Corporate Governance

Funai Soken Holdings Inc. (hereinafter referred to as "the Company") is committed to strengthening Corporate Governance with the primary objectives of implementing compliant management and maximizing shareholder value.
Furthermore, we consider proactive disclosure to be a crucial pillar of our corporate Corporate Governance . Through disclosures based on laws and regulations, holding company briefings, and conducting individual meetings with institutional investors and analysts, we strive for prompt and accurate disclosure not only of our current situation and our group's business strategies but also of our future business strategies.

Corporate Governance system and Initiatives are explained in detail in the document below.

Our Board of Directors is comprised of diverse individuals with extensive experience and advanced expertise, in order to drive the group's sustainable growth and the enhancement of corporate value in the medium to long term. The expertise and experience of each director are as follows:

*Attendance rates are based on the period from January 1, 2024 to December 31, 2024.
*1. This record shows attendance since the appointment as a director on March 23, 2024.
*2. Haruta Motoki's attendance record for both committees was recorded after he assumed the positions of member of the Compensation Committee and the Sustainability Committee on March 23, 2024.
*3. The attendance rate of the previous member, Masahiro Hyakumura (who retired as a full-time audit committee member in March 2025), was 8/8 (100%) for the Risk Management Committee and 2/2 (100%) for the Internal Control Committee.
*4. Former Tatsuro Ono's attendance rate at the Nominating Committee was 8/8 (100%), and his attendance rate at the Successor Nominating Committee was 1/1 (100%).

board of directors

The Board of Directors consists of nine members (six men and three women), including six outside directors, and meets approximately once a month. It is comprised of diverse officers with varying areas of expertise and experience, including directors with deep knowledge of our group's business and outside directors who provide independent and objective oversight (outside directors include those with management experience at other companies).

Regarding the appointment of directors, the Board of Directors creates a skills matrix outlining the main skills and expertise of each director. The Nominating Committee, which is comprised of a majority of outside directors, deliberates on the matter based on a multifaceted evaluation of abilities, performance, and other factors, and the final decision is made by the Board of Directors.

To improve diversity on the board of directors, including gender, we aim for a 30% female representation by 2030. As Date and Time , 2025, three out of nine members of the board of directors are women (33.3% female). Regarding the appointment of foreign directors, we currently believe there is no need for it, as the majority of our sales are domestic.

Furthermore, regarding the Audit and Supervisory Committee, we have appointed one certified public accountant with sufficient knowledge of finance and accounting, and two lawyers with expertise in legal matters.

When formulating and disclosing our management strategies and plans, we accurately grasp the cost of capital and include Targets such as Net sales , Operating income , and return on equity (ROE) in our medium-term management plans. Furthermore, in order to concentrate on businesses that can consistently generate returns exceeding the cost of capital in the medium to long term, we determine the direction of our businesses based on two axes: profitability and growth, and construct our portfolio accordingly.

Information Disclosure policy

Our company aims to provide timely information to all stakeholders .

In addition to Information Disclosure in accordance with the Companies Act, the Financial Instruments and Exchange Act, Other laws and regulations, and the Timely Disclosure rules established by the Tokyo Stock Exchange, we will also endeavor to proactively and fairly Information Disclosure information that we believe will be effective in deepening understanding of our group, to the extent possible.

Methods of Information Disclosure

Our company will disclose material information that falls under Timely Disclosure rules established by the Tokyo Stock Exchange in accordance with those rules, after providing prior explanation to the exchange, and then register and publish it on Timely Disclosure information transmission system (TDnet) provided by the exchange. In addition, we will promptly provide the same information to the media after registration and will also post the same material on our website without delay. Even when disclosing information that does not fall under Timely Disclosure rules, we will take care to ensure that the information is communicated accurately and fairly through appropriate methods.

Furthermore, if the Information Handling Officer determines that one of our officers or employees (limited to those whose duties involve communicating information to business partners) has unintentionally communicated important information in connection with their work, the Information Handling Officer will report this to the President and promptly make such important information public through the prescribed method.

Prevention of insider trading

Our company has established internal regulations to properly manage important company information and prevent insider trading, and we are promoting thorough dissemination and awareness-raising activities among all employees of our group companies.

Performance forecasts and future outlook

Except for statements relating to past or present facts, our group's plans, forecasts, strategies, etc., as described in our disclosure materials are based on our judgments and assumptions using information available at the time. Actual results may differ materially due to uncertainties, economic conditions, Other risk factors.

Silent period

To prevent the leakage of important information such as Financials results and to ensure fairness in Information Disclosure , our company has designated the period from the day after the end of Financials (quarterly Financials ) until the day of each Financial Results Announcement as a "quiet period." During this period, we will refrain from answering questions regarding Financials and responding to media inquiries. Furthermore, during the quiet period, we will refrain from holding company briefings and individual meetings with analysts and institutional investors. However, if any material facts requiring disclosure arise during this quiet period, we will disclose them in accordance with Timely Disclosure rules and other regulations.

Dialogue with shareholders, investors, and securities analysts is overseen by the executive officer in charge of IR, and President , the director in charge, the executive officer in charge, and the IR department will consider appropriate responses and respond accordingly. The IR department will support dialogue with shareholders and investors by organically collaborating with relevant departments, such as by sharing information and exchanging opinions based on their respective areas of expertise as needed.
In addition to individual meetings, we will strive to enhance our means of communication by providing support via telephone and online, and by holding Financial Results Briefing and small meetings. Furthermore, we will proactively Information Disclosure that is a prerequisite for dialogue, and we will work to expand the content of our " Summary of Financial Results " and " Integrated Report ," which we position as effective tools for dialogue.
The opinions and feedback received during these discussions will be shared within the company through reports to the Board of Directors and management meetings, and will be used in reviewing our management strategy.
In our dialogues, we will pay close attention to the accuracy and fairness of Information Disclosure and manage internal information appropriately.

IR activities for the past three fiscal years

To prevent the leakage of important information such as Financials results and to ensure fairness in Information Disclosure , our company has designated the period from the day after the end of Financials (quarterly Financials ) until the day of each Financial Results Announcement as a "quiet period." During this period, we will refrain from answering questions regarding Financials and responding to media inquiries. Furthermore, during the quiet period, we will refrain from holding company briefings and individual meetings with analysts and institutional investors. However, if any material facts requiring disclosure arise during this quiet period, we will disclose them in accordance with Timely Disclosure rules and other regulations.

Our group has established the " Funai Soken Group Corporate Ethics and Conduct Charter" and the "Group Compliance Regulations" to clearly define the standards for maintaining high ethical standards and acting with good judgment.
To prevent and correct illegal activities and actions that violate Society norms and corporate ethics, we have established "Group Hotline Regulations" and set up an "Internal Hotline" for those working within our group.
Furthermore, Funai Soken Holdings Inc. ' legal and risk management departments, along with the compliance officers of each group company, collaborate to establish a system for understanding the compliance status and any issues across the entire group.
In addition, to raise awareness of compliance, we have made it mandatory to include a compliance-themed program in the onboarding training for new graduates and mid-career hires.
Furthermore, we require our executives and employees to take e-learning courses on compliance and information security at least three times a year, striving to improve their awareness of compliance.

Our group has established an "internal hotline" based on the Group Hotline Regulations as an internal reporting system. This hotline covers compliance violations, including violations of the following basic policies and regulations, and the head of the legal department, outside directors who are audit and supervisory committee members, and external lawyers serve as reporting channels.
Reports can be made anonymously via email or telephone, and the content of the report will be kept confidential. We also strictly prohibit any retaliatory actions against the whistleblower, thereby protecting the whistleblower.
Information regarding reporting channels is provided on cards carried by our officers and employees, and is also clearly displayed on our intranet, which is accessible to all officers and employees of our group companies.

Furthermore, to enhance the effectiveness of the system, we track and disclose its operational performance every fiscal year. In fiscal year 2025, there were zero reports of significant ethical violations. We also take prompt and appropriate investigations and corrective measures for all reported cases.

Our group's basic policy is to sever all ties with anti Society Society forces and to resolutely reject any unreasonable demands made by them.
To achieve this basic policy, we will respond not only as individuals or departments but as an entire organization, ensuring the safety of officers and employees involved, and strengthening cooperation with external expert organizations such as the police and lawyers on an ongoing basis.
Furthermore, we will sever all ties with anti Society forces, including business relationships Other matters. In the event of any unreasonable demands from anti- Society , we will resolutely refuse and take legal action, both civil and criminal, as necessary. We will absolutely not engage in any under-the-table dealings or provide funding to anti- Society forces.

To implement the above basic policy, we have defined specific details in the Group Compliance Regulations, which apply to all employees of our group, and we require all employees of our group to report any violations of these regulations or any actions that may be suspected of being in violation through the internal reporting system described above.

Based on our information security basic policy, we have established rules tailored to our business domain and current trends, and we conduct information security management that deepens understanding among all employees through information security education. We are also striving to strengthen the information security infrastructure that supports these efforts and to development information security personnel.

Our company and its group companies (hereinafter referred to as the " Funai Soken Group ") aim to be a group management that is always needed by Society , under the group purpose of " Sustainable Growth for More Companies Companies," by proposing a better future to all people involved with Funai Soken Group , increasing the number of companies that continue to grow in any era, enabling all people to happily realize their potential, and supporting the improvement of Society productivity. We consider it our responsibility to protect the information assets of Funai Soken Group , including information entrusted to us by our customers and business partners, and have formulated the "Basic Information Security Policy." All officers and employees of all Funai Soken Group (hereinafter referred to as "officers and employees") understand and comply with the spirit of this policy and are Initiatives to maintaining and improving information security.

1. Establishment and improvement of internal management systems
Funai Soken Group will establish an information security management system to maintain and improve information security, and will formalize information security measures as internal regulations. We will build an information management system and strive to promote the appropriate operation of information assets under the management of Funai Soken Group .

2. Initiatives by all officers and employees
Regarding all information acquired or obtained in the course of business activities, and all information held in the course of business, officers and employees involved with these information assets will regularly receive necessary education and training, be made aware of this policy, acquire knowledge and skills, and ensure robust security management measures.

3. Compliance with laws and contractual requirements
We will comply with all laws, regulations, standards, and contractual obligations related to information security, and meet our customers' expectations.

4. Development of internal guidelines and response to violations and accidents
We will establish internal guidelines and various procedures to clarify the handling of all information assets, including personal information. We will not only take measures to prevent violations of laws and regulations, breaches of contract, and incidents related to information security, but also respond quickly if they occur, and strive to prevent recurrence, but we will also make it clear to both internal and external parties that we will take a firm stance against them.

5. Establishment and enhancement of the audit system.
We will strive to establish and maintain a system for conducting internal audits to ensure compliance with this policy, guidelines, and procedures. These activities will demonstrate that our officers and employees are complying with the rules, including this "Basic Information Security Policy."

6. Continuous Improvement
We will operate a management system within the organization to implement this policy and strive for continuous improvement of related regulations, procedures, and information security measures.

Formulated on December 18, 2020
Revised April 21, 2023
Funai Soken Holdings Inc.
Takayuki Nakatani, President

1. Information leak of information assets

As the digital transformation of data utilization accelerates, and the use of software and cloud services, in addition to core systems, increases, we believe that the information assets entrusted to us by our group and our customers will face increased risks in proportion to the number of organizations, information volumes, and systems involved.

2. Deficiencies in the procedures for acquiring personal information

We believe that the increasing confidentiality of data handled due to stricter legislation and deeper customer support will increase the risk of inappropriate handling due to outdated rules and system permissions.

3. Destruction or falsification of important data, system shutdown, etc.

Even with systems and organizations designed to maintain confidentiality, reliability, availability, integrity, and security, a disruption in the transfer of technical skills among IT professionals and an inability to keep up with increasingly sophisticated external attacks pose a risk to business continuity.

1. Establish an information security management department and a group-wide information security countermeasures meeting.

Our group's information security is promoted by the "Information Security Management Department" in dialogue with the Risk Management Committee and the Sustainability Committee. We are working to improve management levels through the "Information Security Measures Meeting," which is attended by key information security practitioners from each group company.

2. Information Security Promotion System Diagram of Our Group

We believe that the increasing confidentiality of data handled due to stricter legislation and deeper customer support will increase the risk of inappropriate handling due to outdated rules and system permissions.

1. Continuous strengthening of the information security management system

Radar chart analysis
To objectively evaluate our information security level, our group conducted comparative surveys with domestic service industries in 2023 and 2024. The results are shown in the radar chart below.

Our latest radar chart analysis (2024) provides an objective assessment of the current state of our group's information security system. Compared to the previous year (2023), progress has been made in some areas, while areas that still require strengthening have also been identified.
We will prioritize these identified issues under our governance structure, including the Risk Management Committee, and allocate resources accordingly. Through continuous monitoring and improvement activities, we aim to enhance the cyber resilience of the entire group and improve sustainable corporate value.

2. Responding to increasingly sophisticated cyberattacks: Promoting zero trust

To strengthen our countermeasures against increasingly sophisticated cyberattacks, our group has implemented and is utilizing company-wide IDaaS (Information as a Service) to provide an employee ID management and authentication platform, EDR (Endpoint Detection and Response) to detect and respond to suspicious behavior on PCs and servers, and SASE (Secure Access Service Edge) products that integrate network and security functions on the cloud, thereby establishing a foundation for realizing a zero-trust security model.

In addition to implementing these infrastructures, we are also focusing on security education and training for group employees to improve security awareness. Furthermore, by strengthening security monitoring, we will build a system that allows us to detect threats early and respond quickly.

We will continue to actively introduce the latest security technologies and strive to provide our customers with safe and secure services.

3. Strengthening the security of the information system infrastructure

① Measures against information leaks of information assets

- Strengthening the safety verification system for DX
As we accelerate the digital transformation of information assets entrusted to us by our group and our customers, and as risks increase, we are implementing group-wide management Initiatives to thoroughly educate our officers and employees on information security and to strengthen our system for verifying the security of increasing amounts of software and cloud services.

• System risk assessment
As part of Initiatives to prevent shadow IT, Funai Consulting Inc. has established an Information Security Committee and has proactively begun conducting system risk assessments.

- Strengthening the remote work Environment
Major companies are promoting both improved work styles and information security, including further support for remote work Environment such as refreshing their authentication infrastructure.

② Measures to address deficiencies in the procedures for acquiring personal information
We are working in cooperation with our legal department and group companies to implement timely measures for departments that handle personal information.

③ Measures against the destruction or alteration of important data, system downtime, etc.
To ensure the safe and continuous use of reliable systems, we are implementing enhanced security measures, including thorough reviews during implementation and major updates, regular checks of critical systems, and re-examinations from expert perspectives.

4. Implementation of information security education

To ensure that our officers and employees, who handle various types of information in their work, can perform their duties safely and efficiently, we believe it is essential that they understand the rules and take ownership of them, enabling them to respond autonomously. Therefore, we promote the implementation of information security training for all officers and employees every year.

e-learning training overview
1. Information Security 2. Personal Information Protection 3. Cyberattacks 4. Compliance 5. Information Security Manual

1. Realizing human-centered AI
Our group recognizes the risks of AI utilization, such as the potential for bias and discrimination, as well as the limitations of AI output. We strive to provide and utilize AI that expands human capabilities and enables everyone to pursue happiness, taking care to ensure that excessive reliance on AI does not negate human dignity or potential, or endanger life or physical safety.

2. Ensuring fairness
Our group recognizes the possibility of bias arising from technical elements such as training data and AI model algorithms, as well as from the way AI is used, when providing and utilizing AI. Therefore, when providing and utilizing AI services, we verify the risks that may arise from the use of such AI services, and we continuously review our management and operations while closely monitoring technological and Society changes.

3. Ensuring information security
Our group recognizes that the data collected and used for training AI may include information related to individual privacy, customer confidential information, Other important information. To ensure that this data is handled appropriately and securely, we strive to implement and strengthen information security measures throughout the entire lifecycle of AI research, development, provision, and utilization.

4. Ensuring transparency and accountability
Our group aims for transparent utilization of AI, taking into account the nature and purpose of AI-based development and services, and strives to communicate appropriately and continuously with stakeholders.

5. Human resource development
Our group will conduct education and practical training to development personnel who can correctly understand this policy and actively realize and promote the utilization of AI based on this policy.

To ensure the effectiveness of the above-mentioned "AI Policy," our group will establish and operate an AI governance process, aiming for sound and fair utilization of AI.
Our group's AI governance process is as follows:
The Board of Directors of Funai Soken Holdings Inc. bears ultimate responsibility for AI governance and discusses and decides on important matters. The Board of Directors directs the Group Legal Department, which is responsible for AI governance, and the compliance departments of each company to operate, implement, and manage AI governance and risks. The responsible departments report to the Board of Directors on the status of operations, make recommendations for rule revisions as a risk management measure, and report on Other important matters.

The Group Legal Department closely monitors and analyzes AI-related laws, regulations, and government guidelines, and reviews the "AI Policy" and considers necessary measures for the entire Group. When necessary, it consults with the Risk Management Committee and the Board of Directors, and proposes and implements the rules and measures required for the Group.
Furthermore, the legal department and the compliance departments of each group company will cooperate to conduct risk assessments of potential risks faced by each group company, design and implement appropriate rules based on those risk assessments, monitor compliance, and conduct audits, in accordance with the characteristics of each group company's business content and business phase.
In the event of any violation of established rules or regulations regarding the use of AI, the compliance and legal departments of each group company will respond appropriately, including reporting to the Risk Management Committee and implementing measures to prevent recurrence.
By continuously implementing these activities, we will assess the effectiveness and problems of the "AI Policy" and the rules based on it, and strive to improve them.

Our group has adopted the following basic policy regarding the prevention of bribery and corruption, as resolved by the Board of Directors. Furthermore, the Board of Directors will periodically review the following content and actual initiatives based on reports of actual implementation, violations, or suspected violations.
Our group complies with the Japanese Penal Code, the Unfair Competition Prevention Act, as well as the laws and regulations concerning commercial bribery in China, the U.S. Foreign Corruption Prevention Act, Other laws and regulations concerning bribery that apply to our group. We do not make inappropriate payments, send gifts, provide services, or entertain Japanese or foreign public officials, and we do not engage in bribery activities that would constitute bribery in the relevant country or bribery of foreign public officials under the Unfair Competition Prevention Act.
Furthermore, our group does not tolerate or engage in any corrupt practices other than bribery, including money laundering, obstruction of justice, embezzlement, abuse of power, coercion of business partners, conflicts of interest, insider trading Other any other form of corruption.
To achieve this, our group will establish an internal whistleblowing system, develop internal regulations Other appropriate mechanisms to prevent bribery and corruption, and continuously monitor these mechanisms and make improvements as needed. Furthermore, our group will ensure that all officers and employees fully understand the regulations regarding bribery and corruption through training and internal communications, and will strive to cultivate a high level of ethical awareness.

Efforts to prevent bribery and corruption

In order to implement the above basic policy, our group has established specific details in the Group Compliance Regulations, which apply to all officers and employees of our group, and requires all officers and employees of our group to report any violations of these regulations or any actions that are suspected of being in violation through the internal reporting system described above.
Compliance with these regulations is regularly checked through internal audits, and the results are reported to the Board of Directors. In addition, if there is a report of a violation or suspected violation of the above basic policy or regulations, the Risk Management Committee reviews the matter and reports the findings to the Board of Directors. Based on these reports, the Board of Directors will consider reviewing the compliance system regarding corruption prevention, in addition to the above basic policy.
Furthermore, our group believes it is necessary for all officers and employees to be aware of and understand the above basic policy, and we will continue to implement various educational and awareness-raising activities.

The following is numerical information regarding corruption prevention within our group:

Funai Soken Group has established the following basic policy regarding fair trade in order to comply with laws and regulations and promote fair business activities.

1. Recognizing the importance of preventing anti-competitive practices, we will not engage in any unfair practices that hinder competition, including collusion, and will conduct fair competition in the market to provide healthy services.

2. We will not engage in any transactions that infringe on the rights of third parties, and in conducting transactions, we will comply with all domestic and international laws and regulations, including the Antimonopoly Act and the Subcontracting Act.

3. We will build equal and fair cooperative relationships with our business partners, collaborating companies, and partners.

4. We will not conduct transactions with our customers or business partners for the purpose of benefiting an individual or a third party.

5. We will not request money or gifts without reasonable justification, nor will we provide or receive entertainment or gifts that exceed Society norms.

6. When selecting business partners, collaborating companies, and partners, we will consider not only economic conditions but also compliance issues, including environmental issues and Society issues.

Our group strives to enhance transparency in corporate accounting in accordance with the " Funai Soken Group Code of Corporate Ethics," and recognizes the importance of similarly increasing transparency in taxation, complying with relevant laws and regulations in each country, and paying taxes appropriately.

The total amount of corporate tax and other taxes paid by our group by country is as follows: