OBIC : Corporate Governance Report December 6, 2021

Corporate Governance

Last Updated: December 6, 2021

OBIC Co., Ltd.

Shoichi Tachibana

President and COO Contact: Tomonori Anan Executive Officer (Administrator of Business Planning Office) TEL: [phone] Securities Code: 4684 https://www.obic.co.jp/

The corporate governance of OBIC Co., Ltd. (the "Co mpany") is described below.

• Basic Views on Corporate Governance, Capital Structure, Corporate Attributes and Other Basic Information

1. Basic Views

The Company understands that strengthening risk management and guaranteeing transparency in management are vital to continuous improvement of corporate value. The Company is a company with an Audit & Supervisory Board through which, along with the Board of Directors, it monitors risks related to business. It has also established a voluntary Nomination & Remuneration Advisory Committee mainly comprised of outside Directors, and works to strengthen managerial supervision functions. The Company also conducts accounting and operational audits through internal audits and works on strengthening its ability to take remedial action while ensuring compliance.

[Reasons for Non-compliance With the Principles of Japan's Corporate Governance Code] Updated

Content has been presented pursuant to Japan's Corporate Governance Code subsequent to its revision in June 2021 (including principles for the Prime Market taking effect in April 2022).

The Company complies with all principles of the Japan's Corporate Governance Code.

[Disclosure Based on the Principles of Japan's Corporate Governance Code] Updated

Content has been presented pursuant to Japan's Corporate Governance Code subsequent to its revision in June 2021 (including principles for the Prime Market taking effect in April 2022).

[Principle 1.4 Shares Held as Cross-Shareholdings]

Policy on cross-shareholdings

The Company does not maintain ownership of cross-shareholdings as a matter of basic policy, unless it has otherwise deemed that such holdings contribute to improving corporate value over the medium and long terms upon having comprehensively taken into account factors that include necessity per business policy and rationale of such shareholdings. The Company currently does not maintain ownership of any cross-shareholdings.

Verifying appropriateness regarding ownership of cross-shareholdings and standards for exercise of voting rights

The Company continues to verify appropriateness regarding ownership of respective shareholdings when maintaining ownership of cross-shareholdings. Meanwhile, the Company exercises voting rights upon having comprehensively assessed whether or not the exercise of voting rights will facilitate sustainable growth of the

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Company and the investee, and whether or not it will give rise to improvement of corporate value over the medium and long terms.

[Principle 1.7 Related Party Transactions]

In seeking to avoid harming its own interests and the common interests of its shareholders, the Company has established the Regulations of the Board of Directors and other such rules essentially mandating prior approval of the Board of Directors with respect to transactions between the Company and its Directors.

In addition, at the end of each fiscal year we confirm the existence of related parties and transactions involving all officers as well as major shareholders and others when applicable.

When a transaction occurs between related parties, the transaction results are disclosed in the annual securities report pursuant to the relevant laws and regulations. Terms and conditions for related party transactions are determined in the same way as terms and conditions for general transactions pursuant to standard provisions.

[Supplementary Principle 2.4.1 Ensuring Diversity in Promotion of Core Human Resources]

Views on ensuring diversity

The Company deems that growth of each and every employee and increasing diversity make it possible to leverage mutual synergies. Guided by its corporate philosophies, "Company growth starts with employee growth" and "Innovation ~Destruction and Creation~," the Co mpany strives to create environments where all employees are able to work over the long haul while achieving growth by implementing employee training as well as establishing a personnel system that enables flexible work styles. In promoting core human resources, the Company seeks to create environments that enable women to play active roles by disclosing the plan of action for general employers pursuant to Japan's Act on Promotion of Female Participation and Career Advancement in the Workplace.

The Company is particularly committed to hiring new graduates and accordingly deems that training employees from scratch through work with its client companies across various types of business and industries in Japan helps to ensure diversity, thereby contributing to its sustainable growth. Therefore, the Company has not set goals such as those entailing promotion of foreign nationals and midcareer hires to middle managerial positions.

Voluntary and measurable goals for ensuring diversity and the current conditions

As of fiscal 2021, the ratio of women in managerial posts is 7.2%, however, we aim to increase it to 10% or more in the future.

For details regarding the Company's initiatives to promote diversity, please refer to the following website. https://www.obic.co.jp/e/diversity.html

[Principle 2.6 Functioning as Asset Owner of Corporate Pension Funds]

This is not applicable because the Company has not adopted a corporate pension fund.

[Principle 3.1 Enhancement of Information Disclosure]

1. Company objectives (e.g., management philosophy), management strategies and business plans
   The Company enlists a management philosophy of seeking to always contribute to society based on its user- oriented approach.
   The Company values the crucial role of its longstanding system of in-house development and direct sales, and accordingly provides total support for corporate information systems encompassing configuration and operation. To such ends, the Company enlists its one-stop solution services which seamlessly encompass everything from consulting on initial system selection through installation and setup, day-to-day operation, and the provision of information. Going forward, the Company will continue to actively promote structural reforms, thereby enhancing its sales capabilities and increasing its productivity.
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In addition, the Company believes that it is important for management to always be aware of earnings in order to realize stable corporate growth over the medium and long terms. Having set a target for return on equity (ROE) of 10% or higher, the Company will strive to sustain and persist with efforts toward such ends.

1. Basic views and policies on corporate governance based on each of the principles of the Code (final proposal) The basic views and policies are identical to those listed under "Basic Views" of this report.
2. Policies and procedures of the Board of Directors in determining the remuneration of the senior management and Directors
   The Company has adopted a performance-linked remuneration system with respect to remuneration of the senior management and Directors in order to facilitate further improvement of the Company's business performance by providing them with greater incentive to improve business performance. However, outside Directors and Audit & Supervisory Board Members are entitled to basic remuneration exclusively due to their position independent of business execution.
   The Board of Directors makes decisions on amounts of remuneration for Directors within a range determined at the General Meeting of Shareholders, based on the results of consultation with the Nomination & Remuneration Advisory Committee, which is a voluntary advisory body in which outside Directors make up a majority of the members. The amounts of remuneration for Audit & Supervisory Board Members are calculated per discussions among the Audit & Supervisory Board Members.
3. Policies and procedures of the Board of Directors in the appointment/removal of the senior management and the nomination of Director and Audit & Supervisory Board Member candidates
   The Company's policy on appointing senior management as well as nominating Director and Audit & Supervisory Board Member candidates is that of selecting professionals equipped with outstanding personal qualities, insight and leadership, and who have specialized skills and extensive work experience as necessary for the Company to achieve sustainable growth.
   When determining nominations of Director and Audit & Supervisory Board Member candidates, the Board of Directors resolves election proposals to be submitted to the General Meeting of Shareholders, based on the results of consultation with the Nomination & Remuneration Advisory Committee, which is a voluntary advisory body in which outside Directors make up a majority of the members (upon having gained preliminary consent of the Audit & Supervisory Board with respect to Audit & Supervisory Board Member candidates).
   Decisions on appointment/removal of senior management are made upon having taken into account factors that include the aforementioned policy as well as their achievements during their term of office and the status of their business execution. The Board of Directors comprehensively assesses such matters based on the results of consultation with the Nomination & Remuneration Advisory Committee, which is a voluntary advisory body in which outside Directors make up a majority of the members.
4. Explanations with respect to individual appointments and removals of the senior management and nominations of Director and Audit & Supervisory Board Member candidates based on (4) above by the Board of Directors.
   The Company discloses professional backgrounds and reasons for appointment/removal of senior management, and nominations of Director and Audit & Supervisory Board Member candidates on each occasion through Convocation Notice and other such channels.

[Supplementary Principle 3.1.3 Initiatives on Sustainability]

Guided by our corporate philosophies, "Company grow th starts with employee growth" and "Innovation ~Destruction and Creation~," the Company aims to ac hieve sustainable growth for society and itself by engaging in key priorities related to our business and corporate activities. As an organization serving directly under the President and COO, the Sustainability Promotion Committee spearheads cross-departmental efforts to take on key priorities related to the environment, society and corporate governance.

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For details regarding the Company's sustainability management, please refer to the following website. https://www.obic.co.jp/e/Sustainability_Management.html

For details regarding the Company's value creation process that takes into account non-financial factors such as investment in human capital and intellectual capital, please refer to the "Corporate Guide 2021," belo w. https://www.obic.co.jp/ir/pdf/security_report/54cg.pdf

In addition, the Company acts in accordance with recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) by strengthening its governance related to climate change, drawing up strategies and goals based on analysis of risks and opportunities, and strives to disclose information on financial effects in that regard.

For details regarding the Company's governance, strategies, risk management, and goals related to climate change, please refer to the following website. https://www.obic.co.jp/company/environment_climatechange.html

[Supplementary Principle 4.1.1 Scope of Matters Delegated to Management]

The Company stipulates matters to be resolved by the Board of Directors in its Regulations of the Board of Directors, and the Board of Directors resolves matters of substantial importance to management, in addition to matters prescribed by laws, regulations and the Company's Articles of Incorporation. Moreover, the Company has established separate internal rules whereby decision-making authority is delegated to management depending on the extent of the transaction or duty, and depending on the nature of the matter.

[Principle 4.9 Independence Standards and Qualification for Independent Outside Directors]

The Company selects individuals equipped with extensive experience and insight in various fields upon having deemed that their independence from management is assured, pursuant to regulations on independence such as those stipulated in regulations of the Tokyo Stock Exchange.

[Supplementary Principle 4.10.1 Views on Independence of Nominating Committee and Remuneration Committee, Etc.]

The Company has established the Nomination & Remuneration Advisory Committee as a voluntary advisory body of the Board of Directors in order to heighten transparency and objectivity in the process of nominating Director and Audit & Supervisory Board Member candidates and determining Director remuneration. The Board of Directors makes decisions on nomination of Director and Audit & Supervisory Board Member candidates and Director remuneration, based on the results of consultation with the Nomination & Remuneration Advisory Committee, which is a voluntary advisory body in which outside Directors make up a majority of the members (upon having gained preliminary consent of the Audit & Supervisory Board with respect to Audit & Supervisory Board Member candidates).

[Supplementary Principle 4.11.1 Overall Balance, Diversity and Size of the Board of Directors]

To ensure the effectiveness of the Board of Directors as a whole, the Company's Articles of Incorporation stipulate that the number of Directors (including outside Director(s)) is 13 or fewer. Membership of the Board of Directors is to align with the Company's basic policy of seeking balance taking into account a variety of attributes such as knowledge, experience, ability and independence, with its membership consisting of a combination of both male and female inside Directors who are well-versed in the Company's business operations, and outside Directors equipped with extensive experience and broad insight external to the Company.

The Company's policy on nominating Director candidates is that of selecting professionals equipped with outstanding personal qualities, insight and leadership, and who have specialized skills and extensive work experience as necessary for the Company to achieve sustainable growth. The Company has furthermore released its "Corporate Guide 2021" containing a Skill Matri x listing attributes of the respective Directors such that include their knowledge, experience, and abilities. In addition, when determining nominations, the Board of

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Directors resolves election proposals to be submitted to the General Meeting of Shareholders, based on the results of consultation with the Nomination & Remuneration Advisory Committee, which is a voluntary advisory body in which outside Directors make up a majority of the members.

Corporate Guide 2021 https://www.obic.co.jp/ir/pdf/security_report/54cg.pdf

[Supplementary Principle 4.11.2 Concurrent Positions Held by Officers]

A Director or Audit & Supervisory Board Member may hold a concurrent position as an officers of another listed company to the extent that such position does not constitute an impediment to fulfilling his or her responsibilities as a Director or Audit & Supervisory Board Member.

The Company discloses concurrent positions held at other listed companies on each year in the Convocation Notice.

[Supplementary Principle 4.11.3 Analysis and Evaluation of the effectiveness of the Board of Directors and Disclosure of Such Results]

The Company exchanges opinions about the effectiveness of the Board of Directors through individual consultations with outside officers. The Company held discussions at the Board of Directors based on the results of those consultations, and has determined that the effectiveness of the Board of Directors is largely secure.

Summaries of the evaluation results are as follows.

• The Company's Board of Directors is well balanced and comprised of members who understand the Company's management philosophy and policies and have a wide variety of experiences and knowledge. It aims to carry out appropriate decision making and supervise the execution of operations.
• Free and active discussion as well as constructive exchange of opinions are conducted by all of the attending Directors including two outside Directors.
• The Nomination & Remuneration Advisory Committee, which is a voluntary advisory body, also receives appropriate advice and proposals from outside Directors, and works effectively.

Based on these evaluation results, the Company is working to improve the effectiveness of the Board of Directors even further.

[Supplementary Principle 4.14.2 Policy for Training of Officers]

The Company strives to sustainably expand knowledge, experience, and abilities of its respective Directors and Audit & Supervisory Board Members by providing and arranging training opportunities encompassing business management and legal knowledge necessary for them to execute their duties, and by providing financial support for associated expenses.

In addition, the Company provides outside officers with information and explanations of issues in a manner that facilitates a better understanding of the Company's business.

[Principle 5.1 Policy for Constructive Dialogue With Shareholders]

The Company seeks to promote constructive dialogue with its shareholders by carrying out investor relations (IR) activities primarily through the Business Planning Office.

The Company holds financial results briefing sessions for institutional investors and analysts twice per year, and has its representatives furnish explanations and conduct question and answer sessions. In addition, the Business Planning Office arranges individual meetings whereby it seeks to provide timely feedback to the Directors and seeks to share information with them particularly with respect to shareholder views gleaned through dialogue. The Company seeks to prevent divulgence of insider information when conducting dialogue with its shareholders.

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