Corporate governance

Promoting and accurately implementing the PRONEXUS Corporate Governance Guidelines

We have formulated the PRONEXUS Corporate Governance Guidelines, which not only show shareholders and other stakeholders our thinking and framework for dealing with corporate governance, it also serves as a code of conduct for our executives and employees. We execute management based on the Guidelines with the aim of having lasting development and growth that maximizes shareholder value and earns recognition from shareholders and customers. To make management more accurate and efficient and to appropriately and fairly perform our management responsibilities, which leads to enhanced corporate value, we continually review and improve the effectiveness of our management system.

We strive to achieve timely and accurate information disclosure about our business, as well as to strengthen oversight and checking on our business activities, improve transparency, and thoroughly implement compliance and risk management.

Revitalizing the Board of Directors and improving management oversight mainly through outside officers

Given its fiduciary responsibility and accountability to shareholders, the Board of Directors makes deliberations and decisions on important matters relating to PRONEXUS's corporate management and supervises the Company's business and overall management with the aim of increasing corporate value over the medium to long term.

The Board of Directors has an appropriately balanced composition as a whole that provides a deep understanding of PRONEXUS Group's business and diverse insight and expertise on finance and accounting, risk management, legal compliance and other related matters. The Board of Directors has no more than ten members. PRONEXUS nominates candidates for outside officers who have a high level of refined judgment and extensive experience in corporate management, finance and accounting, legal matters and other areas who can appropriately convey their opinions from an objective standpoint. Outside officers are qualified to monitor the execution of the duties of directors and work to enhance the activities of the Board of Directors by expressing constructive opinions and proposals sincerely and actively. In addition, PRONEXUS has adopted an executive officer system to separate the management decision-making function from business execution.

Creating and operating a companywide risk management system that is directly connected with management challenges

In accord with its Risk Management Rules, PRONEXUS finds, identifies and analyzes risk to be addressed in each division and investigates possible countermeasures, led by the General Affairs Division, the division in charge of risk management. We specify risk at the system level and examine and decide on preventive and corrective measures via the Insider & Information Security Committee based on the ISO 27001 (information security management system) certification that we have gained across the company. We conduct training and drills on security for all employees and onsite surveys for outsourcing suppliers from the perspective of information management. In this way, we are working to enhance security awareness among employees as well as strengthen our information management system.

In addition, we have introduced a safety confirmation system and conduct safety confirmation drills every year for all employees to confirm the safety of employees during a disaster.

Directors and Audit & Supervisory Board Members(as of June 28, 2021)

As of June 28, 2021 there were 9 directors including 3 outside directors. We had 3 Outside Audit & Supervisory Board Members among 4 Audit & Supervisory Board Members to provide monitoring functions. There were a total of 25 executive officers, with 4 of these executive officers also serving concurrently as director.

(Note)

• 1. Directors Takatsugu Nagatsuma, Ken Shimizu and Ichiro Sakai are outside directors.
• 2. Corporate auditors Osamu Sudo, Takuya Oshida and Yoshihiro Tsuda are Outside Audit & Supervisory Board Members.