Basic Stance on Corporate Governance

The Company recognizes that it is essential to build good relationships with shareholders and other stakeholders in order to continuously improve corporate value, and that it is necessary to ensure and strengthen the transparency, efficiency, and soundness of management on a daily basis in order to build such relationships.

Specifically, in addition to strengthening management systems that enable compliance with laws and regulations, timely and appropriate information disclosure, prompt decision-making and business execution, the Company is enhancing its management monitoring system.

ZOZO, Inc. a major shareholder of the Company, falls under the category of other affiliated companies of the Company. In light of the existence of conflict of interest risks between other affiliated companies and general shareholders, the Company has established a system to ensure the soundness and appropriateness of transactions by confirming the economic rationale of such transactions and obtaining approval from the Board of Directors in accordance with the Related Party Transaction Management Rules for related party transactions, including transactions involving conflicts of interest with other affiliated companies. The Company has established a system to ensure the soundness and appropriateness of transactions.

Outline of the corporate governance system and reasons for adopting the system

Based on our basic philosophy of corporate governance, we have adopted a company-with-auditors system because we believe that a system in which each auditor audits the execution of duties by directors from an independent standpoint is effective in ensuring the efficiency and soundness of management.

As part of our corporate governance structure, we have established a General Meeting of Shareholders, a Board of Directors, a Board of Corporate Auditors, and an Independent Auditor. In addition, the Internal Audit Office and the Risk Management and Compliance Committee have been established as voluntary organizations.

In addition, to speed up and improve the efficiency of business execution and to invigorate the Board of Directors by separating execution and supervision, we have introduced an executive officer system under which executive officers assume authority and responsibility for day-to-day execution of business operations.

Corporate Governance Structure

Corporate Governance Report

The Company has submitted a “Report on Corporate Governance” to the Tokyo Stock Exchange.