Corporate governance fundamental policies

In order to continue being a company trusted by customers and society, we are striving to enhance our corporate governance. We will continue to meet the expectations of our various stakeholders, maximize our corporate value, and further strengthen our structure.

Fundamental Approach to Corporate Governance

The Company recognizes that the enhancement of corporate governance is extremely important to improve corporate value amid a rapidly changing and increasingly severe business environment. We have, therefore, adopted the fundamental policies of transparency, efficiency, and soundness in corporate management, as well as thorough compliance and other risk management, and are striving to achieve these.

◆Corporate Governance Structure

Board of Directors Skills Matrix (as of June 24, 2025)

The Company expects each Director to have the following skills:

Name

Corporate Management and

Business Strategy

Technology and IT

Sales and Marketing

HR

Financial Affairs

Risk Management

Global Experience

Sustainability and

ESG

Hidetaka Nakagita

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Takanori Ashikawa

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Hirohiko Kyoho

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Yasuaki Hori

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Yasunori Arai

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Masashi Kaneko

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Seiichi Hashimoto★

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Masako Osuna★

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Junko Ogushi★

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Assessment of the Effectiveness of the Board of Directors

Overview of the assessment process

A questionnaire and interview were carried out with nine Directors, including outside Directors, and four Audit & Supervisory Board Members, including outside Audit & Supervisory Board Members. In the interview conducted by an external consultant, we sought to understand whether the Board of Directors is aware of issues related to the composition, operation, and agenda of the Board, based on the important issues of corporate governance and the responses to the issues identified in fiscal 2023, as well as the advice of the external consultant. Based on the results of the external consultant’s analysis of the responses, the Board of Directors deliberated on the effectiveness of the Board of Directors.

Overview of the Results

As a result of the above discussions, we confirmed that the composition of the Board of Directors meets the requirements of the Corporate Governance Code and that the composition and operation of the Board of Directors are generally appropriate as a system for decision-making and supervision of business operations. Furthermore, we decided to arrange other opportunities separate from Board meetings to deepen discussions on management issues from a medium- to long-term perspective.

Future Responses

By considering the issues identified, the Company’s Board of Directors will work to further improve the effectiveness of the Board of Directors. The Company will continue to share issues and improve the effectiveness of the Board of Directors based on the assessment of the Board’s effectiveness.

Cross-shareholdings

  1. The Company holds cross-shareholdings for the purpose of contributing to the sustainable growth of the Company through maintaining and strengthening long-term and stable relationships of trust with key business partners and various stakeholders. This is with the aim of contributing to the enhancement of its corporate value over the medium to long term.  

  2. The Board of Directors annually adjudicates the appropriateness of holding cross-shareholdings after comprehensively examining the rationale for holding these stocks from both quantitative and qualitative perspectives for each individual stock.

  3. Specifically, first, on the quantitative side, we verify whether the return on capital, including the following, is commensurate with the cost of capital: 
    (1) orders received directly or through referrals, 
    (2) expansion of orders received through joint sales, 
    (3) supply of human resources, and 
    (4) other business synergies. 
    In addition to quantitative verification, from the qualitative side, we assess the possibility for further synergy expansion driven by the potential for future business expansion and are working through a comprehensive evaluation.

  4. Since fiscal 2010, as a result of the implementation of the assessment of the suitability of holdings, a total of 31 stocks have been sold by the end of fiscal 2023, and the Company has been working to reduce the number of issues.

  5. Through the implementation of the above verification, the Company will continue to reduce the number of shares it holds that are judged to have no purpose or rationale for holding. Cross-shareholdings

Internal Control System

Based on the Companies Act of Japan, the Board of Directors resolved to establish an Internal Control System Basic Policy to ensure the proper conduct of business. We are appropriately maintaining and operating systems—covering[p1.1] compliance, information storage and management, risk management, efficient job execution, Group company management, and auditor audits—in accordance with our current business operations.

Internal Control over Financial Reporting

Regarding “internal control related to financial reporting” based on the Financial Instruments and Exchange Act of Japan, we implemented an assessment test of the effectiveness of Company-wide internal control, financial reporting process control, IT control, and business process control. The three companies subject to the assessment were the Company and two subsidiaries. Based on the results of the most recent test performed, such internal controls of the Group were effective for fiscal 2023.