Acom : Corporate governance report submitted to Tokyo Stock Exchange (Last updated on June 30, 2023)

ACOM CO., LTD.

CORPORATE GOVERNANCE

Last updated on June 30, 2023

ACOM CO., LTD.

President & CEO: Masataka Kinoshita

Contact: Corporate Planning Dept., Telephone: [phone] Code Number: 8572 https://www.acom.co.jp/

The status of corporate governance of the Company is described below:

1. Basic Policies on Corporate Governance, and Capital Structure, Company Outline and Other General Information

1. Basic Policy

The ACOM Group, guided by its lifelong "circle of trust" spirit, maintains an ongoing corporate commitment to respecting other people, putting the customer first, and conducting creative and innovative management. Based on this commitment, we are seeking to deepen mutual trust between our stakeholders and ourselves and thus progress in partnership with society.

In order to meet the expectations of stakeholders and build stronger trust, we will strengthen corporate governance as a key management priority. To this end, we will take steps to enhance the soundness, transparency, and efficiency of our operations and achieve sustained increases in our shareholder value.

We recognize that effective internal control systems are essential to creating an appropriate corporate governance framework. Based on this recognition, we are encouraging all members of our organization to join forces in building internal control systems and assuring their effectiveness, under the leadership of management. At the same time, we are constantly evaluating, verifying, and improving the effectiveness of internal control mechanisms already in place.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code] [Supplementary Principle 4.10.1 Independence and Authority Roles of the Appointment Committee and

Renumeration Committee]

ACOM has Appointment and Remuneration Committee in place as optional committee in charge of appointment of and compensation for senior management and directors. The structure of appointment and remuneration committee is as follows:

• The Number of Inside Directors and Independent Outside Directors.
• • Board of Directors: 7 inside directors and 2 independent outside directors
  • Appointment and Remuneration Committee: 4 inside directors and 2 independent outside directors
• The Number of Directors not Serving as Members of Audit and Supervisory Committee and Those Serving as Members of Audit and Supervisory Committee.
• • Board of Directors: 6 directors who are not members of the committee and 3 directors who are members of the committee
  • Appointment and Remuneration Committee: 3 directors who are not members of the committee and 3

directors who are members of the committee

Independent outside directors do not constitute the majority of Appointment and Remuneration Committee, however, the Company ensures their appropriate involvement and receives their suitable advice upon consideration of appointment and compensation.

[Principle 4.11 Prerequisites for Ensuring the Effectiveness of the Board of Directors]

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ACOM CO., LTD.

CORPORATE GOVERNANCE

In order to fulfill the roll and responsibility of the Board of Directors effectively, ACOM provided the Policy of the Composition of the Board of Directors as of February 9, 2023. Based on the management strategy, the Company has also created a skill matrix for directors after identifying the skills that the directors should hold.

*Please refer to "I. 1. Basic Policy [Disclosure Based on the Principles of the Corporate Governance Code] [Supplementary Principle 4.11.1]" of this report for the Policy of the Composition of the Board of Directors and the Skill Matrix.

At this point, the Board of Directors of the Company consists of nine members, and as described in the skill matrix, the Company ensure a good balance of knowledge, experience and abilities as a whole, and also ensure diversity in terms of work experiences and ages.

There is no female or foreigner directors at the Company at this point. However, the Company is willing to nominate any individuals who meet criterion in appointment policy as candidate and who holds the skill that the directors should hold, regardless of one's gender and nationality.

[Disclosure Based on the Principles of the Corporate Governance Code] (Updated)[Principle 1.4 Strategic Shareholdings]

The Company currently does not have any strategic shareholdings and does not plan to do so in the future.

[Principle 1.7 Transactions with Related Party]

Pursuant to relevant laws, it is provided in our regulations of board of directors that transactions with directors and material transactions with major shareholders require prior approval of the board of directors.

[Supplementary Principle 2.4.1 Ensure Diversity in the Appointment of Core Human Resources]

Under the situation where competition between companies is intensifying and changes in needs are accelerating, in order to implement "creative and innovative management" that the Company advocates in its corporate philosophy, and to continue to meet the expectations from stakeholders, it is necessary to create a new value by fusing abilities, ideas and values from diverse human resources.

With that in mind, ACOM is actively taking measures to secure diversity, including recruitment, promotion, and human resource development of female and mid-career employees.

To ensure the diversity of core human resources, ACOM has set the following targets for the ratio of females and mid-career hires in managerial or higher positions.

	Category	As of March 31, 2023			By March 31, 2025（Target）
	Percentage of Females in managerial positions	20.2%		25.0%
	(above assistant manager)
	Percentage of Mid-Career Hires in managerial	5.8%			Increase from current level
	positions (above assistant manager)*

*For the purpose of this tabulation, mid-career hires are defined as "those who joined the company in mid-career and have been with the company for 10 years or less."

In addition, the Company promotes employees to managerial position with an emphasis on their ability and personality regardless of their gender or nationality.

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ACOM CO., LTD.

CORPORATE GOVERNANCE

• Policies on Human Resource Development, Internal Environmental Development, and Implementation Status to Ensure Diversity>
  ACOM has established Policy on Human Resource Development and internal environment development as follows. 〔Policy on Human Resource Development〕
  Aiming for the Company Group's sustainable growth, the Company will respect the abilities, ideas, values, etc. of diverse human resources and develop human resources who can embody its corporate philosophy.
  〔Policy on Internal Environment Development〕
  Based on the Group's corporate philosophy of "The Spirit of Human Dignity," the Company will promote diversity and develop an internal environment in which employees can feel motivated and comfortable.
  Based on the above policy, ACOM is implementing the following human resource development and internal environment development.

Category		Status
Initiatives on Human Resource	-	Development of leaders
Development		In response to the recent changes in the external environment and internal
		challenges, the Company newly formulated "ACOM Leadership Principles" as
		the requirements for leaders. The Company strives to develop leaders, focusing
		on the ability to support the growth of members, in addition to the capacity as a
		manager having excellent administrative skills.
	- Digital human resource development
		For the purpose of developing human resources that contribute to digital
		promotion, the Company started "a digital human resource development
		program." By providing systematic training programs, from fostering a digital
		mindset to acquiring specialized skills, the Company aims to develop core
		human resources for digital promotion.
	-	Diversity
		The Company has created an environment in which each employee can be active
		while respecting use of the abilities, ideas, values, etc. of diverse human
		resources. As for the promotion of women's activity, the Company established
		the "Woman Career Program" in the fiscal year ended March 2023, a program to
		foster a career development mindset among female employees. In addition, the
		Company has set a target of increasing the ratio of female managers (above
		assistant manager) to 25.0% or more by the end of the fiscal year ending March
		2025.
	- Training and education by purpose
		The Company actively works on measures to promote employees' autonomous
		career development through means such as various training programs, including
		selective training and level-based training for the purpose of systematically
		developing future management candidates, correspondence education, official
		qualification acquisition support, and in-house study meetings.
Initiatives on Job Satisfaction	-	Ingraining the Vision
		In order to encourage ingraining the Vision stated in the medium-term
		management plan, the Company created a Vision Book to clarify the "link
		between operations and the Vision" and "criteria for decision-making in daily
		behavior." The Company also implemented the Vision Ingraining Program for
		all employees, with the participation of Directors, as facilitators.

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ACOM CO., LTD.

CORPORATE GOVERNANCE

	- Other initiatives on job satisfaction
		(Initiatives in the fiscal year ended March 2023)
	- Started the business contest "DRIVE" across the ACOM Group
	- Activities of the ES working Group and the women's activity working group
	- Increased wage for all employees (Approximately 5.2% increase in wages,
		combining base salary increase in October 2022 with regular salary increase in
		April)
		(Initiatives in the fiscal year ending March 2024)
	- Introduced a secondary job system, mainly for individual business owner.
	- Promote employees' own growth through updating education system
Initiatives on Diversity and	-	Implemented measures to balance work and childcare
Workplace Comfort		For the purpose of enabling employees to actively participate while balancing
		work and childcare, the Company promotes taking childcare leave and provides
		support to employees returning to work, and acquired the Kurumin Mark in the
		fiscal year ended March 2021.
	-	Enhanced employee welfare
		Under our vision to "Make our employees and their families happier tomorrow
		than today," the Company has worked to enhance the employee welfare plan and
		was certified for two consecutive years as a "Welfare Promotion Corporation
		(comprehensive)" through the welfare award and certification system, "Hataraku
		Yell."
	-	Promoted health management
		In order to keep employees and their families active and happy, the Company's
		officers, the Human Resources Department, the Hygiene Committee, industrial
		physicians, and the ACOM Health Insurance Association, etc. are all cooperating
		to promote health and productivity management, and the Company was
		recognized as a Superior Health Management Corporation 2023.
	-	Other initiatives
		- Developed a follow-up system for employees with disabilities
		(conducted annual questionnaires and interviews with their supervisor and
		Human Resources Department multiple times a year)
		- Granted paid special leave for fertility treatment
		- Granted paid special leave for volunteer activities
		- Introduced a telecommuting system
		- Provided lighter attire for employees
		- Introduced paid leave on an hourly basis
		- Introduced a three- to four-day workweek system for rehired employees
		after retirement

[Principle 2.6 Functioning as an Asset Owner for Corporate Pension Plans]

The Company has Corporate Pension Asset Management Committee in place to effectively manage corporate pension asset. The committee comprises of the director in charge of Human Resources Dept. and chief general managers of Human Resources Dept., Corporate Planning Dept., Finance Dept. and Treasury Dept.

The members of the committee need to deepen their understandings on investment theory, asset management system, contents of asset for investment, etc. They also need to grasp asset management environment. Therefore, the

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ACOM CO., LTD.

CORPORATE GOVERNANCE

Company provides necessary information from trustee management institutions to committee members in periodic manner.

The committee discusses basic policy on corporate pension asset management, matters on investment and trustee management institutions. The Company further discusses these matters at management meeting where Audit and Supervisory Committee members attend and share their opinion. Therefore, the Company ensures appropriate management of corporate pension asset.

[Principle 3.1 Enhancement of Information Disclosure]

1. Guiding Principles of the Company (Corporate Philosophy, etc.), Management Strategy and Management Plan

1. Guiding Principles of the Company (Corporate Philosophy, etc.) Please refer to "Corporate Philosophy" on our website. (https://www.acom.co.jp/corp/english/about-us/philosophy/)
2. Management Strategy and Management Plan

Please refer to "Medium-term Management Plan" on our website.

(https://www.acom.co.jp/corp/english/ir/management/medium-term_management_plan/)

1. Basic approach and key policies on corporate governance

Please refer to "I. 1. Basic Policy" of this report for our basic approach and key policies on corporate governance.

1. Policies and procedures for determining compensations for senior management and directors

Please refer to "II. 1. [Compensation for Directors]" of this report for our policies and procedures for determining compensation for senior management and directors.

1. Policies and procedures for appointing and dismissing senior management, and nominating candidates for directors

1. Policies

1. Appointing Senior Management
2. • The candidate owns rich experience, in-depth insight and high expertise of Company's business which are necessary for conducting swift and pertinent business execution.
   • The candidate possesses great humanity such as wide trust from others, dignity and high moral.
   • The candidate is sound both in mind and body, and does not possess possible concern for business performance.
   • The candidate does not have any past record of violations of law and compliance (including harassment) which inflicted significant loss to the Company and any other entities the candidate has served.
   • The candidate is not affiliated with any anti-social forces.
3. Dismissing Senior Management
4. • A senior management is dismissed when one no longer meets criterions under appointment policy.
5. Nominating Candidates for Directors (Excluding Those Serving as Members of Audit and Supervisory Committee)
6. • The candidate owns rich experience, in-depth insight and high expertise which are necessary for efficient supervision on management.
   • The candidate possesses great humanity such as wide trust from others, dignity and high moral.
   • The candidate is sound both in mind and body, and does not possess possible concern for business performance.

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