Mercari : Corporate Governance 2021.10.01

コーポレートガバナンス

CORPORATE GOVERNANCE

October 1, 2021 Mercari, Inc.

Chief Executive Officer: Shintaro Yamada

Inquiries: Corporate Division 03-6804-6907 Securities Code: 4385 https://about.mercari.com/

The Company's corporate governance situation is as follows.

I. Our Basic Policy on Corporate Governance, Capital Structure, Company Attributes, and Other Basic Information

1. Our Principle

Under the mission "Create value in a global marketplace where anyone can buy & sell," Mercari, Inc. aims to build a society where finite resources are used sparingly and everyone can create new value.

The Company has set forth the mission of improving enterprise value through working to enhance its

monitoring management function and its internal control function while practicing strict compliance management as its basic policy of corporate governance. In order to meet the trust of all stakeholders, the Group upholds a policy of working to improve the efficiency and transparency of management, maximize enterprise value, and achieve sustainable growth and development under the aforementioned basic policy.

Rationale for Not Implementing Certain Principles of the Corporate Governance Code

The Company implements the Fundamental Principles of the Corporate Governance Code.

Supplementary Principle 4.1.2

The Company is in the internet industry, where the environment and technologies change rapidly. Therefore, the Company believes that a detailed and concrete mid- to long-term business plan is not suitable. Instead, the Company explains its mid- to long-term management strategies through efforts such as IR activities to promote shareholder understanding.

Disclosure Based on the Principles of the Corporate Governance Code

Principle 1.4

The Company does not hold shares of other listed companies as cross-shareholding. If the Company were to hold shares of other listed companies, it would only be in the instance that it would improve the value of both companies involved.

Principle 1.7

Transactions that pose a conflict of interest between directors/the Company and transactions by directors in competition with the Company require resolution by the Board of Directors. Directors who have a vested interest in that resolution are prohibited from participating in the resolution process.

In addition, the Company confirms the necessity of any transaction by related parties beforehand, as well as the conditions and the propriety of the method for deciding to conduct such transaction. For any transactions that are determined particularly important, the Board will adequately deliberate regarding their necessity and appropriateness before approving.

Principle 2.6

The Company does not have a company pension fund.

Principle 3.1

(i) Company Objectives, Business Strategies, and Business Plans

Under the mission "Create value in a global marketplace where anyone can buy & sell," Mercari, Inc. aims to build a society where finite resources are used sparingly and everyone can create new value.

1. Basic Views and Guidelines on Corporate Governance Based on Each of the Principles of the Code The Company has set forth the mission of improving enterprise value through working to enhance its monitoring management function and its internal control function while practicing strict compliance management as its basic policy of corporate governance. In order to meet the trust of all stakeholders, the Group upholds a policy of working to improve the efficiency and transparency of management, maximize enterprise value, and achieve sustainable growth and development under the

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コーポレートガバナンス

CORPORATE GOVERNANCE

aforementioned basic policy.

1. Board Policies and Procedures in Determining the Remuneration of Senior Management and Executive Directors
   In realizing growth of the Company's enterprise value in the mid/long term, the Company has introduced a stock option as a form of incentive remuneration for Directors and Senior Vice Presidents, linking remuneration to shareholder value and investing in "people" to maximize Directors' and Senior Vice Presidents' performance and motivate them to contribute to the Company. In this way, it aims to enable more appropriate risk taking. The Company consults with the Nomination and Remuneration Advisory Committee, of which a majority is Outside Directors, in order to ensure the appropriateness of the remuneration plan and levels for Directors and Senior Vice Presidents, as well as ensure the independence, objectivity, and transparency of the process for determining remunerations.
2. Board Policies and Procedures for the Appointment/Dismissal of Senior Management and the Nomination of Executive Director and Auditor Candidates
   When appointing and dismissing Directors and Senior Vice Presidents, importance is given to achieving a balance of knowledge, experience, and skills across the Board of Directors, and appointments and dismissals are determined based on the management environment surrounding the Company and by deliberation of the Board of Directors. Additionally, the Company ensures the independence, objectivity, and transparency of the process for determining remunerations by consulting the Nomination and Remuneration Advisory Committee, of which a majority is Outside Directors.
3. Explanations with Respect to the Individual Appointments/Dismissals and Nominations Described in (iv) The Company lists "Reasons for Nomination" for each nominated Executive Director or Auditor in the relevant election proposal in the Notification of Annual General Meeting of Shareholders (reference documents).

Supplementary Principle 4.1.1

The Board of Directors makes all final decisions regarding important business matters and audits the execution of operations in accordance with laws and regulations, articles of incorporation, and regulations related to the Company.

However, decisions regarding other individual business matters are to be handled by the Senior Vice Presidents, in order to ensure decisions are made promptly.

Principle 4.9

Candidates for independent Outside Directors are those who possess a wealth of professional knowledge, experience, and considerable insight, which are required for advising and supervision of the business management of the Company, and are selected among those who meet the requirements stipulated by the Companies Act and Tokyo Stock Exchange, Inc.

Supplementary Principle 4.11.1

The Company strives to keep transparency and soundness of business management by appointing Outside Directors and Auditors, while maintaining a modest-sized Board of Directors to assure the practicality of the discussion in Board Meetings. Furthermore, the Company ensures the Board of Directors represents a variety of professional skills and knowledge as a whole in order for precise and prompt decision-making as well as appropriate supervision over management of corporate affairs. Regarding the appointment of Directors, the Company consults with the Nomination and Remuneration Advisory Committee, of which a majority is Outside Directors.

Supplementary Principle 4.11.2

The Company discloses information regarding the major duties concurrently performed by Executive Directors and Auditors in the Notification of Annual General Meeting of Shareholders every year. The Company confirms that those appointed have ample time and energy to fulfill their roles and duties with regards to the Company even if they hold other positions concurrently.

Supplementary Principle 4.11.3

The Company analyzes and evaluates the effectiveness of the Board of Directors Meetings every year by taking self-evaluations written by each Executive Director and Auditor as well as opinions from Outside Directors into consideration.

Supplementary Principle 4.14.2

The Company provides Outside Directors with the relevant opportunities to learn about the Company's business, finance, and organization to ensure that they are able to fulfill their roles and responsibilities.

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Principle 5.1

The Company strives to disclose information appropriately and fairly and promote constructive dialogue with shareholders. Under the CFO's management, IR works to promote constructive dialogue with shareholders. As a part of these initiatives, IR creates financial results materials, holds financial results presentations, ensures cooperation between each department to collect information necessary for promoting dialogues, and discusses shareholders' opinions and concerns shared through dialogues, as well as gives feedback to the Board of Directors and relevant Executive Directors.

IR does not share insider information with shareholders through dialogues and makes sure the content of the information is screened by the legal department and external advisors in advance.

2. Capital Structure

	Foreign Stock Ownership Ratio	More than 30%
Major Shareholders
	Name or Title	Number of Shares Owned	Ratio (%)
	Shintaro Yamada	37,812,530	23.96
	Hiroshi Tomishima	8,542,900	5.41
	MSIP CLIENT SECURITIES	8,476,660	5.37
	GOLDMAN SACHS & CO. REG	8,462,993	5.36
	SSBTC CLIENT OMNIBUS ACCOUNT	6,781,331	4.30
	suadd K.K.	6,567,000	4.16
	UNITED, Inc.	4,690,000	2.97
	MLI FOR CLIENT GENERAL OMNI NON	3,513,467	2.23
	COLLATERAL NON TREATY-PB
	MORGAN STANLEY & CO. LLC	3,419,067	2.17
	BNYM AS AGT/CLTS 10 PERCENT	2,986,786	1.89
	Controlling Shareholder Name	ー
	Parent Company Name	ー
	Stock Exchange on which Parent Company is Listed	ー
Supplementary Explanation
	ー
3. Company Attributes
	Stock Exchange Section	Mothers
	End of Accounting Period	June
	Sector	Information and Communication Technology
	Consolidated Number of Employees as of Preceding	1000 or more employees
	Year-end
	Consolidated Revenue as of Preceding Year-end	10-100 billion JPY
	Consolidated Number of Subsidiary Companies as of	Less than 10 companies
	Preceding Year-end

1. Guidelines for Protection of Minority Shareholders in Transactions with Controlling Shareholders
   －
2. Other Special Circumstances Significantly Affecting Corporate Governance

－

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コーポレートガバナンス

CORPORATE GOVERNANCE

1. Business Management Organization and Other Corporate Governance Systems Regarding Decision Making, Execution of Business, and Supervision in Management
   1. Organizational Composition and Operation

Organizational Form

Company with an Audit and Supervisory Board

Executive Directors

Maximum Number of Executive Directors Stipulated

No maximum number

in Articles of Incorporation

Term of Office Stipulated in Articles of

1 year

Incorporation

Chairperson of the Board

President

Number of Executive Directors

5

Appointment of Outside Directors

Appointed

Number of Outside Directors

3

Number of Independent Officers Designated from

3

among Outside Directors

Outside Directors' Relationship with the Company (1)

Name

Attribute

Relationship with the Company (*1)

a

b

c

d

e

f

g

h

i

j

k

Ken Takayama

From another company

△

Makiko Shinoda

From another company

Norio Murakami

From another company

△

*1 Categories for "Relationship with the Company"

*A hollow circle (◯) signifies the individual currently or recently having that relationship with the Company, whereas a hollow triangle (△) signifies the individual having that relationship with the Company in the past.

*A filled circle (●) signifies an immediate family member currently having that relationship with the Company, whereas a filled triangle (▲) signifies an immediate family member having that relationship with the Company in the past.

1. Executive of the Company or its subsidiary
2. Non-executivedirector or executive of a parent company of the Company
3. Executive of a fellow subsidiary of the Company
4. Party whose major business partner is the Company or an executive thereof
5. Major business partner of the Company or an executive thereof
6. Consultant, accounting professional, or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a director
7. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a corporation)
8. Executive of a business partner of the Company (which does not correspond to any of d., e., or f.) (the Director themself only)
9. Executive of a corporation to which outside officers are mutually appointed (the Director themself only)
10. Executive of a corporation that receives donations from the Company (the Director themself only)
11. Other

Outside Directors' Relationship with the Company (2)

Name	Design	Supplementary Explanation of the	Reasons for Appointment
	ation	Relationship
	as
	Indepe
	ndent
	Office
	r

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コーポレートガバナンス

CORPORATE GOVERNANCE

Ken Takayama	○	Mr. Takayama was an executive at	Mr. Takayama possesses
		Mizuho Bank, Ltd. Although the	expert knowledge and
		Company does not have any capital	extensive experience in the
		relationship with Mizuho Bank, the	management of finance- and
		Company does have loans with that	Internet-related businesses.
		bank, and that bank is a major	The Company has appointed
		business partner of the Company. As	him as an Outside Director
		Mr. Takayama left Mizuho Bank	for the supervision and
		more than 10 years ago in 1999,	advice he can provide
		there is no particular conflict of	regarding management from
		interest in the relationship between	a neutral standpoint.
		Mr. Takayama and Mizuho Bank.	Furthermore, the Company
			has appointed Mr. Takayama
			as an independent officer,
			having determined that his
			appointment meets the
			requirements for
			independent officers set
			forth by Tokyo Stock
			Exchange, Inc., and there is
			no likelihood of any
			conflicts of interest arising
			with general shareholders.
Makiko Shinoda	○	−	Ms. Shinoda possesses
			expert knowledge and
			extensive experience in
			fields such as D&I, ESG,
			and finance. The Company
			has appointed her as an
			Outside Director for the
			supervision and advice she
			can provide regarding
			management from a neutral
			standpoint.
			Furthermore, the Company
			has appointed Ms. Shinoda
			as an independent officer,
			having determined that her
			appointment meets the
			requirements for
			independent officers set
			forth by Tokyo Stock
			Exchange, Inc., and there is
			no likelihood of any
			conflicts of interest arising
			with general shareholders.
Norio Murakami	○	Mr. Murakami was an executive at	Mr. Murakami possesses
		Google Japan G.K. Although the	experience managing global
		Company does not have any capital	companies and technical
		relationship with Google Japan, that	knowledge. The Company
		company is a major business partner	has appointed him as an
		of the Company. As Mr. Murakami	Outside Director for the
		left Google Japan more than 10	supervision and advice he
		years ago in 2011, there is no	can provide regarding
		particular conflict of interest in the	management from a neutral
		relationship between Mr. Murakami	standpoint.
		and Google Japan.	Furthermore, the Company
			has appointed Mr.
			Murakami as an independent
			officer, having determined
			that his appointment meets
			the requirements for

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