COLOPL : Corporate Governance Report（577KB）

Note: This document is a translated version for reference purposes only. Therefore, any discrepancy may occur with the Japanese original version. Please refer to the Japanese version if you find anything unclear. COLOPL, Inc. takes no responsibility for any problems of translation.

Corporate Governance Report

CORPORATE GOVERNANCE	COLOPL, Inc.
	Last Update: December 26, 2022
	COLOPL, Inc.
	Takashi Miyamoto, President and Representative Director
	Contact: Yoshiaki Harai, Executive Director and Head of the Corporate Division
	Securities code: 3668
	https://colopl.co.jp/en/ir/

The corporate governance of COLOPL, Inc. (the "Company") is described below.

1. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other

Basic Information

1. Basic Views

The Company's basic approach to corporate governance is to engage in fair, logical and speedy decision-making on the premise of "collaborative creation" with shareholders, users, employees, business partners, local communities, and other stakeholders for the purpose of enhancing corporate value.

The Company has a basic policy of seeking to balance decision-making, business execution and management oversight functions to support appropriate management decisions and business execution by the President and Representative Director.

Reasons for Non-compliance with the Principles of the Corporate Governance Code [Updated]

[Supplemental Principle 1-2-5]

Since not having been asked by institutional investors who hold shares in street name to attend a General Meeting of Shareholders or to exercise voting rights, the Company have not taken measures to meet such requirements. Going forward, the Company will be pursuing initiative designed to consider and develop guidelines for the attendance of beneficial shareholders at General Meeting of Shareholders giving adequate consideration for their requirements and the trends of trust banks, etc.

[Supplemental Principle 2-4-1]

The Company, as an entertainment company, recognizes the importance of workforce with a variety of experiences, skills, and attributes for our sustainable growth. In addition, the Company conducts personnel evaluations based on the abilities of each employee, and treats them in accordance with such evaluations, including promotions and advancement. In spite of not having presented goals for promotion based on gender, nationality, or hiring method, the Company has taken various measure such as childcare, nursing care, and personnel training to create a comfortable working environment for diverse personnel, including women, non-Japanese, and mid-career hires, thereby supporting diversity in its human resources from a systemic standpoint.

Please refer to the following.

URL:https://be-ars.colopl.co.jp/recruit/summary/welfare/(Japanese only)

[Supplemental Principle 4-1-2]

In the entertainment industry to which the Company belongs, the standard users require for this industry is becoming more

sophisticated with astonishing technological innovation. Hence, recognizing that a mid-term business plan is a commitment to shareholders might undermine our flexibility and agility to respond to changes in the environment. For this reason, the Company does not disclose its medium- to long-term management plan.

[Supplemental Principle 4-1-3]

Over the long-term, the Company has been developing candidate who can succeed the incumbent Chairman of the Board as well as President and Representative Director. Given the age of them, the Board of Directors and the Nomination and Compensation Advisory Committee have not held specific discussions on the succession plan as a matter of urgency, however, will consider the details of it.

[Supplemental Principle 4-8-1]

The Board of Directors has active discussions with opinions from independent Outside Directors based on their objective standpoints. The way of exchanging information and developing a shared awareness among themselves from an independent and objective standpoint will be considered as necessary, in cooperation with independent Outside Directors.

[Supplemental Principle 4-8-2]

The Corporate Planning Department is responsible for liaison between the independent Outside Directors and management, while the full-time Audit and Supervisory Committee member, who is also an independent Outside Director, is responsible for liaison between the Outside Directors who are Audit and Supervisory Committee members. They work together internally as needed to coordinate with the independent Outside Directors and the Audit and Supervisory Committee. The Company will continue to work with the independent Outside Directors to develop a system for liaison and coordination with management, and cooperation with the Audit and Supervisory Committee members and the Audit and Supervisory Committee, considering such arrangements as necessary.

[Principle 5-2]

Due to the rapid and short-term pace of change in the business environment to which the Company belongs to, it is difficult to calculate appropriate and reasonable targets for our performance outlook. Therefore, the Company does not disclose earnings forecasts. Specific measures regarding the allocation of management resources, etc., will be disclosed in business reports, financial statements, and financial results briefings providing clear explanations with using understandable expressions to shareholders and investors. Accordingly, the Company will be pursuing to ensure that our shareholders fully understand the Company's business activities at various briefings and meetings with its shareholders such as financial results briefings.

Disclosure Based on the Principles of the Corporate Governance Code [Updated]

[Principle 1-4:Cross-Shareholdings]

Given an acquisition of the shares of listed companies as cross-shareholdings, the Company has the policy only which can be reasonably explained that the shares are strongly tied to business including a capital and business alliance, and that such an alliance proceeds more smoothly as a result of the holding.

After that, cross-shareholdings are periodically examined the effectiveness of the alliance by the Board of Directors with

considering the transition of appraised value of the shares holding.

With respect to exercising of voting rights, the Company basically approves the proposals of the issuing company provided unless no conflict with the Company's interest, since the relationship is usually a capital and business alliance.

[Principle 1-7: Related Party Transactions]

Given related party transactions, the Company has the policy that the Board of Directors discusses its terms and conditions and validation of the method of making decisions and implements it.

In addition, accounting division and internal audit division review the detail of transactions after making decision by the Board of Directors.

[Principle 2-6: Roles of Corporate Pension Funds as Asset Owners]

The Company has not joined any corporate pension fund but has introduced a defined contribution corporate pension plan to support stable asset formation by employees.

In addition, the Company holds seminars for employees on basic knowledge of systems and investment precautions to start asset management.

[Principle 3-1: Full Disclosure]

1. Company objectives (e.g., business principles), business strategies and business plans Please find the Company's Mission and Vision as below.

Mission; "'Entertainment in Real Life': Making every day more enjoyable and wonderful through entertainment", Vision; Delivering "New Experiences" with the latest technology and creative ideas.

ii) Basic views and guidelines on corporate governance based on each of the principles of the Code;

The Company discloses its basic views for corporate governance in the Company's website and Corporate Governance Report. iii) Board policies and procedures in determining the remuneration of the senior management and Directors.

To ensure objectivity and transparency in the process of nominating Directors and determining compensation for them and to strengthen the corporate governance system, the Company has established the Nomination and Compensation Advisory Committee. The committee submits reports on draft plans about the selection and dismissal of Directors, the Directors' compensation system, and the distribution of compensation to each Director, among other matters.

First, each Director conducts a self-assessment of accomplishments and contributions to the board of directors during the year and reports its results to President and Representative Director. The President and Representative Director prepares a proposal for compensation for each Director and decides final compensation after thoroughly considering the report on the proposal from the Nomination and Compensation Advisory Committee established voluntarily by the Company. The Representative Director subsequently interviews each Director to provide feedback on contributions and results and once again communicate management objectives.

1. Board policies and procedures in the appointment/dismissal of the senior management and the nomination of Directors and kansayaku candidates.
   Please find the Company's policies as below.

1. Have knowledge, experience, and abilities for their role and serving to maintain balance to the Board of Directors
2. Contribute to the lasting growth of business and having character and insight suitable to being a Director
3. Contribute to the maximization of med to long term corporate value by understanding and implementing the Company's group philosophy
   (non-renewal) a Director>

1. Violate or be likely to violate laws and regulations or the articles of incorporation
2. Cause a significant loss in the appropriate execution of the duties
3. Not display the potential to meet each requirement of the policies
   

1. Have highly effective leadership and quickly adapt to changes
2. Have knowledge, experience, abilities, being decisive and highly ethics suitable for the decision maker of management (non-renewal) a President and Representative Director>

1. Violate or be likely to violate laws and regulations or the articles of incorporation as a Representative Director
2. Being pursued for Representative Director's responsibility that is attributable to significant misconduct
3. Being regarded as the cause to significant loss in the Company's group management
4. Being regarded as difficult to execute of duty from health problem
5. Clearly Not satisfy each requirement of policies for nominating the candidates for President and Representative Director

Based on the above policies, the Company's policies are to formulate multiple evaluation items required of Directors and Outside Directors and to appoint candidates taking into consideration the degree to which they satisfy the evaluation criteria. With regard to Outside Directors in particular, the company has policy is to appoint persons with knowledge of professional fields such as corporate management, law, accounting, marketing, and management strategy and persons with a wealth of experience and broad insight. In addition, the Company judges whether a candidate is suitable to appoint as a Director of the Company in light of areas of expertise the Company wishes to add to the Board of Directors as a whole and its diversity. As a procedure, the Nomination and Compensation Advisory Committee is consulted on the pros and cons of a nomination before reporting to the Board of Directors, which deliberates on the above evaluation items and makes the final decision.

v) Explanations with respect to the individual appointments/dismissals and nominations based on iv).

The Company discloses the reasons for the appointment of all the candidates for Directors in the Notice of the General Meeting of Shareholders.

[Supplemental Principle 3-1-3: Sustainability initiatives

Establishing basic policies on sustainability, the Company get to make every day more enjoyable and wonderful, solving social challenges through business activities. The Company's basic policies and initiatives related to sustainability are publicly disclosed on the Company's website. (Japanese only)

In December 2022, the Company announced its support of the recommendations of the Task Force on Climate -related Financial Disclosure (TCFD), considering growing movement which companies analyze the impact of climate change-related on their business activities. Please refer to the following for disclosure based on TCFD initiative.

URL：https://colopl.co.jp/sustainability/environment/(Japanese only)

[Supplemental Principle 4-1-1: Determination of scope of delegation to management and disclosure thereof

The Board of Directors makes business determination and major managemental, organizational, and financial decisions, in compliance with agenda matters stipulated in the Rules for Delegation of Authority.

The Management Council also makes business determination and decisions other than agenda items in the Board of Directors for management and organization, and items concerning new businesses and certain investment and contractual matters.

In addition, the Company has instituted the Investment Committee, a body delegated a certain level of authority concerning investment from the Board of Directors whose principal members are the Representative Director and the Director in charge of the corporate headquarters. The Investment Committee makes investment decisions about projects to which all of the following conditions apply. The Management Council and the Board of Directors will be notified of the results of decisions on investments by this Committee.

• Investment amount of 0.1 billion yen or less per project
• Voting rights share of less than 20% after investment
• Maximum total annual (= fiscal year) investment amount of 1 billion yen

[Principle 4-9: Independence standards and qualification for independent Directors]

The company deems our Outside Directors and Outside Director candidates to have independence if they do not fall into any of the following categories.

• Relatives up to the second degree of current or past Outside Director of the Company or its subsidiaries.
• Incumbent business executives or employee of counterparties of the Company that exceed 1% of sales of either the Company or its subsidiaries during the past three business years.
• Outside Directors has received compensation exceeding 10 million yen directly from the Company as a legal, accounting, or tax professional or consultant during the past three business years (excluding compensation as a Director of the Company or compensation paid to an institution or office to which they belong).
• The Company's donations to a nonprofit organization where Outside Directors serve as an executive officer have exceeded 10 million yen and exceeded 1% of said organization's total revenue during the past three business years.

[Supplemental Principle 4-10-1: Independence, authority and roles of the nominating and remuneration committees]

The Company has established Nomination and Compensation Advisory Committee optionally. Independent Outside Directors compose a majority of this Committee, and each of these Directors possess abundant knowledge and broad insight related to corporate management. It is supposed to be an appropriate component for this Committee as an advisory body of the Board of Directors related to the nomination and compensation of executive management and Directors. Resolutions are passed by this Committee with a majority of members when a majority of members who can take part in the passing of resolutions are present.

[Supplemental Principle 4-11-1: Views on overall balance of knowledge, etc., diversity, and size of the board of Directors]

The Company creates a skill matrix that defines evaluation index and contribution field such as the knowledge, experience, and skills of each Director, and judges by the appropriate balance in the Board of Directors as a whole, diversity, and its scale in light of the combination of those attributes. The Company also considers whether Director appointments are optimal for the Board of Directors as a whole in light of evaluation index and contribution field.