ＳＢＩ（8473） – [Delayed]Corporate Governance Report Dec.22,2021

(Note) This document has been translated from the Japanese original for reference purposes only. Where there are any discrepancies between the Japanese original and the translated document, the original Japanese document shall prevail. Corporate Governance Report SBI Holdings, Inc. Last Update: Dec. 22, 2021 SBI Holdings, Inc. Yoshitaka Kitao, Representative Director, President & CEO Contact: Corporate Communications Dept. Securities Code: 8473 http://www.sbigroup.co.jp/english/ The corporate governance of SBI Holdings, Inc. (hereinafter “SBI Holdings” or the “Company”) is described below. I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information 1. Basic Views A company’s stakeholders consist of customers, shareholders, and employees as well as consumers, business partners, and local communities at large. The SBI Group recognizes its sociality as an element that constitutes society and undertakes business operations entirely from a customer perspective, based on its fundamental “Customer-centric Principle,” with a view to contributing to the maintenance and development of society through businesses while responding to requests from a wide range of stakeholders. The Group considers that gaining social trust is essential in each process of the businesses it conducts. Accordingly, with also a view to establishing an appropriate corporate governance structure that contributes to the improvement of corporate value, it strives to maintain an organizational structure that responds rapidly to any change in the transparency/fairness of decision-making processes and business environments. [Reasons for Non-compliance with the Principles of the Corporate Governance Code] Updated This report is posted pursuant to the Corporate Governance Code revised in June 2021. [Supplementary Principle 3.1.3 Activities for Sustainability] (Disclosure of information about the impact of climate change in Supplementary Principle 3.1.3) The Company recognizes that environmental issues including risks associated with climate change are an important social issue and will continue to consider its policy for environmental activities and way to disclose information. [Disclosure Based on the Principles of the Corporate Governance Code] Updated [Principle 1.4 Cross-Shareholdings] ■ Strategic shareholding policy When engaging in business alliances or cooperation that contribute to the SBI Group’s business development and enhancement of the Company’s corporate value, the Company may acquire and hold shares of business partners with a view to earning profits through their future sale if it is rational to do so for reasons such as prospective enhancement of the corporate value of business partners. The Board of Directors individually examines the objective and rationale for those listed shares that are held from a strategic reason, on an annual basis. Specifically, the Board of Directors conducts assessments from qualitative perspectives, – 1 – such as whether or not the holding of shares contributes to the maintenance and strengthening of the relationship with the relevant parties, and quantitative perspectives, such as whether or not dividends or earnings from transactions related to the relevant parties are in line with the Company’s capital cost. If it decides that there is no rationale in such holding after a comprehensive examination, the Company, in principle, starts to sell such shares that are held. In a certain case where the Company’s shares are held by a strategic shareholder, it will not engage in economically unreasonable transactions that are detrimental to the joint corporate and shareholder interests with the relevant company. If the relevant shareholder of strategic holdings indicates an intention to sell such holdings, the Company takes appropriate measures, instead of preventing the sale of such holdings by indicating the possibility of reducing transactions and other means. ■ Policy on exercise of voting rights The Company exercises voting rights after confirming that the content of proposals submitted to General Meetings of Shareholders does not damage the SBI Group’s corporate value and taking into consideration the circumstances of investee companies. The Company does not hold any strategic shareholdings as of the end of March 2021. [Principle 1.7 Related Party Transactions] When the Company engages in a transaction with a principal shareholder (a shareholder holding 10% or more of voting rights) or when the Company engages in a transaction with a Director of the Company, approval of the Board of Directors shall be required. Apart from the above, when the Company or a subsidiary of the Company engages in a transaction with a related party, the Board of Directors shall appropriately monitor the details of the transaction. [Supplementary Principle 2.4.1 Ensuring Diversity in the Recruitment, etc. of Core Human Resources] The Company believes that people are the sources of creativity and the major cause of differentiation that forms competitiveness. It provides open employment opportunities as a “comprehensive corporate group” that achieves innovation without being restricted by conventional ideas. The Company respects human rights and is developing an environment that allows diverse human resources to maximize their abilities and motivate one another to encourage personal growth, irrespective of gender, educational background, nationality, race, disability, sexual orientation, gender identity, and other attributes. The Company also fosters human resources who will achieve personal growth and pass on the Company’s unique corporate culture. It achieves sound employee motivation through fair and rewarding evaluation and employee treatment systems and an extensive system of education. In 2018, the Company introduced an advanced specialist system that would allow treatment that differs from the conventional frameworks of salaries and working patterns, based on the idea that securing human resources in charge of operations requiring high specialization would become even more necessary. Numerical targets for ensuring diversity The Company believes that maintaining diversity is essential to achieving its new medium-term vision and has set a female manager ratio of at least 20% and a foreign-national employee ratio of at least 40% as targets to consistently strive aim to achieve until 2025. The Company will continue to steadily work towards these targets and raise and maintain the current ratios (26.9% and 43.1%, respectively, as of September 30, 2021). Status of ensuing diversity (as of March 31, 2021) [global, consolidated] ratio of female executive officers: 12.6%; ratio of foreign-national employees: 43.0% [domestic, consolidated] ratio of female managers: 16.0% [the Company, non-consolidated] ratio of female managers: 24.6%; ratio of foreign-national managers to all managers: 12.3%; ratio of managers who were mid-career recruits to all mid-career recruits: 84.4% See the following website for information about the Company’s human resource development. • Enhancing Human Capital Value: https://www.sbigroup.co.jp/english/sustainability/social/employee.html – 2 – [Principle 2.6 Roles of Corporate Pension Funds as Asset Owners] The Company is not engaged in the operation of a corporate pension and has introduced and operates a defined contribution pension plan only but, considering that operation of the defined contribution pension plan has a significant impact on employees’ asset formation, the Company makes a multifaceted judgment on the selection of the operational institution and also seeks appropriate operation of the plan through the provision of training on plan operation to employees and supervision of the operational management organization. [Principle 3.1 Full Disclosure] (1) Company objectives (e.g., business principles), management strategies and management plans Please refer to the Company’s Management Philosophy, corporate vision and business strategies posted on the Company’s website, respectively. Management Philosophy: http://www.sbigroup.co.jp/english/company/information/concept.html Corporate vision: http://www.sbigroup.co.jp/english/company/information/vision.html Business strategies: http://www.sbigroup.co.jp/investors/management/strategy_01.html (Note: The website for business strategies is available only in Japanese.) (2) Basic views and principles on corporate governance Please refer to the Company’s Corporate Governance Principles posted on its website. https://www.sbigroup.co.jp/english/sustainability/governance/policy.html (3) The Board of Directors’ policies and procedures for determining the compensation of Directors Compensation for Directors (excluding Outside Directors) consists of basic compensation, which is fixed compensation, as well as bonuses based on business results, etc. and restricted stock units (RSUs), a stock compensation plan. The Board of Directors determines the amounts to be paid after receiving feedback from the Management Advisory Committee, taking into consideration a range of factors such as the details of duties and the level of responsibility, authority and contribution, within the range of the total compensation amount approved at the General Meeting of Shareholders. As for the compensation for Outside Directors, it consists of basic compensation, which is fixed compensation, as well as bonuses based on business results, etc., and the Board of Directors also determines the amounts to be paid within the range of the total compensation amount approved at the General Meeting of Shareholders. However, if the Board of Directors leaves the decision for either case to the Representative Director, the Representative Director makes such decision. In terms of the policies for determining the compensation of Executives and Directors, please refer to “II-1 Organizational Composition and Operation, [Director Remuneration] Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods” of this report. (4) The Board of Directors’ policies and procedures for the appointment of the candidates for Directors and Statutory Auditors [Nomination of Director Candidates] ■ Procedure To determine Director candidates, the Representative Director selects individuals that he/she considers to be qualified based on the performance of their duties. Meanwhile, the Board of Directors designates Director candidates after consulting with the Management Advisory Committee regarding whether or not such candidates satisfy the qualities and abilities required for Directors or management personnel and appoints them as Directors through the resolution of the General Meeting of Shareholders. ■ Policy With respect to the designation of Director candidates, attention shall be paid to securing a reasonable number of members to convene meetings flexibly and conduct discussions actively. In addition, the matters listed below shall be considered while simultaneously considering the balance between knowledge, experience, capabilities and roles that are expected of Directors, regardless of their nationality, race or gender. Director candidates are determined by considering the following two requirements; – 3 – a Director candidates recognize their fiduciary duty to shareholders and have qualities that enable them to appropriately perform their duties with the care of a prudent manager and loyalty toward the Company. b Director candidates possess sufficient professional knowledge and a wealth of experience in management or management supervision and are able to engage in appropriate decision-making to contribute to enhancing the Company’s corporate value. Candidates for Independent Outside Directors are expected to have sufficient insights to supervise management from a third-party perspective, extensive job experience, high-level expertise in areas such as company management, financing, accounting and laws, or knowledge and experience of the Company’s business areas. If Independent Outside Director candidates concurrently hold positions as officers of other companies, it shall be possible for them to appropriately fulfill the abovementioned role in the Company. Director candidates the Company plans to appoint as management executives are expected to be able to contribute to the enhancement of the Company’s corporate value utilizing their knowledge and experience of the SBI Group as a whole or the SBI Group’s important businesses. [Nomination of Statutory Auditors Candidates] ■ Procedure To determine Statutory Auditor candidates, the Representative Director selects individuals that he/she considers to be qualified based on the performance of their duties. Meanwhile, the Board of Directors designates Statutory Auditor candidates with the consent of the Board of Statutory Auditors following the consultation with the Management Advisory Committee regarding whether or not such candidates satisfy the qualities and abilities required for Statutory Auditors, and appoints them as Statutory Auditors through the resolution of the General Meeting of Shareholders. ■ Policy At the time of determining Statutory Auditor candidates, the Board of Directors nominates candidates considering the following matters, having taken into account that at least one person with sufficient knowledge of finance and accounting be appointed. Statutory Auditor candidates who are capable of making appropriate decisions from an independent and objective standpoint in accordance with their fiduciary duty to shareholders. Statutory Auditor candidates who endeavor to maintain an independent stance, always maintain a fair and unbiased attitude, and are able to act on the basis of their own convictions. Statutory Auditor candidates who have a wealth of knowledge and experience of financing, accounting and law, or have extensive accomplishments in professional fields necessary for performing the audit function. (5) Explanations on the election, dismissal and the appointment of each candidate for Director and Statutory Auditor It is disclosed in the convocation notice for the 23rd Ordinary General Meeting of Shareholders. Please refer to “Convocation Notice for the 23rd Ordinary General Meeting of Shareholders” posted on the Company’s website. http://www.sbigroup.co.jp/english/investors/share/pdf/23th_convocation_notice_en.pdf [Supplementary Principle 3.1.3 Activities for Sustainability, etc.] The Company strives to contribute to the development and maintenance of society based on its unchanging concept since its founding, namely that a company is a constituent of society and is able to continue to exist only because it belongs to society. The underlying aspiration is to make our society fair, comfortable, environmentally friendly, and safe, rather than simply seeking profit. With this aspiration, the Company will strive to achieve both the creation of sustainable society and an increase in corporate value by commercializing appropriate activities in light of social justice and actively engaging in direct social contribution, thereby facilitating solution of social issues. The Company will establish its Basic Sustainability Principles in December 2021 and appropriately respond to and help solve social issues based on this policy in the future. – 4 – Investment in human capital and intellectual capital In addition to on-the-job training (OJT) on specialized knowledge in various fields held at each company in the SBI Group, SBI Graduate School established in 2008 with full support of the SBI Group is used to provide training. Promotion to a senior managerial position requires the completion of the SBI Group Senior Manager Training Program. A corporate dispatch system is available to employees who wish to learn business administration more broadly, and as of March 31, 2021, 132 employees were using this system to earn a Master’s degree in business administration. See Supplementary Principle 2.4.1 for the information about the Company’s idea of human resources. In terms of intellectual capital, the Company supports the growth of companies that possess innovative technologies and findings through investment in ventures and other projects. In addition to the introduction of such innovative technologies, the company is contributing to the development of new industries and social technological innovation by providing new financial services using innovative technologies and through cross-industrial expansion of technologies outside the Company. To secure human resources for advanced information technology, the Company develops its own data scientists and plans also to acquire human resources through M&As. Please see the following websites for the information about the Company’s idea of sustainability. Sustainability of the SBI Group: https://www.sbigroup.co.jp/english/sustainability/ Basic Sustainability Principles & the SBI Group’s Materiality: https://www.sbigroup.co.jp/english/sustainability/policy.html SDGs Initiatives: https://www.sbigroup.co.jp/english/sustainability/sdgs/index.html [Supplementary Principles 4.1.1 Scope and Content of the Matters Delegated to the Management] The Board of Directors makes decisions on matters stipulated by laws and regulations and matters stipulated as important matters and, to rapidly and flexibly respond to changes in the business environment, delegates business execution authority for other matters to authorized persons designated by the Representative Director in accordance with rules for delegation of authority decided by the Board of Directors. [Principle 4.8 Effective Use of Independent Directors] The Company is working on strengthening the supervisory functions of the Board of Directors while increasing management transparency from an outside perspective through the use of multiple Independent Outside Directors. The Company currently appoints seven Independent Outside Directors, who meet the independence criteria established by the Company, with a view to secure over one-third of the total number of Directors as Independent Outside Directors. Furthermore, the Company established the Management Advisory Committee, a voluntary advisory organization for the Board of Directors, in which the majority of the committee members are the abovementioned Independent Outside Directors. The Committee is operated for the purpose of being properly involved with the function of the Board of Directors and the deliberation processes thereof related to the designation of candidates for Directors and Statutory Auditors, the appointment/dismissal of management executives, compensation for Directors, as well as the development of the next generation of management executives. In doing so, the Committee increases the objectivity and transparency of the decisions the Board of Directors makes, and further enhance the Company’s corporate governance system. In the meantime, Independent Outside Directors engage in proper and active discussions at meetings of the Board of Directors and seek to exchange information and share recognition based on an objective standpoint at such meetings that are held periodically to execute the duties properly from an independent standpoint. [Principle 4.9 Independence Standards and Qualification for Independent Directors] Please refer to SBI Holdings’ Independence Criteria for Outside Directors in the Company’s Corporate Governance Principles posted on its website. https://www.sbigroup.co.jp/english/sustainability/governance/policy.html#_2 – 5 – [Supplementary Principle 4.10.1 Concept of Independence of the Composition of Committees and Their Authority, Roles, etc.] Currently, an independent Management Advisory Committee is placed under the Board of Directors, and seven of the nine members, or more than two thirds of the members, of the Committee are independent Outside Directors. The chairperson of the Committee is elected by the Committee members who are independent Outside Directors. The roles of the Committee are described in II-1 Voluntary Establishment of Committee(s). [Supplementary Principle 4.11.1 Concept of Diversity and Scale and Policy and Procedure for the Appointment of Directors] Diversity in the Board of Directors is described in “Policy and Procedure of the Board of Directors for Nominating Candidates for Directors and Statutory Auditors.” The Company has also prepared a matrix of skills (specialization and experience) required of Directors to appropriately make decisions and function as management supervisors. Please see the final page of this report for the skill matrix of Directors. [Supplementary Principles 4.11.2 Status of Concurrent Posts Held by Directors and Statutory Auditors] The status of concurrent posts held by Directors and Statutory Auditors is disclosed in the Reference Materials for the General Meeting of Shareholders (“Proposals on the election of Directors and Statutory Auditors”) and the Business Report (“Company Officers”). [Supplementary Principles 4.11.3 Analysis and Evaluation of the Effectiveness of the Board of Directors] The Board of Directors strives to improve its effectiveness by analyzing and evaluating the overall effectiveness of the Board of Directors once a year, and endeavors to improve issues that are identified. Please refer to “Summary of the Evaluation Results on the Effectiveness of the Company’s Board of Directors (available only in Japanese)” on the following website. http://www.sbigroup.co.jp/news/2021/0325_12375.html [Supplementary Principles 4.14.2 Training Policy for Directors and Corporate Auditors] The Company has prepared a training environment for the acquisition and updating of knowledge that each Director and Statutory Auditor is required as a business executive. In addition, the Company has prepared a training environment for newly appointed Directors and Statutory Auditors appropriately and on a timely basis to deepen their understanding of the SBI Group as necessary. [Principle 5.1 Policy for Constructive Dialogue with Shareholders] For the purpose of actively engaging in dialogues to establish good relationships with investors, including shareholders, through investor relations activities, based on the following basic policy, the Company will endeavor to improve the system. Please refer to the basic policy for constructive dialogue with shareholders in the Company’s Corporate Governance Principles posted on its website. https://www.sbigroup.co.jp/english/sustainability/governance/policy.html#_01 2. Capital Structure Foreign Shareholding Ratio More than 30% [Status of Major Shareholders] Updated Name / Company Name The Master Trust Bank of Japan, Ltd. (Trust account) Number of Shares Owned 34,204,100 Percentage (%) 13.97 – 6 – Custody Bank of Japan, Ltd. (Trust account) NORTHERN TRUST COPMPANY (AVFC) ACCOUNT NON-TREATY The Bank of New York Mellon 140051 The Bank of New York Mellon 140042 Custody Bank of Japan, Ltd. (Trust account 9) Yoshitaka Kitao State Street Bank West Client Treaty 505234 State Street Bank and Trust Company 505223 JP Morgan Chase Bank 385781 Controlling Shareholder (except for Parent Company) Parent Company ― None Supplementary Explanation Updated 12,787,727 12,567,178 10,746,336 6,697,331 5,585,139 4,007,960 3,791,917 3,168,023 3,141,686 5.22 5.13 4.39 2.74 2.28 1.64 1.55 1.29 1.28 Status of Major Shareholders was current as of September 30, 2021. While the large shareholding report (change report) made available for public inspection indicates the following ownership of the Company’s shares, the Company is unable to verify the actual number of shares held as of September 30, 2021, and therefore, the above status of large shareholders is presented based on the shareholder registry. • J O Hambro Capital Management Limited and its joint holders change report dated December 13, 2021: number of shares held 18,098,902 (7.40%) • Sumitomo Mitsui Trust Asset Management Co., Ltd. and its joint holders change report dated October 21, 2021: number of shares held 16,608,540 (6.79%) • Mizuho Securities Co., Ltd. and its joint holders change report dated April 22, 2021: number of shares held 12,722,946 (5.11%) • Nomura Securities Co., Ltd. and its joint holders change report dated January 20, 2021: number of shares held 22,629,104 (8.40%) • SMBC Nikko Securities Inc. and its joint holders change report dated July 7, 2020: number of shares held 9,699,232 (4.06%) • JP Morgan Asset Management Inc. and its joint holders change report dated December 19, 2019: number of shares held 10,839,137 (4.55%) Baillie Gifford & Co. Limited and its joint holders change report dated October 15, 2019: number of shares held 31,736,805 (13.42%) • BlackRock Japan Co., Ltd. change report dated January 21, 2019: number of shares held 12,996,078 (5.49%) 3. Corporate Attributes Fiscal Year-End Listed Stock Market and Market Section Tokyo Stock Exchange, First Section March – 7 – Type of Business Securities & Commodity Futures Number of Employees (consolidated) as of the End of the Previous Fiscal Year Sales (consolidated) as of the End of the Previous Fiscal Year More than 1,000 persons From ¥100 billion to less than ¥1 trillion Number of Consolidated Subsidiaries as of the End of the Previous Fiscal Year From 100 to less than 300 4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder ― 5. Other Special Circumstances which may have Material Impact on Corporate Governance [Policies regarding Group management as a company with listed subsidiaries, the significance of holding listed subsidiaries and concepts concerning the securing of effective corporate governance systems for listed subsidiaries] As the SBI Group has a diverse array of business fields, certain investors have stated that the overall picture of the Group’s business is difficult to understand. As a solution, the Company is promoting initial public offerings of its subsidiaries, thereby ensuring that the value of each business entity is clarified, and the overall corporate value of the Group is more visible. The Company believes that through public stock offerings each company in the SBI Group can enhance its capital-raising capability and strengthen its financial position to become more independent. On the other hand, in order to protect minority shareholders, the SBI Group respects the independence of each company’s business management and secures fair and reasonable transactions according to the arm’s length rule. For example, in the SBI Group, the Company has a business management agreement with each listed company and has established a system, based on this agreement, under which only matters subject to timely and appropriate disclosure, etc. are reported to the Company, including consolidated business performance management, business alliance with other companies and acquisitions and dispositions of investment securities (those regarding cross shareholding). In addition, it is stipulated that the Company has the right to investigate subsidiaries when there is a risk that they may jeopardize the Group’s reputation. However, the Company respects each listed company’s independence and entrusts the listed company’s own business management to the listed company. [Morningstar Japan K.K.; listed on the 1st Section of Tokyo Stock Exchange] Considering that neutral characteristics are required in the business of Morningstar Japan K.K., it went public in 2000. Moreover, Morningstar Japan K.K. has the basic policy that transactions with the SBI Group shall be objective and fair. It has resolved at its Board of Directors to secure appropriate transactions with the SBI Group which shall be conducted, when such opportunity arises, based on the same basic terms and conditions as those used in transactions with other counterparties and at fair market prices. Furthermore, key auditing items in internal audits and audits by the Corporate Auditors of Morningstar Japan K.K. include inspection on whether the terms and conditions of transactions with the SBI Group are determined in the same manner as other general transaction terms and conditions. [SBI Insurance Group Co., Ltd; listed on the TSE Mothers market] SBI Insurance Group Co., Ltd. went public in 2018, based on the view that a public stock offering would promote the visualization of its business value as one of the core businesses of the SBI Group, as well as enable its subsidiary SBI Insurance Co., Ltd., in particular, to reinforce its capital for the improvement of the solvency margin ratio. – 8 – It is a basic policy of SBI Insurance Group Co., Ltd. to secure the same appropriate terms and conditions used in general transactions when transacting with the SBI Group, and in the event of conducting these transactions, it is committed to protecting the interests of shareholders other than the controlling shareholder by ensuring that decisions on transactions with the SBI Group shall be made after due deliberation on the fairness of the terms and conditions of the transactions at Board of Directors meetings, etc. In addition to the above, due to the high shareholding percentage, BroadBand Security, Inc., whose shares are listed on the TSE JASDAQ market, is recognized as a consolidated subsidiary from an accounting perspective. However, the Company is holding its shares solely for the purpose of pure investment. 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 Kansayaku Board [Directors] Maximum Number of Directors Stipulated in Articles of Incorporation Term of Office Stipulated in Articles of Incorporation Chairperson of the Board Number of Directors Appointment of Outside Directors Number of Outside Directors Number of Independent Directors 22 persons One year President 15 persons Appointed 7 persons 7 persons Outside Directors’ Relationship with the Company (1) Name Attribute Teruhide Sato Heizo Takenaka Yasuhiro Suzuki Hiroshi Ito Kanae Takeuchi Junichi Fukuda Hiroyuki Suematsu From another company Academic From another company From another company From another company From another company From another company Relationship with the Company* a b c d e f g h i j k * * * Categories for “Relationship with the Company” ”○” when the director presently falls or has recently fallen under the category; ““●” when a close relative of the director presently falls or has recently fallen under the category; △“▲”when a close relative of the director fell under the category in the past ” when the director fell under the category in the past a. Executive of the Company or its subsidiaries – 9 – b. Non-executive director or executive of a parent company of the Company c. Executive of a fellow subsidiary 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 listed company or an executive thereof f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a director/kansayaku g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) legal entity) (the director himself/herself only) i. Executive of a company, between which and the Company outside directors/kansayaku 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 Outside Directors’ Relationship with the Company (2) Name Designation as Independent Director Supplementary Explanation of the Relationship Teruhide Sato ○ ― Reasons of Appointment Mr. Teruhide Sato has wealth of experience and extensive knowledge, particularly in relation to Internet business in Asia. Since Mr. Sato meets the independence criteria and has no likelihood of any conflicts of interest arising with general shareholders, the Company deemed that he is qualified as an independent officer and has appointed him as the Independent Director. Mr. Heizo Takenaka has a wealth of experience and broad knowledge, which includes having served successively as the Minister of State for Economic and Fiscal Policy, the Minister of State for Financial Services, the Minister of State for Internal Affairs and Communications, and in other posts and teaching at Keio University and Toyo University, while also serving as an Outside Director in private companies. Since Mr. Takenaka meets the independence criteria and has no likelihood of any conflicts of interest arising with general shareholders, the Company deemed that he is qualified as an independent officer and has appointed him as the Independent Director. Mr. Yasuhiro Suzuki has a wealth of in a wide range of fields, experience including Internet business. Since Mr. Suzuki meets the independence criteria and has no likelihood of any conflicts of interest arising with general shareholders, the Company deemed that he is qualified as Heizo Takenaka ○ ― Yasuhiro Suzuki ○ ― – 10 – in an independent officer and has appointed him as the Independent Director. Mr. Hiroshi Ito has served successively in important positions, such as Representative Director of Marsh Japan, Inc., which is a global leading company providing services related to insurance and risk management, and has expert knowledge in insurance fields that the Group will focus on. The Company newly selected Mr. Hiroshi Ito as a candidate for Outside Director because the Company deems that he can adequately conduct duties as an Outside Director of the Company utilizing his wealth of experience and broad knowledge. Ms. Kanae Takeuchi has exceptional the field of “management expertise strategies women’s incorporating perspectives,” which the Company values deeply. As women continue to increasingly gain substantial authority in the selection of financial services for household finances, it has become important to conduct product development from the perspective of women, and one of the Company’s most important challenges is to ensure the Board of Directors heeds and perspectives” strengthens its approach in this regard. In addition, in light of the fact that she has been and is active in a broad range of areas and particularly in the media, it is anticipated that she will bring fresh viewpoints in relation to her supervision of the Company’s management, differing from Directors whose expertise lies within the Group business and industrial issues, and that she will reflect the opinions of the stakeholders of the Company, including many individual shareholders, at meetings of the Board of Directors, so the Company deems that she is an appropriate choice and has newly selected her as a candidate for Outside Director. Mr. Junichi Fukuda has served successively as the Vice-Minister of the Ministry of Finance and in other posts and has a wealth of experience in general financial issues. Since Mr. Fukuda meets the independence criteria and has no likelihood of any conflicts of interest arising with general shareholders, the Company deemed that he is qualified as an independent officer and has appointed him as the Independent Director. “women’s Hiroshi Ito ○ ― Kanae Takeuchi ○ ― Junichi Fukuda ○ ― – 11 – Hiroyuki Suematsu ○ ― as served has Mr. Hiroyuki Suematsu successively the Vice-Minister of Agriculture, Forestry, and Fisheries and in other posts and has a wealth of experience in all aspects of the agriculture, forestry, and fisheries industry and food industry. Since Mr. Suematsu meets the independence criteria and has no likelihood of any conflicts of interest arising with general shareholders, the Company deemed that he is qualified as an independent officer and has appointed him as the Independent Director. Voluntary Establishment of Committee(s) Corresponding to Nomination Committee or Remuneration Committee Established Committee’s Name, Composition, and Attributes of Chairperson 9 persons 0 0 7 persons 2 persons 0 person Committee Corresponding to Nomination Committee Committee Corresponding to Remuneration Committee Management Advisory Committee Management Advisory Committee All Committee Members 9 persons Committee’s Name Full-time Members Inside Directors Outside Directors Outside Experts Other Chairperson 0 0 7 persons 2 persons 0 person Outside Director Outside Director Supplementary Explanation Updated The Management Advisory Committee, an independent advisory body placed under the Board of Directors, comprises members, more than two thirds of whom are independent Outside Directors, who are appropriately involved in the nomination of candidates for Directors and Statutory Auditors, the election and dismissal of management executives (President, Vice President, Senior Managing Director, Managing Executive Officer, and other executive Directors), decisions on the remuneration for Directors, the functions of the Board of Directors and the deliberation process for the development of the next generation of management executives. The Committee operates for the purpose of raising the objectivity and transparency of such decisions and further improving the Company’s corporate governance. Since the Committee members who are independent Outside Directors satisfy the criteria for independence specified by the Company, the Company considers that the independence of the Committee, more than two thirds of whose members are independent Outside Directors, is ensured and the Commitee is able to appropriately play its roles from an independent standpoint. The Committee meets more than once every quarter each fiscal year, deliberates on the above and other matters inquired by the Board of Directors, and reports its answers to the Board of Directors. Taking into account the reports, the Board of Directors makes important decisions such as the nomination of candidates for Directors and Statutory Auditors and remuneration for Directors. The secretariat of the Committee is managed by person(s) designated by the Representative Director, who hold Committee meetings, prepare and store minutes of meetings, and engage in other general affairs by order of the Chairperson of the – 12 – Committee.*The Committee functions as a voluntary committee corresponding to both a Nomination Committee and a Remuneration Committee. [Member of the Management Advisory Committee] Independent Outside Director: Mr. Heizo Takenaka, Mr. Teruhide Sato, Mr. Yasuhiro Suzuki, Mr. Hiroshi Ito and Ms. Kanae Takeuchi, Mr. Junichi Fukuda, Mr. Hiroyuki Suematsu Outside Experts: Mr. Hirofumi Gomi and Mr. Yoshitaka Asaeda [Kansayaku] Establishment of Kansayaku Board Established Maximum Number of Kansayaku Stipulated in Articles of Incorporation Number of Kansayaku 4 persons The maximum number is not stipulated. Cooperation among Kansayaku, Accounting Auditors and Internal Audit Departments Regarding collaboration between the internal audit division and the Board of Statutory Auditors, collaboration occurs organically, with the internal audit division regularly reporting to and exchanging opinions with the Board of Statutory Auditors separately from the Board of Directors and also incorporating the requests of the Board of Statutory Auditors into the selection of audit themes and the scope of the audit. In their dealings with the Accounting Auditor, the internal audit division exchanges information mainly about internal control over financial reporting as appropriate and the Board of Statutory Auditors receives an explanation on the annual audit plan and other explanations based on audit reports at the end of the quarterly and annual accounting periods and also shares information about and discusses management-related issues and problems as necessary. Outside Directors and Outside Statutory Auditors ask them questions about reports or resolutions as appropriate and express opinions from an independent standpoint where necessary. Appointment of Outside Kansayaku Number of Outside Kansayaku Number of Independent Kansayaku Appointed 2 persons 2 persons Outside Kansayaku’s Relationship with the Company (1) Relationship with the Company* Name Attribute Toru Ichikawa Yasuo Sekiguchi From another company CPA a Categories for “Relationship with the Company” ”○” when the director presently falls or has recently fallen under the category; ““●” when a close relative of the director presently falls or has recently fallen under the category; △“▲”when a close relative of the director fell under the category in the past ” when the director fell under the category in the past b k h d c e g f i j △* * * a. Executive of the Company or its subsidiary b. Non-executive director or accounting advisor of the Company or its subsidiaries l m – 13 – c. Non-executive director or executive of a parent company of the Company d. Kansayaku of a parent company of the Company e. Executive of a fellow subsidiary 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 thereof h. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a kansayaku i. Major shareholder of the Company (or an executive of the 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) k. Executive of a company, between which and the Company outside directors/kansayaku are mutually (the kansayaku himself/herself only) appointed (the kansayaku himself/herself only) l. Executive of a company or organization that receives a donation from the Company (the kansayaku himself/herself only) m. Others Outside Kansayaku’s Relationship with the Company (2) Name Designation as Independent Kansayaku Toru Ichikawa ○ Yasuo Sekiguchi ○ Reasons of Appointment Mr. Toru Ichikawa has a wealth of experience in the financial sector. Since Mr. Ichikawa meets the independence criteria and has no likelihood of any conflicts of interest arising with general shareholders, the Company deemed that he is qualified as an independent officer and has appointed him as the Independent Statutory Auditor. Sekiguchi meets Mr. Yasuo Sekiguchi has a considerable degree of knowledge regarding finance and accounting. the Since Mr. independence criteria and has no likelihood of any conflicts of interest arising with general shareholders, the Company deemed that he is qualified as an independent officer and has appointed him as the Independent Statutory Auditor. Supplementary Explanation of the Relationship Mr. Toru Ichikawa used to serve as an Operating Officer of Mizuho Bank, Ltd., one of the Company’s major supplier, and its parent company Mizuho Financial Group, Inc., however after he left Mizuho Financial Group, Inc. in August 2008, he has not held any position an Operating Officer of Mizuho Bank, Ltd. and parent company Mizuho Financial Group, Inc. ― its as – 14 – [Independent Directors/Kansayaku] Number of Independent Directors/Kansayaku 9 persons Matters relating to Independent Directors/Kansayaku The Company has appointed all Outside Officers as Independent Directors/Statutory Auditors, insofar as they meet the qualifications thereof. [Incentives] Incentive Policies for Directors Stock Options Supplementary Explanation Updated No stock options were issued between April and December 22, 2021. Stock options issued during the fiscal year ended March 31, 2021, are as follows: [Overview of the Paid-In Capital Stock Options] (1) Type of shares granted through stock acquisition rights: Common stocks (2) Number of shares granted through stock acquisition rights: 3,300,000 shares (100 shares per 1 stock acquisition rights unit) (3) Payment amount in exchange for stock acquisition rights: JPY 5,500 per share (4) Amount to be paid for the exercise of stock acquisition rights: JPY 2,280 per share (5) Period for the subscription: July 3, 2023 to September 30, 2024 [Overview of the Qualified Stock Options] (1) Type of shares granted through stock acquisition rights: Common stocks (2) Number of shares granted through stock acquisition rights: 3,796,400 shares (100 shares per 1 stock acquisition rights unit) (3) Payment amount in exchange for stock acquisition rights: No payment of money shall be required (4) Amount to be paid for the exercise of stock acquisition rights: JPY 2,308 per share (5) Period for the subscription: July 3, 2023 to September 29, 2028 Inside Directors, Parent Company’s Employee, Subsidiaries’ Directors and Subsidiaries’ Employee Recipients of Stock Options Supplementary Explanation The Company grants stock options to Directors and employees of the Company and the Company’s subsidiaries to incentivize and motivate them to contribute to the Company’s consolidated performance and to help attract talent. [Director Remuneration] Disclosure of Individual Directors’ Remuneration Supplementary Explanation [FY2020] Selected Directors – 15 – JPY 656 million to 14 Directors, including JPY 72 million to 6 Outside Directors. [Directors whose total consolidated compensation is JPY 100 million or more] Yoshitaka Kitao: JPY 244 million Katsuya Kawashima: JPY 154 million Masato Takamura: JPY 120 million Policy on Determining Remuneration Amounts Established and Calculation Methods Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods [Policies and procedures for determining the compensation amount of Directors] 1. The Company has established the Management Advisory Committee, the majority of which is composed of Independent Outside Directors, in order to secure fairness and clarity in the processes for determining executive remuneration, etc. The policy on determining the amount and calculation method of executive remuneration, etc. is to be decided by the Board of Directors after receiving feedback from the Management Advisory Committee. The policy on determining the amount and calculation method of remuneration for Directors for the fiscal year ended March 31, 2021 was decided by the Board of Directors after receiving a report and feedback from the Management Advisory Committee. 2. The amount of remuneration, which is made up of fixed basic remuneration as well as bonuses based on the Company’s performance and restricted stock units, for each Director (excluding Outside Directors) is to be decided by the Board of Directors after receiving feedback from the Management Advisory Committee, and is to be within the total remuneration limits approved at the General Meeting of Shareholders. Similarly, the amount of remuneration for each Outside Director, which is made up of fixed basic remuneration and bonuses, is to be decided by the Board of Directors, and is to be within the total remuneration limit approved at the General Meeting of Shareholders. However, when these decisions have been entrusted to the Representative Directors by the Board of Directors, the Representative Directors will determine the above remuneration matters. The basic remuneration is paid by monthly monetary remuneration and the amount of basic remuneration for each Director will be decided based on the following: Basic compensation The amount of basic compensation is decided for each Director taking into consideration the following matters. The maximum amount of employee salary Remuneration paid to executives of the same rank in the past The Company’s business performance outlook The prevailing rate of compensation for directors The degree of contribution to the Company’s business performance The circumstances of assumption of office Other matters Bonuses and restricted stock compensation Bonuses are paid annually in principle, restricted stock units are paid in a timely manner during the term of office of each Director, and the amounts paid to each Director as bonuses and restricted stock units will be decided based on an overall assessment of basic factors, such as their work duties and how they are conducting their work, as well as the business environment, and their overall contribution to the Company. Accordingly, no particular quantitative targets are set. The ratio of the basic remuneration, bonuses, and restricted stock units will be decided appropriately based on the business environment, level of remuneration in other companies, and other factors so that such remuneration acts as an incentive to enhance corporate value. Remuneration of Statutory Auditors is made up of only fixed basic remuneration, and the amount – 16 – of remuneration for each Statutory Auditor is to be decided by consultation with the Statutory Auditors and is to be within the total remuneration limit approved at the General Meeting of Shareholders. [Supporting System for Outside Directors and/or Kansayaku] The Company will assign persons, who are nominated by the internal auditing division as employees with sufficient knowledge to support Statutory Auditors in their duties, to act as employees who are independent from the chain of command of Directors and who are required to support Statutory Auditors in their duties for a period determined through discussion with Statutory Auditors. [Situation of retired President & CEO and others] Names, etc. of counselors, advisors and others who are retired President & CEO and others Name Title/Position Job duties Employment type/conditions (full/part time, existence of remuneration, etc.) Date of retirement from office as President, etc. Term of office ― ― ― ― ― ― Total number of counselors, advisors and others who are retired President & CEO and others ― Other matters N/A 2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System) The Company’s Board of Directors is composed of fifteen Directors (thirteen men and two women), including seven (six men and one woman) Executive Directors who are responsible for the execution of business (as of the reporting date). Seven of the Directors are Independent Outside Directors which means that there is no risk of a conflict of interest arising between them and the Company’s general shareholders. The Board of Directors nominates the President and other Directors with specific titles such as Vice President and Senior Managing Director from among the Executive Directors and also clarifies where responsibility lies by specifying the segregation of duties and responsibilities of these directors. The Company has also adopted the Executive Officer system and appointed 11 Executive officers (nine men and two women) with expertise and insight comparable to that of the Directors. Furthermore, the Company uses a Senior Executive Officer system to actively promote the appointment of highly skilled professionals and have them contribute to business management. The Company believes that, with the governance structure outlined above, it will be able to adapt more appropriately, quickly and flexibly to an increasingly highly specialist, complex and rapidly changing operating environment. The Company’s Board of Directors meeting is convened, in principle, once every month or whenever necessary to make decisions on important matters and to supervise the execution of duties. The Company has also established a Management Advisory Committee, with a majority of the members being Independent Outside Directors, as a voluntary advisory body of the Board of Directors to increase objectivity and transparency in the Board of Directors’ functions and deliberation process in relation to matters such as the nomination of Director and Statutory Auditor candidates, the appointment and removal of senior management (Directors with specific titles such as President, Vice President and Senior Managing Director), compensation for Directors and also the development of next-generation senior management. – 17 – [Auditing and supervisory function] (Auditor’s audit) The Company is a company with a Board of Statutory Auditors, and the Statutory Auditors are responsible for ensuring an effective corporate governance structure worthy of public trust by auditing the execution of duties by Directors as organs that are independent from executive organs. The Company’s Board of Statutory Auditors is composed of four (four men and no women) Statutory Auditors, of whom two are Outside Statutory Auditors. One of the two Statutory Auditors who are not Outside Statutory Auditors is a Standing Statutory Auditor and has many years’ experience of accounting operations and knowledge of finance and accounting in the capacity of a certified public accountant, while the other has experience of working for many years at financial institutions and has extensive knowledge of the financial sector in general. Meanwhile, one of the Outside Statutory Auditors is a Standing Statutory Auditor and has many years of experience working for financial institutions and the financial authorities and has extensive knowledge of the financial sector in general, and the other has vast experience and specialist knowledge as a certified public accountant and tax accountant and has a considerable degree of expertise in finance and accounting. The actual audit procedures conform to the Statutory Auditors’ Audit Standards determined by the Board of Statutory Auditors, and the Statutory Auditors attend Board meetings and other important meetings, view important approval documents, etc., and exchange opinions as appropriate with Representative Directors and Directors, etc. and conduct their audits of company internal control systems in accordance with Audit Practice Standards for Internal Control Systems. (Internal audit) The Company has an internal audit division which is an organization that is independent from both business operation management and administration divisions. The internal audit division comprehensively and objectively evaluates the appropriateness of internal control systems which includes legal compliance, the appropriateness of business operations and the appropriate operation of internal controls and proposes improvements for and follows up any issues identified as a result of the audit. The internal audit division obtains assistance from Executive Officers and outside experts if necessary when conducting audits. The audit results are reported to the Representative Directors and the Board of Directors without delay after completion of individual audits and are also reported regularly to the Statutory Auditors. The internal audit division is composed of a general manager and members who have specialist knowledge of audits (internal audits, accounting audits, internal control, etc.), and it conducts audit procedures with reference to general internal audit standards, etc. (Accounting audits) The Company’s accounting audit was carried out by three certified public accountants who belong to Deloitte Touche Tohmatsu LLC, Kunikazu Awashima, Shigehiko Matsumoto and Toru Harada. In addition, twenty-two certified public accountants, eleven persons with accounting qualifications, etc. and twenty-two others assist with the Company’s audit operations. 3. Reasons for Adoption of Current Corporate Governance System The Company has selected a Company with Board of Statutory Auditors system as its organizational structure and has established a Board of Directors and Board of Statutory Auditors. The Board of Directors decides important matters, supervises the status of business execution, and in principle, by securing one-third of the total number of Directors as Independent Outside Directors who pose no risk of conflict of interest with general shareholders and meet the independence criteria established by the Company, strengthens the supervision of management appropriateness and improves management transparency. On the other hand, the Board of Statutory Auditors has the responsibility to establish a good corporate governance system that maintains the trust of society by auditing the Directors’ performance of duties as an organization independent from the executive bodies. In particular, the Statutory Auditors are directly elected by the shareholders and have the authority to conduct investigations of subsidiaries or audits at their sole discretion in the pursuit of responsibility of Directors. The Standing Statutory Auditors play a – 18 – central role in appropriately ensuring collaboration between the Statutory Auditors or Board of Statutory Auditors and Independent Outside Directors and Accounting Auditor. The Company believes that, through this structure as it now stands, the Company is able to uphold the basic principles of corporate governance, which are to ensure the rights and the equality of all shareholders, collaborate properly with other stakeholders besides shareholders, ensure appropriate information disclosures and transparency, execute the responsibilities of the Board of Directors, etc. and maintain dialogue with shareholders. III. Implementation of Measures for Shareholders and Other Stakeholders 1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting Rights Early Notification of General Shareholder Meeting Allowing Electronic Exercise of Voting Rights Participation Voting Platform in Electronic Providing Convocation Notice in English Other Updated Supplementary Explanations The Company aims to issue convocation notices at least three weeks before the ordinary General Meeting of Shareholders in order to give shareholders time to examine proposals. Shareholders are able to vote for or against proposals by accessing “the website for exercising voting rights” designated by the Company. Institutional investors are able to access the electronic voting platform operated by ICJ, Inc. An English translation of the information about proposals in the convocation notice for the ordinary General Meeting of Shareholders and an English version of the convocation notice is available on the Company’s website. The Japanese and English versions of the notice of convocation of the General Meeting of Shareholders are posted on the electronic voting platform operated by the Tokyo Stock Exchange and ICJ, Inc. and the Company’s website for reference in advance of the mailing to shareholders. The Company has been holding virtual General Meetings of Shareholders for hybrid attendance since the Ordinary General Meeting of Shareholders held in June 2020. Moreover, the Company holds a “debriefing session” after the ordinary General Meeting of Shareholders to answer a wide range of additional questions about the Company and to maintain dialogue with shareholders. In normal times, the Company also holds briefings about the businesses and strategies of the entire Group in a number of cities around the country to give individual shareholders a deeper understanding of the Group. 2. IR Activities Preparation and Publication of Disclosure Policy Supplementary Explanations The Information Disclosure Policy is posted on the Company’s website. [The Information Disclosure Policy] http://www.sbigroup.co.jp/english/investors/management/disclosure.html Presentation by Representatives – 19 – Regular Investor Briefings for Individual Investors Regular Investor Briefings for Analysts Institutional Investors and Regular Investor Briefings for Overseas Investors Posting of IR Materials on Website Establishment of Department and/or Manager in Charge of IR Stipulation of Internal Rules for Respecting the Position of Stakeholders Implementation of Environmental Activities, CSR Activities etc. Updated Yes Yes Yes In normal times, information briefings for shareholders are held semi-annually, after the 1H financial results and the full-year financial results announcements, at several cities across the country. For the fiscal year ended March 2021 were not held due to the COVID-19 pandemic. Presentation meetings for analysts and media are held every quarter after the announcement of the Company’s quarterly financial results. Upon requests from analysts/institutional investors, the Company holds face-to-face or online (Web/telephone conferences) as needed with the aim of facilitating communications. The president and officers of the Company periodically attend IR conferences held overseas by securities firms the aim of facilitating communications with with institutional investors in Europe, North America and Asia. For the fiscal year ended March 2021, the C