Amvis : Corporate Governance Report（March 14, 2023）

Corporate Governance Report (Unofficial Translation)

Last update: March 14, 2023 Company name: Amvis Holdings, Inc.

Securities Code: 7071

Representative: Keiichi Shibahara, Representative Director and CEO Inquiries: Tetsuya Nakagawa, Director and CFO https://www.amvis.com/en/

The corporate governance of Amvis Holdings, Inc. (the "Company") is described below.

I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information

1. Basic Views

In line with the vision to "become the world's most exciting medical and healthcare company," based on the mission to "create a vibrant, happy society through medical and health care with an ambitious vision," the Company and its consolidated subsidiaries (the "Group") aims to contribute to its sustainable growth and development and the happiness of society as a whole through honest and fair business activities. The Group also places value on the interests and trust of all its stakeholders, including shareholders, investors, service users, medical institutions, government agencies, local communities and residents, employees, and business partners. In order to achieve this, the Group believes that it is necessary to emphasize the rights of its shareholders and to live up to society's trust, and it considers establishing and strengthening corporate governance to be its most important management issue.

[Reasons for not Implementing Each Principle of the Corporate Governance Code]

[Subject Code]

The contents are based on the Corporate Governance Code revised in June 2021.

[Supplementary Principle 2-4-1]

(1) Views of ensuring diversity

In order to maximize the power of the organization, the Group respects and accepts individuals with diverse backgrounds. It is committed to create an organization and develop human resources that enable diverse individuals to maximize their abilities, and to provide equal opportunities for compensation, education, and promotion regardless of gender, nationality, or disability.

(2) Voluntary and Measurable Goals for Ensuring Diversity

The Group's policy is to actively recruit and promote capable people regardless of gender, nationality, etc., and to provide equal evaluations and opportunities to all employees, so it has not set any numerical targets.

(3) Status of ensuring diversity

At present, the Group has a lot of track records of appointing female and mid-career hires to management positions. On the other hand, due to the fact that the Group's business domain is limited to Japan, there is no track record of appointing overseas nationals to management positions at this time. The ratio of female in management positions is disclosed in the full-year financial highlights, and the Group will consider disclosing other actual figures.

(4) Human resource development policies, internal environmental improvement policies, and their status

In order to achieve diversity and inclusion, the Group is committed to providing a comfortable workplace for individuals of all backgrounds.

[Supplementary Principle 3-1-3]

As the Company is engaged in the hospice business, it does not make any disclosures based on TCFD because we currently expect climate change issues to have immaterial impact on its business. However, the Company regards that addressing climate change issues is important for developing the economy and for maintaining and improving the standard of living in Japan. Therefore, the Company is taking various initiatives such as strict energy-saving and promotion of paperless operations by digitizing documents, and reduction of food waste.

[Supplementary Principle 4-1-3]

The Company considers the succession of the CEO and other officers to be an important issue in the long term, and although it has not formulated a succession plan at this time, it will make a comprehensive judgment and appoint a successor based on the criteria that the successor is a suitable person who can fulfill his/her duties and responsibilities, taking into consideration his/her personality, knowledge, achievements, and abilities.

[Principle 5-2]

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Corporate Governance Report (Unofficial Translation)

The Company formulates and announces its medium-term management plan based on its management policy and in consideration of the business environment and management issues. The plan is explained in an easy-to-understand manner to shareholders and investors at financial results briefings and the General Meeting of Shareholders and other events. In formulating the plan, the Company sets profit targets and monitor the status of their achievement, but at this time it has not yet set numerical targets for capital efficiency.

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

[Principle1-4]

In principle, the Company does not engage in cross-shareholdings. The Board of Directors will make a comprehensive decision on whether it is necessary to engage in cross-shareholding only when it is judged to contribute to the enhancement of the Company's corporate value over the medium to long term.

[Principle 1-7]

The Company has established the rules for the related-party transactions management, which stipulate that any new transaction with a related party must be approved in advance by the Board of Directors after fully considering the rationality (business necessity) of the transaction and the appropriateness of its terms and conditions, based on the opinions of independent officers and Audit & Supervisory Board members. The Company monitors such transactions. Furthermore, for transactions that are still ongoing as of the end of each fiscal year, the reasonableness and appropriateness of such transactions shall be reported to the Board of Directors.

[Principle 2-6]

The Company does not have a corporate pension fund system.

[Principle 3-1]

1. The management philosophy, management strategies, and medium-term management plan are disclosed on the Company's website and in the financial highlights.
2. The basic views and basic policy of corporate governance are disclosed on the Company's website, in this report and in the Annual Securities Report.
3. The policies and procedures for determining the compensation of senior management and directors by the Board of Directors are disclosed in this report and in the Annual Securities Report.
4. The nomination of candidates for directors and Audit & Supervisory Board members of the Company shall be decided by the Board of Directors after deliberation by the Nomination and Compensation Committee, and shall be conducted through fair and highly transparent procedures. In nominating candidates, the Company selects those who are considered to contribute to the enhancement of the Company's corporate value from various perspectives, such as possessing the basic qualities, competencies, experience, and achievements required of directors and Audit & Supervisory Board members, and having excellent personal insight. With respect to the dismissal of the directors and Audit & Supervisory Board members, the Company will decide on a proposal for their dismissal or non-reappointment and submit the proposal to the General Meeting of Shareholders as necessary, such as when there is an obstacle to the execution of their duties.
5. When nominating candidates for directors and Audit & Supervisory Board members, the reasons for each individual appointment and nomination are stated in the notice of the General Meeting of Shareholders (reference documents), and the notice of the General Meeting of Shareholders is disclosed on the website.

[Supplementary Principle 3-1-3]

(1) Initiatives on sustainability

Details of our sustainability philosophy, policies, and initiatives are disclosed on our website. Website: https://www.amvis.com/en/sustainability/

(2) Investment in human capital and intellectual capital

In addition to human resource development through education and training, the Company is actively working to create an environment where employees can fully demonstrate their abilities, and to support various work styles such as remote working and flextime systems. Due to the nature of its business, it does not invest much in intellectual capital such as patents, but it does so to the extent necessary for its business.

(3) Disclosure based on TCFD

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Corporate Governance Report (Unofficial Translation)

As the Company is engaged in the hospice business, it does not make any disclosures based on TCFD because we currently expect climate change issues to have immaterial impact on its business. However, the Company regards that addressing climate change issues is important for developing the economy and for maintaining and improving the standard of living in Japan. Therefore, the Company is taking various initiatives such as strict energy-saving and promotion of paperless operations by digitizing documents, and reduction of food waste.

[Supplementary Principle 4-1-1]

By appointing outside directors who do not engage in business execution to the Board of Directors, the Company aims to separate business execution from supervision, and by having Audit & Supervisory Board members attend the meetings, the Company enhances the supervisory function of overall management and ensures fairness and transparency in management.

The Board of Directors shall make decisions on important business operations in accordance with laws and regulations, the rules of the Board of Directors, the rules for authority, and the rules for approval. In addition, for the purpose of making prompt and decisive decisions on business operations and decisions other than those to be made by the Board of Directors, the authority shall be transferred to the Management Meeting or the representative director and other members of the management team in accordance with the above-mentioned rules, and the Board of Directors shall supervise the status of business operations by receiving reports from each director in a timely manner.

[Principle 4-9]

In selecting candidates for outside directors, the Company places importance on their high level of expertise and knowledge and experience in various businesses, etc., which enable them to advise and supervise the Company's management from a neutral and objective perspective, in addition to the requirements for independence stipulated in the Companies Act and required by the Tokyo Stock Exchange. The requirements for a candidate are that the candidate be an officer of a listed company in an industry different from that of the Company or have equivalent knowledge and experience.

[Supplementary Principle 4-10-1]

The Nomination and Compensation Committee, as an advisory body to the Board of Directors, deliberates on matters related to the selection, dismissal, and compensation of directors, and reports to the Board of Directors. It deliberates on compensation and other matters, in accordance with the rules for compensation of officers, but may recommend changes to such rules and submit a report to the Board of Directors in accordance with such recommendations. The Nomination and Compensation Committee consists of two outside directors (members: Nobutaka Ushigome and Tsuyoshi Yamada) and one inside director (chairperson: Keiichi Shibahara), who are appointed by resolution of the Board of Directors, and one outside Audit & Supervisory Board member (Ryoji Arai) attends for monitoring purposes.

[Supplementary Principle 4-11-1]

The Company believes that the Board of Directors must be composed of personnel with diverse knowledge and experience and advanced abilities in order to supervise business execution and make important decisions, and it appoints directors in consideration of the balance and diversity of knowledge, experience and abilities.

The directors consist of five members, including two independent outside directors who are officers of listed companies in industries different from that of the Company. In addition, the three Audit & Supervisory Board members consist of three independent outside Audit & Supervisory Board members with expertise.

These members utilize their respective knowledge, experience, and abilities to make multifaceted decisions and supervise the execution of business.

The expertise, etc. (skill matrix) of directors and Audit & Supervisory Board members is disclosed in the Annual Securities Report and the notice of the General Meeting of Shareholders (reference documents).

[Supplementary Principle 4-11-2]

The Company requires outside officers to ensure that they have the time and effort to properly carry out their responsibilities as officers of the Company, and appoints only those candidates who are deemed capable of fulfilling their responsibilities. The status of concurrent positions held by outside officers is disclosed in the Annual Securities Report and other documents.

[Supplementary Principle 4-11-3]

The Company has introduced a system whereby all directors analyze and evaluate the composition and operation of the Board of Directors every year, and a summary of the analysis and evaluation of the effectiveness of the Board of Directors is as follows.

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Corporate Governance Report (Unofficial Translation)

・Composition of the Board of Directors

The number of directors (five directors) is appropriate for active discussions and prompt decision-making, and the Board of Directors is composed of directors who have experience and knowledge of various businesses, a high level of expertise and insight, and a neutral and objective viewpoint.

・Operation of the Board of Directors

The attendance rate of directors (including outside directors) at the Board of Directors meetings is approximately 100%, and decisions are made through appropriate discussions. In addition, appropriate decision-making and supervision are carried out by invigorating discussions at the Board of Directors meetings through questions and opinions of outside directors, and by presenting opinions from various perspectives from outside directors.

・Materials and information provided

The Company provides directors with necessary and sufficient materials and information to consider the contents of proposals.

[Supplementary Principle 4-14-2]

The Company provides the following support to directors and Audit & Supervisory Board members to enable them to fulfill their roles and responsibilities.

・The Company provides necessary and important information, such as economic conditions, industry trends, and insurance systems, in a timely and appropriate manner.

・The Company provides opportunities to participate in seminars held by the Japan Audit & Supervisory Board Members Association, financial institutions, etc., as appropriate, and encourages them to acquire necessary knowledge, self-development, and study.

・At the time of appointment, explanations are given by the officer in charge or the department in charge regarding necessary knowledge and information such as the Company's corporate philosophy, medium-term management plan and financial conditions.

[Principle 5-1]

In order to realize constructive dialogue with shareholders and investors, the Finance Department is in charge of IR, and senior management meets with shareholders and investors as necessary to explain capital policies, medium-term management plans, and other matters to shareholders and investors in a clear and easy-to-understand manner.

In order to ensure rational and smooth dialogue with shareholders and investors, each department works together and assists the director in charge.

In addition to individual dialogues with shareholders and institutional investors, the Company holds briefings on its medium-term management plan and quarterly financial results, corporate briefings, and briefings for individual investors. In addition, the Company discloses explanatory materials for management plans and financial results briefings, etc. on its website.

The results of the dialogue with shareholders and investors are reported to the management team by the director in charge or the head of the department at the management meeting as appropriate, and are appropriately reflected in the business management, leading to the sustainable growth of the Group and the enhancement of corporate value over the medium to long term.

As measures for insider information management, the Company strives to disclose information fairly, promptly and in a timely manner, while considering insider information management in accordance with its disclosure policy. When meeting with shareholders and investors, it provides information only after confirming that the information to be provided does not fall under the category of insider information. The three weeks prior to the announcement of quarterly financial results are designated as a "silent period" during which the Company refrains from discussing financial information.

The disclosure policy is available on the website.

2. Capital Structure

		Percentage of Overseas Shareholders	From 10% to less than 20%
[Major Shareholders]
		Name			Number of Shares			Shareholding
				Held (shares)			Ratio (%)
	IDEA Capital		26,831,000	54.85

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Corporate Governance Report (Unofficial Translation)

Keiichi Shibahara		8,431,000		17.24
SSBTC CLIENT OMNIBUS ACCOUNT		3,622,800		7.41
Custody Bank of Japan, Ltd. (Trust Account)		2,037,500		4.17
The Master Trust Bank of Japan, Ltd. (Trust Account)		640,100		1.31
MSCO CUSTOMER SECURITIES		431,700		0.88
Tetsuya Nakagawa		420,000		0.86
Sumitomo Life Insurance Company		309,800		0.63
BNP PARIBAS SECURITIES SERVICES SYDNEY/ JASDEC/	196,900		0.40
AUSTRALIAN RESIDENTS
STATE STREET BANK AND TRUST COMPANY 505223		189,500		0.39
Controlling Shareholder (excluding Parent Company)	IDEA Capital / Keiichi Shibahara
Parent Company	―

Supplementary Explanation

1. Capital Structure and Major Shareholders are as of September 30, 2022.
2. IDEA Capital was established for the purpose of managing the assets of Keiichi Shibahara, representative director and CEO of the Company, and he owns all of its shares.
3. The Company implemented a 2-for-1 stock split on October 1, 2022. Therefore, the number of shares held in Major Shareholders is not taking into account the stock split.
4. Although Capital Research and Management Company reported that it held 3,787,400 shares as of February 28, 2022 in a large shareholding report (change report) made available for public inspection on March 7, 2022, the Company is unable to confirm the number of shares actually held as of the end of the current fiscal year. Therefore, Capital Research and Management Company is not included in the above major shareholders.
   The contents of the large shareholding report (change report) are as follows.

	Name:	Capital Research and Management Company
	Address:	333 South Hope Street, Los Angeles, CA 90071, U.S.A
	Number of shares held:	3,787,400 shares
	Shareholding ratio:	7.80 %
3. Corporate Attributes
		Listed Stock Markets and Market Sections		Tokyo Stock Exchange Prime
		Fiscal-Year End			September 30
		Type of Business			Service
		Number of Employees (consolidated) as of		More than 1,000
		the End of Previous Fiscal Year
		Net Sales (consolidated) of Previous Fiscal Year		From 10 billion yen to less than 100 billion yen
		Number of Consolidated Subsidiaries as of the End of the		Less than 10
		Previous Fiscal Year

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholders

In the case of transactions with the controlling shareholder, the Board of Directors decides on the transaction after sufficient consideration of the rationality and necessity of the transaction and the appropriateness of the transaction conditions.

The Special Committee has a basic policy of ensuring that transactions occurring with the Company's controlling shareholder are subject to the same appropriate terms and conditions as general transactions and deliberates as necessary to ensure the fairness and reasonableness of the content and appropriateness of the terms and conditions of transactions, and to protect the interests of the minority shareholders. The special committee consists of two outside directors and three outside Audit & Supervisory Board members, and the committee members select the chairperson.

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