Response to Corporate Governance Code

Disclosure Based on the Principles of the Corporate Governance Code

【Principle 1.4 Cross-Shareholdings】

The Company’s basic policy is to hold cross-shareholdings to establish and strengthen stable relationships with important business partners. If the Company judges that cross-shareholdings will not help to improve its corporate value or develop its businesses, the Company will reduce such crossshareholdings. In light of the above policy, the Company reviews whether or not it will hold cross-shareholdings as necessary. In the Board of Directors meeting held on June 24, 2022, the Company reclassified certain cross-shareholdings as investments for pure investment purposes.
Moreover, in terms of its standards for exercising the voting rights of cross-shareholdings, the Company decides whether to vote for or against individual proposals based on careful consideration of each individual proposal, from the perspective of whether its content will serve the efficient and sound management of the issuing company, and whether it can be expected to improve corporate value, among other viewpoints, as well as determining whether the Company’s corporate value could be impaired or there are any important concerns about corporate governance.

【Principle 1.7 Related-Party Transactions】

The Company has set forth in its Rules of the Board of Directors that transactions by Directors which may compete with the Company or transactions involving conflicts of interest must be deliberated and approved by the Board of Directors. In those rules, it has also set forth that if such transactions are undertaken, they must be reported to the Board of Directors. Furthermore, once a year, the Company conducts a questionnaire survey about relatedparty transactions covering the Directors via the Secretariat of the Board of Directors. Through this survey, the Company properly monitors the status of any changes in concurrent positions held by the Directors and checks the status of any transactions with the Company.

【Principle 2.3 Sustainability Issues, Including Social and Environmental Matters】

The Company recognizes that its response to sustainability issues, including climate change, is an important management issue, and it has established a system that enables the Board of Directors to exercise more appropriate supervision. The Sustainability Committee, which reports to the Executive Committee, the body responsible for overall business execution, manages progress on the response to climate change. The Sustainability Committee works closely with the Corporate Planning Dept., which is in charge of environmental management, to supervise the climate change response measures and related planning at each division, headquarters, department, branch and sales office. The Sustainability Committee comprises appointed members of departments within the Corporate Headquarters. The Executive Committee discusses the current status of progress on these activities or important issues. Following these discussions, these issues are reported to and discussed by the Board of Directors at least once a year, and they are reflected in and aligned more closely with the Company’s management strategy.
(ESG Information: https://www.techmatrix.co.jp/en/ir/esg/index.html)

【Principle 2.4 Ensuring Diversity, Including Active Participation of Women】

The Company believes that having diverse perspectives and values that reflect different experiences, technical abilities and personal attributes within the Company will energize the organization, maintain flexibility and enhance the Company’s abilities, and that this will enable it to achieve sustainable growth. Based on this belief, 2 female directors were elected at the 36th Ordinary General Meeting of Shareholders held in June 2020. Their election has reinvigorated discussions on the active participation of women in the Company even more than before.
In terms of recruitment activities, under a basic policy of ensuring diversity, the Company strives to secure diverse human resources regardless of gender, ationality, or other attributes. In October 2017, the Company introduced a work-from-home system for all employees. The Company has also introduced the Life Event Support system that allows employees to flexibly select where they will live even if they have no choice but to move far away due to a life event such as marriage, child raising, ursing care or a job transfer of a spouse or other family member living in the same home. A flex-time system has also been rolled out. In these and other ways, the Company is actively working to design systems and create environments in which women and their spouses can work comfortably and productively, such as childcare leave, child raising support leave, partial subsidies for nursery facility usage fees, and shortened work schedules. In addition, the Company strives to develop comfortable and productive work environments for its employees. In accordance with the Act on Advancement of Measures to Support Raising Next-Generation Children, the Company has formulated and promoted a General Employer Action Plan with the aim of developing workplaces where employees can demonstrate their full abilities while balancing career and child-raising responsibilities. As a result, the Company is currently certified as a general employer that meets standards based on the Act on Advancement of Measures to Support Raising Next-Generation Children.

(Supplementary Principle 2.4.1 Ensuring Diversity in the Promotion to Core Human Resources and Related Matters)
Regarding diversity in human resources, the Company believes that having diverse perspectives and values that reflect different experiences, technical abilities and personal attributes within the Company will energize the organization, maintain flexibility and enhance the Company’s capabilities, thereby enabling the Company to achieve sustainable growth.
With this in mind, the Company has adopted human resource development/organizational development (including promotion of diversity) as one of its key strategies in the new Medium-term Management Plan “BEYOND THE NEW NORMAL,” which was announced on May 10, 2021.
Furthermore, the Company established the Diversity & Inclusion Department in July 2022. The D&I Promotion Office has accelerated a wide range of initiatives to raise diversity and inclusion awareness and achieve diversity and inclusion.
Another priority is to appoint women, non-Japanese individuals and mid-career recruits to management positions. The Company aims to increase the female manager ratio to 20% by the end of FY2030 (versus approx. 6% as of the end of FY2022). To achieve this target, the Company has been working to increase the female recruitment ratio for new graduate and mid-career recruits. The ratio of women to all workers recruited in FY2022 reached approximately 33%. The Company will work to increase the female employee ratio to 30% by the end of FY2026 (versus approx. 25% as of the end of FY2022).
In terms of the recruitment of non-Japanese individuals and their appointment to management positions, the Company has been able to recruit a certain number of non-Japanese individuals at this time. However, the number of non-Japanese applicants is still limited. For this reason, to increase the number of non-Japanese managers, the Company will raise the share of non-Japanese employees in the workforce by recruiting such individuals as it expands its overseas business. In the process, the Company will make efforts to recruit management personnel or train non-Japanese employees.
Looking at the appointment of mid-career recruits as managers, mid-career recruits account for a large share of recruited personnel in the Company’s recruitment activities. Currently, the Company appoints mid-career recruits to management positions in a timely and appropriate manner, evaluating their suitability by comparing the requirements of each position with the abilities, aptitude and experience of each individual candidate.
Going forward, the Company will work to optimize the composition of managers by type of recruitment, nationality, and gender.
As part of the Company’s policy on human resources development to ensure diversity, the Company has been making efforts to develop next-generation leaders and advanced IT personnel for the future. In addition, the Company has been providing support to balance child raising and work, as well as implementing measures to support women’s career development and enable them to demonstrate their abilities in management and as specialists, such as holding women’s career seminars. Moreover, as part of its policy on creating an internal environment, the Company seeks to realize new communication styles and flexible work styles that maximize employees’ potential abilities. To this end, the Company has introduced a system that allows employees to select days when they will work in the office and days when they will work remotely. Additionally, the Company has implemented a free-address office system with no assigned workstations or seating at its new office, which it moved into in December 2022. With this step, the Company has created an office environment in which optimal collaboration can be achieved across organizations and job roles.

【Principle 2.6 Roles of Corporate Pension Funds as Asset Owners】

The Company does not have a corporate pension fund plan.

【Principle 3.1 Full Disclosure】

(i) The Company’s Corporate Philosophy, Standards of Business Conduct, Medium-Term Management Plan, and related information are posted on the Company’s website.
(Corporate Philosophy: https://www.techmatrix.co.jp/en/company/policy.html)
(Medium-Term Management Plan: https://www.techmatrix.co.jp/en/company/plan.html)
(ii) The Company’s basic policy on corporate governance is presented in its Corporate Governance Report and is posted on its corporate website and the Tokyo Stock Exchange’s website. In addition, the Company prepares these materials to disclose its basic policy on corporate governance and posts them on its corporate website.
(Addressing the Corporate Governance Code: https://www.techmatrix.co.jp/ir/esg/esg_07.html)
(Information on companies listed on the Tokyo Stock Exchange: https://www.jpx.co.jp/listing/co-search/index.html)
(iii) (iv) The Company has established the Personnel Committee. This committee deliberates matters concerning the selection and dismissal of Directors and the policy on determining remuneration of Directors and related issues, and reports to the Board of Directors. It is made up of three or more Directors selected by resolution of the Board of Directors, with Outside Directors selected to serve as a majority of the committee. Candidates for Director are personnel who are well versed in the Company’s business and possess strategic thinking skills, the ability to discern technological advances, and knowledge of compliance and internal control. The candidates also have abundant knowledge of the markets where the Company conducts business, experience and knowledge of corporate finance and corporate management, and are well versed in corporate legal affairs and have a high degree of specialization, among other qualities. Candidates for the selection and dismissal of Directors are determined by the Board of Directors based on the proposals formulated by the Personnel Committee　 and their decisions are reflected in proposals put forward to the general meetings of shareholders. The Company’s basic policy is to adopt a remuneration structure linked to shareholder interests so that the remuneration of each Director provides adequate incentive for them to achieve sustained increases in corporate value. The basic policy also calls for setting the remuneration of each individual Director at an appropriate level based on each Director’s individual job responsibilities when determining such remuneration. Specifically, the remuneration of Executive Directors comprises base remuneration as fixed remuneration, as well as performance-linked monetary remuneration, post-delivery type performance-linked share remuneration and stock compensation-type stock option remuneration as performance-linked remuneration. Outside Directors, who assume a supervisory role, are paid only base remuneration in light of their duties. The determination of specific amounts of individual remuneration is entrusted to the President and CEO based on a resolution by the Board of Directors. The scope of authority of the President and CEO covers the amount of base remuneration of each Director and the number of stock options allotted to each individual Director. The performance-linked remuneration of each individual Director is paid in accordance with a standard amount and target achievement rate established in advance by the Board of Directors. To ensure that this authority is properly exercised by the President and CEO, the Board of Directors submits the original proposal for review to the Personnel Committee, and the committee reports back to the Board of Directors. The President and CEO, who is entrusted with this authority as described above, is required to make the determination in accordance with the content of the report. The content of this determination is fully entrusted to the President and CEO because the Company has judged that he is the most knowledgeable about matters such as the Group’s environment and its management condition and is capable of comprehensively determining the remuneration of officers. This determination will be made based on the original proposal, which is submitted for review to the Personnel Committee and reported back to the Board of Directors. Based on this process, the Company has judged that the Representative Director’s authority will be exercised appropriately without any arbitrary decisions being made. For details, please see “Details of Disclosure on Policy for Determining the Amount or Calculation Method of Remuneration” later in this report.
(v) The reasons for appointing all candidates for Director, including candidates for Outside Director, are presented in the convocation notice for the general meeting of shareholders.

（Supplementary Principle 3.1.2 Providing English Language Disclosures）
The Company translates certain parts of its website (corporate profile, business overview, IR-related information) into English. Furthermore, the Company strives to promptly announce and publish its earnings reports and supplementary earnings briefing materials in English as soon as possible after the Japanese documents are disclosed. Regarding the convocation notice for the general meeting of shareholders, since the Ordinary General Meeting of Shareholders held in June 2021, the Company has translated into English the parts that correspond to the so-called narrowly defined convocation notice and parts of the reference documents for the general meeting of shareholders and has disclosed those documents on its website and the Tokyo Stock Exchange’s website. Since 2023, the corporate governance report has also been translated and disclosed in English. The Company will continue working to provide information in English, taking into consideration the level of the foreign investor ratio.

（Supplementary Principle 3.1.3 Initiatives on Sustainability, Investments in Human Capital and Intellectual Properties）
The Company recognizes that its response to sustainability issues, including climate change, is an important management issue, and it has established a system that enables the Board of Directors to exercise more appropriate supervision. The Sustainability Committee, which reports to the Executive Committee, the body responsible for overall business execution, manages progress on the response to climate change. The Sustainability Committee works closely with the Corporate Planning Dept., which is in charge of environmental management, to supervise the climate change response measures and related planning at each division, headquarters, department, branch and sales office. The Sustainability Committee comprises appointed members of departments within the Corporate Headquarters. The Executive Committee discusses the current status of progress on these activities or important issues. Following these discussions, these issues are reported to and discussed by the Board of Directors at least once a year, and they are reflected in and aligned more closely with the Company’s management strategy.
The Company discloses information about climate change-related impacts on the Company using the TCFD framework. Specific disclosures include the amount of greenhouse gas emissions generated by the Company’s business activities, identification of climate change-related risks and opportunities that will affect the Company’s business activities, and future environmental targets.
Additionally, the Company formulated and disclosed the Medium-Term Management Plan “BEYOND THE NEW NORMAL” on May 10, 2021.
The Company views the rapid shift to digitalization and the drastic changes in the industrial structure as new growth opportunities. It will accelerate businesses toward areas absolutely necessary for society and provide services to solve social issues, with the aim of contributing to the creation of a sustainable society.
Specifically, the Company will contribute to customers’ efforts to promote digital transformation (DX) and achieve the SDGs through its business activities. Guided by its seven key strategies, the Company will endeavor to increase its corporate value by striving to expand business and enhance its systems.
The Company has adopted “The IT professional group who creates a better future” as its Mission Statement. It understands that ongoing investment in human capital is more important than anything else in achieving continuous growth in the future. Accordingly, the Company is actively investing in and developing an environment conducive to human resource development. As a specific measure, the Company is building a training system and curriculum to allow personnel to acquire the proper and necessary abilities according to their position, duties and occupation. Notably, engineers need to learn the latest cutting-edge technologies. Therefore, the Company is focusing on nurturing advanced IT personnel through such means as making use of external professional organizations. Moreover, the Company has set up a rewards system that, for example, provides incentives to those who acquire specialized qualifications. Through these measures, the Company fosters a corporate culture that will accelerate the realization of the Three Standards of Business Conduct and SIMPLE & 4C (the Company’s ideal professional human resources), which are based on the Mission Statement, and conduct related human resources development.
Regarding investment in intellectual property, the Company has adopted a business model based on providing outstanding products and services by developing unique applications and services. Therefore, it actively invests in technology research to solve customers’ issues. The Company strives to maintain the value of its technologies through such means as acquiring patents for specific intellectual property developed in the course of its business activities.
In addition, the Company discloses information about climate change-related impacts on the Company using the TCFD framework. Specific disclosures include the amount of greenhouse gas emissions generated by the Company’s business activities, identification of climate change-related risks and opportunities that will affect the Company’s business activities, and future environmental targets.
(The Company’s Corporate Philosophy: https://www.techmatrix.co.jp/en/company/policy.html )
(Medium-Term Management Plan “BEYOND THE NEW NORMAL”: https://www.techmatrix.co.jp/en/company/plan.html)
(ESG Information: https://www.techmatrix.co.jp/en/ir/esg/index.html)
(Initiatives for employees (human resources development): https://www.techmatrix.co.jp/ir/esg/esg_04.html) (Only in Japanese)
(Information disclosure based on the TCFD recommendations: https://www.techmatrix.co.jp/ir/esg/esg_01.html) (Only in Japanese)

（Supplementary Principle 4.1.1 Scope and Content of the Matters Delegated to the Management）
The Company has set forth in its Rules of the Board of Directors the matters that are to be deliberated and resolved in meetings of the Board of Directors. In addition, in accordance with its transition to a Company with an Audit & Supervisory Committee, the Company has revised its Articles of Incorporation to conduct rapid management decision-making. Under these revisions, the Board of Directors can entrust all or some decisions on business execution to the Full-time Directors within the scope permitted by laws and regulations.
The Executive Committee comprises Full-time Directors (including Directors who are Full-time Audit & Supervisory Committee Members), Executive Officers, business department managers and certain other personnel. Pursuant to requests for advice from the President and CEO, the Executive Committee provides its advice to the Board of Directors and the President and CEO on 1) important corporate management issues; 2) agenda items for Board of Directors meetings; and 3) the establishment, amendment and abolition of various important rules, in accordance with the Rules of the Executive Committee. The President and CEO serves as the chair of the Company’s Executive Committee.
The Company’s Board of Directors and Executive Officers believe that the Medium-Term Management Plan “BEYOND THE NEW NORMAL,” which was formulated in May 2021, constitutes a commitment to shareholders and other stakeholders. Therefore, the management strategies laid out in the plan are steadily being implemented. In addition, the Board of Directors and Executive Officers believe that progress on those strategies should be explained to shareholders and other stakeholders. Based on this belief, the status of progress on strategies is explained at earnings briefings, general shareholder meetings, and other events.

【Principle 4.9 Independence Standards and Qualifications for Independent Outside Directors】

The Company’s independence criteria for Independent Outside Directors are formulated with reference to the independence requirements established by the Tokyo Stock Exchange.
When selecting candidates for Independent Outside Directors, the Company selects individuals who have abundant experience and extensive knowledge of corporate management, corporate legal affairs and other subjects, and who can be expected to offer opinions and advice that will help to increase the Company’s corporate value over the medium and long terms.

（Supplementary Principle 4.10.1 Appropriate Involvement and Advice from Independent Outside Directors by Establishing an Independent Nomination Committee and Remuneration Committee）
The Company has established the Personnel Committee to deliberate on matters concerning the decision-making policy for the selection and dismissal of Directors, and Directors’ remuneration, among other matters, and report to the Board of Directors. The Personnel Committee comprises three or more Directors selected by resolution of the Board of Directors, with Outside Directors selected to form a majority of the members. While considering opinions from Outside Directors based on their independent perspectives, the Personnel Committee conducts discussions on the ideal remuneration structure and the next generation of candidates for Director. The committee also carries out highly fair and transparent evaluations of Directors and considers the composition of the next generation of Directors.
（Supplementary Principle 4.11.1 Views on the Composition of the Board of Directors and Related Matters）
The Company has established that there shall be no more than nine Directors (excluding Directors who are Audit & Supervisory Committee Members) and no more than four Directors who are Audit & Supervisory Committee Members.
The Company believes that its top priority is to increase medium- to long-term corporate value by achieving sustainable growth of its businesses and improving business stability. The Company selects Directors from among candidates who are personnel that are well versed in the Company’s business and possess strategic thinking skills, have the ability to discern technological advances, and possess knowledge of compliance and internal control. The candidates also have abundant knowledge of the markets where the Company conducts business; experience and knowledge of corporate finance and corporate management, and are well versed in corporate legal affairs and have a high degree of specialization, among other qualities.
Moreover, from the perspective of promoting diversity and women’s success in the workplace, the Company has selected two female Directors to ensure that management can take the lead in actively discussing such issues.
The Company has posted a skills matrix of its Officers on its corporate website.
(Information about governance: https://www.techmatrix.co.jp/ir/esg/esg_06.html)

（Supplementary Principle 4.11.2 Concurrent Positions of Directors and Audit & Supervisory Committee Members）
The Full-time Directors hold concurrent positions at the Company’s Group companies and companies in which the Company has invested. The Company believes that these are important duties necessary to conduct business operations efficiently while ensuring compliance. Furthermore, four Outside Directors concurrently serve as officers of other publicly listed companies. The Company has determined that these concurrent positions are reasonable in scope, and that these Directors are adequately fulfilling their roles and responsibilities as Directors of the Company.
The Company presents the concurrent positions held by its Directors in the convocation notice for the general meeting of shareholders and posts this information on its corporate website.
(Information on concurrent positions is presented in the convocation notice for the general meeting of shareholders: https://www.techmatrix.co.jp/en/ir/event/event_03.html)
(Supplementary Principle 4.11.3 Summary of Results of Analysis and Evaluation of the Effectiveness of the Board of Directors as a Whole)
To ensure the effectiveness of the Board of Directors and improve how it functions, the Company conducts a questionnaire survey on the performance of Directors’ duties, the effectiveness of the Board of Directors as a whole, the composition of the Board of Directors, and the status of the Board of Directors’ operation, covering the Directors (including Audit & Supervisory Committee Members). Based on the results of an analysis of the questionnaire survey, the Company conducts an evaluation of the effectiveness of the Board of Directors as a whole.
This year, the Company conducted the questionnaire survey in April 2023, and conducted the evaluation in May 2023.
The evaluation results of this year’s survey are as follows:
(1) The Company’s Board of Directors has largely achieved diversity and has secured effective and appropriate management supervisory functions.
(2) The Board of Directors conducts active and constructive discussions, making the most of the knowledge, experience, and other qualities of each member.
Based on the aforementioned results, the Company has determined that the Board of Directors’ duties and roles are being performed effectively.
Going forward, the Company will continue to conduct an analysis and evaluation once a year.
The evaluation is presented in the Company’s Corporate Governance Report and is posted on its corporate website and the Tokyo Stock Exchange’s website.
(Addressing the Corporate Governance Code: https://www.techmatrix.co.jp/ir/esg/esg_07.html)
(Information on companies listed on the Tokyo Stock Exchange: https://www.jpx.co.jp/listing/co-search/index.html)
（Supplementary Principle 4.14.2 Training policy for Directors and Audit & Supervisory Board Member）
The Company provides Ful-time Directors and Executive Officers with training as appropriate for their duties in charge of acquiring new knowledge. Additionally, the company encourages them to participate in outside seminars, participated in industry groups, and actively participated in training sessions and exchange sessions held by various organizations at our expense to create an environment in which they can acquire new knowledge and develop their own self-development. Furthermore, the Outside Director (lawyer specializing in corporate law) explain the latest trends in the Corporate Law and the Corporate Governance Code. At the same time, we have established a forum for dialogue with institutional investors to create opportunities to grasp evaluations, issues, and expectations of the Company. In addition, the Board of Directors conducts monthly

【Principle 5.1 Policy for Constructive Dialogue with Shareholders】

Every six months, the Company conducts an earnings briefing. The President and CEO conducts a presentation at these briefings. In addition, the Company is working to increase the number of briefings for individual investors and improve the frequency of small meetings.
The President and CEO conducts a dialogue with shareholders and other investors within a reasonable scope, and the opinions and concerns obtained through this dialogue are reported to the Board of Directors as needed. When IR staff members conduct these activities, reporting to the Board of Directors is undertaken by having the staff members report their findings to the General Manager of the Corporate Planning Dept., who then reports the findings to the Board of Directors.
When conducting dialogue with shareholders and other investors through not only earnings briefings and briefings for individual investors, but also other opportunities for dialogue, the Company strives to manage insider information by using information disclosed in earnings reports, securities reports, medium-term management plans and other materials as dialogue topics.

（Supplementary Principle 5.1.1 Shareholder Meetings with Senior Management, Outside Directors or Audit and Supervisory Board Members）
The President and CEO of the Company basically handles earnings briefings, individual investor briefings, small meetings, individual interviews, and　dialogues with shareholders and investors. In addition, IR staff members, the General Manager of the Corporate Planning Dept. and the Full-time Audit & Supervisory Committee Member respond to requests for interviews.