Corporate Governance System

Corporate governance system
Board of Directors
Nominating Committee and Remuneration Committee
Audit & Supervisory Board

Corporate governance system

The Company has established the Board of Directors as a decision-making body for important matters and an oversight body for the status of business execution. The Board of Directors also plays a role of steering management to improve the long-term enterprise value. At present, the Board of Directors consists of 11 directors, including six external directors, and decision-making by the Board of Directors is based on appropriate information provided in advance and after thorough discussions.
In addition, the Company has established the Audit & Supervisory Board to conduct efficient and effective audits regarding the status of execution of duties by directors. The Audit & Supervisory Board consists of four Audit & Supervisory Board Members, including two external Audit & Supervisory Board Members, and formulates the audit policy, audit plan and audit method. Audit & Supervisory Board Members carry out audit activities in accordance with this policy and plan.
Moreover, the Company has introduced the executive officer system to ensure clarification of the management supervisory function, strengthening the business execution function of the Board of Directors, and expediting management.

The Company's corporate governance structure is as follows:

Overview of corporate governance system

(As of June 26, 2025)

Organization Structure	Company with an Audit & Supervisory Board
Number of Directors	11 (6 of whom are Independent Directors)
Number of Auditors	4 (2 of whom are External Audit & Supervisory Board Members)
Chair of the Board of Directors	Junichi Miyakawa (President & CEO)
Adoption of an Executive Officer System	Yes
Advisory Committee of the Board of Directors	Nominating Committee and Remuneration Committee ESG Promotion Committee
Executive Remuneration System	① Basic remuneration: Annual basis by position, which shall be paid in cash in monthly installments. ② Short-term performance-based remuneration: Paid as stock-based compensation multiplied by a payout ratio based on the degree of achievement of performance and other targets for the current fiscal year. (The form of restricted stock) ③ Medium-term performance-based remuneration: Paid as stock-based compensation every three years multiplied by a payment rate based on the status of the Company's TSR over a three-year term. (The form of restricted stock) [Note] * Independent External Directors are paid Basic remuneration (cash compensation) and stock remuneration.

Corporate governance structure

Board of Directors

The Company's Board of Directors is a decision-making body for important matters and an oversight body for the status of business execution. It also plays a role in steering management to improve long-term corporate value. The Company's Articles of Incorporation stipulates that the number of Board Directors must be 15 or less. Their terms of office last until the conclusion of the Ordinary General Meeting of Shareholders held with respect to the final fiscal year ending within one year after election. The Board of Directors elects, as candidates for Board Director, those who are considered the most suitable for the position in consideration of their nationality, ethnicity, gender, and age, based on discussions by the Nominating Committee.
As of June 2025, there are 11 Board Directors serving, including six independent external directors, who hold constructive and lively discussions from diverse perspectives, including outside perspectives. Furthermore, the Company has introduced an executive officer system for ensuring clarification of the management supervisory function and strengthening the business execution function of the Board of Directors, as well as expediting management.

Main topics discussed (FY2024)

Corporate management
Financial matters
Matters related to the acquisition of land and buildings for the construction of AI data centers
Matters related to the construction of international submarine cables
Matters related to results and forecasts of business performance and business KPIs
Matters related to affiliated companies
Matters related to risk management

Supporting System for External Directors
and/or External Audit & Supervisory Board Members

The Company is focusing on efforts to strengthen communication and information sharing between internal and external officers so that external officers can maximize their management oversight function, improve the effectiveness of the Board of Directors, and provide general management advice.

Briefing session of the Board of Directors meetings

Prior to each Board of Directors meeting, a briefing session is held for the external directors and Audit & Supervisory Board members. With the CFO and/or other appropriate officers attending all these meetings, the departments in charge provide detailed explanation of the agenda items, followed by a question-and-answer session to ensure a clear understanding from the external directors and Audit & Supervisory Board members. In addition, in cases where issues are raised by external directors at such briefings, the department in charge clarifies such issues before the Board of Directors meeting.

Various meetings

To make monitoring by the Board of Directors more effective, various initiatives are implemented throughout the year to enable external directors to obtain and share information necessary for monitoring outside of the Board of Directors meetings.

Number of meetings (FY2024)

Briefing session of the Board of Directors meetings (12 times)
Executive Directors and External Directors Exchange Of Views (1 time)
Directors, Auditors and Executive Officers Discussion (10 times)
External Directors and Auditors Information Exchange Meeting (2 times)
External Directors and The Independent Auditor Discussion (1 time)
External Directors regular Conference (4 times)

The evaluation of the effectiveness of the Board of Directors

In order to further ensure its effectiveness and to improve its functions, the Company's board of directors analyzes and evaluates the effectiveness of the board of directors every year.
A summary of the method and results of the evaluation of the effectiveness of the Company's board of directors for FY2024 are as follows:

Evaluation method

(1) Subjects of evaluation	Five Internal Directors, six External Directors, and four Audit & Supervisory Board members
(2) Method of evaluation	Questionnaire-based survey (in a signed form) and/or interview
(3) Evaluation period	From December 2024 to June 2025

Evaluation process

The major question items in the questionnaire for FY2024 are as follows. Each question is rated on a 5-point scale, with a free comment box provided for each item.

Strategies and implementation thereof
Risk and crisis management
Corporate ethics
Business restructuring (mergers, acquisitions, divestitures or business alliances)
Group governance
Management evaluation, remuneration, and succession planning
Dialogue with stakeholders
Structure and operation of the board of directors

Status of responses in FY2024 to the issues of FY2023

	Issues	Initiatives and Results
FY 2023	Medium- to long-term strategies	In light of opinions stating that, to enhance corporate value in the medium to long term, consistency in strategies across the Group and coordination with financial strategies are indispensable, and that the board must continue strategic discussions with an awareness of Groupwide synergy, it continued its discussions on strategies for each business as well as the entire Group. Additionally, in terms of post-evaluation of investments, in response to opinions stressing the need to strengthen the board's oversight functions, the board, by providing information required for post-investment management metrics and exit decisions in a more organized manner, conducted quarterly checks on comparisons of plans at the time of investment and actual results, and the necessary measures. In the FY2024 interviews, the following opinions were voiced: Vigorous discussions are being conducted with greater depth at the board meetings, strategic discussions, and at the roundtable meetings. Reorganization of the financial business is going forward. Post-investment progress is being managed quantitatively and being reported to and discussed by the board.
	Next-generation human resources strategies	In light of opinions stating that to secure talent who will lead the next generation of business, the Company must hire and nurture high-level talent with state-of-the-art technical expertise while continuing to invest in human capital and ensuring the diversity of the organization, the board deepened its discussions on securing next-generation, core human resources. Additionally, in response to opinions expressing the need to discover and nurture talent capable of leading the sustainable growth of the overall Group at an early stage, the board continued to confirm and discuss the progress of succession planning and specific actions. In the FY2024 interviews, the following opinions were voiced: Each business is preparing a succession plan, and its progress is being confirmed and discussed at the roundtable meetings.
	Group governance and risk management	In light of opinions expressing the need for ongoing oversight by the board from the standpoint of the sustainable growth of the overall Group and ensuring reliability, the board discussed capital relationships and confirmed the status of responses to the problem of information leakages. Additionally, as new unconventional risks, such as recent geopolitical risks and economic security, emerge, in response to opinions expressing the need to update risk awareness in light of these changes and sort out information, the board conducted discussions on new risk themes such as economic security and AI data governance. In the FY2024 interviews, the following opinions were voiced: Material risks are being managed on a sufficiently high level. A large number of subsidiaries are being appropriately organized and reported.

Priority issues to be addressed going forward

	Issues	Action Plans
FY 2024	Medium- to long-term strategies	Opinions of FY2024 The next overall Group Medium-term Management Plan based on AI strategies must be formulated. Initiatives Deepen discussions on growth strategies for the entire Group to formulate the next Medium-term Management Plan.
	Next-generation human resources strategies	Opinions of FY2024 Discussions on succession planning for senior management and the policy for securing expert talent must be deepened, and optimization of the composition of human resources of the overall Group must be considered. Initiatives Continue discussions on the policy for nurturing top management and Group human resources strategies based on the next Medium-term Management Plan.
	Group governance and risk management	Opinions of FY2024 Discussions on overall Group governance and the effectiveness of risk management must be deepened, and measures are necessary against risk, taking into account the changing times. Initiatives Continue discussions on the ideal form of cooperation among the Group as a whole as well as the policy on responding to risks based on changes in the external environment, including the heightened risk of cyberattacks and world affairs.

Issues identified in the past and status of responses

Transactions with controlling shareholder

The Company recognizes that related party transactions including transactions with the parent company group are transactions that may have an impact on the financial position or the results of operations by using the advantageous position of the related party. As such, in implementing related party transactions, the Company carries out important transactions upon approval of the board of directors each time, by paying particular attention to whether such transactions are rational from a managerial standpoint of the Group and whether the terms and conditions of the transactions are appropriate compared to external transactions, in accordance with the Related Party Regulations and Related Party Transactions Management Manual. Among these transactions, for the ones that are particularly important, a structure was established around the Independent Outside Directors' Meeting, comprising exclusively independent external directors. The priority of the Independent Outside Directors' Meeting is to protect the interests of minority shareholders and is intended to further invigorate discussions at the board of directors from that perspective. The meeting engages in the prior consideration of matters in the same way as the former special committee.
Even with regard to related party transactions that do not fall under important transactions, the Finance and Accounting Division monitors the aggregate amount and details of such transactions once a year in principle.
In addition, the Board of Directors Rules stipulate that the board of directors must approve transactions conducted by directors if these may compete or cause conflicts with the Company's interests. Each transaction is subject to approval by the board of directors and the transaction results are reported to the board of directors.

Nominating Committee and Remuneration Committee

The Company has voluntarily established the Nominating Committee and the Remuneration Committee. As of June 30, 2025, each committee is composed of the President & CEO and four independent external directors and chaired by an independent external director to ensure its independence. Both committees deliberate and determine recommendations to be submitted to the General Meeting of Shareholders. The Nominating Committee deals with the election and dismissal of Board Directors and the nomination of Representative Directors, while the Remuneration Committee handles remuneration for Board Directors.

Composition of the Nominating and Remuneration Committees

Main topics discussed (June 2024 to May 2025)

Nominating Committee
Structure of the Board of Directors, election of Board Directors, nomination of Representative Directors, Board Director's skill matrix

Remuneration Committee
Remuneration by position, performance-linked indicators, disclosure documents, individual remuneration amounts

Audit & Supervisory Board

The Company has established an Audit & Supervisory Board to conduct efficient and effective audits regarding the status of execution of duties by Board Directors. It consists of four expertAudit & Supervisory Board Members rich in knowledge and expertise, including two external Audit & Supervisory Board Members.
The Audit & Supervisory Board meets once a month in principle. It examines risks and issues in the five areas of Board Directors, business execution, subsidiaries, internal audits, and accounting audits. It also sets annual activity plans, and makes proposals and recommendations to Board Directors and executive departments on matters recognized through audit activities.

Internal audits

Established as an independent organization directly under the President & CEO, the Internal Audit Department conducts internal audits of the overall duties of the Company as well as company-wide internal control audits of its subsidiaries and affiliates (mainly consolidated subsidiaries), by setting the goal of “achieving management goals and increasing value” and by formulating a risk-based annual audit plan based on the philosophy of “audits that contribute to management.”
The annual audit plan is submitted to the Board of Directors for resolution each year. The process of formulating the plan not only incorporates the perspective of company-wide risks recognized by the Representative Directors and the management (board directors, external directors, unit heads, executive officers, division heads, etc.), but also takes into consideration the opinions of the Audit & Supervisory Board Members and Independent Auditor (Deloitte Touche Tohmatsu LLC). In addition, at the end of the first half of the fiscal year, management interviews are conducted again to review the annual audit plan on a rolling basis, which enhances internal audits in line with changes in the management and business environment and risks surrounding the Company.

Cooperation among Audit & Supervisory Board Members,
Independent Auditors and Internal Audit Departments

Cooperation between the Audit & Supervisory Board Members and the Independent Auditor	The Audit & Supervisory Board Members receive briefings from the Independent Auditor (Deloitte Touche Tohmatsu LLC) on the audit policy and audit plan, and exchange opinions. The Audit & Supervisory Board Members receive reports on the main items to be audited and the method and results of audit, regarding the audit during and at the end of the fiscal year (including quarterly review). Full-time Audit & Supervisory Board Members cooperate with the independent auditor mainly by exchanging information and opinions with the Independent Auditor on a monthly basis, as well as accompanying the Independent Auditor who conducts accounting audits and attending the audits.
Cooperation between the Audit & Supervisory Board Members and the Internal Audit Department	The Audit & Supervisory Board Members regularly provide opportunities to exchange information with the Company's Internal Audit Department and Internal Control Division, cooperating organically with them including requesting them to conduct an investigation as necessary. In particular, the Audit & Supervisory Board Members confirm the progress of the internal audit plan and exchange opinions with the Internal Audit Department every month such as by holding regular meetings attended by full-time Audit & Supervisory Board Members. In addition, the general manager of the Internal Audit Department reports the internal audit plan and results, among other matters, to the Audit & Supervisory Board Members semi-annually, and provides explanation regarding the report of audit results to representative directors as appropriate, through sharing of materials each time.
Cooperation between the Independent Auditor and the Internal Audit Department	The Independent Auditor receives briefings from the Internal Audit Department on the audit plan and, when necessary, on the results of Internal Audits and other matters. The Internal Audit Department receives regular briefings from the Independent Auditor regarding audit results and other matters. Moreover, both parties cooperate with each other as necessary by exchanging information and opinions, among other measures.

Corporate Governance System