Iida : Corporate Governance Report

Corporate Governance Report

Last Update: December 23, 2021

Iida Group Holdings Co., Ltd.

President and Representative Director : Masashi Kanei

Contact: [e-mail]

Securities Code: 3291

https://www.ighd.co.jp/en/

The corporate governance Iida Group Holdings Co., Ltd. is described below.

1. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and

Other Basic Information

1. Basic Views

The group-wide Management Philosophy of Iida Group Holdings Co., Ltd. (the "Company") is "To contribute to the nurturing of an affluent society through the creation of a living environment where a greater number of people can live truly fulfilling lives."

Based on this Management Philosophy, the Company establish the group management policy and thinks that it is critical to enhance efficiency, transparency, and soundness of the Group management through active initiatives by the Board of Directors and the Supervisory Board for the purpose of ensuring sustainable corporate growth and improving corporate value over the medium to long term.

(1) Securing the rights and equal treatment of shareholders

The Company takes appropriate steps to substantially ensure the rights of all shareholders, including minority shareholders and foreign shareholders. At the same time, the Company strives to treat all shareholders equally in accordance to their equity interest and disclose information in an appropriate manner to prevent information gaps from arising between shareholders.

(2) Appropriate cooperation with stakeholders other than shareholders

The Company has established a group-wide Code of Conduct that clarifies our basic stance on matters such as corporate ethics and legal compliance. The Company strives to cooperate appropriately with our stakeholders by putting this Code of Conduct into practice.

(3) Ensuring appropriate information disclosure and transparency

The Company aims to earn the trust of all stakeholders, including shareholders, by providing information on the management strategies, business results, financial standing and other matters of the Company group (the "Group") in a prompt, accurate and fair manner.

(4) Responsibilities of the Board of Directors

Given its fiduciary responsibility and accountability to shareholders, the Board of Directors sets the overall direction of the Company, including corporate strategies, to shareholders. At the same time, it promotes sustainable growth of the Group and enhancement of corporate value over the medium to long term to lead to higher profitability and capital efficiency by creating an environment supporting appropriate risk taking and engaging in highly effective supervision.

(5) Dialogue with Shareholders

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The Company engages in constructive dialogue with shareholders and other stakeholders at the General Meeting of Shareholders and other opportunities to the extent reasonable and works to establish a system to encourage dialogue.

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

This report is presented in accordance with the Code as it stands after its revision in June 2021.

[Supplementary Principle 2-4-1 Ensuring Diversity in the Promotion of Core Human Resources] The Company promotes skillful human resources to middle managerial positions regardless of gender, nationality, new graduates or midcareer hires in order to ensure diversity in the promotion of core human resources, etc.

The Company has deemed that more time is needed to consider and establish structures in order to understand necessary objective information, decide on how to demonstrate targets, etc. in disclosing measurable voluntary targets and the current conditions.

Measurable voluntary targets and the current conditions, as well as the policies for human resource development and internal environment development and the status of their implementation will be disclosed on the Company's website (https://www.ighd.co.jp/) once they have been prepared.

[Supplementary Principle 4-10-1 Utilization of Independent Advisory Committee]

The Company had considered the establishment of an independent nominating committee and remuneration committee mainly comprised of independent Outside Directors under the Board of Directors while welcoming the involvement and advice of independent Outside Directors. Consequently, however, it has not established an independent nominating committee or remuneration committee mainly comprised of independent Outside Directors under the Board of Directors up to date, based on the fact that each independent Outside Director is currently appropriately involved in decision-making on matters of particular importance, taking advantage of their highly specialized knowledge and extensive experience to actively provide their opinions, including those from the viewpoint of diversity, such as gender, and skill, and to offer advice as necessary at the Board of Directors meetings.

[Supplementary Principle 4-11-1 Views on Total Balance, Diversity and Size of the Board of Directors] The Company's views on the total balance, diversity and size of the Board of Directors are as set forth in (4) of "Principle 3-1" under "Disclosure Based on the Principles of the Corporate Governance Code."

The Company has deemed that more time is needed to consider the disclosure of the combination of skills, etc. to comprise the table of knowledge, experience and capabilities of each Director. The Company will make this disclosure once it has been prepared.

[Supplementary Principle 4-11-3Self-Evaluations by Members of the Board of Directors]

The Company has been considering analyses and evaluations of the effectiveness of the Board of Directors along with disclosure of their results. In addition to ensuring high attendance at the Board of Directors meetings and sufficient time to deliberate on agenda items, including the use of prior inquiry at the Group Management Committee meetings, both inside and Outside Directors and Corporate Auditors provide evaluations of and opinions on the status of operations and discussions as appropriate, and attempts are made at improvement whenever that happens. As such, the Company has determined that the effectiveness of the Board of Directors has been sufficiently ensured. From this perspective, the Company has decided not to disclose analyses or evaluations of the overall effectiveness of the Board of Directors nor the results thereof at this time.

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[Disclosure Based on the Principles of the Corporate Governance Code]

This report is presented in accordance with the Code as it stands after its revision in June 2021.

[Principle 1-4Cross-Shareholdings]

The Group has no listed shares as cross-shareholdings subject to the Code.

[Principle 1-7 Related Party Transactions]

Transactions by the Company's Directors and Corporate Auditors with related parties are matters to be approved by the Board of Directors, which checks the reasonableness (business-related necessity) of the transaction and the appropriateness of the transaction terms. Additionally, transactions of a certain amount or more between the Company's officers, their close relatives and major shareholders, etc. and the Company or its subsidiaries are monitored each fiscal year and disclosed in the annual securities report.

[Principle 2-6 Roles as Asset Owners of Corporate Pension Plan]

The Company does not have a corporate pension plan, so there are no efforts undertaken as asset owners of a corporate pension plan.

[Principle 3-1 Full Disclosure]

1. Company objectives (e.g., Management Philosophy), management strategies and management plans
   These are published on the Company's website (https://www.ighd.co.jp/).
2. Basic views and basic policies on corporate governance

As set forth in "I. 1. Basic Views" of this report.

1. The Board of Directors' policies and procedures in determining the remuneration of the senior management and Directors
   As set forth in "II. 1. [Director Remuneration] Disclosure of Policy for Determining Remuneration Amounts or Calculation Methods Thereof" of this report.
2. Board of Directors' policies and procedures in the appointment/dismissal of the senior management and the nomination of Director and Corporate Auditor candidates
   From the standpoint of emphasizing substantial discussion and prompt decision-making, the Articles of Incorporation stipulate that the Company's Board of Directors is to be comprised of no more than 12 Directors, and efforts are made to ensure that both the Board of Directors and the Supervisory Board are comprised of members possessing the character and discernment befitting of their respective duties as well as diverse and extensive experience and skills.
   The policy is to primarily elect persons familiar with the Group's business and in a position to supervise the main subsidiaries of the Group as inside Directors from the perspective of ensuring management of the Group as a whole and efficient business operations.
   The policy is to elect Outside Directors after comprehensively taking into consideration independence in addition to management experience at other companies, understanding of the Group's challenges, and a high level of expertise from the perspective of contributing to improving management efficiency and strengthening the corporate governance structure from an independent and objective standpoint. When nominating candidates for Director, they are evaluated and selected in light of the above policy, and the decision is made by the Board of Directors. When nominating candidates for Corporate Auditor, persons who sufficiently possess appropriate experience and skills as well as necessary knowledge regarding finance, accounting and legal matters are recommended as candidates for Corporate Auditor, and the decision is made by the Board of Directors with the consent of the Supervisory Board.
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1. Explanations with respect to individual appointments/dismissals of the senior management and nominations of Director and Corporate Auditor candidates based on (4) above by the Board of Directors.

[Directors]

■Kazuhiko Mori (Chairman Emeritus and Board Director)

Having served as representative director of subsidiaries of the Company and group companies, he is familiar with the Group's business and possesses deep knowledge with respect to management in general. He has also played a central role in management of the Company as Representative Director since its establishment. As such, the Company has determined that he is qualified to be a Director of the Company and proposes that he be elected as Director.

■Masashi Kanei (President and Representative Director)

Having served as representative director of subsidiaries of the Company and group companies, he has played an appropriate role in supervising decisions on important management matters and execution of business since the establishment of the Company, taking advantage of his wealth of experience and knowledge in the field of design and sales. As such, the Company has determined that he is qualified to be a Director of the Company and proposes that he be elected as Director.

■Hiroshi Nishino (Executive Board Director)

Having served as representative director of subsidiaries of the Company and group companies, he is familiar with the Group's business. He has also played an appropriate role in supervising decisions on important management matters and execution of business since the establishment of the Company. As such, the Company has determined that he is qualified to be a Director of the Company and proposes that he be elected as Director.

■Tadayoshi Horiguchi (Executive Board Director)

He serves as representative director of subsidiaries of the Company and is familiar with the Group's business. He has also played an appropriate role in supervising decisions on important management matters and execution of business since the establishment of the Company. As such, the Company has determined that he is qualified to be a Director of the Company and proposes that he be elected as Director.

■Shigeo Yamamoto (Senior Advisor, Member of the Board)

He has served as representative director of subsidiaries of the Company and group companies and has supervised the execution of business as a Director since the establishment of the Company. As Senior Advisor, he also plays an appropriate role in providing good advice to senior management. As such, the Company has determined that he is qualified to be a Director of the Company and proposes that he be elected as Director.

■Yoshinari Hisabayashi (Director )

He serves as representative director of subsidiaries of the Company and has played an appropriate role in supervising decisions on important management matters and execution of business since the establishment of the Company, taking advantage of his wealth of experience and knowledge in the field of sales. As such, the Company has determined that he is qualified to be a Director of the Company and proposes that he be elected as Director.

■Shigeyuki Matsubayashi ( Director )

He serves as representative director of subsidiaries of the Company. He has also played an appropriate role in supervising decisions on important management matters and execution of business since the establishment of the Company, taking advantage of his flexible administrative

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abilities as Director. As such, the Company has determined that he is qualified to be a Director of the Company and proposes that he be elected as Director.

■Kazuhiro Kodera ( Director )

He serves as representative director of subsidiaries of the Company and group companies and is familiar with the Group's business. He also plays an appropriate role in supervising decisions on important management matters and execution of business. As such, the Company has determined that he is qualified to be a Director of the Company and proposes that he be elected as Director.

■Toshihiko Sasaki (Outside Director)

He plays an appropriate role in improving the efficiency of the Company's management and strengthening the corporate governance structure, taking advantage of his high level of knowledge as a financial and economic expert and his extensive experience as a university professor and executive officer of other organizations. As such, the Company has determined that he is qualified to be a Director of the Company and proposes that he be elected as Outside Director.

■Eiichi Hasegawa (Outside Director)

In addition to his high-level knowledge as an expert in economic policy, Eiichi Hasegawa has extensive experience as a university professor and at other organizations. He can play an appropriate role in improving the Company's management efficiency and strengthening the corporate governance system. As such, the Company has determined that he is qualified to be a Director of the Company and proposes that he be elected as Outside Director.

[Corporate Auditors]

■Ikuko Ishimaru (Standing Corporate Auditor)

Having served as general manager of Accounting Department, Financial Department, Administration Division, etc. at a subsidiary of the Company, she possesses specialist knowledge and practical experience, primarily in the area of accounting, finance, and taxes. After serving as director of the subsidiary, she also worked as standing corporate auditor. As such, the Company has determined that she is qualified to audit the execution of duties by Directors and proposes that she be elected as Corporate Auditor.

■ Makoto Shimazaki (Standing Corporate Auditor)

In addition to his experience and knowledge gained from having served as officer responsible for sales, operational audit, and administrative departments at financial institutions such as banks, securities companies, and venture capital firms, he has also worked for a long time at financial institutions outside the Group. As such, the Company believes that he can be expected to conduct audits from a neutral and objective perspective and contribute to ensuring the soundness of the Company's management, and proposes that he be elected as Corporate Auditor.

■Chikara Tanaka (Outside Corporate Auditor)

He possesses specialist knowledge and extensive experience with respect to taxes and accounting as a tax accountant. The Company believes that his experience and high level of knowledge from serving as corporate auditor at a subsidiary of the Company can be utilized in strengthening the audit structure of the Company and proposes that he be elected as Outside Corporate Auditor.

■Koji Fujita (Outside Corporate Auditor)

He possesses specialist knowledge and extensive experience with respect to law as an attorney at law. The Company has determined that he is capable of enhancing audits at the Company by taking advantage of his experience serving as corporate auditor at a subsidiary of the Company and proposes that he be elected as Outside Corporate Auditor.

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