Corporate Governance Report
March 28, 2024
MEDLEY, INC.
Kohei Takiguchi
President and Chief Executive Officer
Contact: Sho Imanaka
Senior Executive Officer and Head of Legal & Compliance
Attorney at Law
TEL: +813-6386-9387
URL: https://www.medley.jp/en/ir/

The corporate governance of MEDLEY, INC. is described below.

I. Basic Views on Corporate Governance, Capital Structure, Corporate Attributes, andOther Basic Information
1. Basic Views
With its mission of “Creating the future of medical healthcare”, MEDLEY, INC. (the “Company”
or “We”) and its affiliates (collectively, the “Group”) develop and provide various Internet services
in the medical healthcare field.
The Group recognizes that strengthening and enhancing corporate governance is an importantmanagement issue in order to improve corporate value over the medium to long term. In order toimprove fairness and transparency of management decision making as the basis of corporate
governance, the Group considers it indispensable to further enhance the supervisory function of
directors and to further strengthen the system for prompt and appropriate information disclosure
under the precondition of maintaining and improving efficiency in execution of business, and weare currently working to build an internal system for this purpose.
As part of these efforts, the Group is continuing to review its organizational structure in line withbusiness expansion, clarify the responsibilities of every part of its organization, and monitor
efficiency in execution of business. In the future, while developing sincere corporate activities that
harmonize corporate profits with social responsibility, we will strive to enhance corporate
governance with the aim of realizing management that contributes to the profits of shareholders
and all the other stakeholders and improving corporate value.
Reasons for Non-compliance with the Principles of the Corporate Governance CodeSupplementary Principle 2-4-1: Voluntary and quantifiable targets to ensure diversity.
The Group has created list of core principles called “Our Essentials” in order to achieve our
mission of “creating the future of medical healthcare” and we use these as decision making
criteria in a variety of situations including when making hiring decisions, and when evaluating
job performance. It is the policy of the Group to hire, evaluate, and promote personnel who
embody Our Essentials without regard to gender, nationality, or disability and we proactively
promote mid-career hires to management positions. We do not set numerical targets for each
attribute, but we disclose the gender ratios, etc. among senior management, managers, and all
employees on our website. Going forward, we view setting numerical targets for each attribute as
an issue to be considered.

••

Our Essentials: https://www.medley.jp/team/culture.html
Data on our organization and employees: https://www.medley.jp/sustainability/esg.html

Supplementary Principle 3-1-3: Disclosure based on the framework established by the TCFD or its
equivalent
The Group develops and provides Internet services in the field of medical healthcare and, as wecurrently do not expect climate change issues to have a material impact on our business, we do
not conduct disclosure based on the framework established by the TCFD (Task Force on Climaterelated Financial Disclosures). However, the Group considers addressing climate change issues tobe an important initiative for ensuring stable economic development and securing the foundationsof human life, and is taking steps to do so, including implementing far-reaching energy
conservation measures and document digitization.
Disclosure based on the principles of the Corporate Governance CodePrinciple 1.4 : Strategic Shareholdings
The Group has no strategic shareholdings. If, in the future, it is considered that the creation andstrengthening of long-term stable relationships with other companies will contribute to the mediumto long-term growth of the Group’s corporate value, and that the holding of strategic shareholdings isnecessary and appropriate, such strategic shareholdings will be considered and their appropriatenesswill be determined in advance by the Board of Directors.
Principle 1.7 : Related Party Transactions
In the event that the Group conducts related party transactions, careful consideration is given towhether said transactions harm the soundness of the Group’s management, whether saidtransactions are valid, and whether said transactions are appropriate relative to other outsidetransactions. These transactions are then carried out after making reasonable judgements inaccordance with the provisions of Related Party Transaction Regulations and Delegation Rules on
Administrative Authorities. Details regarding related party transactions are disclosed appropriately
in securities reports and other documents in accordance with the provisions of applicable laws andregulations.
Supplementary Principle 2-4-1: Ensuring diversity in appointment of core personnel, etc.
The Group respects all types of diversity and considers understanding individual values andidentities to be important to improving corporate value.
For this reason, the Group strives to accept diverse personnel and workstyles, recognize individual
values independent of attributes or constraints on labor, build human relationships based on trust,and provide an environment where information can be obtained. Specifically, the Group is making
the following efforts.
•
Promotion of hiring and retention of diverse personnel− Establishment of systems available to employees regardless of gender, such as childcare
leave, shortened working hours for childcare, child caregiving leave, and exemptions fromovertime− Establishment of systems enabling employees to continue work while caring for family
members, such as caregiving leave and exemptions from overtime− Support based on individual circumstances so that people with disabilities can perform
work comfortably− Strengthening of hiring of personnel with diverse nationalities•
Promotion of activities of diverse personnel− Creation of an organizational culture enabling individuals to make use of their strengths
regardless of life stages or backgrounds, and development and promotion of employees in/to
management positions− Establishment of training and development content that anyone can view and learn from

Against the background of these efforts, the percentage of employees of the Group who are women is
70.1%, the percentage of employees in management positions who are women is 42.5%, thepercentage of employees who take childcare leave is 77.6% (men: 42.1%, women: 90.9%), and thepercentage of employees who return from childcare leave is 100%. Please see our website for details.
•

Data on our organization and employees: https://www.medley.jp/sustainability/esg.html

Principle 2.6 : Roles of Corporate Pension Funds as Asset Owners
The Group has not established a corporate pension system.
Principle 3.1 : Full Disclosure(i) Business principles, business strategies and business plan
Based on its mission of “Creating the future of medical healthcare”, the Group develops and provides
various Internet services in the medical healthcare field.
The Group business strategy is maximization of long-term free cash flow and believes it is in a
growth phase for net sales and gross profit from sales, which it views as its main sources for longterm free cash flow. The Group has established a new medium-term target of EBITDA ¥20 billionand ¥100 billion in net sales in fiscal year ending December 2029 and aims to reach this goal earlier
by making aggressive investments. Our basic policy is to analyze net sales using the formula:
Number of customer facilities × Average Revenue Per User (ARPU; average sales per the Group’s
customer facility). We therefore strive to continuously improve both of these numbers. Specifically, in
addition to making continuous efforts to acquire new customers, we aggressively invest in increasing
the frequency of service usage by the Group’s customers and strengthening our product lineup.
(ii) Basic views and guidelines on corporate governance based on the principles of the Corporate
Governance Code
Basic views and guidelines on corporate governance are included in the section of this report titled “I.
1. Basic Views”.
(iii) Policies and procedures in determining the compensation for the senior management anddirectors
Compensation for directors is discussed below in “Policy on Determining Remuneration Amounts andCalculation Methods” under the section of this report titled “Director Remuneration”.
(iv) Policies and procedures in election and dismissal of senior management and nomination ofcandidates for directors and corporate auditors by the Board of Directors
Depending on the Group’s corporate phase and business environment, candidates able to increase thecorporate value of the Group by following proper corporate governance are appointed and nominatedwith consideration given to work history regardless of whether they are from inside or outside theCompany and without regard to gender or nationality. For directors and executive officers, decisions
are made by the Board of Directors after the Nominating and Compensation Advisory Committee, of
which Independent External Directors comprise a majority, deliberates and provides advice on
nominations. With respect to the attributes and requirements necessary for becoming our CEO,appointment procedures, and dismissal standards and procedures, while it is not an urgent issue
given the age, etc. of the CEO, we have long believed these to be important issues to be addressed
and therefore the following policy has been adopted, after discussion at the Nominating andCompensation Advisory Committee for the fiscal year ended December 2023. In future, we willdevelop CEO requirements tailored to the company's phase and design a full-fledged successor
development plan.
[CEO appointment procedure]
The procedure for appointing a new CEO if the person eligible for the succession plan has thequalities and requirements necessary for a CEO, or if a candidate with the qualities andrequirements which will be defined in future is brought in from outside the company, will be to havethe Nominating and Compensation Advisory Committee deliberate on whether the candidate issuitable as the new CEO, and if the candidate is deemed suitable, it will make a report to the Boardof Directors, which will make a resolution to appoint the candidate.
[Standards and procedures for CEO dismissal]
The basic approach regarding CEO dismissal is that, rather than setting specific requirements for
dismissal, the Nominating and Compensation Advisory Committee will discuss the pros and cons ofreplacing the current CEO when selecting a suitable candidate to succeed the CEO, and if thecandidate is deemed suitable for the position of CEO, the current CEO will be replaced. In addition, if
due to a deterioration of health or other reasons the CEO lacks the suitability and qualities for the
position of CEO, we will consider dismissal from time to time as necessary.
In either case, when dismissing the CEO, the Nominating and Compensation Advisory Committee
will deliberate on the dismissal, and if dismissal is deemed appropriate, a report will be made to theBoard of Directors, and the Board of Directors will pass a resolution for dismissal.
(v) Explanations with respect to the individual appointments and nominations based on the above(iv) by the Board of Directors when selecting and dismissing senior management and nominating
candidates for directors and corporate auditors
When submitting proposals for the election of each executive, the Group provides details regarding
the individual reasons for all Director and Auditor candidates in the Notice of Convocation of theGeneral Meeting of Shareholders (Reference Documents). In addition, the roles expected of External
Directors are also disclosed in the Annual Securities Report and in supplementary documents
attached to the Notice of Convocation of the General Meeting of Shareholders. Regarding theselection and dismissal of senior management, the Group also explains biographies and expectedroles at Board of Directors meetings.
Supplementary Principle 3-1-3: Sustainability initiatives
A wide range of stakeholders have interests in the field of medical healthcare, in which the Group
operates, and by developing business in accordance with our mission of “Creating the future of
medical healthcare”, we believe we can create a shared, sustainable, and bright future for patientsand consumers, and for the businesses and professionals who serve them, as well as for society as awhole.
We also prioritize four key issues to be addressed (materiality) in order to meet the expectations anddemands of a wide range of stakeholders, and by addressing these issues, we seek to combine
continuing contributions to society with improvements to our corporate value.
•
Promotion of digital transformation in the medical healthcare field•
Ensuring information security and protecting privacy•
Promotion of diversity and inclusion•
Strengthening of our governance systems
In identifying these key issues and disclosing non-financial information, the Company has referred tointernational indicators such as those established by the SASB (Sustainability Accounting Standards
Board), GRI (Global Reporting Initiative) Standards, and SDGs (United Nations Sustainable
Development Goals), and based on feedback from stakeholders, we have identified social issues thatare highly relevant to the Group’s business activities and corporate culture.
Regarding investment in intellectual property (IP), from February 2020, a personnel specializing in
IP formulates and executes an integrated long-term IP strategy tailored to all growth phases of theGroup’s business that covers patents, designs, and copyrights.
Specifically, we have established an IP activity plan that establishes the direction and objectives of IP
activities for each stage of our businesses and a roadmap for implementing the plan. We conduct IP
activities including building of operational infrastructure, infringement investigations, internal
awareness-raising, and support for emerging IP, etc. based on the plan and the roadmap.

The Group's sustainability initiatives and investments in human capital are appropriately disclosed
to shareholders and investors on the Company's website. Please see the section titled “Reasons for
Non-compliance with the Principles of the Corporate Governance Code” for the Group’s response tothis Supplementary Principle.
•
Sustainability initiatives: https://www.medley.jp/sustainability/
Supplementary Principle 4.1.1 : The scope of authority delegated to the management
In addition to relevant laws and the articles of incorporation, the Group delegates to the Board of
Directors all matters stipulated in “Regulations for the Board of Directors”. We have established an
executive officer system to achieve the highest standards of management and fulfill our
responsibilities to customers, employees, society, and shareholders by dividing the roles between the
Board of Directors, which supervises management, and executive officers, who are responsible for
executing management, and promote streamlined and efficient business management by delegating
authority for the execution of business to executive departments, Specifically, we have established asystem in which the Group's business condition is reported to and discussed with the Management
Committee, which comprises all of our executive officers, in a timely manner, and we haveestablished the Board of Senior Executive Officers as a meeting body to decide on important mattersrelated to the execution of the Group's business and discuss matters referred to it by the President
and CEO. Based on this type of management structure, the "Delegation Rules on Administrative
Authority" and the "Table of Administrative Authority" clearly stipulate the scope of authority
delegated to the decision-making bodies and persons such as the Board of Directors, the Board of
Senior Executive Officers, Representative Director and CEO, Senior Executive Officers, and heads ofbusiness units or heads of divisions, etc.
In the future, when considering changes in the scope of delegation to the management team due tochanges in organizational structure, etc., the Board of Directors and the Board of Senior Executive
Officers will discuss, decide upon, and disclose a summary of said changes.
Principle 4.9 : Independence standards and qualifications of External Independent Directors
The Group has established independence standards for external independent directors as included in
the section of this report titled “II. 1. External Directors’ Relationship with the Company”.
Supplementary Principle 4-10-1: Authority and roles, etc. of the Nominating Committee andCompensation Committee
Four out of six directors comprising our current Board of Directors are Independent External
Directors which comprise a majority of the board. The Company has a voluntary Nominating andCompensation Advisory Committee, of which Independent External Directors comprise a majority
which deliberates, and provides advice and recommendations to the Board of Directors with respect
to the composition and framework (including skills matrix) of the Board of Directors, CEOqualifications/requirements and succession plan, the appointment of Directors and Executive officers,
policies concerning decisions on individual remuneration, etc. of directors, individual remuneration
amounts, as well as other key corporate governance issues and necessary basic policies, rules andprocedures, etc..
Therefore, when making decisions on nominations for Directors and Executive Officers, the Board of
Directors does so after consulting with the Nominating and Compensation Advisory Committee, andappropriate deliberations are conducted that take into account factors including diversity and skills.
It is therefore the view of the Company that independence, objectivity, and accountability have been
ensured.
Supplementary Principle 4-11-1: Views on the diversity of the Board of Directors
Depending on the Group’s corporate phase and business environment, candidates able to increase thecorporate value of the Group by following proper corporate governance are appointed and nominatedwith consideration given to work history regardless of whether they are from inside or outside theGroup and without regard to their gender or nationality.

When selecting Director candidates, the Nominating and Compensation Advisory Committee, of
which Independent External Directors comprise a majority, deliberates and provides advice on thecomposition of the Board of Directors and the selection and dismissal of directors taking into accountfactors including the balance of diversity and skills, etc.
The composition of the current Board of Directors appointed at the 15th Annual General Meeting of
Shareholders is six Directors, four of whom are Independent External Directors, two of whom are
women. These Independent External Directors were appointed taking into consideration theknowledge, experience, and abilities of the Board of Directors as a whole, and going forward they will
provide appropriate supervision and advice on the Company's management issues from a variety ofperspectives.
A skills matrix, which lists the skills expected of each Director along with their knowledge,
experience, and abilities, etc., is provided in “V. Other, 2. Other Matters Concerning Corporate
Governance System”. We will continue to consider the appropriate size and composition of the Boardof Directors based on diversity relative to the scale of the Group's business and the prevailingbusiness environment.
Supplementary Principle 4-11-2: Holding of concurrent positions by Directors and Auditors
When nominating Director and Auditor candidates, the Group confirms in advance whether they canfully fulfill the roles expected of them in the Group, taking into consideration the holding of any
potentially concurrent positions. The Group reports the status of material concurrent positions of its
directors and auditors every year in its Annual Securities Report and in supplementary documents
attached to the Notice of Convocation of the General Meeting of Shareholders. Regarding currently
serving Directors and Auditors, the Group confirms that, in consideration of their concurrent position
status, persons holding these positions have adequate time and ability to properly fulfill the relevantroles and responsibilities and any new material concurrent appointments are reported to the Board of
Directors in advance to confirm their impact on the execution of the Company's business.
Supplementary Principle 4.11.3 : Summary of analysis and evaluation of the effectiveness of theBoard of Directors
The Company evaluates the effectiveness of its Board of Directors based on the Corporate
Governance Code.
Most recent method of evaluation
In December 2023, the Company conducted a survey of all (6) of its directors and all (3) of its auditors
including questions regarding the composition, status of meeting management, agenda setting,utilization status of external officers, and whether the Company’s Board of Directors is effective as adeliberative body, with a focus on freely written answers. The responses were collected by theadministrative office of the Company and the results of the survey were reported to the Board of
Directors. Based on the results of the questionnaire, discussions were held on the ideal and current
state of the Board of Directors.
Survey questions
Main questions on the effectiveness evaluation survey were as follows:- Questions regarding composition of the Board of Directors- Questions regarding Board of Directors management- Questions regarding the content of deliberations by the Board of Directors- Questions regarding the utilization of external officers- Questions regarding the executive officer system- Questions regarding the Nominating and Compensation Advisory Committee (CEOappointment/dismissal and succession planning)- Questions regarding internal controls and risk
management

Summary of evaluation results and issues for future action
As a result of discussions based on the results of the effectiveness evaluation survey, the Board of
Directors of the Company determined that the Board of Directors is, in general, appropriately
effective. Specifically, with regard to “composition of the Board of Directors”, “utilization of external
officers”, and “internal controls and risk management” out of the above survey questions, the survey
found that the Board of Directors was generally appropriate (or currently generally appropriate).
On the other hand, since there is increased awareness of issues regarding the content of discussions
at board meetings (mainly discussions on medium-term management policy and strategies) and somepoints for improvement were raised regarding the “Board of Directors management” and the“Executive Officer System," we believe that ongoing consideration of improvements regarding theseissues is a key action point going forward. In addition, discussions regarding CEO
appointment/dismissal and succession planning at the Nominating and Compensation Advisory
Committee only began in earnest from the fiscal year ended December 2023, and a substantive
evaluation is expected to be made again from the next meeting onward.
Going forward, the Company will continue to take action to further improve the effectiveness of theBoard of Directors based on the results of the aforementioned evaluation of the effectiveness of theBoard of the Directors and the various opinions expressed by individual directors.
Supplementary Principle 4.14.2 : Training policy for Directors and Auditors
To enable External Directors to fully perform their functions, opportunities are provided by theGroup to each External Director according to their situation so that they can acquire necessary
knowledge about the Group’s management environment, business activities, financial information,organizational structure, and issues faced, etc.
In addition, to enable directors and auditors to fulfill their roles and responsibilities, they areencouraged to participate in external seminars and study groups at the Company's expense and theCompany provides opportunities to acquire necessary knowledge continuously.
In addition to the above, for newly appointed Directors and Auditors, an onboarding process isconducted wherein they are provided with explanations and necessary information regarding their
expected roles and the business and management environment through individual meetings with the
management team, and this will be an ongoing process in future as well.
Principle 5.1 : Policy on constructive dialogue with shareholders
In order to sustainably increase corporate value over the medium- to long-term, the Company strives
to provide highly transparent disclosure to shareholders and investors and create a long-term
relationship based on constructive dialog.
The Company’s CFO and the Finance Division, IR & Treasury Office are charged with handling IR
activities based on the aforementioned philosophy and the Company’s Disclosure Policy. In
cooperation with related departments, the Company is working to strengthen its information
disclosure system for shareholders and investors. Continuous disclosure of information on the
Company in a fair and appropriate manner to all our stakeholders is conducted based on this policy.
Disclosure Policy: https://www.medley.jp/ir/disclosure-policy/[Measures to achieve management that is conscious of capital cost and share price]
Our Group believes that maximizing the value we provide to customers, that is, maximizing ourgroup's sales, will lead to maximizing long-term free cash flow and ultimately improving corporate
value, and we are addressing various management issues by positioning sales as a key management
indicator. Our Group also places importance on EBITDA, which is a profit indicator that is similar to
long-term free cash flow. In the process of maximizing long-term free cash flow, we have set new
medium-term targets of 100 billion yen in sales and 20 billion yen in EBITDA for the fiscal year
ending December 2029. While our basic approach during the term to achieve our new medium-termgoals is to increase income and profits, we will strive to quickly achieve our new medium-term goals
by responding to changes in the business environment and prioritizing attractive investment
opportunities.

In terms of shareholder returns, we believe that our Group is currently still in a growth phase, andthat allocating capital to proactive investments aimed at sustainable growth will provide the greatest
return to shareholders. Our approach to growth investment is disclosed in the Presentation Material
for FY2023 Financial Results.
https://ssl4.eir-parts.net/doc/4480/ir_material_for_fiscal_ym2/150398/00.pdf
In addition, as part of our flexible response to share price changes and the business climate and our
response to capital policy and policy on returning profits to shareholders, our policy is to acquire
treasury stock as appropriate.

2. Capital Structure
Foreign Shareholding Ratio

30% or higher

Status of Major Shareholders
Name or name

Number of shares held(%)

Kohei Takiguchi

The Master Trust Bank of Japan, Ltd. (trust
account)

5,989,400

18.51

3,476,300

10.74

3,295,800

10.18

1,944,900

6.01

1,590,382

4.91

1,457,400

4.50

947,900

2.92

933,100

2.88

441,000

1.36

423,984

1.31

Goichiro Toyoda

Custody Bank of Japan, Ltd. (trust account)

NORTHERN TRUST CO.(AVFC) RE IEDU UCITS
CLIENTS NON LENDING 15 PCT TREATYACCOUNTCREDIT SUISSE (LUXEMBOURG) S.A. /CUSTOMER ASSETS, FUNDS UCITS

Keiichi Shibahara

NTT DOCOMO, INC.

One Globe Capital Co., Ltd

MSCO CUSTOMER SECURITIESControlling Shareholder (except for Parent
Company)―

Parent Company

N/ASupplementary Explanation
1.
2.
3.

The Company owns 384,191 shares of treasury stock.
Shareholding ratios exclude treasury stock (384,191 shares).
One Globe Capital Co., Ltd. is the asset management company of Kohei Takiguchi, our
President and Chief Executive Officer.
In the statement of large-volume holdings filed by Polar Capital LLP on November 9, 2021, it isstated that Polar Capital LLP owns 1,777,300 shares (total shareholding ratio of 5.52%) as ofNovember 2, 2021; however, as the Company cannot confirm the actual number of shares held
as of the end of the fiscal year, Polar Capital LLP is not included in the above major
shareholders.
In the statement of large-volume holdings filed by Mizuho Securities Co., Ltd. on May 10, 2023
(amended statement), it is stated that Mizuho Securities Co., Ltd. and two co-owners thereofown 2,093,200 shares (total shareholding ratio of 6.39%) as of April 28, 2023; however, as theCompany cannot confirm the actual number of shares held as of the end of the fiscal year,
Mizuho Securities Co., Ltd. is not included in the above major shareholders.
In the statement of large-volume holdings filed by Mizuho Securities Co., Ltd. on September 25,
2023 (amended statement), it is stated that UBS AG (Bank) owns 1,639,580 shares (total
shareholding ratio of 5.01%) as of September 15, 2023; however, as the Company cannot confirm
the actual number of shares held as of the end of the fiscal year, UBS AG (Bank)is not includedin the above major shareholders.
In the statement of large-volume holdings filed by Mizuho Securities Co., Ltd. on January 11,2024 (amended statement), it is stated that Asset Management One Co., Ltd. currently owns
2,248,700 shares (total shareholding ratio of 6.87%) as of September 15, 2023; however, as theCompany cannot confirm the actual number of shares held as of the end of the fiscal year AssetManagement One is not included in the above major shareholders.

4.

5.

6.

7.

3. Corporate Attributes
Listed Stock Market and Market Section
Fiscal Year-End

Type of BusinessTokyo Stock Exchange, Prime

Ending on December 31st

Information & Communications

Number of Employees (consolidated) as of
the End of the Previous Fiscal Year

Over 1000 employees

Sales (consolidated) as of the End of thePrevious Fiscal Year

Not less than JPY 10 billion and less than JPY
100 billion

Number of Consolidated Subsidiaries as of
the End of the Previous Fiscal Year

Less than 10 companies

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

5). Other Special Circumstances that Could Have Material Impact on Corporate Governance-II. Business Management Organization and Other Corporate Governance Systems
regarding Decision-making, Execution of Business, and Oversight in Management
1. Organizational Composition and Operation
Organization Form

Company with audit and supervisory board

Directors
Maximum Number of Directors Stipulated in
the Articles of Incorporation

12 or lessTerm of Office of Directors stipulated in the
Articles of Incorporation

One year

Chairperson of the Board

President

Number of Directors

6

Appointment of External Directors

Appointed

Number of External Directors

4

Number of External Independent Directors

4Outside Directors’ Relationship with the Company (1)NameAttribute

Relationship with the Company*aNoboruKotani

From othercompanies

Rina Sakuraba

From othercompanies

Reiko
Nagatsuma

From othercompanies

Keisuke Hioki

From othercompanies

b

c

d

e

F

g

h

I

j

k

* 1 Categories for relationship with the Company*Each item marked with “○” if currently/recently applicable, “△” if applicable in the past
*Each item marked with “●” if currently/recently applicable, “▲” if applicable to a close relative in the pasta. Executive of the Company or its subsidiaries
b. Non-executive director or executive of a parent company of the Company
c. Executive of a brother company of the Company
d. A party whose major client or supplier is the Company or an executive thereof
e. Major client or supplier of the Company or an executive thereof
f. Consultant, accountant, or legal professional who receives a large amount of monetary consideration or otherproperty from the Company besides compensation as a director / audit and supervisory board member
g. Major shareholder of the Company (or an executive of said major shareholder if the shareholder is a legal entity)
h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) (thedirector himself/herself only)

i. Ms. Sakuraba, the executive of a company, between the Company and which external directors/audit andsupervisory board members are mutually appointed (the director himself/herself only)
j. Executive of a company or organization that receives a donation from the Company (the director himself/herself
only)
k. Others

External Directors’ Relationship with the Company (2)Name

Designationas
Independent Director

Supplementary Explanationof the Relationship

Reasons of Appointment

NoboruKotani○Not applicable

Since being appointed
External Director of theCompany in 2018, Mr.
Kotani has used his
management experience inthe field of consulting andexperience serving asExternal Director at listed
corporations to assist theCompany in decision
making, providing advice
and recommendations
especially in the areas ofstrengthening governanceand management strategy.
He also serves as a memberof the Company’s voluntary
Nominating andCompensation Advisory
Committee, which
deliberates on mattersrelated to the composition of
the Board of Directors,
appointment and dismissalof directors and executive
officers, and thecompensation of directors
and has been reappointed
External Director with the
expectation that he willfurther strengthen the
management structure of
the Group.

Rina
Sakuraba○

Not applicable

Using her experience andinsight in the area of humanresources gained working
with Japanese and global
companies, she has been
involved in decision-making
at the Company as anExternal Director since 2023
and has in particularprovided advice andrecommendations related tobuilding a globalorganizational structure andstrengthening the Company
group’s HR structure. She
also serves as a member of
the Company’s voluntary
Nominating andCompensation Advisory
Committee regarding theCompany’s executive
remuneration andappointments, and has been
appointed as an External
Director with the
expectation that she willfurther strengthen the
management structure of
the Group..
Reiko
Nagatsuma○

Not applicable

Using her management
experience and insightgained working with global
IT companies, Ms.
Nagatsuma has been
involved in the Company’s
decision-making as anExternal Director since2023, in particular giving
advice and recommendations
on the Company group’s
organizational management
and business and productstrategies. She also serves
as a member of theCompany’s voluntary
Nominating andCompensation Advisory
Committee regarding theCompany’s executive
remuneration andappointments, and has been
appointed as an External
Director with the
expectation that she willfurther strengthen the
management structure of
the Group.

Keisuke
Hioki○

Not applicable

Using his management
experience in the consulting
industry and experience insupporting the globalizationof Japanese companies, hasbeen involved in the
Company’s decision-making
as an External Director
since 2023, in particulargiving advice and making
recommendations on
strengthening the Company
group’s corporate functions
centering on legal, finance,and HR and to assist withmanagement structure on a
global basis. He also serves
as a member of theCompany’s voluntary
Nominating andCompensation Advisory
Committee regarding theCompany’s executive
remuneration andappointments, and has been
appointed as an External
Director with the
expectation that he willfurther strengthen the
management structure of
the Group.

Voluntary Establishment of Committee(s)Voluntary Establishment of Committee(s)Corresponding to Nomination Committee orRemuneration Committee

YesVoluntary advisory committee establishment status, composition, and attributes of chairperson
Voluntary committee corresponding to Nomination Committee
Name of committee
Nominating and Compensation Advisory Committee
Chairperson
All
Full-time
Internal
External
Internal
Others(Chair)committee
members
Directors
Directors
experts(No.ofmembers(No.of(No.of(No.of(No.ofpersons)(No.ofpersons)
persons)
persons)
persons)
persons)
5
0
1
4
0
0
Internal
Director
Voluntary committee corresponding to Remuneration Committee
Name of committee
Nominating and Compensation Advisory Committee
Chairperson
All
Full-time
Internal
External
Internal
Others(Chair)committee
members
Directors
Directors
experts(No.ofmembers(No.of(No.of(No.of(No.ofpersons)(No.ofpersons)
persons)
persons)
persons)
persons)
5
0
1
4
0
0
Internal
Director
Supplementary Explanation
The Company stipulates that prior to the Board of Directors meeting at which the nomination andremuneration of Directors is to be decided, the Nominating and Compensation Advisory Committee
shall be consulted regarding the nominees and amount of individual remuneration of Directors as
described in the outline below.
(Outline of the Nominating and Compensation Advisory Committee)
1. The Committee shall consist of Independent External Directors and Directors appointed by aresolution of the Board of Directors in accordance with the rules of the Nominating andCompensation Advisory Committee.
2. The Committee shall consist of at least three (3) members, a majority of whom shall be
Independent External Directors.
3. The Chairperson of the Committee shall be appointed by a resolution of the Board of Directors
from among the Directors.
4. The Nominating and Compensation Advisory Committee shall deliberate and provide advice andrecommendations to the Board of Directors with respect to composition and policies of the Board of
Directors and the establishment of policies concerning decisions on the content of individual
remuneration, etc. of Directors and Executive Officers, the content of individual remuneration
amounts, etc., as well as other necessary basic policies, rules and procedures, etc.
Audit and Supervisory Board
Establishment of Audit and Supervisory
Board

Established

Maximum Number of Audit and Supervisory
Board Members Stipulated under the
Articles of Incorporation

4 or lessNumber of Audit and Supervisory Board
Members3

Cooperation among Audit and Supervisory Board Members, Independent Auditors and Internal Audit
Departments
Audit system of the Company is based on three basic audits: audits by corporate auditors, internal
audits, and accounting audits by accounting auditors. We cooperate with each other for the purposeof improving the overall quality. Specifically, the Audit and Supervisory Board receives reports on
the status of internal audits from the Internal Audit Office, and exchanges opinions with theaccounting auditor on the status of implementation of accounting audits, thereby improving theeffectiveness and efficiency of audits, thereby we strive to improve the quality of overall oversightand monitoring. In addition, the Audit & Supervisory Board, accounting auditors and internal
auditors hold regular quarterly meetings to improve audit effectiveness and efficiency.

Appointment of External Audit andSupervisory Board Member(s)Appointed

Number of External Audit and Supervisory
Board Members

2

Number of Independent Audit andSupervisory Board Members

2

External Audit and Supervisory Board Member’s Relationship with the Company (1)NameAttribute

Relationship with the CompanyaMasahide
Kamachi

Certified Public
Accountant

Ryoko
NagataFrom othercompanies

b

c

d

e

f

G

h

i

j

k

l

m

* 1 Categories for relationship with the Company*Each item marked with “○” if currently/recently applicable, “△” if applicable in the past
*Each item marked with “●” if currently/recently applicable, “▲” if applicable to a close relative in the pasta. Executive of the Company or its subsidiaries
b. Non-executive director or Accounting advisor of the Company or its subsidiaries
c. Executive or non-executive of a parent company of the Company
d. Audit and supervisory board member of the parent company of the Company
e. Executive of a brother company of the Company
f. A party whose major client or supplier is the Company or an executive thereof
g. Major client or supplier of the Company or an executive thereofh. Consultant, accountant, or legal professional who receives a large amount of monetary consideration or otherproperty from the Company besides compensation as a director / audit and supervisory board member
i. Major shareholder of the Company (or an executive of said major shareholder if the shareholder is a legal entity)
j. Executive of a client or supplier company of the Company (which does not correspond to any of f, g, or h) (the audit
and supervisory board member himself/herself only)
k. Executive of a company, between the Company and which external directors/audit and supervisory board members
are mutually appointed (the audit and supervisory board member himself/herself only)
l. Executive of a company or organization that receives a donation from the Company (the director himself/herself
only)
m. Others

External Audit and Supervisory Board Member’s Relationship with the Company (2)NameDesignationas
Independent
Director

Supplementary
Explanation of theRelationship

Reasons of Appointment

Masahide
Kamachi○Not applicable

Since becoming an External Audit& Supervisory Board Member of
the Company in 2017, Mr. Kamachi
has provided auditing, advice, andrecommendations from an
independent standpoint and with ahigh degree of expertise inmanagement. The Company
appoints Mr. Kamachi as anExternal Audit & Supervisory
Board Member having determinedthat he will adequately
demonstrate managerial oversightcapabilities through his richexperience and expert knowledge
as a certified public accountant andcertified public tax accountant
going forward.

Ryoko
Nagata○Not applicable

Since becoming an External Audit &Supervisory Board Member of theCompany in 2023, Nagata has utilized
her extensive auditing experience atlisted companies to provide auditing,
advice, and recommendations from an
independent standpoint and with ahigh degree of expertise inmanagement. The Company appoints
Ms. Nagata as an External Audit &Supervisory Board Member having
determined that she can strengthen
the audit functions of the Company byauditing the management of theCompany using her wealth ofknowledge and deep insight in relation
to corporate management andauditing.

Independent Directors
Number of Independent Directors

6Other Matters Relating to Independent Directors
The Company designates all External Directors and External Auditors who meet the requirements forindependent directors and auditors as Independent Directors and Auditors.
The following criteria for determining independence shall be used to determine whether a director or
auditor is independent, provided that the matters indicated in the "Guidelines Concerning Listing
Controls, etc." do not apply.
Criteria for determining independence of External Directors
The Company has established the following criteria for determining the independence of External
Directors. The Company deems that an External Director has independence when it is confirmed thatnone of the items below apply to the External Director and it is deemed that there is no conflict ofinterest between holders of common shares in the Company and the External Director.
(Herein, “operating officer” is defined as executive directors, directors who execute the business of acorporation, and employees, etc.)
1. Operating officers of the Company
Operating officers of the Company or its subsidiaries (hereinafter the Group)
2. Major trading partners(1) Major trading partners of the Group or operating officers thereof- Major trading partners of the Group are herein defined as persons whose payments to the Groupaccounted for sales in excess of 2% of the Group’s annual consolidated net sales in the most recently
ended fiscal year.
(2) Partners or operating officers thereof for whom the Group is a major trading partner- Persons for whom the Group is a major trading partner are herein defined as persons for whom
payments from the Group account for an excess of 2% of said persons’ annual consolidated net sales
in the most recently ended fiscal year. For persons not reporting consolidated results, annual nonconsolidated net sales shall be used as the basis instead of annual consolidated net sales.
(3) Major lenders to the Group or operating officers thereof- Major lenders to the Group are defined herein as persons extending loans to the Group in excess of 2%of the Group’s consolidated total assets as of the end of the most recently ended fiscal year.
3. External providers of specialized services
Consultants, experts in accounting such as certified public accountants and certified tax accountants,
and experts in law such as lawyers receiving large sums of money or other assets from the Group otherthan executive compensation (in cases wherein an organization such as a corporation or partnership
receives said assets, persons belonging to the relevant organization)- “Large sums of money or other assets” are herein defined as follows. In cases wherein the provider of
specialized services is an individual, when the total value of assets received from the Group excluding
executive compensation exceeds 10 million yen in the most recently ended fiscal year. In cases
wherein the provider of specialized services is an organization such as a corporation or partnership,
when the total value of assets received from the Group surpasses the greater of 2% of saidorganization’s annual consolidated net sales in the most recently ended fiscal year or 10 million yen.
4. Holders of voting rights(1) Direct or indirect holders, or operating officers thereof, of 10% or more of the voting rights of theCompany(2) Organizations, or operating officers thereof, of which the Company is a direct or indirect holder of
10% or more of the voting rights
5. Donation or grant recipients
Persons or organizations such as a corporations or partnerships, or operating officers thereof, thatreceive large donations or grants from the Group.

- “Large donations or grants” are herein defined as donations or grants valued at 10 million yen or
more within the period of one year.
6. Persons with corresponding histories(1) Persons who have been applicable to 1. above within the past ten years(2) Persons who have been applicable 2. or 5. above within the past three years(3) Spouses or relatives in second degree of an important person applicable to 1. or 5. above- “Important person” is herein defined as employees conducting important operations such as executive
directors, executive officers, corporate officers, and division managers.
Incentives
Incentive Policies for Directors

Stock Option Plans, etc.

Supplementary Explanation on applicable items
The Group implements stock option plans, with the aim of increasing motivation and morale for the
improvement of business performance, by aligning the Group’s mid to long term growth andcorporate value improvement with the remunerations that the stock options holders receive. At the12th Annual General Meeting of Shareholders held on March 26, 2021, in order to provide
incentives to continuously increase the Company's corporate value over the medium- to long-term
and more closely align the interests of Directors of the Company (excluding External Directors,
hereinafter Eligible Directors) with those of the Company’s shareholders, a Transfer-restricted
Stock Compensation System was implemented for Eligible Directors.

Recipients of Stock Options

Internal directors / employees / audit andsupervisory board members

Supplementary Explanation
By granting stock options to the members (from the above-mentioned recipients) who are expectedor anticipated to play important roles for the Group’s business performance, we incentivise suchmembers to improve our business performance in the future. In addition, we use stock option
grants as leverage to recruit more and more superior members into the Group, and as such we
grant some of the stock options at the time of recruitment.

Director Remuneration
Disclosure of Individual Directors’
Remuneration

No disclosure of individual director’s
remuneration

Supplementary Explanation
There is no individual disclosure of remuneration because there is no person with a total of over
JPY 100 million in remuneration. Compensation for directors and audit and supervisory board
members is disclosed in the total amount for each of the categories in the Company’s securities
report.

Policy on Determining Remuneration
Amounts and Calculation Methods

As below

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods
Policy on Determination of Details of Remuneration for Directors and Auditors
a. Director remuneration(a) Policy and method for determining remuneration
The Board of Directors of the Company has authority to render decisions regarding the basic planfor director compensation. At the Company’s Board of Directors meeting held on February 28, 2022,
the following Basic Plan for Director Compensation was adopted.
(i) The basic plan regarding remuneration of the Company’s Directors is that the remuneration ofindividual directors shall be determined at an appropriate level based on the responsibilities of eachposition under a remuneration system that provides appropriate incentives to increase theCompany's corporate value over the medium- to long-term and align the interests of Directors of theCompany with those of the Company’s shareholders.
(ii) The policy for determining the remuneration of Internal (Executive) Directors is as follows.
1. Basic policy
The remuneration system provides appropriate incentives to further the Company’s mission of“Creating the future of medical healthcare” and increasing corporate value over the medium- tolong-term.
2. Balance
In order to avoid a system that encourages the taking on of excessive risk, the Company endeavors
to strike an appropriate balance between base salary and performance-based compensation.
However, in order to place emphasis on achievement of growth, compared with other companies inthe same field, a higher ratio of performance-based compensation to base salary has been adopted.
3. Total remuneration
In order to secure excellent human resources, the remuneration system provides top-level
remuneration in comparison with companies of similar scale (in terms of sales, market
capitalization, number of employees, etc.) in the same field.

4. Base salary
Base salary is determined based on the market value of each Director and with reference tobenchmark comparisons with statistical data.
5. Performance-linked remuneration
Regarding performance-linked remuneration, in order to emphasize incentives to increase corporate
value over the medium-to-long term, the Company has not introduced annual performance-linked
bonuses linked to performance in a single fiscal year, but has instead adopted share-price-linked
remuneration (stock-based remuneration), in which the interests of shareholders and management
are aligned.
6 The policy for determining the remuneration of External Directors is as follows.
1. Remuneration for each External Director is based on their role in supervising the execution ofbusiness by directors.
2. In order to ensure independence, only fixed cash remuneration is paid, with the amount notlinked to the Company’s performance. The amount paid is commensurate with expected governanceroles and risks.

Prior to the meeting of the Board of Directors at which directors' remuneration is decided, theNominating and Compensation Advisory Committee is consulted regarding the amount of
remuneration for individual directors.
(b) Composition and determination process of remuneration
At the 6th Ordinary General Meeting of Shareholders convened on March 30, 2015, the aggregatecompensation payable to Directors was approved to be no more than 200 million yen per year
(excluding the portion of employees’ salaries for Directors who concurrently serve as employees). Asof the date of this resolution, the number of directors subject to the resolution was four (4).
At the 12th Annual General Meeting of Shareholders held on March 26, 2021, in order to provide
incentives to continuously increase the Company's corporate value over the medium- to long-term
and more closely align the interests of Directors of the Company (excluding External Directors,
hereinafter Eligible Directors) with those of the Company’s shareholders, the implementation of aTransfer-restricted Stock Compensation System (hereinafter “Stock Compensation System”) wasapproved for Eligible Directors. As of the date of this resolution, the number of Eligible Directors
subject to the resolution was seven (7). Remuneration provided via this system is separate from theaforementioned remuneration limited to 200 million yen per year. The total value of transferrestricted stocks granted under the Stock Compensation System shall be no more than 200 million
yen per year and the total number of transfer-restricted stocks granted under the Stock
Compensation System shall be no more than 30,000 shares per year.
In the current fiscal year, the amount of remuneration for each director shall be determined at thediscretion of the Representative Director based on a resolution of the Board of Directors. The
amount of remuneration for each director shall be determined by taking into consideration suchfactors as the business environment, position, contribution to the company, and businessperformance. The reason for delegating these decisions is to take into account the individual
circumstances of each director with respect to the management environment, position, contribution
to the company, and business performance.
At the Board of Directors meeting held on February 28, 2022, the Board of Directors resolved thatthe ratio of base compensation to stock compensation for individual internal (executive) directors
and the total amount of compensation for external directors shall be determined by the Board of
Directors based on consultation with the Compensation Advisory Committee (currently: theNominating and Compensation Advisory Committee). Kohei Takiguchi, Representative Director
determines the compensation of each director within the authority delegated by the Board of
Directors in accordance with the policy established by the Nominating and Compensation Advisory
Committee.
The remuneration of Directors for the current fiscal year shall be determined by the Representative
Director in accordance with the above policy for determining remuneration, within the scope of thedelegation by the Board of Directors and based on consultation with the Compensation Advisory
Committee.
b. Remuneration of Auditors
At the 11th Annual General Meeting of Shareholders held on March 27, 2020, annual remuneration
for the Company’s Auditors was set at not more than 40 million yen and the number of Auditors atthat time was four (4). The amount of remuneration for each Auditor is determined throughdiscussions among the auditors.
Supporting System for External Directors / Audit and Supervisory Board Members
We predominantly provide support for the External Directors / Audit and Supervisory Board
members through the Secretariat of the Board of Directors, Legal & Compliance Division. As forthe agenda in the board meetings, the Secretariat of the Board of Directors, Legal & Compliance
Division provides explanatory materials in advance to the board meetings, and ensures that theExternal Directors / Audit and Supervisory Board members have sufficient time to consider thematters in the agenda as appropriate, and in case needed, provides individual supplementary

explanations verbally. In addition, necessary or important information is communicated by e-mailor telephone as needed.

2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination andRemuneration Decisions (Overview of Current Corporate Governance System）○ Overview of Corporate Governance System
The Company has established its corporate governance system as a “company with audit andsupervisory board.” In this system, the Company aims to achieve thorough corporate governancethat serves to increase long-term corporate value by advancing the separation of supervisory andexecutive functions, having a board of directors composed of directors with thorough knowledge ofbusiness and independent outside directors who bring an objective point of view be responsible tosupervising management and determining basic policies, and promoting the delegation of businessexecution authority to executive departments centered on senior executive officers. In addition,
Executive Directors and Independent auditors, who are independent of Directors, attend board
meetings and report the content of those meetings to the Audit & Supervisory Board to ensure thatthe auditing function is performed in a timely and appropriate manner. The Company thereby aims
to establish a corporate governance system that conducts appropriate management decision-making
and business execution and ensures fairness and transparency in management decision-making andthat is effectively systematically checked and monitored. The following organizations are involved in
the Company’s management decision-making, enforcement and supervision.

a. Directors and Board of Directors
The Company is a company with a board of directors, and the board of directors consists of six
directors (including four Independent External Directors) and the President and Representative
Director serves as the chairperson. In principle, the Board of Directors meets once a month on aregular Board of Directors meeting, and flexibly holds extraordinary Board of Directors meetings asnecessary and makes decisions on basic management policies and important matters and supervises
the status of the execution of business.

b. Audit and Supervisory Board Members and Audit and Supervisory Board
The Company is a company with an Audit and Supervisory Board. The Audit and Supervisory
Board consists of three members, including one full-time Auditor and two part-time Auditors (bothof them are Independent External Auditors), and the full-time Auditor, Shohei Omote serves as thechairperson. In principle, the Audit and Supervisory Board meeting is held once a month, Audit andSupervisory Board meetings are held on an ad hoc basis as needed, and reports on the status ofaudit implementation by each Audit and Supervisory Board Member and discussions amongauditors, etc. are conducted. Audit and Supervisory Board members attend meetings of the Board of
Directors and other important meetings in order to audit the execution of duties by Directors,
conduct interviews with each Director and important employees, and conduct business audits oneach department to determine the execution of duties by Directors. Each Auditor conducts audits inaccordance with the audit policy and audit plan established by the Board of Auditors.
All Auditors attend meetings of the Board of Directors, express their opinions as necessary,exchange opinions with the Company’s President and Representative Director on a regular basis,and receive reports on the results of accounting audits (reviews) from the Accounting Auditor andreports on the implementation of internal audits from the Internal Audit team.
Full-time auditors conduct audits by attending important meetings other than Board of Directors
meetings, inspecting important documents, interviewing Directors and employees as necessary, andreceiving reports from each department.

c. Executive Officers and Board of Senior Executive Officers

The Company has established an executive officer system to achieve the highest standards ofmanagement and fulfill our responsibilities to customers, employees, society, and shareholders bydividing the roles between the Board of Directors, which supervises management, and executive
officers, who are responsible for executing management, in order to promote streamlined andefficient business management by delegating authority for the execution of business to executive
departments. Specifically, we have established a system in which the Group's business status can bereported to and discussed with the Management Committee, comprising all of our executive officers,
in a timely manner, and we have put in place a Board of Senior Executive Officers as a meeting
body to decide on important matters related to the execution of the Group's business and discussmatters referred to it by the President and CEO.

d. Nominating and Compensation Advisory Committee
The Company has established a voluntary Nominating and Compensation Advisory Committee, themajority of whose members are independent external directors, with the aim of strengthening theindependence, objectivity, and accountability of the Board of Directors' functions regarding
personnel matters and remuneration, etc. of directors and executive officers. The committee
deliberates on matters related to the composition and structure of the Board of Directors, policies
regarding the appointment and dismissal of directors and executive officers, the details of individual
remuneration, etc., and other necessary basic policies, rules, and procedures. Therefore, thenomination and compensation decisions for directors and executive officers are made by the Board of
Directors after consultation with the Nominating and Compensation Advisory Committee.

e. Other voluntary committees
The Company has established voluntary committees throughout the Company at the judgment of
the Board of Directors and the Board of Senior Executive Officer to address high priority
management action points in order to improve both the speed and quality of decision making. In
principle, an executive officer serves as the chair of each committee, and establishment andoperation are implemented in accordance with the Regulations of Voluntary Committee . Eachcommittee chair provides the Management Committee with minutes and progress status reports,
ensuring decision making transparency.

f. Internal Audit
The Company establishes the Internal Audit Office (2 members) with the mission of evaluating theeffectiveness of internal control and the appropriateness of the actual business situation. It covers
all departments and subsidiaries based on the annual internal audit plan as an organization under
the direct control of the President and the Representative Director, independent of eachdepartment. Internal audits are conducted and the audit results are reported to the President andthe Representative Director. The President and Representative Director receives audit results,
notifies audited departments of audit results and improvements, and submits improvement status
reports. The Internal Audit Office cooperates with the Audit and Supervisory Board Members andthe Accounting Auditor from time to time regarding the status of internal audits.

g. Accounting Auditor
The Company has concluded an auditing agreement with EY Shinnihon Yugen Sekinin Kansa
Hojin and receives an appropriate timely accounting audit from an independent standpoint. There
are no special interests between the Company and the auditing corporation engaged in the audit of
the Company and the executive officers of the Company.
The certified public accountants who executed our accounting audits for the fiscal year ended
December 31, 2023 are Motoaki Ikeuchi, Kohei Koyama and Naoki Tokita of EY Shinnihon Yugen
Sekinin Kansa Hojin. In addition, there are three (4) certified public accountants and twelve(12)other persons assisting with the accounting audit of the Company for the fiscal year ended
December 31, 2023.
As of March 2024, the managing partner of the audit corporation has been participating in audits of
the Company for no more than seven years.

○ Risk Management System Status
The Group has established “Risk Management Regulations” for the purpose of improving the risk
management system, and it is intended to prevent risks related to internal and external risk
management and minimize company losses. To this end, the Risk Management Committee, which iscomposed of personnel selected from among the Company's internal directors and executive officers
by the Representative Director, has been established as an independent committee organization,
striving to understand risks, examine countermeasures, implement countermeasures, and monitor
them. In addition, we established a “Code of Conduct” for the purpose of establishing a legal
compliance system, and to ensure compliance and education regarding relevant laws andregulations, social norms and internal rules to officers and employees, and to detect illegal activities
in the company at an early stage. In accordance with “Internal Reporting Rules”, full-time corporate
auditors, outside attorneys, and the department in charge of compliance will cooperate to handle
reports in a timely and appropriate manner. In addition, by conducting audits by Audit andSupervisory Board members and internal audits, we strive to discover risks and, as necessary, havea system in place to receive advice on risk management from specialists such as lawyers,
accountants, tax accountants, and social insurance laborers.

○ Exemption of directors and audit and supervisory board members fromliabilities
Based on Article 427, Paragraph 1 of the Companies Act, the Company has entered into anagreement with directors (excluding executive directors) and audit and supervisory board members
to limit liability for damages under Article 423, Paragraph 1 of the Companies Act. The limit ofliability for damages based on this contract is the minimum amount stipulated by laws andregulations. The limitation of liability is permitted only when the respective directors and audit andsupervisory board members are in good faith and have no material negligence regarding theperformance of the duties that caused the responsibility.

3. Reasons for Adoption of Current Corporate Governance System
Based on its basic policy on corporate governance, the Company adopts the current corporate
governance system to ensure that the Board of Directors makes decisions on basic management
policies and important matters while promoting the delegation of business execution authority to
executive officers in order to separate the supervisory functions from the business executionfunction, thereby increasing the efficiency and speed of business execution. The Company has also
adopted the above corporate governance system to ensure the soundness and transparency ofcorporate management by establishing sufficient checks and balances by the Internal Audit Officeand the Audit and Supervisory Board. In addition, four of out of six directors appointed by theCompany are independent external directors and two of the three auditors appointed by theCompany are external audit and supervisory board members, and has strengthened its managementmonitoring functions by utilizing their experience and knowledge, etc., and making use of theirfunction of monitoring the execution of duties by directors from an independent and fair perspective.
The Company also ensures fairness and transparency in the procedures for nomination andcompensation of directors and executive officers by establishing a voluntary Nominating andCompensation Advisory Committee, the principal members of which are independent external
directors.

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Meeting of Shareholders and to Facilitate Exerciseof Voting Rights
Supplementary Explanation

Early Notificationof General
Meetings ofShareholders

To ensure that shareholders have sufficient time to consider the agenda, we
are working to expedite the settlement of accounts and disclose Electronic
Provision Measures Matters and send out the convocation notice before thelegal deadline. We will post Electronic Provision Measures Matters on thewebsite of the Tokyo Stock Exchange and the Company’s website(https://www.medley.jp/en/ir/).

Scheduling
General Meetingof Shareholders
Avoiding the PeakDay

To allow more shareholders to participate in the event, we will take care to
avoid the days when other companies' events are concentrated. We also
strive to ensure that the meeting is physically accessible and easy to attend
in order to have as constructive a dialogue with our shareholders as possible.

Allowing
Electronic
Exercise of Voting
RightsWe have prepared an environment in which shareholders can exercise theirvoting rights by accepting the exercise of voting rights via the Internet,
including personal computers and smartphones, etc.

Participation inElectronic Voting
Platform

We have participated in the voting platform for institutional investors
operated by ICJ, Inc. since the Annual General Meeting of Shareholders forthe fiscal year ending December 31, 2019.

ProvidingConvocation
Notice in English

We have prepared a notice of convocation (summary Notice of Convocation
and Reference Documents) in English and post it on the Tokyo Stock
Exchange website, the voting platform for institutional investors, and theCompany's website (https://www.medley.jp/en/ir/)since the Annual General
Meeting of Shareholders for the fiscal year ending December 31, 2019.

2. IR Activities
Supplementary Explanations

Explanation byRepresentative

Preparation andPublication ofDisclosure
PolicyWe have posted our disclosure policy on our website( https://www.medley.jp/en/ir/disclosure-policy/),which describes "Information DisclosureStandards," "Information Disclosure Methods,""Prevention of Insider Trading," "Quiet Period,"and "Maintenance of Internal System”.

RegularInvestor
Briefings forAnalysts andInstitutional
Investors

We hold briefings for analysts and institutional
investors, in which the Representative Director andother Directors participate, on the same day as theannouncement of quarterly results to explain theGroup’s results and management policies.

RegularInvestor
Briefings forOverseas
Investors

We hold briefing meetings for overseas investors
from time to time, via teleconference or in-person
meetings, and we also plan to participate ininvestor conferences a few times a year.

Yes

Posting IR
Materials on
WebsiteThe Company’s IR materials has been posted on its
website（ https://www.medley.jp/en/ir/）.

Yes

Establishmentof a Department(person in
charge) related
to IR

The Director and CFO and the Finance Division, IR& Treasury Office are responsible for IR.

Yes3. Measures to Ensure Due Respect for Stakeholders
Supplementary Explanations

Stipulation ofInternal Rules for
Respecting the
Position of
Stakeholders

The Group believes that it is important to earn the trust of various
stakeholders, including shareholders, investors, and customers, and ismaking efforts to provide timely, appropriate, and fair information to its
stakeholders by establishing a timely disclosure manual and preparing tocomply with the Fair Disclosure Rules.
In addition, for the purpose of ensuring thorough compliance within theGroup and building a system for fulfilling social responsibility based on
sound ethical standards, we have established the Compliance Regulations,which stipulate the following items
・ Compliance with laws, regulations and social norms
We will understand and comply with laws and regulations and social norms.
・ Provision of appropriate information
We will provide appropriate information in compliance with laws andregulations related to advertisements and information provision so that ourusers can properly understand the content and nature of services.
・ Disclosure of management information
We will appropriately disclose information on financial details, businessactivities, etc. to shareholders and investors in accordance with the laws andregulations.
・ Prevention of insider trading
The Company shall establish a system to prevent transactions of shares, etc.
using undisclosed important information of the Company, its affiliatedcompanies, or business partners.

Implementationof Environmental
Conservation
Activities, CSR
Activities, etc.
Development of
Policies on
Information
Provision to
Stakeholders

In line with the Group’s mission of “Creating the future of medical
healthcare”, in our everyday operations and in the projects we undertake, weface social issues in the field of healthcare head on to create a more
prosperous and sustainable society.

The Group's basic policy is to make efforts to disclose appropriate corporate
information in a timely manner in order to ensure management transparency.
In disclosing information, we will actively and using a disciplined approach
disclose information that is required to be disclosed under the Financial
Instruments and Exchange Act and other laws and regulations, as well as
information in accordance with the timely disclosure rules established by the
Tokyo Stock Exchange, and information.

Ⅳ. Matters Related to the Internal Control System
1. Basic Views on Internal Control System and the Progress of System Development
The Group has formulated the basic policy for the internal control system described below, andclearly defines the authority and division of duties according to various internal rules in order to
execute business appropriately and efficiently, and appropriate internal control functions.
a. System to ensure that the execution of duties by directors and employees of the Group
complies with laws and the Articles of IncorporationA.

The Company and its subsidiaries (hereinafter referred to as the “Group”) position
the practice of compliance as a key management issue, and in order to comply withlaws and regulations, the Articles of Incorporation, and social norms, etc. necessary
for corporate activities and working to establish a compliance system, we haveestablished “Compliance Rules.” We will conduct activities to inform and educate thedirectors and employees of the Group on compliance, and establish a department tooversee the development and operation of the compliance system.

B.

The Group will establish a whistleblowing system based on “Internal
Whistleblowing Rules” to prevent fraudulent conduct and early detection, and toprevent disadvantageous treatment of whistleblowers.

C. Audits by corporate auditors will be conducted to confirm that the execution of duties
by directors of the Group is being carried out properly without violating laws, theArticles of Incorporation, and established regulations. When a corporate auditor
discovers facts that are or are likely to lack legality in the business of the Group, he /she points out the facts and advises the Company’s board of directors to revise thewrongdoings and request an injunction of the said actions.
D.

The Internal Audit Department audits legal compliance, property management, andother situations in each department of the Group based on the “Internal Audit
Regulations”, and reports and makes recommendations for improvement inaccordance with these regulations.

E.

Based on the “Compliance Rules”, the Code of Conduct shall be to eliminate any
unfair demand without being involved in any anti-social forces, and this shall be
communicated to directors and employees of the Group by the Group.

F.

For violations of laws and regulations, the Articles of Incorporation and otherinternal regulations by directors and employees of the Group, appropriate actions
including disciplinary action will be taken in accordance with the “Compliance
Rules” and various employment rules.

b. System for storing and managing information related to the execution of duties by directors of
the Group
1. The Group records information concerning the execution of duties by directors of the Groupin a document or electromagnetic medium in based on the “Document Management
Regulations”, and stores such information accordingly. Directors and members of the Audit
and Supervisory Board of the Group can view them as necessary.

2. The Group has appointed a person responsible for information management and aperson in charge of information management to appropriately manage undisclosed material
facts, etc. related to the execution of duties by directors, and to prevent insider trading, andin order to prevent information from leaking outside the Group, it will take necessary
measures such as storing undisclosed material facts in isolation.
3. Based on the “Basic Regulations on Information Security,” the Group has formed an
Information Security Committee to deliberate and decide on measures necessary tostrengthen the Group's information security. In addition, we will strive to reduce information
security risks by developing internal regulations on the management and operation of
information assets in compliance with laws, regulations, and norms, etc. related to
information security, and ensuring that all officers and employees are fully aware of theregulations necessary for ensuring compliance.
c. Regulations and other systems for managing risk of lossA.

The Group sets forth “Risk Management Rules” for the purpose of establishing andbuilding a risk management system for the Group's management activities, and set
up a risk management committee composed of officers based on this. The central
focus of the Risk Management Committee is to comprehensively identify the risks
associated with management activities in each division of the Group. The Risk
Management Committee will then report any risks that have been identified to theBoard of Directors and decide on management policies and measures for identified
risks. Each division of the Group will implement the necessary measures through anappropriate decision-making process based on the risk management policy andmanagement measures that have been decided upon, and the internal audit
department will conduct internal audits periodically or as necessary. Furthermore,
the department in charge of risk management will conduct periodic company-wide
education activities, promoting risk management and necessary information sharing
across the organization.

B.

Information sharing and regular discussions with each department of the Group will
be conducted across the organization to strive for early detection and prevention ofrisks. In the event of an unforeseen situation, an emergency response system will beestablished with the Risk Management Committee chairperson as the person in
charge of overall risk management based on the “Risk Management Rules”, andappropriate and prompt responses will be made to the situation, including
appropriate information transmission inside and outside the Company.

d. System to ensure that the execution of duties by directors of the Group is carried out
efficientlyA.

The Board of Directors of the Group makes decisions on legal matters, decisions onimportant management matters, and supervision of business execution. In addition
to holding a regular board meeting once a month, an extraordinary board meeting isheld as necessary to ensure quick and accurate decision-making.

B.

The Group has established an executive officer system to achieve the highest
standards of management and fulfill our responsibilities to customers, employees,society, and shareholders by dividing the roles between the Board of Directors, which
supervises management, and executive officers, who are responsible for executing
management, in order to promote streamlined and efficient business management bydelegating authority for the execution of business to executive departments.
Specifically, we have established a system in which the Group's business status canbe reported to and discussed with the Management Committee, which comprises allof our executive officers, in a timely manner and we have put in place a Board of
Senior Executive Officers as a meeting body to decide on important matters related
to the execution of the Group's business and discuss matters referred to it by the
President and CEO.

C. In each department of the Group, various authorities and duties are transferred anddivided according to the “Rules for Delegation of Authority” and “Rules for Divisional
Duties”, and responsibilities are clarified to ensure speed and efficiency.
D.

The Group shall verify the rationality of procedures and assignment of duties
necessary for the execution of duties by the directors of the Group, and to grasp theexcess and deficiency of the number of employees necessary for the execution ofduties and to improve the situation by internal audit, and understand and verify thesystem for further improvement.

e. Other systems to ensure the appropriateness of business in the GroupA.

The management divisions manage subsidiaries based on the affiliated company
management regulations.

B.

The Company receives relevant documents from the management division in charge
at its subsidiaries with respect to important matters related to the overallmanagement of the subsidiary and based on the Rules for Delegation of Authority
also receives reports on important matters and discusses or approves them.

f. Matters regarding employees who support the Audit and Supervision Board Member whenrequested, and matters regarding how such employees can be independent from the Directors
If Audit and Supervision Board Member requires having employee(s) of the Company toassist in their duties one or more employees who assists the duties of the Audit andSupervision Board Member will be assigned as necessary after consultation with such
Members. In addition, with regard to the duties of employees who assist the duties ofcorporate auditors, they will not receive orders from Directors or other superiors. The
personnel changes and treatment will be determined by discussion between the Directors andthe Audit and Supervision Board Members, and independence from the Directors will beensured.
g. System for reporting to the Audit and Supervision Board Members by Directors and employeesof the GroupA.

Audit and Supervisory Board members attend important meetings such as theBoard of Directors of the Company, Senior Executive Officers Committee and theManagement Committee in order to grasp important decision-making processes andthe status of business execution, and can browse various documents and request
explanations from the Directors and employees of the Group as necessary.

B.

Directors and employees of the Group report to Audit and Supervisory Board
Members matters that have a significant impact on operations or performance, thestatus of implementation of internal audits, the status of reports by thewhistleblowing system, and their contents, in addition to legal matters. We will
establish a system and cooperate so that information can be collected and exchanged
properly by Audit and Supervision Board Members.

h. System to ensure that the person who made the report in the previous item is not subject tounfavorable treatment because of the whistleblowing report
The Group prohibits its Directors and employees from treating the whistleblower(s)unfavourably because of the whistleblowing report he/she has made, and thoroughly educate
the Directors and employees to that effect.
i. Prepayment or reimbursement of expenses arising from the execution of duties by Audit andSupervisory Board Members, and other matters relating to policies relating to the processing ofexpenses or obligations arising from the execution of such duties,
When requested, the expenses or obligations will be processed promptly unless it isreasonably deemed not necessary for the execution of the duties of Audit and Supervision
Board Members.
j. Other systems for ensuring that audits by Audit and Supervision Board Members are
conducted effectively
Audit and Supervision Board Members can cooperate with internal audit division to
exchange information and attend internal audits as necessary. In addition, Audit andSupervision Board Members can meet regularly with the Accounting Auditor to exchange
information and request reports from the Accounting Auditor as necessary.
k. System to ensure reliability of financial reporting
To ensure the reliability of the Group’s financial reporting, we implement and maintaininternal control over financial reporting and continuously and appropriately evaluate andreport on the effectiveness of our internal controls.

2. Basic Views on Excluding Anti-social Forces and the Progress of System Development
The Group shall not have any contact with or support for anti-social forces and shall resolutely reject
any unreasonable demands from such forces. For this purpose, we have established the "Regulations
on the Exclusion of Antisocial Forces" and ensure that all employees are aware of these regulations.
In the event of an attack, such as interference with management activities, assault, or slander, theLegal & Compliance Division will centrally manage the response and the entire organization willtake a resolute action. When new transactions are made, the Company conducts anti-social checks
using the Nikkei Telecon, etc., based on the rules and manuals, and includes a clause on the
exclusion of anti-social forces in the contractual clause when new transactions are made.

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

Supplementary Explanation-

Not Adopted

2. Other Matters Concerning Corporate Governance System

[Chart of Corporate Governance System][Overview of Timely Disclosure System (in Chart)]

REDACTED - Please refer to the original Corporate Governance Report for Reference