MEDIA DO : Corporate Governance Report

Note: This document has been translated from the Japanese-language original for reference purpose only. In the event of any discrepancy between this translated document and the Japanese-language original, the original shall prevail.

Corporate Governance Report

Date of Latest Update: December 17, 2021

MEDIA DO Co., Ltd.

Yasushi Fujita, President and CEO Contact: Corporate Planning Office Securities Code: 3678 https://mediado.jp/english/

The status of corporate governance at MEDIA DO Co., Ltd., is as follows.

1. Basic Policy on Corporate Governance, Capital Structure, Company Details, and Other Basic Information

1. Basic Policy on Corporate Governance (Updated)

MEDIA DO pursues its vision of "More Content for More People!" through operations based on the concept of digital distribution of written works. Through this approach, the Company aims to fulfill its mission of "unleashing a virtuous cycle of literary creation" in which creators are appropriately compensated when their works are used in digitized formats.

To accomplish this mission, MEDIA DO has put forth the basic management policy of improving corporate value and thereby maximizing shareholder value over the medium to long term based on an accurate understanding of the importance of its various stakeholders. MEDIA DO recognizes the following as important management issues to be addressed as its management grows increasingly more global: The expedition and streamlining of management decisions to facilitate the further broadening of its business and the heightening of corporate value, and the improvement of management health and transparency through enhanced corporate governance. Entrenching corporate ethics and awareness of these principles throughout the Company will be imperative to improving the health of management. By fostering such awareness, MEDIA DO aims to develop a corporate culture in which all internal institutions, officers, and employees make fair and accurate decisions. Meanwhile, improving management transparency, and thereby building long-term, trusting relationships with stakeholders, will require prompt and proactive disclosure of information. Systems for information disclosure, both legally mandated and voluntary, are therefore being enhanced toward this end.

To ensure impartial and highly effective management, MEDIA DO will continue to strengthen its corporate governance systems through such means as more effectively allocating resources, expediting decisions, and entrenching compliance awareness under the guidance of the Board of Directors.

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Note: This document has been translated from the Japanese-language original for reference purpose only. In the event of any discrepancy between this translated document and the Japanese-language original, the original shall prevail.

Information on MEDIA DO's initiatives and initiative policies in relation to the principles of Japan's Corporate Governance Code can be found below.

Reasons for Not Adopting the Principles of Japan's Corporate Governance Code (Updated)

Applicable Version of Japan's Corporate Governance Code

This document has been prepared based on the latest version of Japan's Corporate Governance Code following the June 2021 revision. Provisions related to Supplementary Principle 4.1.3 are disclosed voluntarily in accordance with the revised Japan's Corporate Governance Code.

Principle 5.2 Establishing and Disclosing Business Strategies and Business Plans MEDIA DO has established a five-year medium-termmanagement plan and defined targets for net sales and operating profit, and the Company explains qualitative and quantitative factors related to the accomplishment of these targets through its financial results briefings and other investor relations activities. Moving forward, the Company will set future targets for net sales, operating profit, return on equity, and other items based on an accurate assessment of cost of capital.

Supplementary Principle 5.2.1 Status of Business Portfolio Revision

The Company discloses its management strategies and offers explanations on the progress of priority measures and other matters through its financial results briefings and other investor relations activities. The possibility of disclosing information on basic policies related to business portfolios as well as the status of business portfolio revision is being examined.

Disclosure Based on the Principles of Japan's Corporate Governance Code (Updated)

Principle 1.4 Cross-Shareholdings

MEDIA DO engages in cross-shareholdings only when deemed necessary for enhancing business activities or corporate value and when the number of shares required to be held is judged to be rational. Examples of cases in which the Company will engage in cross- shareholdings includes when business alliances or information sharing conducted in association with cross-shareholdings have the potential to generate new synergies in the core eBook distribution business.

Moreover, cross-shareholdings are assessed based on Groupwide equity costs by looking at the quarterly financial, earnings, and funding information of cross- shareholding counterparties as well as whether the intended qualitative synergies are being generated to determine, among other factors, if a given holding should be maintained over the medium to long term when considering the projected risks and returns.

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Note: This document has been translated from the Japanese-language original for reference purpose only. In the event of any discrepancy between this translated document and the Japanese-language original, the original shall prevail.

Assessments and evaluations based on these factors are carried out by the Company's Investment Committee and by the Board of Directors. Voting rights associated with cross-shareholdings are exercised based on comprehensive evaluation of the degree to which each individual proposal will contribute to improved corporate value for the Company and to higher medium- to long-term corporate value for the cross- shareholding counterparty as well as how the proposal will impact the Company. Should a company holding shares of the Company's stock express an intention to sell said shares, the Company shall not attempt to impede such sales.

Principle 1.7 Related Party Transactions

Related party transactions are only conducted after receiving approval based on discussions by the Board of Directors that incorporate the opinions of outside directors and Audit & Supervisory Board members. The related officers are excluded from the vote due to their conflicts of interest. Furthermore, annual surveys are administered to MEDIA DO officers to determine whether or not related party transactions are taking place.

Supplementary Principle 2.4.1 Empowerment of Female Employees and Promotion of Internal Diversity

MEDIA DO's corporate creed contains statements such as "All people have limitless potential and can grow with time." and "MEDIA DO will continue to grow so long as its people grow." As expressed in these statements, human resources are the most important asset to the business activities advanced in pursuit of the ongoing growth of the MEDIA DO Group. Empowerment of diverse human resources has been defined among the Company's environmental, social, and governance (ESG) priorities, and we are working to promote diversity, develop a workplace environment that is conducive to the contributions of individual employees, utilize various employment schemes, and identify and recruit diverse human resources.

Efforts for empowering female employees include working toward the target of raising the ratio of female managers from the level of 21.8% seen in the fiscal year ended February 28, 2021, to 30.0% in the fiscal year ending February 28, 2023.

Furthermore, MEDIA DO has defined its Basic Human Resource Policy, which contains human resource recruitment policies, human resource management policies, human resource development policies, and diversity promotion policies. This policy is available on the Company's corporate website (https://mediado.jp/english/ir/sustainability/).

Principle 2.6 Roles of Corporate Pension Funds as Asset Owners

The Company employs a defined contribution pension plan. It is not involved in the management of this fund, including in efforts to grow the fund, as an asset owner. However, it does provide employee education programs related to asset formation through defined contribution pension plans and the employee shareholding association.

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Note: This document has been translated from the Japanese-language original for reference purpose only. In the event of any discrepancy between this translated document and the Japanese-language original, the original shall prevail.

Principle 3.1 Full Disclosure

1. Company Objectives (e.g., Business Principles), Management Strategies, and Business Plans
   Information on the Company's business philosophy, management strategies, and

medium-term management plan can be found on the Company's corporate website

(https://mediado.jp/english/about/philosophy/) and in its financial results briefing materials and integrated reports (https://mediado.jp/english/ir/library/annualreport/).

(2) Basic Corporate Governance Stance and Policies

Information on the Company's basic corporate governance stance and policies can be found on the Company's corporate website and in its corporate governance reports and annual securities reports. In addition, the Company has formulated the MEDIA DO Basic Corporate Governance Policy, which is available on its corporate website (https://mediado.jp/english/ir/sustainability/governance/policy/).

1. Board of Directors' Policies and Procedures for Determining the Compensation of Senior Management and Directors
   Internal regulations have been established regarding the policies and procedures for deciding director compensation and information on these regulations can be found in the Company's corporate governance reports. For details, please refer to "Director Compensation" in "1. Organizational Structures and Operation" under "II. System of Business Management Organization for Management Decision-Making, Operational Execution, and Auditing and Other Corporate Governance Systems" below.
2. Board of Directors' Policies and Procedures for the Appointment and Dismissal of Senior Management and the Nomination of Director and Audit & Supervisory Board Member Candidates
   Decisions regarding the nomination of director candidates; the appointment of executive officers, who act as senior management; and the dismissal of directors and executive officers are made based on whether the individual in question is capable of contributing to sustainable growth and the improvement of the corporate value of the Company, with consideration paid to gender and other diversity factors and to skills. To ensure the objectivity and transparency of decisions, the Board of Directors consults with the Nomination and Compensation Committee, and this committee reports on the consulted matter after its own discussions and examinations. Decisions are made by the Board of Directors after this process.
   Candidates for positions as Audit & Supervisory Board members are selected with a focus on their ability to improve the soundness of management and to help the Company earn greater trust from society, and their capacity to conduct neutral and objective audits. Candidates for these positions are selected by the Board of Directors after discussions and consensus by the Audit & Supervisory Board.
3. Explanations with Regard to Decisions by the Board of Directors Pertaining to the Appointment and Dismissal of Senior Management and the Nomination of Director and Audit & Supervisory Board Member Candidates
   The reason for the selection of candidates for positions as directors and Audit & Supervisory Board candidates can be found on the Company's corporate website (https://mediado.jp/english/ir/sustainability/governance/); in information on the career history of all candidates and the skill matrix detailing their specialties and experience;

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Note: This document has been translated from the Japanese-language original for reference purpose only. In the event of any discrepancy between this translated document and the Japanese-language original, the original shall prevail.

and in the Company's notices of convocation for the General Meeting of Shareholders (https://ssl4.eir-parts.net/doc/3678/ir_material_for_fiscal_ym2/99339/00.pdf).

Supplementary Principle 3.1.3 Sustainability Initiatives

The MEDIA DO Group's mission is "unleashing a virtuous cycle of literary creation" and its vision is "More Content for More People!" These principles exemplify our commitment to building a social ecosystem founded on co-creation among the creators and publishers who produce written works, the users of these works, the eBook stores that serve as points of contacts between these two, and the Group, which functions as an intermediary between these parties.

Accordingly, sustainability for the MEDIA DO Group entails a concerted effort by all officers and employees to carry out their business activities based on a sense of responsibility and pride toward the contributions made by the Group's businesses and services. These contributions support the development of a healthy economy and the cultural advances stimulated by written works. Based on this belief, we seek to address social and environmental issues, such as those identified by the United Nations Sustainable Development Goals (SDGs), through management practices and strategies founded on our mission and vision. In addition, we view business opportunities and risks through the lens of ESG issues as we pursue increased corporate value by helping to resolve social issues while achieving steady growth.

The Company takes steps to track social trends and stakeholder expectations through a framework centered on the Corporate Planning Office, which is overseen directly by the president and CEO, and on the CSO (Chief Strategy Officer), who has been assigned responsibility for this undertaking. Based on this information, coordination is pursued with the Risk Management Committee to formulate management plans that are consistent with the Company's medium- to long-term mission and vision. These management plans guide business divisions and Group companies in formulating concrete sustainability strategies and targets, which are advanced while being regularly monitored by the Corporate Planning Office and the CSO.

For more information, please refer to the Company's corporate website (https://mediado.jp/english/ir/sustainability/).

Investments in Human Resources and Intellectual Property

Developing a sustainable business requires the effective allocation of management resources from a financial perspective as well as from a non-financial perspective looking at factors such as investments in human capital and research and development. In terms of human capital, a top priority is the recruitment, development, and retention of the engineers who are indispensable to the digital transformation of the overall publishing industry. For this reason, the Company is establishing appropriate evaluation and compensation systems and investing in the development of a conducive workplace environment. Moreover, as a company that deals with copyrights, MEDIA DO is taking steps to foster a publishing ecosystem that facilitates the protection and appropriate use of intellectual assets. The digitization trend is driving quantitative and qualitative changes to the structure of the content market along with the diversification of this

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