コーポレート・ガバナンスCorporate Governance

Supplementary principle 2.4.1: Ensuring Diversity in the Promotion of Core Human Resources

The Group strives to realize sustainable growth by recruiting of talented human resources as well as the talent development systems to enhance the capability of all our employees. This is based on the belief that the source of the Group's competitiveness and comprehensive capability originates from the diversity of the human resources and its utilization that will help in realizing the corporate mission and creating innovation that leads to resolving social challenges and corporate value creation. Additionally, we uphold equal opportunity and respect for diversity in accordance with the Spirit Venture Declaration as a member of GMO Internet Group, which states that "we do not tolerate prejudice on the grounds of race, nationality, gender, educational background, language, religion, or any other factors. We value people for their ability and merits." Based on our view that "workplace is where people can grow," the Group continuously works on workstyle reforms that includes the development of proprietary talent development programs and employee welfare and benefits, as well as to share the vision of business and corporate organization growth among all partners by providing the environment to fully exercise each person's potential. Recruitment activities are based on that individual's comprehensive abilities of views/opinions, passion and capability and does not consider gender, education, science-oriented or humanities/arts-oriented nor the nationality. There are no numerical targets based on personal attributes in order to secure equitable evaluation to all employees and equitable opportunity that is not based on personal attributes.
For further details on initiatives to secure diversity, please refer to "3 Measures to Ensure Due Respect for Stakeholder," found under "III Implementation of Measures for Shareholder's and Other Stakeholders." Information is also available in the Annual Securities Report, under "5 Strategies, Indicators and Targets Related to Human Capital" found under "2. Approach to Sustainability and Related Initiatives."(available in Japanese language only)

Principle 2.6: Roles of Corporate Pension Funds as Asset Owners

This principle does not apply as the Group does not adopt the Defined Contribution Pension plan.

Supplementary principle 4.1.2: Mid-Term Business Plan
Principle 5.2: Establishing and Disclosing Business Strategies and Business Plans

The Group works to maximize the group's corporate value by formulating mid-term management strategy and management plants based on a comprehensive assessment of the business' medium-term strategic value, profitability and risk, which is then decided and approved at the Board of Directors meeting and regularly monitored given the changes in the business environment. The monthly Board of Directors meeting discusses feedback and results to review the achievements of the monthly and annual targets in order to ensure an optimal business execution.
The Group is positioned in the drastically changing Internet industry and it is the agile and prompt responses of business strategies that has resulted in achieving a high growth every year. Hence, releasing a mid-term management plan spanning multiple years may result in misleading shareholders and investors and for this reason, a mid-term management plan is not disclosed.
Moreover, the plans for the current year and the relevant business strategy to achieve them are explained in detail at every quarterly financial results meeting in order to further the understanding of our businesses.

Supplementary principle 4.11.3: Analyzing and evaluating the overall effectiveness of the Board

The Group undertakes an annual analysis and evaluation of the effectiveness of the Board of Directors and strives to improve the functioning of the Board.
Specifically, the Group works to ensure that the Board's effectiveness is appropriately undertaken based on a wide perspective including, but not limited to, its organizational design, nomination and remuneration of each Board member, as well as the Board's composition and its operation and by incorporating objective and quantifiable methods such as questionnaires conducted to all Directors. Concurrently, the issues and problems revealed in the evaluation process is continuously addressed through improvement measures and implementation in order to further enhance the Board's functions.
The disclosure method of the overview of the results of these analyses and evaluations are under consideration.

Principle 1.4: Cross-Shareholdings

The Company may own so-called cross-shareholding shares if it is deemed to improve the medium-to-long-term enterprise value such as through potential business alliances and business synergies. The Company verifies the economic rationality of each of the cross-shareholding share by weighing the business rationale and the benefits of ownership (be it dividends, commercial deals and/or benefits from business synergies) against the capital cost of ownership. Investment decision is authorized by the Board or Executive Committee through careful consideration of the qualitative and monetary implication, depending on the importance of each transaction that are screened by the relevant department.
The exercise of voting rights of these cross-shareholdings is determined by comprehensively evaluating whether the proposal positively contributes to the issuer's enterprise value as well as its potential effect to the shareholder, i.e., the Group. Depending on the proposal, we will endeavor to reach a decision conducive to both the issuer and shareholder by holding discussions with the issuer where necessary.

Principle 1.7: Related Party Transaction

Transactions conducted between the Group and its Directors and/or major shareholders ('related party transactions') must be approved by the Board that includes several External Directors, following due discussion on the appropriateness of the terms and conditions and comparison with other third-party transactions, in order to ensure that such transactions do not harm the interests of the company nor the common interests of shareholders.
When the Board is deciding on such related party transaction, the Director related to the transaction will be excluded from the vote and will not be counted in the quorum of the Board.

Note that for transactions with the parent company will be considered and undergo deliberations by the Special Committee comprised of External Directors, an independent Director, whenever necessary.

Principle 2.6: Roles of Corporate Pension Funds as Asset Owners

The Group does not adopt the defined contribution corporate pension plan and, therefore, this principle is not applicable.

Principle 3.1: Full Disclosure

(1) Company Objectives, etc.

The Group's management principle is "Pursue both material and spiritual prosperity through our contributions to the progress and development of society." This management principle is founded on the Spirit Venture Declaration. Under our parent company GMO Internet Group, Inc.'s corporate slogan of "Internet for Everyone," GMO Internet, Inc. is engaged in the Internet Infrastructure Business, Online Advertising & Media Business, Internet Finance Business, Cryptoasset Business and the Incubation Business. The Spirit Venture Declaration embodies the spirit held since the founding of the company and is made aware and shared through various means to/with all GMO Internet, Inc. group companies and employees.
For further information on the Spirit Venture Declaration, please refer to GMO Internet Inc. website.
（https://www.gmo.jp/en/brand/#philosophy）

(2) Basic views and guidelines on corporate governance

For our basic views on corporate governance, please refer to this document's 1. Basic Views, found under the "I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information."

(3) Board policies and procedures in determining the remuneration of the senior management and directors

The basic policies and procedures in determining the remuneration of senior management and Directors are as follows:
1 Functions as an appropriate incentive to enable the medium-to-long-term improvement in enterprise value and sustainable growth.
2 Remuneration structure that reflects the level of contribution in value creation to stakeholders and reflects the Group's business environment and short-and-medium-term financial performance.
3 Reflects the performance results, roles and responsibilities of each individual Director and does not overly encourage risk-taking.
4 Remuneration must be deemed appropriate based on third party surveys of executive compensation levels in addition to reflecting the prevailing socioeconomic conditions and industry trends.
5 Must consider the regulations over director remuneration in both Japan and overseas as well as the group companies' financial results and financial soundness.
6 Must be determined in accordance with sound corporate governance and revised appropriately and in a timely manner to reflect socioeconomic conditions and the business environment in order to enable a sustainable improvement in corporate value.

Hence, the Director's remuneration is designed not only based on the short-term but to incentivize achievement of medium-to-long term improvement of financial performance. The Director's remuneration is composed of fixed remuneration consisting of fixed monthly amount paid to compensate the execution of duties, Director's bonus which is correlated to the financial performance of a business year and, stock compensation that is correlated to medium-to-long term financial performance. The External Directors, which are in an independent from executing on business operations are only paid a fixed remuneration.
In order to secure the transparency of the remuneration determination process and the appropriateness of the remuneration amount, the company has instituted the Nomination and Remuneration Committee that is chaired by an External Director, to act as the advisory body to the Board etc. The remuneration amount (including the bonus payments) for Directors is determined by the Board after due deliberations conducted at the Nomination and Remuneration Committee.
It is determined that the remuneration amount for each individual Director decided by the Board basically aligns with the Nomination and Remuneration Committee's report following the Committee's multi-faceted considerations to ensure consistency with the policies in determining the remuneration.
The Group's payment policy for Director's that hold concurrent positions at group companies is for the main company to be the payer of remuneration to that Director.

(4) Board policies and procedures in the appointment of the senior management and the nomination of Directors

For the policies and procedures in the appointment of the senior management and the nomination of Directors, please refer to this document's "Disclosure Based on Each Principle of the Corporate Governance Code and Views on Size, Diversity and Balance of Knowledge, Experience and Skills of the Board of Directors under the Supplementary Principle 4-11-1, found under 'I. Basic Information on Company's Characteristics and Capital Composition and Basic Views on Corporate Governance'" as well as "2. Matters on Functions of Business Execution, Audit and Supervision, Nomination, and Remuneration Decisions (Overview of Current Corporate Governance System) under 'II. Business Management Organization and Other Governance Systems regarding Decision-making, Execution of Business and, Supervision in Management.'"

(5) Explanations with respect to the individual appointments and nominations

For the explanation of the reasons for nominations of External Directors, please refer to 1. Organizational Composition and Operation under "II. Business Management Organization and Other Governance Systems regarding Decision-making, Execution of Business and, Supervision in Management."
The reasons for appointment of Director candidates are disclosed in the reference material of the Notice of General Meeting of Shareholders.

Supplementary Principle 3.1.3: Initiatives on Sustainability

(1) Initiatives on Sustainability

As a leading company in the payment industry, the Company promotes business activities that support online and cashless migration, paperless operations, digital transformation (DX) and financial inclusion by building payment infrastructures as well as providing payment and financial-related solutions and platform. These are based on the "GMO-ism" shared with GMO Internet Group, under which the Company upholds the management principle of "contributing to society to pursue both spiritual and material prosperity for our partners."
The Company is engaged in resolving a wide array of societal issues such as socioeconomic revitalization and enhancement of corporate competitiveness through the Company's businesses that leverage innovations centered on payment to support a diverse range of corporate activities.
Together with our stakeholders who support the Company's business activities, we strive to contribute to the realization of a sustainable society and our customers' growth that in turn enhances the Company's corporate value and a sustainable high growth rate.

(2) Investment into human capital

Based on the idea that "Corporation is a place to foster personal growth," the Company continuously undertakes workstyle reforms to develop proprietary talent development programs and employee benefit, etc., sharing the vision among all employees towards organizational growth of the business and company, and the provision of the workplace that enables full realization of one's potential.
For details, please refer to the Annual Securities Report under "(5) Strategies, Indicators and Targets Related to Human Capital" found under "2. Approach to Sustainability and Related Initiatives." Additional information is also available on our website.
Annual Securities Report(https://www.gmo-pg.com/news/pdf/20231218_gmo_pg_ir_yuho.pdf) (available in Japanese language only)
Website on "Social"(https://www.gmo-pg.com/sustainability/social/)

(3) Opportunity and risks associated with climate change

The Company promotes online, cashless and paperless migration, which has a low environmental footprint compared to conventional payment services. In addition, financial-related services such as lending, is offered to domestic and overseas operators involved in online and FinTech services that have a similarly low environmental footprint as the Company. Through such services, we aim to achieve the decarbonization of society and our customers and the transition to a carbon-free sustainable society.
In January 2023, the company endorsed the TCFD (Task Force on Climate-Related Financial Disclosures) recommendations.
The company will continue to work to expand climate change-related information disclosure as per TCFD recommendations.
For details, please refer to the Annual Securities Report under "(4) Strategy, Indicators and Targets Regarding Climate Change" found under "2. Approach to Sustainability and Related Initiatives." Additional information is also available on our website.
Annual Securities Report (https://www.gmo-pg.com/news/pdf/20231218_gmo_pg_ir_yuho.pdf) (available in Japanese language only)
Website on "Environment"（https://www.gmo-pg.com/sustainability/environment/）

Supplementary Principle 4.1.1: Scope and Content of the Matters Delegated to the Management

The Board makes decisions on matters of important management issues and on legal issues. The Board also oversees the execution of business responsibilities by the Directors.
The Executive Committee and Representative Director etc. are delegated to make decisions on matters other than the Board decisions and must comply to the standards set in internal rules and Executive Committee Rules.

Principle 4.9: Independence Standards and Qualification for External Directors

The Company stipulates the independence standards for External Directors in the Independence Standards and Rules for External Directors. (Japanese Language Only)

Supplementary Principle 4.10.1: Independence, Authorization and Roles of Committees on Matters Concerning Nomination and Remuneration

The Company has established the Nomination and Remuneration Committee as the voluntary committee for matters concerning nomination and remuneration of directors, etc. (excluding members of the Audit and Supervisory Committee) and is entrusted to function as both as a nomination committee and as a remuneration committee. For details, please refer to this document's "Advisory Committee, Overview of establishment, composition and chairperson of advisory committees" found under 1. Organizational Composition and Operation of "II. Business Management Organization and Other Governance Systems regarding Decision-making, Execution of Business and, Supervision in Management."
The majority of the members and the chairperson of the Nomination and Remuneration Committee is composed of independent External Directors at the Company.

Supplementary Principle 4.11.1: Views on the Appropriate Balance of Knowledge, Experience and Skill of the Board and its Diversity and Appropriate Board Size

The Board elects the candidates for Directors who are equipped with the knowledge, experience and skill to effectively carry out their role and responsibility and also holistically consider the results of the 360-degree evaluation by management and peer reviews. The Board will be mindful to achieve the appropriate size and diversity (nationality, gender and age) of the Board.
Candidate for Directors and Auditors will be selected on these policies and following the deliberations at the Nomination and Remuneration Committee, and will be formally proposed to the Board for the decision.
The skill matrix of each Director is shown in the "Basic Views on Corporate Governance" of the "Notice of the 30th Annual Meeting of Shareholders" available on the company website.
（https://www.gmo-pg.com/ir/pdf/20231125_gmo_pg_ir_shosyu01.pdf）

Supplementary Principle 4.11.2: Status of Concurrent Positions of Directors and Auditors at Other Listed Companies

The concurrent positions held by External Directors are disclosed yearly in the reference material of the Notice of General Meeting of Shareholders, Business Report and the Annual Securities Report.

Supplementary Principle 4.14.2: Training policy for Directors

In principle, our training policy for Directors is predicated on each individual Director's decision as a management professional to acquire the necessary knowledge and to endeavor to refine their skills. Through thorough discussions held at the Board meetings and by conducting prior explanatory sessions for External Directors, we strive to deepen and share the knowledge and skills base among Directors.
Additionally, external seminars on Corporate Law, Corporate Governance and other topics may be provided based on the requests of Directors, as well as appropriate external seminars for newly appointed Directors, to acquire the requisite knowledge for their role.

Principle 5.1: Policy for Constructive Dialogue with Shareholders.

(1) Basic Views

The Company considers it important not to create inconsistencies or distortions between the capital markets' understanding towards the Company and the top management's understanding of the capital markets' views of the Company, through constructive and continuous dialogue with shareholders and investors, for the purpose of improving the medium and long term enterprise value and for sustainable growth.
The Investor Relations ("IR") headed by the Director in charge of IR is established to conduct such dialogues and hold several venues to communicate with shareholders and investors. In addition, it is the Company's policy that that the top management must directly explain, in their own words, and also directly answer the questions posed to them.

(2) Appointing a member of the management or a director who is responsible for overseeing and ensuring that constructive dialogue takes place and, measures to ensure positive cooperation between internal departments

The Director in charge of IR manages the shareholder and investor dialogues, as well as the oversees the IR Department under the Corporate Value Creation Strategy Division, and also liaises with other internal divisions and departments on a daily basis. Where it is feasible, the management staff including management executive will also attend such meetings with investors in Japan and overseas to conduct the explanations.

(3) Measures to promote opportunities for dialogue aside from individual meetings

The Company's basic policy is to convene results briefing on a quarterly basis for analysts and institutional investors, with the top management as the speaker including for the question-and-answer session. In addition, the Company adopts a policy to carry out semi-annual meetings with individual investors, in principle.

(4) Measures to appropriately and effectively relay feedback from shareholders

The Director in charge of IR regularly reports to the senior management and related parties on the opinions and concerns expressed by shareholders gathered through the dialogues and respond as appropriate. Additionally, periodic internal meetings as well as participation in results briefing by employees including managers also foster sharing of views and opinions expressed by shareholders.

(5) Measures to control insider information when engaging in dialogue

Close attention is paid not to relay insider information in the dialogues with shareholders through appropriate information management based on the information disclosure policy. Information disclosure policies are stated in the following company website.
（https://www.gmo-pg.com/ir/policy-releasepolicy/）

【Action to Implement Management That is Conscious of Cost of Capital and Stock Price】【English disclosure】

The Company is strongly aware of its responsibility towards shareholders to "strive to improve shareholder value by emphasizing capital efficiency."
The weighted average cost of capital (WACC) is estimated for the Group as a whole to ascertain the capital cost, and WACC is utilized to reach management decisions when evaluating profitability of existing and new businesses at the regular Management Committee. In particular, this is used to verify the profitability of financial services such as lending that entail credit risks, given the steady expansion of the Money Service Business. Based on this and in addition to decision on whether the business aligns with the management target of "achieving a continuous 25% growth in operating profit," the Company strives to optimize its businesses and enable the management of both profitability and growth.
In addition, the management is strongly aware of the importance of appropriate information disclosure and investor relations (IR) activities in order to contribute to reduce any asymmetry and discrepancy in information between the equity market and the Company. As such, the Company will work towards improving both the volume and quality of such information disclosure in the effort that the Company's growth is appropriately and sufficiently evaluated by the market.

【Status on Better Dialogue with Shareholders】

The Company is engaged on proactive and continuous dialogue with shareholders and investors, based on the aforementioned policy regarding conducting constructive dialogue with shareholders. For details on the status please refer to the website's.
(https://www.gmo-pg.com/sustainability/governance/)