Benefit One : Corporate Governance Report （June 25, 2021）

CORPORATE GOVERNANCE

Last Updated: June 25, 2021

Benefit One Inc.

Norio Shiraishi, President Contact: Corporate Planning Department (Tel: [phone])

Securities Code: 2412 https://corp.benefit-one.co.jp/en/

The corporate governance of Benefit One Inc. (the "Company") is described below.

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

1. Basic Views

The Company recognizes the importance of operations centered on compliance with laws, regulations, etc. At the same time, the Company also positions its efforts to enhance shareholder value through swift decision-making in response to changes in society and the economic environment, as well as the enhancement of the soundness of management, as a management issue of the utmost priority.

In order to achieve these objectives, the Company aims to create strong relationships with shareholders, customers and suppliers, local communities, employees, and other stakeholders, while also enhancing corporate governance through the further strengthening, improvement, and development of functions and systems set forth in laws and regulations, such as the General Meeting of Shareholders, Board of Directors, Audit and Supervisory Committee, and Accounting Auditor.

The Company will also endeavor to disclose information to shareholders and investors in a timely and accurate manner, thereby enhancing the transparency of management.

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

Update

[Principle 1.4] Cross-Shareholdings < Policy on Cross-Shareholdings >

The Company holds shares as cross-shareholdings in order to enhance corporate value over the medium- to long-term by, for example, developing partnerships with companies that hold business assets that the Company lacks as a more efficient way to complement the Company's services than building such businesses itself, maintaining and strengthening relationships of trust with customers and suppliers, and expanding its businesses through business alliances. Furthermore, the Company verifies the reasonableness and appropriateness of individual cross-shareholdings on a regular and ongoing basis. When it is judged that the objectives of holding shares as cross-shareholdings are not being achieved, based on the results of this verification, the Company will consider reducing the relevant cross-shareholdings.

< Verification of Appropriateness of Holding Cross-Shareholdings >

Each year, the Company verifies such factors as whether the objective of each cross-shareholding is appropriate, and the whether the risks and rewards of the cross-shareholding are appropriate given the Company's cost of capital. The Board of Directors makes judgments concerning the appropriateness of continuing to hold listed shares. Furthermore, when verifying the appropriateness of continuing to hold cross-shareholdings, the Company comprehensively verifies factors including industry trends, earnings trends, and financial position, as well as partnerships in terms of sales, and the future outlook.

< Criteria for the Exercise of Voting Rights >

When exercising voting rights at the General Meeting of Shareholders of a company whose shares are held as cross-shareholdings, the Company makes judgments in accordance with the following criteria.

• The Board of Directors has verified such factors as the appropriateness of the objective of holding the cross -shareholdings and whether the risks and rewards of holding the cross-shareholdings are appropriate given the Company's cost of capital, and has confirmed the appropriateness of continuing to hold the cross-shareholdings in advance;
• The content of specific proposals conform with the Company's objectives for holding the cross-shareholdings.

[Principle 1.7] Related Party Transactions

Each fiscal year, the Company prepares and updates a list of related parties. When engaging in transactions with any parties thus classified as a related party, the General Manager of the Corporate Planning Department gathers related information in advance, and approval must be obtained from the Board of Directors, etc., in accordance with the Administrative Regulations of Related Party Transactions and rules related to duty authority. For important related party transactions and actions that involve a conflict of interest between one or more controlling shareholders and minority shareholders, the "Nomination and Compensation Committee," a voluntary advisory body to the Board of Directors whose members are all independent Outside Directors, first deliberates the necessity and appropriateness of the transaction, then the Board of Directors makes a decision after receiving a report and advice from the Nomination and Compensation Committee.

In addition, the General Manager of the Corporate Planning Department also provides a report to the Board of Directors concerning ongoing related party transactions at the end of each fiscal year, based on the list of related party transactions.

[Principle 2.6] Roles of Corporate Pension Funds as Asset Owners

The Company does not have a corporate pension plan, and therefore does not perform any role as asset owner through a corporate pension fund. Furthermore, the Company has introduced a defined-contribution plan as part of its benefits program, and it provides education and

training to employees via internal seminars, etc. concerning asset formation and asset management.

[Principle 3.1(1)] Management Philosophy, etc., Management Strategies, and Management Plans

As noted in this Report, the Company's annual securities report, and other documents, the Company's corporate philosophy is "Connect people and companies, aim to create new value, and contribute to fulfilling lifestyles and social development by creating the concept of service distribution."

In addition, the Company has also formulated a Medium-term Business Plan (three-year plan from the fiscal year ending March 2022 to the fiscal year ending March 2024), which it announced in May 2021. For details, please refer to the following video and materials released on May 12, 2021.

• [Video] Medium-term Business Plan & Future Growth Strategy: https://irtv.jp/channel/3274 (Japanese only)
• [Video] Summary of Financial Results & Earnings Forecasts: https://irtv.jp/channel/3273(Japanese only)
• [Materials] Performance & Medium-term Growth Strategy: https://global-assets.irdirect.jp/pdf/menu_file/2412/20210601085316_6132.pdf

[Principle 3.1(2)] Basic Views on Corporate Governance and Basic Policies Please refer to section "I. 1. Basic Views" in this Report.

[Principle 3.1(3)] Policies and Procedures for the Determination of the Compensation of Directors by the Board of Directors Please refer to section "II. 1. Organizational Composition and Operation [Director Compensation]" in this Report.

[Principle 3.1(4)] Policies and Procedures for the Nomination of Director Candidates by the Board of Directors [Supplementary Principle 4.11.(1)] Views on Composition of the Board of Directors, etc.

To ensure that the Board of Directors can sufficiently execute its duties and fulfill its supervisory functions, candidates for Directors are selected after considering such factors as their ability to execute their duties as Director, experience, expertise, and the overall composition of the Board of Directors, based on the precondition that each candidate is possessed of excellent character and insight. When selecting candidates, the Director overseeing the Human Resources Division prepares a draft proposition, which is then deliberated by the "Nomination and Compensation Committee," a voluntary advisory body to the Board of Directors whose members are all independent Outside Directors. The Board of Directors then makes a decision after receiving a report and advice from the Nomination and Compensation Committee.

The Company ensures that the number of members of the Board of Directors is appropriate for the size of its businesses, while at the same time being an appropriate number that is effective and enables lively debate. At the time of writing, the Company has four (4) Directors who are not Audit and Supervisory Committee Members and four (4) Directors Serving as Audit and Supervisory Committee Members (including three

1. Outside Directors). In addition, the Company has elected two (2) female Directors, as part of its endeavor to ensure the diversity of the Board of Directors.

[Principle 3.1(5)] Explanations Regarding the Election, Dismissal, and Nomination of Individual Director Candidates by the Board of Directors Based on the Above Principle 3.1(4)

The Company discloses reasons for the election and nomination of individual Director candidates in the Reference Documents in the Notice of Convocation of the General Meeting of Shareholders. For details, please refer to the Reference Documents in the Notice of Convocation of the General Meeting of Shareholders, which is provided on the Company's website.

[Supplementary Principle 4.1(1)] Scope of Delegation to Management

In accordance with laws and regulations, within the "Board of Directors Regulations," the Company has established the "Criteria for Agenda Items at Meetings of the Board of Directors," in which it sets forth the details of matters to be deliberated at meetings of the Board of Directors. For other matters, the Company has clarified the scope that may be executed by management, based on the "Regulations on Official Authority and the Division of Duties."

Specifically, the Board of Directors determines agenda items for the General Meeting of Shareholders and other important matters stipulated in the Companies Act, as well as basic management matters, such as management strategy, management plans, etc. Decisions concerning the execution of specific operations based on the details of such resolutions are delegated to the individual Directors overseeing those operations. The scope of matters that may be delegated is clearly set forth in the regulations on authority.

Furthermore, in order to ensure smooth and accurate decision-making on matters related to management, the Company has established a Management Council. Full-time Officers and managers responsible for the execution of operations attend meetings of the Management Council, and deliberate important matters related to the execution of operations, including matters to be resolved by the Board of Directors.

[Principle 4.9] Criteria for Assessing the Independence of Outside Officers

The Board of Directors has determined "Criteria for Assessing the Independence of Outside Officers," based on the independence criteria set forth by the Tokyo Stock Exchange. The Company ensures that Outside Officers and candidates for Outside Officers satisfy the following criteria for independence that it has set forth, which it discloses in the Notice of Convocation of the General Meeting of Shareholders.

• No relative within the second degree of kinship of the Officer must be or have been an Executive Director of the Group, either currently or in the past.
• If there are any transactions between any company at which the Officer is currently an Executive or employee and the Group, the total

amount thereof must not exceed 1% of the consolidated sales of the Company (excluding any professional services related to legal affairs, accounting, or taxation).

• If the Officer receives direct compensation from the Group as a specialist or consultant in legal affairs, accounting, or taxation (excluding compensation as an Officer of the Company and compensation paid to any institution or office to which the Officer belongs), the total amount thereof must not exceed five (5) million yen per year, in the most recent three (3) fiscal years.
• If an institution or office to which the Officer belongs provides professional services to the Company in relation to legal affairs, accounting, or taxation, the total amount of compensation therefor must not exceed 10 million yen per year in the most recent three (3) fiscal years.
• The Officer must not have been an Executive of any organization receiving more than 10 million yen per year in donations, etc. from the Group, in the most recent three (3) fiscal years.

[Supplementary Principle 4.11(2)] Holding of Concurrent Positions by Directors

Each year, the Company discloses important concurrent positions held by Directors and their main activities in the Notice of Convocation of the General Meeting of Shareholders, and appropriately confirms that the scope of any concurrent positions is appropriate, together with the status of the execution of roles and responsibilities within the Board of Directors.

[Supplementary Principle 4.11(3)] Analysis and Evaluation of the Effectiveness of the Board of Directors as a Whole

Each year, the Company conducts a questionnaire for each Director in relation to an evaluation of the effectiveness of the Board of Directors as a whole, and the evaluation and analysis results are reported to the Board of Directors.

In the fiscal year ended March 2021, the topics covered in the questionnaire included "matters related to the execution of the Director's own duties," "matters related to the effectiveness of the Board of Directors as a whole," "matters related to the composition of the Board of Directors," "matters related to the operation of the Board of Directors," "matters related to deliberations at meetings of the Board of Directors," and "matters related to support for Directors." The evaluation and analysis reports were then reported at a meeting of the Board of Directors held in March 2021.

The evaluation showed that, compared with the previous fiscal year, there had been an improvement in areas such as the liveliness of discussions at meetings of the Board of Directors and Directors' understanding of proposals in advance via prior explanations and the provision of information. On the other hand, it also showed that further measures should be taken to enhance the effectiveness of the Board of Directors, and as such, the Company intends to appropriately consider and implement any required measures in this area.

[Supplementary Principle 4.14(2)] Training Policies for Directors

The Company takes steps to ensure that the corporate philosophy and business strategies are shared among Directors on an ongoing

basis, including meetings to exchange information with Executive Officers and other members of the management team, as well as the attendance of Directors on occasions when the managers of business divisions are expressing their strategies.

The Company also provides information aimed at enhancing newly appointed Directors' understanding of the Company's management strategies and business environment, by creating opportunities for individual explanations of the Company's businesses, financial position, organization, etc. when these Directors are appointed.

[Principle 5.1] Policy for Constructive Dialogue with Shareholders

The President and the Officer responsible for the Corporate Planning Department engage in dialogue with institutional investors (interviews, conference calls, etc.). In addition, the Company also holds earnings briefings or streams video, etc. when first half earnings and full-year earnings are announced.

Employees responsible for IR working in the Corporate Planning Department engage in dialogue with individual investors (telephone calls, e-mails, etc.), and the Company also holds a briefing to report on recent management conditions after the conclusion of the General Meeting of Shareholders, as part of its efforts to explain the Company's management strategies and exchange opinions with individual investors. (At the 26th Annual General Meeting of Shareholders held on June 24, 2021, the Company did not hold a briefing to report on recent management conditions, and instead provided an explanation via video, as in the previous year, in consideration of the impact of COVID-19.)

The Company also actively provides information for investors on its website, in order to enhance investors' understanding of its management strategies and the business environment.

2. Capital Structure

Foreign Shareholding Ratio20% or more and less than 30%

[Status of Major Shareholders] Update

	Name / Company Name	Number of Shares	Percentag
				Owned	e (%)
	Pasona Group Inc.		81,210,400	50.92
	The Master Trust Bank of Japan Ltd. (Trust account)	8,901,700	5.58
	Custody Bank of Japan, Ltd. (Trust account)		7,257,700	4.55
	SSBTC CLIENT OMNIBUS ACCOUNT		3,890,887	2.44
	THE BANK OF NEW YORK, NON-TREATY JASDEC ACCOUNT	2,600,000	1.63
	Norio Shiraishi		2,201,600	1.38
	TMAM-GO JAPAN ENGAGEMENT FUND		1,890,100	1.19
	Tokio Marine & Nichido Fire Insurance Co., Ltd.		1,600,000	1.00
	STATE STREET BANK AND TRUST COMPANY 505001	1,566,389	0.98
	Sunnexta Group Inc.		1,388,000	0.87
	Controlling Shareholder (except for		N/A
	Parent Company)
	Parent Company		Pasona Group Inc. (listed on the Tokyo Stock Exchange) (securities code) 2168

Supplementary Explanation

1. The "Status of Major Shareholders" is reported as of March 31, 2021.
2. The percentages above show the percentage of voting rights held, as calculated after excluding treasury shares (468,243 shares).
3. The Company has introduced a "Japanese Employee Stock Ownership Plan (J-ESOP)" and a "Board Benefit Trust (BBT)," under which Custody Bank of Japan, Ltd. (Trust Account E) ("Trust Account E") holds 366,917 shares of the Company. The shares of the Company held by Trust Account E are not included in treasury shares.
4. The number of the above shares held by trust bank companies that pertain to trust operations are as follows.

Of the number of shares held by The Master Trust Bank of Japan Ltd. (Trust account), 8,839,700 shares pertain to trust operations.

Of the number of shares held by Custody Bank of Japan, Ltd. (Trust account), 7,127,900 shares pertain to trust operations.

5. Custody Bank of Japan, Ltd. was formed on July 27, 2020, when Japan Trustee Services Bank, Ltd. merged with JTC Holdings, Ltd. and Trust & Custody Services Bank, Ltd., and subsequently changed its name.

3. Corporate Attributes

Listed Stock Market and Market Section	Tokyo Stock Exchange First Section
Fiscal Year-end	March
Type of Business	Services
Number of Employees (Consolidated)	1,000 or more
as of the End of the Previous Fiscal
Year
Sales (Consolidated) as of the End of	10.0 billion yen or more and less than 100.0 billion yen
the Previous Fiscal Year
Number of Consolidated Subsidiaries at	10 or more and less than 50
End of the Previous Fiscal Year

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

When conducting transactions, etc. with its controlling shareholder, the Company's basic policy is to apply appropriate terms for the transaction, based on transactions with third parties. The Company appropriately responds to any such transactions after the Board of Directors has completed approval procedures, in order to not harm the interests of the Company, in accordance with the Related Party Transaction Management Regulations and rules related to duty authority.

Furthermore, for important related party transactions and actions that involve a conflict of interest between one or more controlling shareholders and minority shareholders, the "Nomination and Compensation Committee," a voluntary advisory body to the Board of Directors whose members are all independent Outside Directors, first deliberates the necessity and appropriateness of the transaction, then the Board of Directors makes a decision after receiving a report and advice from the Nomination and Compensation Committee.

5. Other Special Circumstances which may have a Material Impact on Corporate Governance	Update

The Company operates a proprietary outsourcing business with a high degree of expertise, as part of a corporate group centered on human resources-related businesses, with Pasona Group Inc. at its core. Pasona Group Inc. is the largest shareholder of the Company, and in terms

of personnel, one (1) of the Company's four (4) Directors who are not Audit and Supervisory Committee Members also serves concurrently as a Director of Pasona Group Inc. The Company has business interactions with Pasona Group Inc. in terms of Officers serving in concurrent positions, the mutual provision of services, etc., but as a listed company, the Company maintains independence when engaging in management and business activities. In addition, the procedures that the Company follows when engaging in transactions with Pasona Group Inc. are as described in the preceding item 4.