors

Posting of IR materials on our
websiteEstablishment of an IR department(person in charge)

The Company holds financial results briefings in thesecond and fourth quarters.
The contents of the briefings include financial reports by
the representative director and presentation of futurebusiness strategies for analysts and institutional investors.
In addition, IR meetings with domestic and foreign
institutional investors are held after the announcement ofquarterly financial results four times a year.
Several times a year, we attend conferences foroverseas investors to explain our businessperformance, etc.
Timely disclosure materials are posted on the Company's
website immediately after disclosure. In addition, a libraryof previously disclosed materials is available on theInvestor Relations section of the Company's website.
In addition, the Company holds briefings for analysts andinstitutional investors on its second quarter financial results
and this earnings release and discloses materials fromthese briefings to the Timely Disclosure Service and posts
them on the Company's website.
The Corporate Division has a department in charge of IRwith five people in charge of IR. The director in charge of
the Division is the director in charge of IR, and the Head of
the Corporate Division is responsible for IR liaison.

18

Explanation byrepresentative

Yes

Yes

No

[Translation]

3. Efforts to Respect the Stakeholder's Position
Supplementary explanation

Formulation of policies on theprovision of information to
stakeholders

The Company strives to provide all of its stakeholders, including
shareholders and investors, with prompt information on the basis oftransparency, fairness and continuity.
The Company's basic policy is to disclose information in accordancewith the Financial Instruments and Exchange Law and the timely
disclosure rules of the Tokyo Stock Exchange.
The Company will proactively disclose as much information as
possible in a timely manner, even if it is not covered by the Timely
Disclosure Rules, if it is deemed to be useful in gaining a better
understanding of the Company.
In addition, the Company has established an English-language
version of its corporate website and has produced English-language
versions of the Notice of General Meeting of Shareholders, financial
results briefing materials, and important press releases in an effort
to enhance information disclosure in English.

19

[Translation]

IV. Matters Related to Internal Control Systems, etc.
1.The Basic Concept and Status of the Internal Control System
As for the Company's internal control system, the Board of Directors has passed a resolution on the basic
policy for establishing an internal control system and has been developing it. The Company's basic approach
to its internal control system is as follows.
a. Basic Policy for the Execution of Duties
The following ”Principle” and “Credo” are the basic policies for all officers (directors, corporate auditors or
their equivalents) and employees (employees, contract workers, contract workers, temporary workers andothers engaged in the Company's business) in the execution of their duties.
<Principle>
Think for yourself and question authority.
<Credo (Behavioral Philosophy) >・TENACITY
Have a strong will
・OPENNESS Question your common sense
・INTEGRITY Stay straight・AGILITY
Be agile
・COURAGE
Be brave
Based on these “Principle” and ”Credo,” the Company has established a system to ensure that all officers
and employees of the Group comply with laws and regulations and make appropriate decisions and takeappropriate actions with high ethical standards.
b. Basic Policy on Internal Control
In accordance with the Companies Act, the Ordinance for Enforcement of the Companies Act, and the
Financial Instruments and Exchange Act, the Company shall establish a system to ensure theappropriateness of its operations (hereinafter referred to as "internal control") as follows.
(1) Systems to Ensure that the Execution of Duties by Directors and Employees(hereinafter referred to as "Directors and Employees") of the Company and directors, etc. (hereinafter referred
to "Directors, etc." as defined in Article 110-4, Paragraph 2, Item 5 (a) of the Ordinance for Enforcement of
the Companies Act) and employees of the Company’s subsidiaries comply with laws and regulations and the
Articles of Incorporation
All Directors and Employees of the Company, as well as Directors, etc. and employees of the Company's
subsidiaries, are required to act with integrity based on the ethics and values expected of them as membersof society. Based on this recognition, the Company has established the Compliance Program as a specificcode of conduct to be applied to its Directors and Employees, as well as Directors, etc. and employees of theCompany's subsidiaries, to ensure fair and appropriate management and harmony with civil society throughstrict compliance with social norms, ethics, and laws and regulations.
In addition, to ensure that the Company, as an operating holding company, is fully compliant, each divisionof the Company and the Company's subsidiaries are classified according to business segment and othercategories ("Business Segments"), and the General Manager of the Corporate Division oversees thecompliance efforts of each business division and the Company's subsidiaries on a cross-sectional basis. The
Corporate Division's personnel will work with each business unit and subsidiary to educate and enlighten
Directors and Employees of the Company and Directors, etc. and employees of its subsidiaries.
The Company's Board of Directors oversees each business unit and operating company within the Group bybusiness segment, and the Corporate Division audits or understands the compliance status of each business
unit and Group company by business segment. The Company's directors and the Corporate Division shallreport regularly on these activities to the Company's Board of Directors and the Company's Audit andSupervisory Committee.
With respect to acts, etc., that raise questions about legal compliance within the Group, the Company has
employees of each Group company contact the Compliance Committee Secretariat or a law firm that serves
as an outside point of contact for matters that may have a significant impact on the Company and its Group
companies, as well as legal compliance status, in addition to the legal requirements. In addition, theCompany's Compliance Committee shall promptly report the information received from a reporter to President
Executive Officer and the Director, who is a member of the Audit and Supervisory Committee.

20[Translation]
The Company shall not have any relationship with antisocial forces that threaten the order and safety of civilsociety and shall reject any unreasonable demands from antisocial forces.
(2) System for the Storage and Management of Information Related to the Execution of Duties of theCompany's Directors
The directors of the Company shall properly record, store and manage information relating to the executionof duties by the directors of the Company in documents or electromagnetic media (hereinafter referred to as"Documents and Others") in accordance with the internal rules for document management and otherregulations. In accordance with the Document Management Rules, the person responsible for management
shall maintain access to these Documents and Others to the directors, etc. of the Company (including
directors who are Audit and Supervisory Committee members) as necessary.
(3) Rules and Other Systems to Manage the Risk of Loss for the Company and its Subsidiaries
The Corporate Division prepares rules and guidelines to address compliance, information security anddisaster-related risks for Directors and Employees of the Company and Directors, etc. and employees of its
subsidiaries. In addition, the Corporate Division prepares and distributes manuals and conducts training forthe efficient functioning of these rules and guidelines at the Company and its subsidiaries, as well as
monitoring and operating the risks. In addition, the Board of Directors shall promptly appoint a director or
corporate officer to be responsible for responding to any new risks that arise.
(4) Systems to Ensure the Efficient Execution of Duties by the Directors of the Company and the Directors,
etc. of the Company's Subsidiaries
The Board of Directors of the Company shall establish objectives that shall be shared by all directors andemployees of the Group, the director or corporate officer in charge of each business segment shall set specificobjectives for the achievement of such objectives in cooperation with the head of each business segment andthe directors of the Company's subsidiaries in each business segment, and each business segment and theCompany's subsidiaries shall determine efficient methods for achieving such objectives.
The Board of Directors of the Company shall periodically review the progress and advise, through the director
or corporate officer in charge of each business unit and the directors of the Company's subsidiaries in eachbusiness unit, as well as encourage improvements as necessary, in order to establish a system to improvethe efficiency of the Group's operations.
(5) System to Ensure the Appropriateness of the Business Operations of the Corporate Group Consisting of
the Company and its Subsidiaries
The Company classifies each of its business divisions and subsidiaries into business categories and appoints
a director or corporate officer to be in charge of each business category. The director or corporate officer incharge of each business segment is responsible for ensuring that the Board of Directors or the Executive
Committee of the Company's Board of Directors and the Executive Committee work to improve operational
efficiency, ensure legal compliance and appropriate risk management systems for each business segment
and the Company's subsidiaries, as well as monitoring these systems. In addition, the Corporate Division
shall promote these systems across the board and regularly review and manage their progress. While
respecting the autonomy of the management of each company in the Group, the Company shall receive
regular reports on its business activities.
(6) Matters Related to Directors and Employees who are to Assist the Duties of the Audit and Supervisory
Committee, Matters Related to the Independence of Such Employees from Directors (Excluding Directors who
are Audit and Supervisory Committee Members) and Matters Related to Ensuring the Effectiveness ofInstructions to Such Employees
The Audit and Supervisory Committee of the Company may order employees of the Internal Audit Office toperform their duties, and employees who receive necessary orders from the Audit and Supervisory Committee
shall not concurrently serve as employees of other departments, and with respect to such orders, they shallact solely under the direction and orders of the Audit and Supervisory Committee to serve as directors of theCompany (directors who are Audit and Supervisory Committee members). The Company shall not be subject
to the orders and instructions of the Audit and Supervisory Committee (except for those of the Company). In
addition, the Audit and Supervisory Committee staff shall be assigned to assist the Company's Audit andSupervisory Committee as necessary.
The Board of Directors of the Company (excluding directors who are Audit and Supervisory Committee
members) and the Audit and Supervisory Committee of the Company shall exchange opinions on such
personnel matters.

21

[Translation](7) Systems for Reporting to the Company's Audit and Supervisory Committee by Directors (Excluding
Directors who are Audit and Supervisory Committee Members), Accounting Advisors, and Employees of theCompany, as well as by Directors, Accounting Advisors, Corporate Auditors, Executive Officers, Employees
who Execute Operations of the Company's Subsidiaries, and Other Persons and Employees of theCompany's Subsidiaries who Perform their Duties as Defined in Article 598-1 of the Companies Act or Other
Persons who are Equivalent to These Persons or who Receive Reports from These Persons(hereinafter referred to as "Directors, employees, etc."), other systems for reporting to Audit and Supervisory
Committee, and systems for ensuring that those who have reported to Audit and Supervisory Committee are
not subjected to any adverse treatment on account of their reportingi. As soon as possible, directors (excluding directors who are Audit and Supervisory Committee
members), accounting advisors and employees of the Company and Directors, employees, etc. of
the Company's subsidiaries shall report to the Audit and Supervisory Committee on matters that
may have a significant impact on the Company and the Group, as well as on the status of compliance,in addition to matters required by law. The Company shall have a reporting system in place. The
method of reporting (e.g., reporter, recipient, timing of reporting, etc.) shall be determined throughconsultation between the directors of the Company (excluding directors who are Audit andSupervisory Committee members) and the Audit and Supervisory Committee of the Company.
ii. The Company shall ensure that the reporter will not be subjected to any disadvantageous treatment
as a result of the report described in the preceding paragraph and shall ensure that all officers andemployees within the Group are aware of this system.
(8) Other Systems to Ensure that the Audits of the Audit and Supervisory Committee of the Company are
Conducted Effectively
The Company's Audit and Supervisory Committee and the Company's directors (excluding directors who are
Audit and Supervisory Committee members) shall set up periodic meetings to exchange views to ensure that
the Audit and Supervisory Committee's audits are conducted effectively.
(9) System to Ensure the Reliability of Financial Reporting
The Company shall establish and promote the establishment and operation of an internal control system toensure the reliability of the financial reporting of the Company and the Group.
(10) Matters Relating to the Procedure for the Advance Payment or Reimbursement of Expenses Incurred in
the Performance of the Duties of the Audit and Supervisory Committee of the Company and Other Matters
Relating to the Treatment of Expenses or Liabilities Incurred in the Performance of Such Duties
i. If Audit and Supervisory Committee of the Company makes a request to the Company for advancepayment of expenses, etc. pursuant to Article 399-2, Paragraph 4 of the Companies Act as a resultof the execution of its duties, the Company shall promptly process such expenses and liabilities after
deliberation by the department in charge, unless it is determined that the expenses and liabilities
related to such request are not necessary for the execution of Audit and Supervisory Committee's
duties.
ii. If the Company's Audit and Supervisory Committee requests its own outside experts (attorneys,
certified public accountants, etc.) to serve as advisors to the Audit and Supervisory Committee, theCompany shall bear the cost of such advisors, unless they are deemed not necessary for the
execution of the Audit and Supervisory Committee's duties.
Under such a system, the Company will strive to ensure the legality and efficiency of its operations andmanage risks, while constantly reviewing its internal control system in response to changes in thesocioeconomic situation and other environmental conditions, in order to establish a more appropriate
internal control system.

2. Basic Approach to the Elimination of Antisocial Forces and the Status of its Development
Based on the Compliance Program, the Group's basic policy is to have no relationships with antisocial forces
and to firmly reject any unreasonable demands from antisocial forces.
In addition, the Corporate Division has been designated as the department in charge of overseeing the
response to anti-social forces, and in order to prepare for unreasonable demands by anti-social forces, theCompany has been working to establish close relationships with external specialist organizations, suchas the police and lawyers, on a regular basis.

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In addition, the Company has appointed a person in charge of preventing undue demands, collecting
information on anti-social forces and participating in seminars and other activities.

V. Other Matters
1. Adoption of Anti-takeover Measures
Adoption of Anti-takeover Measures

Not Adopted

Supplementary Explanation
Basic Policy on Control of the Corporation(1) Basic Policy on Control of the Company
As a listed company, the Company believes that shareholders of the Company are determined through free
trading in the market, and even in cases where a large-scale purchase of the Company's shares is conductedby a large-scale purchaser, it is ultimately up to the shareholders who hold the Company's shares to decide
whether or not to accept the large-scale purchase and sell their shares. The Company believes that a LargeScale Purchaser's involvement in the management of the Company is not necessarily detrimental to thecorporate value of the Company, and if it leads to the improvement of the corporate value of the Company
and, in turn, the common interests of its shareholders, the Company will not deny it. We do not deny that alarge-scale acquirer's involvement in the management of the Company is not necessarily detrimental to thecorporate value of the Company, as long as it leads to the improvement of the corporate value of the Company
and, in turn, the common interests of its shareholders. However, there are many cases of unilateral largescale purchases that are carried out without sufficient consultation and agreement processes with the target
company and are considered inappropriate, such as those that do not provide sufficient information toshareholders regarding the purpose of the purchase or management policy after the acquisition, or those that
do not provide sufficient time for the target company's board of directors to review the details of the largescale purchase and to provide an alternative proposal.
We believe that those who control decisions on the Company's financial and business policies must
understand the Company's purpose and build smooth relationships with various stakeholders to contribute tosociety, maximize the Company's corporate value, and ensure the common interests of shareholders. The
Company's Board of Directors is of the opinion that a person who conducts a large-scale acquisition of theCompany's shares that would unintentionally damage the corporate value of the Company and cause
disadvantages to its shareholders is not an appropriate person to control decisions on the Company's financial
and business policies. Therefore, the Company believes that a person who engages in a large-scale purchasethat would inadvertently damage the corporate value of the Company and create a disadvantage for its
shareholders is not an appropriate person to control decisions on the Company's financial and business
policies.
(2) Efforts to Contribute to the Realization of the Basic Policy on Control of the Company
The Company aims to expand and improve the profitability of the Group's businesses as a whole, and byproactively creating businesses that will become pillars of the Group's future earnings, the Company aims toachieve its corporate value and, in turn, the common interests of its shareholders, and to encourage large
numbers of investors to hold the Company's shares over the long term by taking the following measures We
are implementing the following.
a. The Company's Basic Management Policy
Our purpose is to design “new context” for a sustainable society with technology. The basic concept of ourbusiness is to be a "context company" that organically connects companies, people and information. By
making effective use of our solutions know-how based on our experience from the dawn of the Internet
industry and the latest network technology, we have been developing functions that organically connect
various complex information and enhance the value of the three parties, companies, people and information.
Our basic management policy is to build services that contribute to a comfortable society in which people,
the environment and the digital information society can coexist in harmony, always keeping our eyes a few
steps ahead of the times. Our basic management policy is to build services that contribute to a comfortablesociety in which people, the environment and the digital information society can coexist in harmony, by
always keeping a perspective several steps ahead of the times and by calmly and accurately selecting theright contexts.

23[Translation]b. Medium- to Long-Term Initiatives to Enhance Corporate Value
Our mission and values are "to continuously create sustainable “business context” from an earth-centric
perspective by integrating technology, ESG, and incubation with First Penguin Spirit," and we arecommitted to providing our clients with the latest Internet technology, marketing technology that is one stepahead of the trends in the world, and reliable and trustworthy services. We believe that creating newcontexts at the point of contact between real space and cyberspace (virtual space), based on our advanced
financial technology, will help to ensure and enhance our corporate value and, in turn, the common
interests of our shareholders.
c.

Measures to Prevent Inappropriate Persons from Controlling Decisions on Financial and Business
Policies of the Stock Company
In the event of a Large-Scale Purchase of the Company's Shares, etc., the Company will strive to actively
collect and disclose information in a timely and appropriate manner in order to secure the Company's
corporate value and the common interests of its shareholders, and will take appropriate measures to theextent permitted by the Financial Instruments and Exchange Law, the Companies Act, other relevant laws
and regulations, and the Company's Articles of Incorporation.
(3) The Board of Directors' Decision on the Above Initiatives
Each of the above initiatives is intended to enhance the corporate value of the Group and, in turn, the common
interests of its shareholders, are not intended to maintain the status of the Company's officers, and are all inline with the basic policy described in (1) above.

2. Other Matters Related to the Corporate Governance System, etc.
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Corporate Governance Organization Chart25

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Expertise and Experiences of the Company’s Board of Directors (Skill Matrix)

The items checked do not represent all of the expertise and experience of each director.

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Overview of Timely Information Disclosure27