Information for Investors

Corporate Governance

The corporate governance of GMO Payment Gateway, Inc. (“Company”) is described below.

I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information

1. Basic Views

The GMO Payment Gateway and the consolidated companies (the “Group”) upholds the management principle of “Pursue both material and spiritual prosperity through our contributions to the progress and development of society;” and we implement governance systems that can effectively and efficiently realize this principle. The basic view on corporate governance is to securely both management efficiency and legal compliance by implementing measures and structures necessary for management governance in the interest of achieving sound progress, and considers corporate governance as one of the management's highest priorities. We have strengthened the corporate-wide governance structure by establishing rules to be adhered to by all of the group companies and employees in managerial positions which include the Employee’s Code of Conduct that stipulates the principles and the basic views on compliance, and the Group Company Rules that stipulates the administrative and managerial policies and structure for group companies.

Reasons for Non-compliance with the Principles of the Corporate Governance Code
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.

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 carries out its businesses in the rapidly evolving Internet domain and given the high growth achieved every year while pursuing a flexible and agile business strategy, it would only risk misleading shareholders and investors etc even if a multi-year medium-term management plan were to be disclosed. Hence, the Company does not disclose a mid-term business plan.
The Group clearly defines the departmental responsibility of Directors and sets clear targets for each department. The monthly Board meeting and Executive Committee meeting provides the feedback to the target achievement, reviews and results in order to ensure an optimal business execution.

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

The Audit and Supervisory Committee acts as the central body that conducts an analysis and evaluation of the effectiveness of the Board once yearly, to undertake the improvement of the Board’s functioning. The Company works to ensure that the Board’s effectiveness is appropriately undertaken based on a wide perspective of its organizational design, nomination and remuneration as well as the Board’s composition and its operation and by incorporating objective and quantifiable methods such as questionnaires 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.

Disclosure Based on the Principles of the Corporate Governance Code
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 may be considered by the Special Committee comprised of External Directors, an indenpendent Director, is 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.
(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, the Director's remuneration is designed not only based on the short-term but to incentize achievement of medium-to-long term improvement of financial performance. Therefore, 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 (excluding members of the Audit and Supervisory Committee) 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 (excluding members of the Audit and Supervisory Board) 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.
Additionally, remuneration for directors of the Audit and Supervisory Committee is solely comprised of a fixed remuneration amount from the perspective of emphasizing the Committee’s independence and objectivity from management. The remuneration for director of each Audit and Supervisory Committee member is decided by deliberations at the Audit and Supervisory Committee.
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
The Group is engaged in SDG initiatives by driving social innovations in payment and financial technology, as well as providing services centered on payment that support the DX (Digital Transformation), paperless, cashless and online migration. These initiatives are based on the Group’s management principle to “pursue both material and spiritual prosperity through our contributions to the progress and development of society.”
(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.
(3) Opportunity and risks associated with climate change
The Group promotes paperless and online migration as compared to the conventional payment services, as well as provides lending services to support the growth of global operators that provide FinTech services and online businesses that are similar to the Group. The Group services aim to realize a sustainable society, conversion into a decarbonized society and to reduce the environmental burden of society and customers.
Additionally, based on the recommendations of TCFD (Task Force on Climate Related Financial Disclosures), the Group is working to expand information disclosures regarding climate change. For disclosures based on TCFD recommendation, please refer to the Integrated Report.

(Under Construction)

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 29th Annual Meeting of Shareholders" available on the company website.


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, we strive to deepen and share the knowledge and skills base among Directors.
Additionally, external training agencies may be employed, where appropriate, 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.

2. Capital Structure

Foreign Shareholding Ratio More than 20% but less than 30%
Status of Major Shareholders
Name/Company Name Number of shares owned Percentage (%)
GMO Internet Group, Inc. 31,172,200 40.72
The Master Trust Bank of Japan, Ltd. (Trust account) 7,802,200 10.19
Custody Bank of Japan, Ltd. (Trust account) 5,821,300 7.60
Sumitomo Mitsui Banking Corporation 2,501,600 3.26
The Dai-ichi Life Insurance Company, Limited 855,100 1.11
BNYM AS AGT/CLTS 10 PERCENT 853,451 1.11
Issei Ainoura 800,000 1.04
The Master Trust Bank of Japan, Ltd. (Trust account) 674,305 0.88
Controlling Shareholder (except for Parent Company) -
Parent Company GMO Internet Group, Inc. (Listed on Tokyo Stock Exchange, Prime Section), Securities code: 9449
Supplementary Explanation

The above Status of Major Shareholders is based on the information in the Shareholder Register as of September 30, 2022.

3. Corporate Attributes

Listed Stock Market and Market Section Tokyo Stock Exchange, Prime Section
Fiscal Year-End September
Type of Business Information & Communication
Number of Employees (consolidated) as of the End of the Previous Fiscal Year From 500 to less than 1,000
Sales (consolidated) as of the End of the Previous Fiscal Year From ¥10 billion to less than ¥100 billion
Number of Consolidated Subsidiaries as of the End of the Previous Fiscal Year From 10 to less than 50 companies

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

In the event that transactions engaged in with the parent and the parent company group occurs, including new and recurring transactions, particular attention is paid on the rationality of the terms and conditions of the transaction and on comparing the terms and conditions of the transactions with external transactions from the perspective of proyecting non-controlling interest. Specifically, the suitability of the conditions of the transactions and comprehensive comparisons with third-party transactions are conducted regularly and reported to the Board that must be participated by an External Director who is independent from the parent and parent company group.
Transactions and actions that entail a conflict of interest between the controlling shareholder and non-controlling shareholders are evaluated and deliberated at the Special Committee that includes independent participants such as independent External Director and reported to the Board which is vested to reach a decision.

5. Other Special Circumstances which may have Material Impact on Corporate Governance

(1) Independence from parent company
In conducting business activities, matters regarding business expansion, all aspects of operations, marketing and sales activities of each business is decided independently by the Company, excepting for those matters classified as “Material Items to be Resolved” that must be notified beforehand to the parent company, GMO Internet Group, Inc. The independence of management is acknowledged to be secured and that concurrent positions held by Directors from GMO Internet Group do not impede the indigenous decisions of the management.
(2) Basic view and policy underlying group management
The Group strives to achieve stable management and achievement of business performance through the sound and flexible business operations of each company in the Group based on their respective business environments.
The group seeks to accelerate the business growth through increasing synergy and maintaining cohesion, while also securing the self-sufficiency and independence of each company’s operations for the aim of maximizing the corporate value of the entire Group.
(3) Significance of having listed subsidiaries
GMO Financial Gate, Inc. is a listed consolidated subsidiary, that provides payment processing service in the offline markets such as credit card and debit card payments. Business opportunity in the offline market that GMO Financial Gate, Inc. addresses is expanding, given the backdrop of increasing cashless adoption and the need to tighten security as a national issue.
Through the improvement in recognition and social reliability achieved through listing and by strengthening its systems and business development through the use of proceeds from listing, GMO Financial Gate, Inc. expects sustainable medium-to-long term business opportunities that would enable it to fulfill its social mission in providing a social infrastructure as an offline payment services company.
In addition to striving to grow businesses in each of the respective domains, making efforts to maximize synergies will also contribute to growth throughout the Group as well as to accelerate the growth at GMO Financial Gate, Inc.
Given these considerations, maintaining majority ownership of GMO Financial Gate, Ltd and promoting businesses through the synergies will contribute to the enhancement of the corporate value.
(4) Measures to secure effective governance of listed subsidiaries
The Company intends to maintain GMO Financial Gate, Inc. as a listed subsidiary, while supporting its self-sufficient management and respecting its independence. In matters pertaining to business development and expansion, GMO Financial Gate, Inc. exercises its independent decision-making according to the decisions of management staff composed of a majority of dedicated Directors and independent Directors that do not pose a conflict of interest with the general shareholders and is not subject to approvals or instructions from the Company.

(Cited from Corporate Governance Report, December 19, 2022)