Ichigo : Corporate Governance Report

[Provisional Translation Only]

This English translation of the original Japanese document is provided solely for information purposes. Should there be any discrepancies between this translation and the Japanese original, the latter shall prevail.

Corporate Governance Report

Last Update: November 25, 2022

Ichigo Inc.

Scott Callon, Chairman

Contact: Takanori Sakamatsu, Senior Statutory Executive Officer

Tel. [phone]

Securities Code: 2337

www.ichigo.gr.jp/en

1. Corporate Governance Principles & Corporate Structure

1. Basic Policy

Ichigo is a Japanese sustainable infrastructure company dedicated to making the world more sustainable. We are committed to growing long-term value for shareholders by contributing to a sustainable society.

Ichigo's key businesses are:

1. Sustainable Real Estate - preserving and improving real estate, lengthening the useful life of buildings and other physical and social infrastructure;
2. Asset Management - managing the Tokyo Stock Exchange-listed Ichigo Office (8975), Ichigo Hotel (3463), and Ichigo Green (9282), and private real estate funds;
3. Clean Energy - developing and operating solar and wind power plants nationwide that supply clean energy and bring productive use to idle land.

Ichigo works to continually strengthen its compliance culture and corporate governance in order to improve its business performance, enhance transparency, and promote its sustainable growth. Ichigo is committed to optimizing its organizational structure and further developing the capabilities of its employees.

In pursuit of these goals, Ichigo has taken the following actions:

Ichigo has adopted the Company with Committees (Nominating, Audit, Compensation) governance structure.

All Directors on Ichigo's Board of Directors (the "Board") are aware of their fiduciary responsibility towards shareholders and work collaboratively and appropriately with other stakeholders to ensure sustained value creation for shareholders.

・Ichigo's Board focuses on setting and supervising long-term corporate strategy and management, and delegates day-to-day management of Ichigo to Statutory Executive Officers while making clear the respective roles and responsibilities of the executive team. Through its supervision, the Board aims to drive management transparency and agility.

・In order to ensure active and meaningful discussion, the Board is comprised of four Directors who also serve as Ichigo Statutory Executive Officers, thus having hands-on understanding of Ichigo's business, and six Independent Directors with specialized expertise, including former CEOs of major Japanese companies and experts in finance and accounting.

・The Nominating Committee is comprised of a majority of Independent Directors and selects Director candidates for approval at Ichigo's shareholder meetings, appoints Statutory Executive Officers, and provides advice on the selection of Directors at all Ichigo group companies.

・Ichigo has established a Compliance Committee directly under the Board that is independent from management in order to monitor and evaluate critical compliance matters.

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・As of the date of this report, the number of Directors on the Board and its committees are as follows: Board: 10 (of whom 6 are Independent Directors)

Nominating Committee: 5 (of whom 3 are Independent Directors)

Audit Committee: 3 (of whom all are Independent Directors)

Compensation Committee: 5 (of whom 3 are Independent Directors)

Compliance Committee: 4 (of whom 2 are Independent Directors)

Ichigo works to ensure that all employees understand its mission and values and work to fulfill the mission and values through the following measures:

・Ichigo's mission and values are communicated on an ongoing basis to all employees, including during annual business goal-setting and personnel evaluations.

・Ichigo shares its Code of Corporate Ethics and Code of Conduct with all Ichigo group companies to ensure that all employees are fully informed of the importance of adhering to them.

・All Ichigo employees, including at all Ichigo group companies, participate in annual training where the content of the Code of Corporate Ethics and Code of Conduct is explained and discussed, and all employees expressly acknowledge and pledge their compliance in writing.

Explanation of Any Non-Compliance with Corporate Governance Code Principles

Ichigo complies with all principles of the Corporate Governance Code.

Disclosure with respect to Compliance with Corporate Governance Code Principles

Principle 1.4 Cross-Shareholdings

Ichigo does not engage in cross-shareholdings.

Principle 1.7 Related Party Transactions

Any transaction with a Director or a major shareholder (a "Related Party Transaction") is carefully examined with respect to its purpose, the process of negotiation, the fairness of its price, and whether it will contribute to Ichigo's shareholder value, and is further examined by external legal counsel and discussed by Ichigo's Audit Committee before being submitted for consideration to the Board.

Furthermore, at the end of each business year the Audit Committee requires all Directors, Statutory Executive Officers, and Directors of all Ichigo group companies to submit a signed statement confirming the absence of any conflicts of interest, illegal provision of profits, abnormal transactions, or violations of fiduciary duty during the course of their duties.

Supplementary Principle 2.4.1 Diversity of Core Personnel

More than 90% of Ichigo and its group company personnel are mid-career hires with diverse career backgrounds, and when hiring key personnel, it is Ichigo's policy to consider candidates based on their abilities and achievements in context of expected roles, regardless of gender, age, and nationality. Ichigo aims for the proportion of women in management roles to be equal to the overall gender ratio of the firm, and is working to promote professionalism and career advancement, and support work-life balance.

Ichigo's human resources policy, details of personnel composition, and information about workplace environment are disclosed in Ichigo's Sustainability Report and on its corporate website. Ichigo constantly undertakes progressive measures to ensure both creativity and diversity as Ichigo continues to expand its businesses, and will promptly disclose such measures as necessary.

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Principle 2.6 Roles of Corporate Pension Funds as Asset Owners

Ichigo does not have a corporate pension plan, so therefore does not oversee any pension fund management.

Principle 3.1 Full Disclosure

1. Ichigo discloses its mission, corporate strategy, and long-term vision on its corporate website.
2. Ichigo provides details on its corporate governance through this report, available on its corporate website, and through its Financial Report (Yuka Shoken Hokokusho).
3. Ichigo's policy on Director and Statutory Executive Officer compensation is disclosed in this report, its Financial Report (Yuka Shoken Hokokusho), and its Business Report (Jigyo Hokokusho).
4. With respect to the Board's selection and dismissal of Directors and the appointment of Statutory Executive Officers, the two principles described in (1) and (2) below are considered by the Nominating Committee in making its recommendations.
5. 1. Nomination of Candidates for Directors and Statutory Executive Officers
      Ichigo's Nominating Committee, comprised of a majority of Independent Directors, is responsible for nominating candidates for Director and Statutory Executive Officer. The Nominating Committee holistically considers: 1) the candidates' ability to contribute both to Ichigo and to society in adherence with Ichigo's mission and Code of Conduct; and 2) the candidates' understanding and compliance with relevant laws and regulations.
   2. Nomination of Candidates for Independent Directors
      Nomination of candidates, provided that the candidates do not have any personnel, capital, or other relationship in conflict with Ichigo, are based on a holistic consideration of the Tokyo Stock Exchange's standards for independence; the candidates' depth of expertise and experience in fields such as management, law, accounting, and finance; and the candidates' ability to objectively monitor Ichigo's management. Candidates are nominated by the Nominating Committee and approved by the Board.
6. Explanations with respect to the nomination and appointment of each Director are disclosed in Ichigo's shareholder meeting materials.

Supplementary Principle 3.1.3 Sustainability Initiatives

Ichigo has established an Ichigo Sustainability Policy in order to drive its sustainability initiatives, and discloses details of such initiatives on its website.

The knowledge and expertise of our personnel are essential underpinnings of our business, and we work to grow and develop this critical human capital through measures such as providing in-house trainings. Ichigo considers employee health a management priority and also works to set policies and workplace environments that support employees in realizing their best. Its various efforts towards these ends are disclosed on its website. Ichigo's investments in intellectual property include those related to its promotion of Real Estate DX (digital transformation), as disclosed in its long-term vision, as well as software investments aimed at enhancing operational efficiency and accuracy.

Ichigo has been accelerating its initiatives aimed towards a net-zero carbon society, such as joining RE100 and establishing the ReGeneration Group, which directly reports to the CEO and is responsible for Ichigo's group-wide environmental initiatives. The ReGeneration Group works to gather information towards becoming climate positive, assess and implement related initiatives, calculate greenhouse gas emissions and obtain third-party verifications thereof, and proactively participate in various international initiatives.

(Note: Climate positive refers to a state in which reductions in greenhouse gasses exceed emissions.)

Ichigo analyzes the impact of climate change on its business activities, earnings, and financial plans, and based on such analysis discloses its TFCD-compliantlong-term targets and initiatives towards addressing climate change on its corporate website. (Japanese only; English version in preparation) www.ichigo.gr.jp/esg/Ichigo_TCFD_Alignment_JPN.pdf

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Supplementary Principle 4.1.1 Roles and Responsibilities of the Board

The Board examines and decides on matters stipulated by law and regulation, set in Ichigo's Articles of Incorporation, defined in internal rules pertaining to the Board, and presented to the Board as an agenda item. All other decision matters are delegated to Ichigo's management with the objective to promote sound governance through a clear separation between business execution and the supervision thereof.

All Statutory Executive Officers are expected to efficiently and effectively make decisions and lead employees within their specific scope of delegated responsibility and authority. To this end, Ichigo has established internal rules that clearly define the specific roles, responsibilities, authority, and requirements for consultation of the Board and the respective Executive Officers such that each individual business case is appropriately examined and decided upon by the relevant organization.

Principle 4.9 Independence Standards and Qualifications of Independent Directors

Pursuant to both the Company Law and the Tokyo Stock Exchange's standards for independence, Ichigo selects Independent Directors who have significant experience in the field of finance and corporate management, are accountants with extensive experience in advising various tax and accounting transactions, including M&A, or are former CEOs of major Japanese companies. Ichigo's standards for independence are as defined by the TSE, and are disclosed both in Ichigo's Financial Report (Yuka Shoken Hokokusho) and Ichigo's shareholder meeting materials.

Supplementary Principle 4.10.1 Appropriate Independent Director Involvement and Advice via the Independent Nominating and Compensation Committees

Ichigo has adopted the Company with Committees (Nominating, Audit, Compensation) governance structure and has established the Nominating and Compensation Committees, each comprised of a majority of Independent Directors, to deliberate and resolve on critical issues such as the nomination, appointment, and dismissal of directors, while carefully considering gender diversity and candidate skillset.

Supplementary Principle 4.11.1 Preconditions for Board Effectiveness

Ichigo's view with respect to the diversity, knowledge, experience, and expertise of the Board is consistent with its criteria used to select individual Directors as disclosed in its response to Principle 3-1 (iv).

The skill matrix of Ichigo's Board of Directors has been disclosed on page 26 of the Materials for the Twenty-Second Annual Shareholder Meeting.

www.ichigo.gr.jp/ir/news/p_news_file/file/Ichigo_20220503_FY2022_AGM_ENG.pdf

Ichigo's Articles of Incorporation stipulates that the Board must comprise no more than twelve Directors with a majority of the Directors being Independent Directors. Ichigo believes the size of the Board is appropriate for effective supervision of management and deliberation of Board matters. Also, the Board is comprised of Independent Directors with specialized expertise, including former CEOs of major Japanese companies.

Supplementary Principle 4.11.2 Positions Held at Other Companies by Directors

Positions held at other companies by Directors and Independent Directors are within reason and do not interfere with their roles and responsibilities at Ichigo. Any Director seeking to assume a position at another company must notify Ichigo in advance and receive prior approval by the Board with respect the appropriateness of assuming such position. Positions held at other companies by Directors are disclosed in the Securities Report and on page 54 of the Materials for the Twenty-Second Annual Shareholder Meeting.

www.ichigo.gr.jp/ir/news/p_news_file/file/Ichigo_20220503_FY2022_AGM_ENG.pdf

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Supplementary Principle 4.11.3 Board Evaluation

Ichigo's Board in the previous fiscal period consisted of nine Directors, of whom a majority (five Directors) were Independent Directors. Ichigo conducts the Board evaluation by having each Director independently assess the Board with respect to the below evaluation criteria, followed by the Board collectively analyzing and reviewing the results.

1. Board Composition
2. Board Operation
3. Board Effectiveness
4. Board Support Resources
5. Engagement with Shareholders and Stakeholders
6. Board Operation Under Covid
7. SDGs and Sustainability Initiatives

The Board confirmed that its deliberation and decision-making processes are effective, leveraging the knowledge and experience of the Directors, and that the Board is appropriately overseeing management in line with Japan's Corporate Governance Code. The Board thus concluded that it is functioning properly.

This year the Board added a new evaluation criterion, "SDGs and Sustainability Initiatives."

Ichigo expects to conduct a Board evaluation on an annual basis, and is continuing to work to strengthen the effectiveness of its Board. Ichigo is committed to further increasing its shareholder value by ensuring the effectiveness of its Board and actively communicating with its shareholders and investors.

Ichigo disclosed the details of its most recent board evaluation in its May 25, 2022 release "Board of Directors Evaluation." www.ichigo.gr.jp/news/p_news_file/file/Ichigo_20220525_Board_Evaluation_ENG.pdf

Supplementary Principle 4.14.2 Director and Auditor Training

Ichigo is a member of the Japan Association of Corporate Directors (JACD) and the Japan Audit & Supervisory Board Members Association (JASBA) and provides its Directors, including Independent Directors, with opportunities to participate in seminars and trainings held by these associations. Furthermore, Ichigo will bear expenses with respect to any training and materials that Directors feel are necessary in order for them to execute their supervisory responsibilities. Additionally, Ichigo has established Ichigo University, available to all Ichigo employees, in order to provide opportunities for employees to enhance their skills necessary to successfully perform their respective roles. Ichigo also permits employees to pursue relevant licenses and qualifications at Ichigo's expense. Ichigo-wide compliance training (including the topic of insider trading prevention) is conducted at least once a year. In addition, employees of the two Ichigo companies operating with Financial Instrument and Exchange Law (FIEL) licenses are subject to a strict compliance regime that includes four mandatory training sessions each year.

Newly appointed Independent Directors are briefed on Ichigo's corporate governance, its business, and financial statements, and are given direct exposure to Ichigo's business activities via briefings and site visits to Ichigo real estate assets.

Principle 5.1 Policy for Constructive Dialogue with Shareholders

Ichigo's IR team within the Finance Division is responsible for shareholder relations. A corporate presentation on Ichigo's financial results is held quarterly for analysts and institutional investors. In addition, an English-language earnings webinar is held every quarter for the benefit of global investors. Ichigo also makes available video recordings and transcripts of the Q&A sessions of these corporate presentations and webinars on Ichigo's corporate website. Small group meetings and one-on-one meetings are also conducted for analysts and investors, both domestically and abroad.

The IR team also services telephone calls, email inquiries, and other correspondences with shareholders, and is responsible for reporting all such shareholder interaction with management.

In recognition that Ichigo's shareholder meetings are a critical forum for dialogue with shareholders, Ichigo always holds its shareholder meetings on weekends in order to maximize shareholder attendance and endeavors to share quality time with shareholders not just at the shareholder meeting but also by conducting a business results meeting and reception for shareholders. Ichigo addresses all questions pertaining to voting agenda items in earnest and tries to ensure that shareholders fully understand Ichigo's business strategy.

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