Translation
N o te : Th is d o c u m e n t h a s b e e n t ra n s la te d fr o m th e J a p a n e s e o ri g i n a l f o r re fe re n c e p u rp o s e s o n l y. I n t h e e v e n t o f a n y d i s c re p a n c yb e tw e e n t h is tra n s la te d d o c u me n t a n d t h e J a p a n e s e o ri g i n a l , t h e o ri g i n a l s h a l l p re v a i l .

Corporate Governance Report
CORPORATE GOVERNANCE

Digital Garage, Inc.

Last Update:June 28, 2024

Digital Garage, Inc.
Kaoru Hayashi, Representative Director,
President Executive Officer and Group CEO
Contact: +81-3-6367-1111
Securities code: 4819
https://www.garage.co.jp/en/
The corporate governance of Digital Garage, Inc. (the “Company”) is described below.

I. Basic Views on Corporate Governance, Capital Structure, Corporate Attributes, and OtherKey Information
1. Basic Views
The Company adopts the following "Principle" and "Credo" in order to enhance sustainable growth and corporate value inthe medium- to long-term, to earn the trust of its shareholders and various stakeholders, as well as to reinforce its corporate
governance, which values transparent, fair, swift, and decisive decision-making.
< Principle >Think for yourself and question authority.
< Credo (Behavioral Philosophy) >- TENACITY

Have a strong will

- OPENNESS

Question common sense and norms- INTEGRITY

Be honest and morally upright- AGILITY

Be agile- COURAGE

Be brave

Founded on the aforementioned "Principle" and "Credo", the Company has a clear purpose of "Designing 'New Context'
for a sustainable society with technology." The Company has pioneered launching multiple first-of-its-kind Internet services
in Japan through developing and incubating businesses that are based on two types of profit foundation: unique and leading
marketing technologies, and durable and high-quality financial technologies.
The Company’s mission is to follow the “First Penguin Spirit”, integrate “Technology × ESG × Incubation” with a global
perspective, and continue to create a sustainable “business context”.
The Company Group's basic policy and guidelines for corporate governance are disclosed in the "Corporate Governance
Policy" on its website at https://www.garage.co.jp/en/company/corporate-governance/.

Reasons for Non-compliance with the Principles of the Corporate Governance Code
The Company would comply with all of the principles set forth in the Corporate Governance Code.

Disclosure Based on each Principle of the Corporate Governance Code(Principle 1-4:

Cross-Shareholdings)

The Company as an entity creating genuinely valuable “contexts” may hold shares for the purpose of collaborating withvarious companies upon the long-term and stable strategic alliances. When verifying the cross-shareholdings, the Company’s
Board of Directors consults on the measures to hold shares including the sale of shares at least once a year, pursuant toevaluation criteria of economic rationality based on: (i) whether the returns from enhanced coordination, any collaboration,and creation of synergy through shareholding are expected to exceed the cost of capital, or (ii) whether they contribute toincreasing the corporate value in the medium-to long-term. When exercising voting rights for cross-shareholdings, theCompany would exercise the rights in an adequate manner after comprehensive consideration of whether it contributes toimproving the corporate value of the issuing company and the Company Group in the medium-to long-term.
With regard to the shares held as of the end of March 2024, the Company has determined it is appropriate to hold all theshares, considering overall factors including the medium-to long-term economic rationality and the need to maintain andenhance relationships with invested companies.
(Principle 1-7:

Transaction between Related Parties)

The Company Group would conduct proper oversight of transactions between related parties by obtaining approval of orreporting to the Board of Directors to ensure the transactions do not harm the common interests of the Company or its
shareholders.
(Supplementary Principle 2-4(1):Ensuring Diversity by Appointing Core Human Resources)(1) Human Assets Development Policy
It is believed human resources that is an intangible asset is essential for the business growth of the Company Group.
In particular, the Company recognizes the need to build a diversified talent portfolio composed of personnel who are able
to create businesses and materialize them utilizing technology, and are experts with specialized knowledge. The Company
Group valued the "First Penguin Spirit" since the Company’s establishment and has been the first to take on challenges
having the courage and strong will in the face of risks, never being satisfied with the status quo. The Company
continuously takes measures to drive proactive growth through unconventional thinking and flexibility.
As part of the measures, the Company has revised the personnel system to include an expert course newly establishedas one of career options in addition to the existing management course and created an environment which enables theexperts with a wealth of expertise to play active roles in all positions. The Company takes steps to accelerate the growthof its employees by implementing systems to enhance career support measures, in which superiors support theautonomous career development of employees, so that every employee grows displaying each strength.
The Company continues to accelerate growth in the business of the Company Group and contribute to a sustainable
society through its business by working on the development of personnel who carve out a future.
(2) Diversity in Workforce
The Company Group, since its establishment, has implemented to appoint talented people with emphasis on its abilities
and achievements regardless of the factors such as gender, nationality, or career, in order to develop the various businesses
under dynamically changing market circumstances. The Company fosters diversity by hiring persons with a variety ofcultures, values and skills, and offering opportunities for each to challenge the works and roles. As a result, the ratio of“Career Recruitment” of all is 92.0% and the ratio of female employees of all is 37.9%, the Company actively works on
improvement of work environment and developments of systems including promotion of the advancement of females in
the workplace.
As the Company Group expands its business globally, 9.5% of all employees are foreign nationals, 17.9% are bilingual,and 10.2% are those who grew up overseas or studied abroad as of the end of March 2024. In addition to the investment2

in overseas ventures, the Company further enhances communication and relationships with stakeholders through regional
revitalization and promotions of the local community in Japan to mount new technologies in industry on a global scale
beyond borders.
Realizing the Company Group's purpose, the Company collaborates with diverse employees across group companies
and segments, thereby reinforcing internal communication within the Company Group.
(3) Improvement of In-house Working Environment
As part of the dedication to creating a more comfortable working environment, the Company Group has introduced
work styles such as remote work and flexible working systems which allow employees to flexibly choose their preferredwork styles that suit their individual lifestyle. In terms of realizing the quality of life through work, the Company
endeavors prevention or precaution of accidents by managing working hours utilizing an attendance management system
and monitoring and taking measures utilizing data such as 360-degree surveys and engagement surveys. Other than theenhancement of welfare benefits, the Company has introduced a babysitting system, and a short-time work system thanlegally required which allows working parents raising a child up to the first grade of junior high school to enhance
employees’ benefits. In addition, the Company has defined a "Human Resources Management Policy" that sets out thepromises the Company makes to individuals (employees) and what the Company expects from individuals forreinforcement of relationship between employees and the Company.
The Company will continue to design systems that flexibly respond to changes in social environment and life stagesof the employees, and create an environment in which the employees, who are the driving force behind the creation of
corporate value in the Company Group, are able to perform at their best.
(Principle 2-6:

Exercising the Function as an Asset Owner of a Corporate Pension Plan)

The Company has no corporate pension fund plans, however, have introduced a defined contribution-type corporate pension
plan to ensure stable asset formation for its employees.
(Principle 3-1:

Enhancement of Information Disclosure)(1) Corporate Philosophy, Business Strategy and Business Plan
The Company Group has been committed to its Purpose, Mission, and Value, and these are published on its website athttps://www.garage.co.jp/en/. And the Company has formulated a five-year medium-term Business Plan with the firstyear being the Fiscal Year ended March 2024, and disclosed an outline of the Business Strategy on its website anddisseminated information on the progress of the plan in the presentation materials of financial results, Securities Reports,
and other documents.
(2) Basic Policy on Corporate Governance and its Guideline
Please refer to the above Section I.1. “Basic Views” of this report.
(3) Policies and Procedures for Determining Remuneration of Directors
Please refer to the "Director Remuneration" of Section II.1. of this report below.
(4) Policies and Procedures for Determining Director Candidates (Appointment or Dismissal)
Candidates for Directors except for the Directors who are Audit and Supervisory Committee Members and Outside
Directors are appointed based on whether they have excellent personalities and insight, as well as expertise andexperience to implement management of the Company accurately, fairly and efficiently. Candidates for Outside Directors
are based on whether they have excellent personalities and insight, along with providing advice on overall management
based on their own expertise and appropriately reflecting the views of minority shareholders and other stakeholders at
the Board of Directors meeting from an independent standpoint. The President Executive Officer proposes and submits

3such candidates to the Nomination and Remuneration Advisory Committee, and the Board of Directors determines on
proposals of the candidates based on the recommendations of the committee by resolution. Candidates for Directors who
are Audit and Supervisory Committee Members are proposed by the President Executive Officer based on whether they
have excellent personalities and insight, as well as expertise and experience to audit the performance of Directors' duties
accurately, fairly and efficiently. The proposals of such candidates based on the committee's recommendations are thenapproved by a resolution of the Board of Directors after obtaining the consent of the Audit and Supervisory Committee.
If a Director has seriously violated laws, regulations or the Articles of Incorporation in the performance of its duties,
if a significant lack of eligibility exists, or if there is any other reason for dismissal pursuant to the Director Regulations,
the Board of Directors determines whether or not to submit a proposal to dismiss the Director to the General Meeting of
Shareholders.
(5) Explanation of Appointments and Dismissals of Executive Management, and Individual Appointments, Dismissals,
Nominations of Director Candidates
The reasons for the appointment or dismissal of individual Director Candidates are disclosed in the notice of theGeneral Meeting of Shareholders.
(Supplementary Principle 3-1(3):Disclosure of Information Related to Sustainability Initiatives)

The Company Group defined the purpose, “Designing ‘New Context’ for a sustainable society with technology”, andendeavors to solve social issues by means of connecting different phenomena in context, such as "real and cyber," "Japan andoverseas," "marketing and technology," and "present and future," to create new services that are beneficial and serve society.
The Company is advancing efforts to enhance the Company Group's corporate value and to dedicate to contributing to thedevelopment of a sustainable society. It is considered to be achieved where the Company attempts to perceive the technologicalchange and evolution around the world by collaborating with stakeholders including alliance partners and startup companies
on research and development of new technologies to be implemented socially to improve the future. The Company’ssustainability policy, governance, risk management, strategies, indicators and goals are disclosed on its website athttps://www.garage.co.jp/en/sustainability/.
[Investment in Human Assets]
In performing and conducting the Company Group’s unique and highly specialized business, the Company recognizes theGroup's sustainable growth and offering value to society will be led by the diverse employees who maximize their potential.
It is believed essential to enhance the relationship between employees and the Company in order to achieve the Company
Group's purpose other than that the employees with diverse backgrounds collaborate with each other. Therefore, the Company
has defined a "Human Resources Management Policy" that sets out the promises the Company makes to individuals(employees) and what the Company expects from individuals to promote the development of organization and human assets
to realize the vision of the Company Group as it wishes to be. The details are disclosed on the website athttps://www.garage.co.jp/en/sustainability/social/ .
[Addressing Climate Change (Disclosure in accordance with TCFD Recommendations)]
The Company Group recognizes climate change which has a serious impact on the earth, humanity and corporate activities
is not only risk but also possible new business opportunities. In consideration of these factors, the Company endorsed therecommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in May 2022, and have disclosed
informationinaccordance

with

the

TCFD

recommendation

on

the

websiteathttps://www.garage.co.jp/en/sustainability/environment/.
(Supplementary Principle 4-1(1):Scope of Delegation to Management)

The Board of Directors of the Company determines the matters stipulated by laws, regulations and the Articles of4Incorporation, and those stipulated in the Board of Directors Regulations. Any other determinations related to the executionof operations are delegated to the Executive Committee, full-time Directors, and Corporate Officers, that is set forth in internal
regulations such as the Executive Committee Regulations and the Regulations of Approval.
(Principle 4-8:

Effective Use of Independent Outside Directors)

The Company has appointed six (6) Independent Outside Directors who provide appropriate supervision and advice on
overall management based on their own expertise from an independent standpoint.
(Principle 4-9:

Independence Standard and Qualification for Independent Outside Directors)

The Company’s Independent Outside Directors are appointed taking into account they are expected to play roles with
providing objective and appropriate supervision or auditing based on their own expertise. And they are appointed fromindividuals who have no conflicts of interest with the Company and are unlikely to cause a conflict of interest with generalshareholders with reference to the requirements for outside directorship under the Companies Act and independence standard
pursuant to the Tokyo Stock Exchange and other institutions.
(Supplementary Principle 4-10(1):Constitution of Voluntary Nomination and Remuneration Advisory Committee)

Please refer to the “Voluntary Committee” in Section II.1. of this report below, presenting Name and Constitution ofCommittee, Attributes of Chairperson, and others.
(Supplementary Principle 4-11(1): Views on Balance of Board Composition in Terms of Knowledge, Experience, andSkills as a Whole, Diversity and Board Size)
The number of Directors except for the Directors who are Audit and Supervisory Committee Members is limited to ten (10),and the number of Directors who are Audit and Supervisory Committee Members is limited to five (5). For effective fulfillmentof roles and responsibilities of the Board of Directors, the Company ensures the Board of Directors is composed of diverse
human resources, including females and individuals who have been conducting international business serving as Directors atother companies and organizations. That is based on that diverse perspectives such as female and foreign nationals contributeto the enhancement of business and supervision of management, other than a well-balanced overall knowledge, experience,
and ability. A skills matrix summarizing the specialized expertise and experience of each Director is specified in “Other” inSection V. of the report below.
(Supplementary Principle 4-11(2): Directors' Concurrent Positions as Officers of Other Listed Companies)
The Directors’ concurrent positions serving as officers at other listed companies are disclosed in the notice of the General
Meeting of Shareholders and the Securities Report. As several Directors serve as outside directors or outside auditors at otherlisted companies, it is considered within a reasonable scope.
(Supplementary Principle 4-11(3):Analysis, Evaluation and Disclosure of the Effectiveness of Board of Directors asa Whole)The Company's Board of Directors, in accordance with each Director's self-evaluation, periodically uses a third-party
organization to analyze and evaluate effectiveness in the view of roles and responsibilities of the Nomination andRemuneration Advisory Committee and compliance with the Corporate Governance Code as well as the views of constitution,
operation, roles, responsibilities, and deliberations of the Board of Directors.
In the Fiscal Year ended March 2024, the results of a relative comparison evaluation provided by an external third-party
organization confirmed that the effectiveness of the Company's Board of Directors was sufficiently ensured. This year
particularly there have been confirmed and evaluated the promotion of sustainability management and enhancement of risk
management system due to establishment of a risk management committee. The Company will continuously discuss how to
improve corporate value in the medium-to long-term by deepening sustainability management as well as conducting

5

succession planning and human resource development.
(Supplementary Principle 4-14(2): Training Policy for Directors)
For the purpose of performing the expected roles and duties of the Directors, they pursue to acquire the requisite knowledge
and self-improvement and the Company provides them appropriate training at the Company's expense which are beneficial
for acquiring the necessary knowledge.
(Principle 5-1: Policy Related to Constructive Communication with Shareholders)
The Company engages in constructive communication with shareholders and investors and optimizes systems to enhancecommunication to achieve sustainable and the medium-to long-term improvement of the corporate value.
The Director, Vice President Executive Officer and Group COO, who is responsible for communication with shareholders
and investors, oversees the Investor Relations Department and conducts individual interviews, small meetings, and overseas
roadshows. The Representative Director, President Executive Officer and Group CEO, and related business segments,
Financial Department and other departments share information and exchange views as appropriate from each professional
perspectives, thereby disclosing information which may be a prerequisite for constructive communication. Moreover, theoutline of communication with capital market participants, such as shareholders, investors, and securities analysts, is reported
at the Board of Directors meeting every month, and opinions received during communication are shared with internal andexternal Directors as necessary and reflect in improvements to Business Strategies and Investor Relations activities.
When engaging in communication with shareholders and investors, the Company pays adequate attention to the fairness of
information disclosure and appropriately controls insider information pursuant to the Company’s Disclosure Policy.
(Investor Relation activities: Approximately 150 individual meetings and four (4) small meetings were held in the Fiscal
Year ended March 2024)(Action to Implement Management that is Conscious of Cost of Capital and Stock Price [English disclosure available])
The Company Group is committed to improving the corporate value through sustainable business expansion. Based on
management focused on cash flow, the Company implemented investments for future growth with capital efficiency and cash
flow allocation while maintaining financial soundness and optimizing the balance between shareholder returns.
In the medium-term Business Plan beginning in the Fiscal Year ended March 2024, the Company is positioning the paymentbusiness in which a high return on capital is expected as the Company Group's business foundation. And it is expected toaccelerate growth and improve its return on capital by making continuous investments for future growth and working on thedevelopment of business in new areas in which any links to the payment business are intended.
Further, the Company Group has defined a dividend policy of progressive dividends funded by recurring cash flows
generated from the business to realize stable returns to shareholders and maximize the corporate value through businessgrowth.

6

2. Capital Structure
Foreign Shareholding Ratio

30% or more

Status of Major Shareholders
Name or Company Name

Number of Shares Owned

Percentage (%)

Kaoru Hayashi

5,764,100

12.17

Resona Holdings, Inc.

5,240,000

11.06

The Master Trust Bank of Japan (Trust Accounts)

4,507,900

9.51

JCB Co., Ltd.

2,364,500

4.99

Dentsu Group Inc.

2,348,000

4.96

BNY GCM CLIENT ACCOUNT JPRD AC ISG (FE-AC)

1,848,852

3.90

HAYASHI CAPITAL, Inc.

1,803,900

3.81

Custody Bank of Japan, Ltd. (Trust Accounts)

1,376,394

2.91

OASIS JAPAN STRATEGIC FUND LTD.

1,100,000

2.32

949,500

2.00

Toshiba Tec Corporation

Name of Controlling Shareholder, if applicable(excluding Parent Companies)
Name of Parent Company, if applicable

None

Supplementary Explanation
In the Large Volume Holding Report made available for public inspection on April 20, 2023, it is stated Schroder Investment
Management (Japan) Limited and its joint holder, Schroder Investment Management North America Limited, hold thefollowing shares as of April 14, 2023, however, they are not included in the above Major Shareholders since the Company isunable to confirm the actual number of shares held by them as of March 31, 2024. In this regard, the details of Report are as
follows.
-

Number of shares held by Schroder Investment Management (Japan) Limited is 2,102,100 (4.42%).

-

Number of shares held by Schroder Investment Management North America Limited is 172,700 (0.36%).
In the Large Volume Holding Report made available for public inspection on June 7, 2023, it is stated FIL Investments(Japan) Limited holds the following shares as of May 31, 2023, however, they are not included in the above Major Shareholders
since the Company is unable to confirm the actual number of shares held by them as of March 31, 2024. In this regard, thedetails of Report are as follows.
-

Number of shares held by FIL Investments (Japan) Limited is 1,882,400 (3.95%).
In the Large Volume Holding Report made available for public inspection on September 25, 2023, it is stated AssetManagement One Co., Ltd. holds the following shares as of September 15, 2023, however, they are not included in the above
Major Shareholders since the Company is unable to confirm the actual number of shares held by them as of March 31, 2024.
In this regard, the details of Report are as follows.

7-Number of shares held by Asset Management One Co., Ltd. is 1,632,400 (3.43%).
In the Large Volume Holding Report made available for public inspection on April 4, 2024, it is stated Nomura Securities

Co., Ltd. and the two (2) companies which are its joint holder hold the following shares as of March 29, 2024, however, they
are not included in the above Major Shareholders since the Company is unable to confirm the actual number of shares held bythem as of March 31, 2024. In this regard, the details of Report are as follows.
-

Number of shares held by Nomura Securities Co., Ltd. is 1,098,266 (2.31%).

-

Number of shares held by Nomura International plc is 9,996 (0.02%).

-

Number of shares held by Nomura Asset Management Co., Ltd. is 1,082,800 (2.27%).

3. Corporate Attributes
Listed Stock Exchange and Market Segment

Prime Market of Tokyo Stock Exchange

Fiscal Year-End

MarchBusiness Sector

Information & Communication

Number of Employees (Consolidated) as of the Endof the Previous Fiscal YearNet Sales (Consolidated) for the Previous Fiscal Year
Number of Consolidated Subsidiaries as of the Endof the Previous Fiscal Year

1,000 or more
¥10 billion or more but less than ¥100 billion
10 or more but fewer than 50

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

5. Other Special Circumstances which May Have a Material Impact on Corporate GovernanceNot applicable.

8II. Business Management Organization and Other Corporate Governance Systems regarding
Decision-making, Execution of Business, and Oversight
1. Organizational Composition and Operation
Corporate Governance System

Company with Supervisory Committee

Directors
Number of Directors Stipulated in Articles ofIncorporation
Directors' Term of Office Stipulated in Articles ofIncorporation15

1 yearChairperson of the Board

President

Number of Directors

13Election of Outside Directors

ElectedNumber of Outside Directors

7

Number of Independent Directors

6Outside Directors’ Relationship with the Company (1)Name

Relationship with the Company*

Attributes

Hiromi Ozaki

From another company

Mitsushi Nishida

From another company

Hironobu Moriyama

From another company

Masako Ikeda

Attorney at law

Junji Inoue

From another company

Koji Makino

Certified public accountant

Shuma Uchino

From another company

a

b

c

d

e

f

g

h

i

j

k

*Categories for “Relationship with the Company”.
(Use “○” when the director presently falls or has recently fallen under the category; “△” when the director fell under the category
in the past; “●” when a close relative of the director presently falls or has recently fallen under the category; and “▲” when a close
relative of the director fell under the category in the past.)
a. Person who executes business for the Company or its subsidiary
b. Person who executes business for a non-executive director of the Company's parent company
c. Person who executes business for a fellow subsidiaryd. Person/entity for which the Company is a major client or a person who executes business for said person/entity
e. Major client of the Company or a person who executes business for said clientf. Consultant, accounting expert, or legal expert who receives large amounts of cash or other assets from the Company in addition
to remuneration as a director/company auditor
g. Major shareholder of the Company (in cases where the shareholder is a corporation, a person who executes business for the
corporation)h. Person who executes business for a client of the Company (excluding persons categorized as any of d, e, or f above) (applies todirector him/herself only)
i. Person who executes business for another company that holds cross-directorships/cross-auditorships with the Company (applies
to director him/herself only)

9

j. Person who executes business for an entity receiving donations from the Company (applies to director him/herself only)
k. OtherOutside Directors’ Relationship with the Company (2)Name

HiromiMembership ofSupervisory
Committee

Designation as
Independent
Director

Supplementary
Explanation of
the Relationship

Reasons for Appointment○-

Hiromi Ozaki has extensive experience and expertisein the fields of art, design, technology, and other areas.

Ozaki

As she offered beneficial views and suggestions from awide range of perspectives especially in the trend andmovement of web3 and diversity equity & inclusion, theCompany has determined her contribution is further
expected to appropriate oversight of business operations
and ensure the sound management for pursuingsustainable management of the Company.
She is designated as an Independent Director,
considering that she has no conflicts of interest with theCompany and maintains a high level of independence,and is unlikely to pose a conflict of interest with generalshareholders.
Mitsushi-

Mitsushi Nishida has extensive experience working
on development projects related to payment at a major

Nishidalisted company that develops systems for financial
services, payments and other services and also has years
ofexperienceinbusinessdevelopment

andmanagement. The Company therefore has determined
he is expected to provide appropriate strategic guidance
and management oversight for pursuing the FinTechbusiness of the Company.
Hironobu○-

Hironobu Moriyama has extensive experience andexpertise in the field of corporate management andMoriyama

financial services. As he is particularly knowledgeable
about global financial business and has extensive
insights in the startups in Japan, the Company has
determined he is expected to provide appropriate
strategic guidance and management oversight forpursuing the FinTech business of the Company.
He is designated as an Independent Director,
considering that he has no conflicts of interest with theCompany and maintains a high degree of independence,and is unlikely to cause a conflict of interest withgeneral shareholders.

10○Masako-Masako Ikeda has extensive experience and expertisein legal as a lawyer, even though she has not been

Ikeda

involved in corporate management in the past. The
Company has determined her contribution is expected
to appropriate oversight of business operations andensure the sound management of the Company fromoverall management and legal aspects, in the recent
business environment where the digital transformationand digitalization are progressing in various industries
and the related legislation is currently being enacted.
She is designated as an Independent Director,
considering that she has no conflicts of interest with theCompany and maintains a high degree of independence,and is unlikely to cause a conflict of interest withgeneral shareholders.
Junji

○

○

-

Junji Inoue has a wealth of business experienceoverseas as well as those as CEO and CTO of a globallyInoue

expanding IT company, experience at an IT company in
Silicon Valley, and development experience at payment
system companies in Japan. As he offered beneficial
views and suggestions from global perspectives as
Company Outside Auditor and Outside Director who is
an Audit & Supervisory Committee Member, theCompany has determined his contribution is further
expected to appropriate oversight of business operations
and ensure the sound management of the Company
while providing supervision and advice related to the
execution of duties by Directors.
He is designated as an Independent Director,
considering that he has no conflicts of interest with theCompany and maintains a high degree of independence,and is unlikely to cause a conflict of interest withgeneral shareholders.
Koji

○

○

-

Koji Makino has extensive experience and expertiseas a certified public accountant and consultant andMakinoexperience as an outside director of listed companies,
even though he has not been involved in corporate
management in the past other than having served as an
outside officer. As he offered beneficial views andsuggestions from accounting and tax aspects as
Company Outside Auditor and Outside Director who is
an Audit & Supervisory Committee Member, theCompany has determined his contribution is further
expected to appropriate oversight of business operations
and ensure the sound management of the Company

11while providing supervision and advice related to the
execution of duties by Directors.
He is designated as an Independent Director,
considering that he has no conflicts of interest with theCompany and maintains a high degree of independence,and is unlikely to cause a conflict of interest withgeneral shareholders.
Shuma

○

○

-

Shuma Uchino has a wealth of expertise and expertisein the field of corporate management and financial

Uchinoaccounting, experienced as CFO and officer at major
listed companies. As he offered beneficial views andsuggestions from a specialized perspective with deep
expertise especially in business management, theCompany has determined his contribution is further
expected to appropriate oversight of business operations
and ensure the sound management of the Company
while providing supervision and advice regarding theexecution of duties by Directors.
He is designated as an Independent Director,
considering that he has no conflicts of interest with theCompany and maintains a high degree of independence,and is unlikely to cause a conflict of interest withgeneral shareholders.

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

Full-time Members

Inside Directors

Outside Directors

Committee Chair

4

1

1

3

Inside Director

Supervisory
Committee

Appointment of Directors and/or Staff to Support theSupervisory Committee

Not Appointed

Reasons for Adopting Current System
The Company has no dedicated staff to assist the Audit and Supervisory Committee Members in their duties, however, it isconfirmed the current system is properly functioning for the reason that the Internal Directors who are Audit and Supervisory
Committee Members work together with the Internal Audit Office to implement audits and supervision.

12

Cooperation among the Supervisory Committee, Accounting Auditors and Internal Audit Department
The Audit and Supervisory Committee and the Accounting Auditor are dedicated to improving the effectiveness andefficiency of audit by exchanging information and views. Specifically, the Audit and Supervisory Committee and the
Accounting Auditor hold a regular meeting once a quarter to exchange views on future issues and discuss if there may be any
problems with the audit. There is also a system whereby meetings are to be held whenever necessary.
The Company has an Internal Audit Office and has established a system for auditing the Company and each group company.
Further, the Company regularly reports the results of internal audits to the Audit and Supervisory Committee and closelycooperates with them. The Internal Audit Office and the Accounting Auditor are dedicated to improving the effectiveness andefficiency of audits by exchanging information and views.

Voluntary Established Committee(s)Voluntary Establishment of Committee(s) equivalent toNomination Committee or Remuneration Committee

Established

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

Nomination andVoluntarily
Established
Committee
Equivalent toRemuneration
Committee

Nomination andRemuneration
AdvisoryAll
Members

Full-timeMembers

InsideDirectors

OutsideDirectors

OutsideExperts

Other

Chairperson

3

0

1

2

0

0

Outside Director

3

0

1

2

0

0

Outside Director

Committee

Remuneration
Advisory
Committee

Supplementary Explanation
The Nomination and Remuneration Advisory Committee has been established as a voluntary advisory committee to theBoard of Directors to promote stability of the corporate governance, which consists of three (3) or more Directors and the
majority of whom are Independent Outside Directors to establish independence and objectivity of functions of the Board of
Directors regarding the nomination and remuneration of Directors. The committee has been composed of three (3) members,
Kaoru Hayashi who is the President Executive Officer, Junji Inoue who is Independent Outside Director, and Koji Makino
who is Independent Outside Director. It deliberates and advises on the matters related to the appointment of Directors andremuneration of Directors except for the Directors who are Audit and Supervisory Committee Members upon the consultationof the President Executive Officer.
The chairperson is appointed from among the members who are Independent Outside Directors by resolution of thecommittee.

13Matters Concerning Independent Directors
Number of Independent Directors

6

Other Matters Concerning Independent Directors
The Company designates all Outside Directors as Independent Directors, who satisfy the qualifications for independent
directors.

Incentives
Implementation Status of Measures related toIncentives Granted to Directors

Stock Option System and relevant systems have been introduced or
implemented.

Supplementary Explanation for Applicable Items
With regard to remuneration for Directors of the Company excluding the Directors who are Audit and Supervisory
Committee Members and Outside Directors, it was approved at the 21st Ordinary General Meeting of Shareholders held on
September 29, 2016, to allocate stock acquisition rights as stock-based compensation stock options up to 250 million yen peryear and up to a total of 100,000 stock acquisition rights to be issued. It is intended to encourage their motivation to contributeto improving the medium-to long-term business performance and corporate value through increasing the link between the
Directors' remuneration and the Company's share price and to share with shareholders not only the benefits of rising stock
prices but also the risks of falling stock prices.
Along with awarding incentives to the Directors for the purpose of sustainably increasing the Company’s corporate value
and promoting shared value between the Directors and shareholders, it was also approved to provide Restricted Stock
Compensation of up to 100 million yen as the substantial annual amount for one (1) Fiscal Year to the Directors and up to a
total of 40,000 shares to be issued.

Persons Eligible for Stock Options

Internal Directors, and employees of the Company, Directors, Executive
Officers, and employees of the Company’s subsidiaries

Supplementary Explanation for Applicable Items
The reason why the Company’s Directors excluding the Directors who are Audit and Supervisory Committee Members andOutside Directors are eligible for Stock Options is to encourage motivation of the Company Directors to make contributions
to improve business performance and enhance the corporate value in the medium-to long-term by increasing the link between
the Company Directors’ remuneration and the Company’s share price, and sharing with shareholders not only the benefits ofhigher share prices but also the risks associated with lower share prices.
Besides, the reason why the Corporate Officers and employees of the Company, as well as the Directors, Executive Officers
and employees of the Company’s subsidiaries are eligible for Stock Options is to encourage their motivation to makecontributions to improve business performance and enhance the corporate value of the Company Group in the medium-to longterm by linking between the Company’s business performance and their benefits received.

14

Director Remuneration
Status of Disclosure of Individual Director’s
Remuneration

Disclosure for Selected Directors

Supplementary Explanation for Applicable Items
Remuneration of Directors (Fiscal Year ended March 2024):
Total amount of remuneration for Executives is 782 million yen, as of the end of Fiscal Year ended March 2024.
-

Of the total amount, remuneration of Directors excluding the Directors who are Audit and Supervisory Committee
Members and Outside Directors is 683 million yen to which six (6) Directors are applicable.

-

Of the total amount, remuneration of Directors who are Audit and Supervisory Committee Members excluding
Outside Directors is 39 million yen to which one (1) Director is applicable.

-

Of the total amount, remuneration of Outside Directors is 61 million yen to which six (6) Directors are applicable.

There are six (6) Directors excluding the Directors who are Audit and Supervisory Committee Members and Outside
Directors, one (1) Director who is Audit and Supervisory Committee Member excluding Outside Directors, and six (6) Outside
Directors.
The Directors whose total consolidated remuneration and other remuneration is 100 million yen or more have been disclosed
individually in the 29th Annual Securities Report.

Policy on Determining Remuneration Amounts andCalculation Methods

Established

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods
At the 21st Ordinary General Meeting of Shareholders held on September 29, 2016, the following items were approved: (i)the amount of remuneration for Directors (excluding members of the Audit and Supervisory Committee) is limited to 500
million yen per year (less than 50 million yen for Outside Directors; excluding salaries as employees); (ii) in addition to (i),the amount of monetary compensation claims for stock acquisition rights granted to Directors (excluding Directors who aremembers of the Audit and Supervisory Committee and Outside Directors) as stock compensation-type stock options is limited
to 250 million yen per year; and (iii) the amount of monetary compensation provided for the grant of restricted stock is limited
to 100 million yen per fiscal year in effect.
At the 21st Ordinary General Meeting of Shareholders held on September 29, 2016, the amount of remuneration for
Directors (members of the Audit and Supervisory Committee) was approved to be limited to 100 million yen per year.
The Company's Board of Directors decides the policy for determining the details of the remuneration of individual Directors(excluding Directors who are members of the Audit and Supervisory Committee). The Board of Directors decides the policythat is formulated based on the Company's past practices regarding remuneration for Directors. The amount and details of the
remuneration of the Directors who are members of the Audit and Supervisory Committee are determined in consultation among
the members of the Audit and Supervisory Committee within the limits of the total amount approved at the General Meetingof Shareholders.
The following is a summary of the policy for determining the details of individual Director compensation.
i. Important Matters in Determining the Details of Individual Director Remuneration
The Company's basic policy regarding the remuneration of individual Directors is to link the remuneration to the Company's

15

share price to share the benefits and risks associated with the ups and downs of the share price with its shareholders. The
Company sets the ratio of stock-based compensation at a high level in order to increase Directors' motivation to improve theCompany's performance and corporate value in the short, medium, and long term.
ii. Matters Concerning Determination of Remuneration for Individual Directors
A.

Base Remuneration (Remuneration excluding Performance-Linked Remuneration and Non-Monetary Remuneration)
The Company has the following policy for determining remuneration excluding performance-linked and non-monetary
remuneration, etc. ("Base Remuneration").
a.

The total amount of Base Remuneration shall be decided at the General Meeting of Shareholders and shall be
determined within the scope of the resolution.

b.

Directors receive monetary base remuneration, and the amount of such remuneration shall be determined within
the scope that is decided based on the grade of office and the amount and composition of remuneration for each
grade of Directors.

B.

Performance-linked Remuneration, etc.
The Company does not grant performance-linked remuneration, etc.

C.

Non-monetary Compensation, etc.
The Company has the following policy for determining non-monetary remuneration, etc. ("Stock-based
Remuneration")a.

Stock-based Remuneration consists of a monetary claim equal to the amount paid for stock options (stockacquisition rights) with an exercise price of 1 yen per share ("SO") and a monetary claim equal to the amount paid
for the restricted stock ("RS"). The Directors offsets said monetary claims against the paid-in amounts of the stockacquisition rights or the restricted stock to acquire the stock acquisition rights or the restricted stock. The
respective total amounts of SO and RS are determined by resolution of the General Meeting of Shareholders, andthe actual amounts and composition of the remuneration are determined within the framework established by the
Board of Directors for each class and level of Directors.

b.

The amount of individual SO compensation shall be calculated by multiplying the fair value per stock acquisitionright that is calculated based on various conditions, including the stock price and exercise price on the allotment
date, by the total number of stock acquisition rights allotted.

c.

The amount of individual RS compensation shall be based on the closing price of the Company's common stockon the Tokyo Stock Exchange on the business day immediately preceding the date that the Board of Directors
resolves to grant RS (or, if no trading is conducted on that date, the closing price on the immediately precedingbusiness day). It will be calculated by multiplying the paid-in amount per share determined by the Board of
Directors by the number of RS shares to be allotted, to the extent that the amount is not particularly favorable to
the Directors who will receive the RS.

d.

RS shall be subject to a restriction on transfer for a period determined by the Board of Directors between one (1)year and five (5) years, and Directors shall not transfer, grant a security interest in, or otherwise dispose of RS
during such restricted transfer period.

16

iii. Determination Policy of the Ratio of Base Remuneration, Performance-linked Remuneration, Non-monetary Remuneration,etc.
A.

Directors excluding Outside Directors
These Directors receive approximately 60% of their total compensation as base compensation and 40% as share-based
compensation (of which SO 30% and RS 10%).

B.

Outside Directors
These Directors receive the Base Remuneration only.

iv. Policy for Determining the Timing or Terms of Granting Remuneration, etc.
A.

Base Remuneration
At the Board of Directors meeting immediately following the approval of the appointment of Directors by the ordinary
General Meeting of Shareholders, the amount of remuneration for individual Directors is resolved, and the Directors
receive a monthly remuneration starting from the month following their appointment or reappointment in 12 equalmonthly installments.

B.

Stock Compensation
At the Board of Directors' meeting immediately following the approval of the appointment of Directors at the Ordinary
General Meeting of Shareholders, the amount and number of grants for individual Directors are decided as part of the
Directors' compensation proposal.

v. In Cases where the Determination of the Details of Individual Remuneration is Delegated to a Third Party (including
reappointment to Representative Director)
A.

Name / Position / Responsibility of the person to be delegated: President Executive Officer and Group CEO

B.

Details of delegated authority: The President Executive Officer prepares remuneration plans for individual Directors
within the total amount decided by the General Meeting of Shareholders and submits them to the Nomination andRemuneration Advisory Committee to obtain their feedback. On this basis, the President Executive Officer makes thedecision, if the Board resolves to delegate the decision to the President Executive Officer.

C.

Details of the measures (if taken) to ensure that the authority is properly exercised by the assignee.
a.

President Executive Officer shall draft a proposal of remuneration for each individual, within the limits of thetotal remuneration resolved at the General Meeting of Shareholders, and submit it to the Nomination and
Renumeration Advisory Committee to obtain their answer.

b.

The Nomination and Remuneration Advisory Committee shall consist of at least three (3) members, and the
majority shall be Independent Outside Directors. The chairperson of the committee shall be appointed by aresolution of the committee from among its members who are Independent Outside Directors.

vi. Method of Determining the Details of Remuneration of Individual Directors
The President Executive Officer proposes remuneration plans for individual Directors that are within the total amountapproved at the General Meeting of Shareholders, using available objective data from outside the Company and considering
their performance in the current Fiscal Year. The President Executive Officer then submits these proposals to the Nomination
and Renumeration Advisory Committee to decide the details of the compensation.

17

Support System for Outside Directors
The Company’s Corporate Division provides support to Outside Directors, including notice of Board meetings, confirmationof attendance, and distribution and signing of meeting minutes. If there are agenda items that require a resolution or report at
the Board of Directors meeting, the Outside Directors receive briefings on the agenda in advance, so that they can exchange
views and make decisions at the meeting. When the Company needs to report or consult with the Outside Directors on othermatters, the Company generally meets with them in person; otherwise, the Company reports or consults with them individuallyby e-mail or telephone.

2. Matters Concerning Functions of Business Execution, Auditing and Supervision, Nomination, andRemuneration Decisions (Overview of Current Corporate Governance System)
The Company has chosen to adopt a company structure with an Audit and Supervisory Committee under the Companies
Act. The Board of Directors makes important management decisions and supervises the execution of duties by Directors, while
the Audit and Supervisory Committee audits the performance of the Directors. Additionally, to facilitate swift decision-making
in business operations, the Management Committee, composed of full-time Directors and Corporate Officers, holds regularmeetings.
The following is an overview of the Company's management decision-making, execution and supervision.
- Board of Directors
The Company's Board of Directors consists of nine (9) directors (excluding Directors who are Audit and Supervisory
Committee Members), three (3) of whom are Outside Directors, and four (4) Directors who are Audit and Supervisory
Committee Members (including three (3) Outside Directors). In addition to the regular monthly meetings, extraordinary
meetings of the Board of Directors are convened as necessary to make important management decisions and supervise theexecution of Directors' duties. The Outside Directors, leveraging their extensive management experience and broad-based
insights, serve the function of monitoring management from an objective standpoint.
- Audit and Supervisory Committee
The Company's Audit and Supervisory Committee consists of four (4) Directors, including three (3) Outside Directors.
The committee, in principle, meets once a month after the regular Board of Directors meeting and attends important
meetings, including the Board of Directors, to express its opinions, thereby striving to enhance the effectiveness of corporate
governance.
- Management Committee
The Management Committee, which includes the President Executive Officer, Directors and Corporate Officers
appointed by the President Executive Officer, meets weekly. These meetings aim to confirm day-to-day business operations
and accelerate decision-making processes, seeking to improve the Company's corporate value.
- Accounting Auditors
The Company has entered into an audit contract with Ernst & Young ShinNihon LLC and has been audited in accordancewith the Financial Instruments and Exchange Law and the Companies Act, and appropriate audits have been conducted asnecessary. 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

18- Nomination and Remuneration Advisory Committee
To strengthen the independence and objectivity of the Board of Directors' functions in relation to the nomination andremuneration of Directors, and to further enhance corporate governance, the Company has established the Nomination andRemuneration Advisory Committee. This voluntary advisory committee consists of at least three (3) Directors, with amajority being Independent Outside Directors. The current members are Representative Director, Kaoru Hayashi,
Independent Outside Director, Junji Inoue, and Independent Outside Director, Koji Makino. The Committee deliberates
and submits its report on the appointment of Directors and the compensation of Directors (excluding Audit and Supervisory
Committee Members) in consultation with the 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 theCompany’s Non-executive Directors for limited liability stipulated in paragraph 1, Article 423. Limit of liability fordamages 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
Directors, Auditors, Corporate Officers, etc. of the Company and its consolidated subsidiaries

ii. Outline of the contents of the insurance contract
The insurance policy covers legal damages and litigation costs incurred by the insured. However, to ensure that theinsured's duties are not compromised, the policy does not cover claims for damages arising from the illegal provisionof personal benefits, claims for damages arising from the insured's criminal acts, or claims for damages from actions
that the insured knew were in violation of laws and regulations. The premiums are fully borne by the Company, resulting
in no substantial premium burden on the insured.

3. Reasons for Adoption of 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 Company has chosen to
establish a company with an Audit and Supervisory Committee. By ensuring that at least one-third of the Board of Directors
are Outside Directors, thereby the Company aims to further strengthen corporate governance. In addition, the Company has
been reviewing the Corporate Officer system to clarify the separation of management decision-making and supervisory
functions from business execution functions and promoting the delegation of business execution authority in order to speed
up and improve the efficiency of business execution.

19

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize General Meeting of Shareholders and Facilitate Exercise of Voting Rights
Supplementary Explanation
The convocation notice of the 29th Ordinary General Meeting of
Early Posting of Notice of the General Meeting

Shareholders was sent out 21 days prior to the date of the General Meeting ofof Shareholders

Shareholders, and was also disclosed 23 days prior to such date on thewebsites of the Tokyo Stock Exchange, the Company, and other sites.

Scheduling of the General Meeting of
Shareholders on a Non-Peak Day

Electronic Exercise of Voting Rights
Participation in a Platform for the Electronic
Exercise of Voting Rights and Other Initiatives
to Enhance Environment for Institutional
Investors to Exercise Voting Rights

The 29th Ordinary General Meeting of Shareholders was held on June 21,2024, as a day set for avoiding the so-called peak days for shareholders'meetings.
A system for shareholders to exercise their voting rights by electromagnetic
means has been introduced for their greater convenience.
The Company has been participating in the electronic voting platform,
considering the improvement of the environment for institutional investors inJapan and abroad in exercising their voting rights.

Provision of Notice (or Summary of Notice) of

An English version of the convocation notice is produced and disclosed on

the General Meeting of Shareholders in English

the websites of the Tokyo Stock Exchange, the Company, and other sites.

]

2. Status of IR-related Activities
Explanation by aRepresentative
Supplementary Explanation

Director or a
Representative
Executive Officer

Formulation and Publication of Disclosure
Policies

The Company has defined Disclosure Policy anddisclosed it on the website athttps://ir.garage.co.jp/en/disclosurepolicy/.
The Company holds financial results briefings in thesecond and fourth quarters, with its contents including
financial reports presented by the Representative

Regular Investor Briefings held for Analysts

Director and presentations related to future Businessand Institutional Investors

Strategies for analysts and institutional investors.

Held

Investor Relations meetings for domestic and overseas
institutional investors are held four times a year after theannouncement of each quarterly financial results.
Regular Investor Briefings held for Overseas
Investors

The Company has explained the Business Strategy,
performance and other matters, attending conferences foroverseas investors.

20

Held

Timely disclosure materials are posted on the Company's
website immediately after disclosure, and a library ofpreviously disclosed materials is available on theInvestor Relations page of the website.
Online Disclosure of IR Information

In addition, the Company holds financial results briefings
for analysts and institutional investors in the second andfourthquarteranddiscloses

thematerialsofpresentations to the Timely Disclosure Service and on thewebsite.
The
Establishment of Department and/or Placementof a Manager in Charge of IR

Company’s

Corporate

Divisioncontainsadepartment in charge of Investor Relations with threestaff members in charge of Investor Relations, andDirector in charge of the Division is the Director in
charge of Investor Relations.

3. Status of Measures to Ensure Due Respect for Stakeholders
Supplementary Explanation
Formulation of Policies, etc. on Provision ofInformation to Stakeholders

The Company endeavors to promptly provide all of its stakeholders,
including shareholders and investors with information on the basis oftransparency, fairness and continuity.
The Company’s basic policy is to disclose information in accordance withthe timely disclosure rules in accordance with the Financial Instruments andExchange Law and Tokyo Stock Exchange.
The Company discloses information as proactively as possible in a timely
manner which is deemed to be beneficial to its shareholders’ and investors’
understanding of the Company, even the information is not required by theabove rules on timely disclosure.
Further, the Company has launched its corporate website in English andproduced English versions of the convocation notice of the General Meetingof Shareholders, financial results briefing materials, and important press
releases to enhance the disclosure of information in English.

21

IV. Matters Concerning the Internal Control System
1. Basic Views on Internal Control System and Status of Development
As for the Company's internal control system, the Board of Directors has passed a resolution on the basic policy forestablishing 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 (Behavioral Philosophy)” are the basic policies for all officers (Directors,
Corporate Auditors or their equivalents) and employees (employees, fixed-term employee, contract workers, temporary
workers and others 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 common sense and norms- INTEGRITY Be honest and morally upright- AGILITY

Be agile- COURAGE

Be brave

Based on these “Principle” and ”Credo,” the Company has established a system to ensure that all officers andemployees of the Company Group comply with laws and regulations and make appropriate decisions and take appropriate
actions with high ethical standards.
B.

Basic Policy on Internal Control
In compliance 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 the appropriateness of its operations(hereinafter referred to as "internal control") as follows.
(1) Systems to Ensure that the Execution of Duties by the Company’s Directors and Employees (hereinafter referred toas "the Company’s Directors and Employees") and the Company’s subsidiaries Directors, etc. (hereinafter referredto " the Company’s subsidiaries’ Directors, etc." as defined in Article 110-4, Paragraph 2, Item 5 (a) of the Ordinancefor Enforcement of the Companies Act) and employees comply with laws and regulations and the Articles ofIncorporation
Directors and employees of the Company, as well as directors and employees of the Company's subsidiaries are
required to act with integrity based on the ethics and values expected of them as members of society. Based on thisrecognition, the Company has established the Compliance Program as a specific code of conduct to be applied to its
directors and employees of the Company, as well as directors and employees of the Company's subsidiaries, to ensure
fair and appropriate management and harmony with civil society through strict 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 division of theCompany and the Company's subsidiaries are classified according to business segment and other categories("Business Segments"), and the General Manager of the Corporate Division oversees the compliance efforts of each22

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, as
well as Directors and employees of the Company's subsidiaries.
The Company's Board of Directors oversees each business unit and operating company within the Company Groupby business segment, and the Corporate Division audits or monitors the compliance status of each business divisionand subsidiary. The activities are regularly reported to the Board of Directors and the Audit and Supervisory
Committee.
The Company has established a system that allows employees of group companies to directly report to theCompliance Committee Secretariat or an external law firm regarding actions that may be in violation of laws, inaddition to legally mandated matters, and issues that significantly impact the Company or its compliance status. Thissystem ensures the confidentiality and protection of the reporting party and that there are no adverse consequences
for them. The Compliance Committee reports the information received to the President Executive Officer, and the
Directors who are members of the Audit and Supervisory Committee promptly.
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 the Company's
Directors
The Directors of the Company shall properly record, store and manage information relating to the execution ofduties by the Directors of the Company in documents or electromagnetic media (hereinafter referred to as"Documents and Others") in accordance with the Document Management Regulations and other internal regulations.
The responsible manager ensures that Directors (including Directors who are Audit Committee Members) can view
these documents, etc., as necessary.
(3) Rules and Other Systems to Manage the Risk of Loss for the Company and its Subsidiaries
The Corporate Division of the Company prepares rules and guidelines risks related to compliance, information
security, disasters, and other areas for Directors and employees of the Company, as well as Directors and employeesof the Company's subsidiaries. In addition, the Corporate Division prepares and distributes manuals, conducting
trainings to ensure these rules and guidelines function effectively, monitors risk situations, and manages theirimplementation. For newly emerging risks, the Board of Directors promptly appoints a responsible Director or
Corporate Officer.
(4) Systems to Ensure the Efficient Execution of Duties by the Directors of the Company and the Directors, etc. of theCompany's Subsidiaries
The Board of Directors of the Company shall establish objectives that shall be shared by all Directors andemployees of the Company Group. The Director or Corporate Officer in charge of each business segment shall set
specific objectives in cooperation with the head of each business segment and the Directors of the Company's
subsidiaries in each business segment, and each business segment and the Company's subsidiaries shall determine
efficient methods for achieving such objectives. The Board of Directors of the Company shall regularly 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 each business unit, as well as encourage improvements as necessary to realize an
efficient system for the Company Group's operations.
(5) System to Ensure the Appropriateness of the Business Operations of the Corporate Group Consisting of the Company
and its Subsidiaries

23

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 responsible Directors or Corporate
Officers ensure the efficiency of operations, compliance systems, and risk management systems for each businessdivision and subsidiary at the Board of Directors or management meetings and monitor their appropriateness. The
Corporate Division shall promote these systems across the Company Group and review and manage their progress
regularly. While respecting the autonomy of the management of each company in the Company Group, the Company
shall receive regular reports on its business activities.
(6) Matters Related to Directors and Employees Assisting the Audit and Supervisory Committee, the Independence from
Directors (Excluding Directors who are Audit and Supervisory Committee Members) and Ensuring the Effectivenessof Instructions
The Audit and Supervisory Committee can issue necessary orders to employees of the Internal Audit Office.
Employees receiving these orders will not concurrently serve in other departments and will comply solely with the
Audit and Supervisory Committee's directives, without receiving orders from other Directors (excluding Directors
who are Audit Committee Members). If necessary, staff may be assigned to assist the Audit and Supervisory
Committee, and personnel decisions will involve discussions between the Directors (excluding Directors who are
Audit Committee Members) and the Audit and Supervisory Committee.
(7) Systems that Parties (defined below) Report to the Company's Audit and Supervisory Committee and its
Accompanying Structure to Ensure that Any Persons who Reported will not Suffer Disadvantage(“Parties” includes (a) the Company’s Directors (excluding Directors who are Audit and Supervisory Committee
Members), Accounting Advisors and employees, and (b) the Company's subsidiaries’ Directors, Accounting
Advisors, Corporate Auditors, Corporate Officers, Officers in charge of its business, persons who is to perform theduties as defined in Article 598-1 of the Companies Act or other persons equivalent thereto, and any persons who
receive reports from them (the "Applicable Subsidiaries’ Officers")i.

The Company establishes a system where the Company’s Directors (excluding the Directors who are Audit andSupervisory Committee Members), Accounting Advisors, employees, and the Applicable Subsidiaries’ Officers
promptly report to the Audit and Supervisory Committee on significant matters affecting the company and theCompany Group, as well as compliance status, in addition to legally mandated matters. The method of reporting(reporter, recipient, timing, etc.) is decided through consultations between the Directors (excluding the Directors
who are Audit Committee Members) and the Audit and Supervisory Committee.

ii. The Company shall ensure to maintain the structure that individuals who report to the Audit and Supervisory
Committee will not suffer any disadvantage due to their reporting, and thoroughly communicate this structure
to all Directors and employees within the Company Group.
(8) Other Systems to Ensure Effective Auditing by the Audit and Supervisory Committee
The Company's Audit and Supervisory Committee and the Company's Directors (excluding Directors who are
Audit and Supervisory Committee Members) shall set up regular 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 is committed to developing and maintaining an internal control system to ensure the reliability of
the financial reporting of the Company and the Company Group.

24

(10) Policy on Advance Payment or Reimbursement of Expenses Arising from the Execution of Duties by the Audit andSupervisory Committeei.

When the Audit and Supervisory Committee requests the advance payment of expenses or other costs related tothe execution of its duties under Article 399-2, Paragraph 4 of the Companies Act, the Company promptly
processes the expenses or payment liabilities unless deemed unnecessary for the 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, the Company shall bear the costof such advisors, unless deemed unnecessary for the Audit and Supervisory Committee's duties.
Under this system, the Company strives to ensure the legality and risk management of its operations, while constantly
reviewing and improving its internal control system to adapt to changes in social and economic conditions and otherenvironments.

2. Basic Views on Measures for Eliminating Anti-Social Forces and Status of Development
Based on the Compliance Program, the Company Group's basic policy is to have no relationships with antisocial forces andto firmly reject any unreasonable demands from antisocial forces.
The Corporate Division acts as the central department for dealing with antisocial forces and, in preparation for unjust
demands, maintains close cooperation with external specialized agencies such as the police and lawyers.
Further, the Company has appointed persons responsible for preventing undue claims, who collect information on antisocial forces and participate in relevant seminars.

25

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

Not Adopted

Supplementary Explanation for Applicable Items
Basic Policy on Control of the Corporation(1) Basic Policy on Control of the Company
As a public company, the Company believes that the shareholders are formed by free market trading. Even if a large
buyer attempts to acquire a large volume of the Company's shares, it is up to the shareholders to decide whether to accept
the offer and sell their shares. The Company does not reject the involvement of a large buyer in management if suchactivity contributes to improving the corporate value of the Company and the common interest of its shareholders.
However, there have been some cases that are inappropriate, such as a large buyer conducting a large volume purchasewithout sufficient consultation or agreement process with the target company. These cases include inadequate disclosureof information to shareholders about the purpose of the acquisition and subsequent management policies, etc., and failure
to provide sufficient time for the Board of Directors of the target company to consider the details of the large acquisitionand offer an alternative.
The Company believes that the person who controls decisions on the Company's financial and business policies must
understand the Company's purpose (raison d'etre), contribute to society by smooth relationships with various stakeholders,maximize the corporate value, and ensure the common interests of its shareholders. Therefore, the Company does notbelieve that a large purchaser who unintentionally undermines the value of the Company and creates disadvantages forshareholders is an appropriate person to control decisions on the Company's financial and business policies.
(2) Initiatives to realize the Basic Policy on Control of the Company
The Company Group aims to expand its business and improve profitability, and proactively develop businesses thatwill drive future earnings. The Company is implementing the following measures to improve corporate value and thecommon interests of shareholders and ensure that a large number of investors continue to hold the Company's shares fora long period.
a.

Basic Management Policy
The Company Group's purpose is "Designing ‘New Context’ for a sustainable society with technology." And theCompany’s basic business concept is to be a "context company" that organically links companies, people, andinformation. The Company's goal is to develop "new contexts" that organically link different types of complex
information, using its solution expertise with a track record since the early days of the Internet industry and cuttingedge network technology to enhance the value of a company, its people and its information. The Company’s basic
management policy is to always look several steps ahead of the times, calmly and accurately select the target context,
and develop services that can contribute to a comfortable society where people, the environment, and the digital
information society can harmonize.

b.

Initiatives to Enhance Corporate Value over the Medium- to Long-Term
The Company's mission and values are to "Integrating Technology×ESG×Incubation with the First Penguin Spirit,
the Company continues to create sustainable “business context” from an earth-centric perspective". The Company
believes that creating new contexts at the interface between real space and cyberspace (virtual space), based on
cutting-edge Internet technology, forward-looking marketing technology, and highly reliable financial technology,
will enhance the corporate value and the common interests of the shareholders.

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c.

Prevention measures not to be controlled by inappropriate persons in making decisions on the financial and business
policies of the Company
If a major buyer attempts to acquire the Company's shares, the Company will take appropriate measures to protect
the corporate value and the common interests of shareholders to the extent permitted by the Financial Instruments
and Exchange Act, the Companies Act, other relevant laws and regulations and the Company's Articles ofIncorporation, while proactively collecting information and disclosing it in a timely and appropriate manner.

(3) The Board of Directors' judgment on the above initiatives
All initiatives are designed to enhance the Company's corporate value and the common interests of its shareholders,
not to preserve the status of the Company's Directors and officers, and are consistent with the basic policy described in(1) above of this Section.

2. Other Matters Concerning the Corporate Governance System
N.A.

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Corporate Governance Framework

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

GlobalRepresentative
Director

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○

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Keizo
Odori

Director○○○

Masahito
Okuma

Director

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○

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JoichiIto

Director

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○

○

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Hiroshi
Shino

Director○

Hiromi
Ozaki

Independent
Outside Director

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Mitsushi
NishidaOutside Director○

Hironobu
Moriyama

Independent
Outside Director

MasakoIkeda

Independent
Outside Director

YasuyukiRokuyata

Director(Audit andSupervisory
Committee
Chairperson)

Junji
Inoue

Independent
Outside Director(Audit andSupervisory
Committee
Member)Koji
MakinoIndependent
Outside Director(Audit andSupervisory
Committee
Member)Shuma
UchinoIndependent
Outside Director(Audit andSupervisory
Committee
Member)

Kaoru
Hayashi

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○

○
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○

○

○

Legal &
ComplianceHR,
Organization& Diversity

Business
Management

Position

Finance &Accounting

Governance& RiskManagement

Business
Development

Name

○

○
○

○

○

○

○

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

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Overview of Timely Information Disclosure30