Glory : Corporate Governance Report

Corporate Governance Report

Updated: June 25, 2024

GLORY LTD.

Akihiro Harada, President & Representative Director Contact: Legal Department [phone] Securities Code: 6457

https://corporate.glory-global.com/

The corporate governance of GLORY LTD. (the "Company") is described below.

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

1. Basic Views

Based on our "Corporate Philosophy," which embodies our determination to grow as a sustainable enterprise by contributing to a prosperous society through our commitment to product development, the Company and its subsidiaries (collectively, the "Group") aim to improve the corporate value by striving to exist in harmony with society and promoting sound and efficient corporate management that is trusted and supported by all stakeholders. To this end, we strive to improve corporate governance thus further improve our corporate value, through enhanced supervisory and executive functions of management, expedited, transparent, and objective decision-making, and enhanced compliance management.

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

The Company implements each principle of the Corporate Governance Code.

Disclosure Based on the Principles of the Corporate Governance Code Updated

The contents of disclosure based on each principle of the Corporate Governance Code are as follows.

Principle 1.4: Cross-Shareholding*

It is the Company's policy to hold shares of listed companies as cross-shareholdings only if, based on a broad consideration of factors such as business strategies and transaction status of such companies, we judge that maintaining and enhancing the relationship with such companies would increase the corporate value of the Group. To ensure the economic rationale of such holdings, the Company pays attention to the soundness of the management of such companies and consider the market value of shares as well as the dividends and other returns of such companies.

The Board of Directors annually reviews the purposes and rationale of each cross-shareholding, and discuss whether to continue or discontinue such holdings, based on the economic rationale and future outlook as well as risks and returns over the mid- to long-term. Additionally, such holding is reconsidered if it is found to be unsuitable.

In FY2023, the Company decided to continue its shareholdings based on the Board's examination of the stock name, purpose and rationale thereof including the business synergy with the investee companies, the balance of risks and returns against the capital cost, while some of the shares were sold due to reasons such as deviations from the original purpose and lessening of significance of such holdings.

The Company will exercise voting rights on cross-held shares based on broad consideration of factors including the condition of each investee company and on the criteria such as whether or not such exercise is deemed to improve the corporate value of the Company and the investee company.

*Cross-shareholdings here include mutual shareholdings besides unilateral ones.

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Principle 1.7: Related Party Transactions

Approvals of the Board of Directors are obtained in advance to ensure transactions with related parties, such as Directors or major shareholders, do not harm the Group or the common interests of its shareholders, unless the terms of the transactions are equivalent to those of other general transactions.

Aside from the foregoing, the Company's "Regulations of the Board of Directors" stipulates that resolution of the Board of Directors is required before a Director conducts any competitive transactions, self-dealing transactions, or other transactions that involve a conflict of interest with the Company.

Transactions with related parties are disclosed in accordance with the Companies Act, the Financial Instruments and Exchange Act, and other applicable laws and regulations.

Meanwhile, the Audit & Supervisory Committee requires Directors to submit confirmation letters concerning their engagement in competitive transactions, self-dealing transactions, any other transactions that involve a conflict of interest with the Company, and transactions with shareholders under unusual terms of transactions, and reports the details thereof to the Board of Directors.

Supplementary Principle 2.4.1: Ensuring Diversity in the Core Human Resources

The Company considers diverse human resources who create new value and business as one of the keys for further growth of the Company. We actively and consistently recruit diverse personnel regardless of age, gender, nationality, and career backgrounds and promote their appointment to management positions.

In addition, the Company aims to develop its employees' skills based on the belief that the growth of employees will lead to the growth of the Company and, in turn, will contribute to the sustainable improvement of our corporate value.

■ For details: https://www.glory.co.jp/csr/society/human_resources/

Principle 2.6: Roles of Corporate Pension Funds as Asset Owners

The Company manages its corporate pension plan through the GLORY Group Corporate Pension Fund and a contract-type pension plan. Recognizing that cases where the management of pension fund reserves may affect its financial condition besides the stable asset formation of beneficiaries, the Company has assigned personnel trained and suited for the management of the pension fund reserves, and in addition, has established a system to ensure sound management of pension assets by incorporating the opinions of outside professionals where deemed necessary, through the committees regarding the corporate pension plan. Further, the status of the management of the pension fund reserves is reported to the Board of Directors on a regular basis.

Principle 3.1: Full Disclosure

1. Managerial Creed, Etc., Corporate Management Strategy and Management Plan
   The Company's corporate philosophy and managerial creed are made available on its website, while long- term visions and mid-term management plans are disclosed through the Tokyo Stock Exchange ("TSE") and other media, and on the Company's website when formulated.
   ■ Corporate Philosophy https://corporate.glory-global.com/groupinfo/philosophy/
   ■ Long-Term Vision and the Medium-Term Management Plan https://corporate.glory-global.com/ir/management/plan/
2. Basic Views and Policy on Corporate Governance
   The Company's Corporate Governance Guidelines sets forth its basic views and policy concerning corporate governance of the Group.
   ■ Corporate Governance Guidelines https://corporate.glory-global.com/groupinfo/governance/
3. Policy and Procedures for Determining Remuneration of Directors and Other Officers
   See the section (of) "Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods" under "II. 1. Directors' Remuneration" herein.
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1. Policy and Procedures for Appointing, Dismissing and Nominating Directors and Other Officers
   For the appointment of senior management from among Directors or nomination of candidates for Directors, the Company examines individuals based on such criteria as their extensive experiences in and out of Japan, depth of insight, ability and expertise for the expected roles, personalities, and other factors required to develop the corporate governance system and to contribute to the steady increase corporate value of the Group. Candidates for executive Directors are appointed from among individuals with extensive knowledge of the Group's domestic and overseas businesses or corporate operations. Candidates for Outside Directors are appointed from among individuals who have expertise in the areas of corporate management, law, finance, and accounting and are qualified to provide recommendations and advice on the management from broad perspectives.
   Candidates for Directors who are Audit & Supervisory Committee Members are appointed from among individuals who have experience, abilities, and necessary knowledge of finance, accounting, and legal matters required for audits and supervisions for the businesses that the Group is engaged in Japan and overseas. Specifically, the Audit & Supervisory Committee will include at least one individual who has sufficient knowledge of finance and accounting, and candidates for Outside Directors who are Audit & Supervisory Committee Members are appointed from among individuals who have high level of independence as well as broad experience and extensive knowledge in the areas of law, finance, accounting, and corporate management.
   To ensure transparency and objectivity in the appointment of Directors and executives, the Company has established, as an optional advisory committee to the Board of Directors, the Nomination Advisory Committee, of which the majority of members are independent Outside Directors. Candidates for Directors who are not Audit & Supervisory Committee Members are determined by the Board of Directors (with the consent of the Audit & Supervisory Committee in the case of Directors who are Audit & Supervisory Committee Members), taking into consideration the advice from the Nomination Advisory Committee.
   In the event that any member of the senior management is deemed to no longer meet the criteria above, the Board of Directors determines, upon deliberation by the Nomination Advisory Committee, his or her dismissal from the position.
2. Explanation regarding Appointment, Dismissal or Nomination of Directors
   The Company states reasons for appointing each candidate for Director in the convocation notices of its general meetings of shareholders. Further, in the case that the Board of Directors has determined to dismiss any member of the senior management from his or her position, disclosure will be made regarding such information in accordance with the timely disclosure rules, etc. based on the regulations set forth by the TSE.
   ■ Notice of Ordinary General Meeting of Shareholders https://corporate.glory-global.com/ir/meeting/

Supplementary Principle 3.1.3: Initiatives on Sustainability

The Group's 2026 Medium-Term Management Plan sets out its sustainability policy with a specific target and initiatives, based on its mission to address social issues with technological innovation and contribute to the realization of sustainable society.

The policy sets forth the initiatives from the aspects of environment, society, governance, and creation of new value, with the aim of increasing the corporate value of the Group through its contribution to a sustainable growth of society. In order to promote these initiatives, we have established the Sustainability Committee chaired by the President and supervised by the Board of Directors on a regular basis. Also, the Board sets the policies and material issues regarding sustainability, and confirms the status of the initiatives.

Since November 2021, the Company has been supporting the Task Force on Climate Related Financial Information Disclosure (TCFD) recommendations and implementing a series of initiatives.

■ For details see:https://www.glory.co.jp/csr/

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Supplementary Principle 4.1.1: Scope and Content of Matters Delegated to the Management

The Company stipulates the matters to be resolved by the Board of Directors in the "Regulations of the Board of Directors" sets forth, as matters to be resolved by the Board of Directors, the matters stipulated in relevant laws and regulations and the Articles of Incorporation such as matters concerning general meetings of shareholders and accounting; Directors and the Board of Directors; the Company shares; basic policies on management; important assets and borrowings; organization and personnel affairs; the Group's management, and important matters of the Group. The Board of Directors delegates certain decisions regarding executions of important operations to Directors.

In addition, decision-making authorities are delegated to Representative Directors, executive officers, or managers of relevant departments for matters out of scope of resolution as stipulated in the "Rules on Approval Authority".

Principle 4.9: Independence Standards and Qualifications for Independent Outside Directors

With regard to independence of individuals assuming the office of independent Outside Directors of the Company, the Company requires them to satisfy the Independence Standards for Independent Outside Directors described in this report under "II. 1. Independent Directors", in addition to the independence criteria set forth by TSE.

Supplementary Principle 4.10.1: Approach, Authority, and Roles, etc. regarding Independence of the Composition of the Nomination Committee and the Compensation Committee

Please refer to "2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System)" of "II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management".

Supplementary Principle 4.11.1: Balance, Diversity and Scale of the Board of Directors

In the belief that it is important to secure the balance and diversity of knowledge, experience and ability of the Board as a whole, the Board consists of (a) executive Directors who have extensive knowledge of the Group's businesses or corporate operations in and out of Japan and (b) Outside Directors who have expertise in areas such as corporate management, law, finance and accounting and are qualified to provide the management with valuable recommendations and advice from broad perspectives.

As to the number of Directors, the Board consists of no more than ten (10) Directors who are not Audit & Supervisory Committee Members and no more than five (5) Directors who are Audit & Supervisory Committee Members to expedite the decision-making process and promote active deliberation. In addition, one-third or more of the Directors are independent Outside Directors who have credentials to contribute to the Company's sustainable growth and the increase in its corporate value over the medium- to long-term to ensure appropriate supervision of the Company's management.

Skills required for the members of the Board of Directors are described in the Notice of the 78th Ordinary General Meeting of Shareholders.

■ Notice of Ordinary General Meeting of Shareholders

https://corporate.glory-global.com/ir/meeting/

Supplementary Principle 4.11.2: Situation of Directors Concurrently Holding Positions

Status of Directors concurrently serving as officers at other listed companies are disclosed through the convocation notices of the general meetings of shareholders, annual securities reports, corporate governance reports, or similar publications.

■ Notice of Ordinary General Meeting of Shareholders

https://corporate.glory-global.com/ir/meeting/

Supplementary Principle 4.11.3: Summary of Analysis and Evaluation of Effectiveness of the Board of Directors and Results thereof

The Company strengthens the functions of the Board of Directors through evaluating of the effectiveness of the Board involving Directors' self-evaluation followed by analysis by the Board. Summary of the results is available on the Company's website.

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■ Results of Evaluation on Effectiveness of the Board of Directors https://corporate.glory-global.com/groupinfo/governance/evaluation/

Supplementary Principle 4.14.2: Policy for Training of Directors

It is the Company's basic policy to appropriately provide Directors with training as necessary and on a regular basis for them to fulfill their respective roles and responsibilities.

Directors acquire, update, and develop necessary knowledge through in-house training and/or seminars organized by the TSE and other external organizations and are given the opportunities such as factory tours and on-site visits in the Company and its subsidiaries, for them to refine their knowledge and understanding towards the Group's business, finance, and structures. Further, they participate in workshops given by outside professionals such as lawyers and other subject matter experts as necessary.

Principle 5.1: Policy for Constructive Dialogue with Shareholders

In order to attain sustainable growth and the increase of corporate value of the Company over the medium to long term, it is our basic policy to have in place an integrated framework and implement initiatives to promote constructive dialogue with shareholders and investors. This policy is disclosed on the Company's website.

■ Policies concerning Disclosure of Information and Constructive Dialogue with Shareholders and Investors https://corporate.glory-global.com/ir/management/policy/

Initiatives to promote management that is conscious of cost of capital and stock price [Available in English]

Please see the following materials for the initiatives to improve the Company's corporate value. ■ The 2026 Medium-Term Management Plan (P16)

https://corporate.glory-global.com/files/user/ir/pdf/2026_1_en.pdf

■ Integrated Report 2023 (P45)

https://pdf.irpocket.com/C6457/cEro/IM3F/aCN1.pdf

2. Capital Structure

Foreign Shareholding Ratio	From 20% to less than 30%

Status of Major Shareholders

Updated

Name/Company Name		Number of Shares Owned	Percentage (%)
The Master Trust Bank of Japan, Ltd. (Trust account)		7,558,200	13.48
Nippon Life Insurance Company		3,427,224	6.11
GLORY Group Employees' Stock Ownership Association	2,602,802	4.64
Custody Bank of Japan, Ltd. (Trust account)		2,156,200	3.85
Tatsubo Fashion Co. Ltd.		1,500,000	2.68
GLORY Business Partners' Stock Ownership Association	1,113,874	1.99
Sumitomo Mitsui Banking Corporation		1,100,444	1.96
MUFG Bank, Ltd.		879,600	1.57
THE BANK OF NEW YORK MELLON 140044		848,057	1.51
Tatsuta Bouseki Co., Ltd.		726,204	1.30
Controlling Shareholder (except for Parent Company)	-
Parent Company	-
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Supplementary Explanation

1. The "Status of Major Shareholders" above is based upon the status as of March 31, 2024. The Company, which holds 2,873,306 treasury shares, is not included in the "Status of Major Shareholders."
2. The "(Change) Report of Possession of Large Volume" dated April 7, 2011, filed by Nippon Life Insurance Company with the Director-General of the Kinki Local Finance Bureau, declares the holding of 3,878,824 shares of the Company (shareholding ratio of 5.65%) as of March 31, 2011. However, the above list only includes the number of shares registered on the shareholder registry, since the Company was unable to confirm the number of shares beneficially held by such company as of March 31, 2024.
3. The "Report of Possession of Large Volume" made public as of December 16, 2019 and the "Report of Possession of Large Volume (Amendment Report)" made public as of July 14, 2023 by Mitsubishi UFJ Financial Group, Inc. declares that MUFG Bank, Ltd. and its two joint holders held a total of 3,383,500 shares of the Company (shareholding ratio of 5.32%) as of December 9, 2019. However, the above list only includes the number of shares registered on the shareholder registry, since the Company was unable to confirm the number of shares beneficially held by such companies as of March 31, 2024.
4. The "Report of Possession of Large Volume" made public by Sumitomo Mitsui Trust Bank, Limited as of November 7, 2023, declares the holdings of 2,516,000 shares of the Company (shareholding ratio of 4.27%) with two other holders as of October 31, 2023. However, it is not included in the above list, as the Company was unable to confirm the number of shares beneficially held by such companies as of March 31, 2024.

3. Corporate Attributes

	Listed Stock Market and Market Section						Tokyo Stock Exchange
						Prime
	Fiscal Year-End						March
	Type of Business						Machinery
	Number of employees (consolidated)	as	of	the	end	of	More than 1,000
	previous fiscal year
	Sales (consolidated) as of the end of previous fiscal year		From ¥100 billion to less than ¥1 trillion
	Number of Consolidated Subsidiaries	as	of	the	end	of	From 50 to less than 100
	previous fiscal year

1. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder
   -
2. Other Special Circumstances which may have Material Impact on Corporate Governance

-

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1. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management

1. Organizational Composition and Operation

Organization Form

Company with Audit & Supervisory Committee

Directors

Maximum Number of Directors Stipulated in Articles of Incorporation	15
Term of Office Stipulated in Articles of Incorporation	1 year
Chairperson of the Board	President
Number of Directors			11
Updated
Appointment of Outside Directors	Appointed
Number of Outside Directors	5
Number of Independent Directors within the above number of Outside Directors	5

Outside Directors' Relationship with the Company (1)

Updated

Name

Attribute

Relationship with the Company*

a

b

c

d

e

f

g

h

i

j

k

Joji Iki

From another company

△

Ian Jordan

From another company

Ikuji Ikeda

From another company

△

Keiichi Kato

Attorney-at-law

Yukako Ikukawa

Certified Public Tax

Accountant

*Categories for "Relationship with the Company"

"○" when the director presently falls or has recently fallen under the category; "△" when the director fell under the category in the past; "●" when a close relative of the director presently falls or has recently fallen under the category; and "▲" when a close relative of the director fell under the category in the past.

1. Person who executes business for the Company or its subsidiary
2. Person who executes business for a non-executive director of the Company's parent company
3. Person who executes business for a fellow subsidiary
4. Person/entity for which the Company is a major client or a person who executes business for said person/entity
5. Major client of the Company or a person who executes business for said client
6. Consultant, accounting expert, or legal expert who receives large amounts of cash or other assets from the Company in addition to remuneration as a director/company auditor
7. Major shareholder of the Company (in cases where the shareholder is a corporation, a person who executes business for the corporation)
8. Person who executes business for a client of the Company (excluding persons categorized as any of d, e, or f above) (applies to director him/herself only)
9. Person who executes business for another company that holds cross-directorships/cross-auditor ships with the Company (applies to director him/herself only)
10. Person who executes business for an entity receiving donations from the Company (applies to director him/herself only)
11. Others
12. • 7 -

Outside Directors' Relationship with the Company (2)

Updated

			Member of		Designated as			Supplementary
			Audit &
	Name			Independent			Explanation of
		Supervisory
				Director			the Relationship
			Committee
	Joji Iki			✔	No special interest
							between Mr. Iki and
							the Company.

Ian Jordan	✔	No special interest
		between Mr. Jordan
		and the Company.

Reasons of Appointment

Joji Iki possesses extensive knowledge and experience as a management executive at another global company with emphasis on technological development.

The Company has appointed Mr. Iki as an Outside Director based upon the judgement that his advice and recommendations, given from an independent standpoint, would contribute to the enhancement of the supervisory function of the board and ensuring transparency and fairness in the Company's management.

Mr. Iki is designated as "Independent Director," as we believe that there was, is and will be no likelihood for any conflict of interest arising between him and the Company's general shareholders.

Ian Jordan possesses considerable experience and knowledge in the world of software and technology services as

• management executive at large multi- national consulting and technology companies.
  The Company has appointed Mr. Jordan as an Outside Director based upon the judgement that, his advice and recommendations, given from an independent standpoint, contribute to the enhancement of the supervisory function and our competitiveness in the global market while ensuring and ensuring transparency and fairness in the Company's management.
  Mr. Jordan is also designated as "Independent Director," as we believe that there was, is and will be no likelihood for any conflict of interest arising between him and the Company's general shareholders.

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Ikuji Ikeda	✓	No special interest
		between Mr. Ikeda
		and the Company.

Keiichi Kato	✔	✔	No special interest
			between Mr. Kato
			and the Company.

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Ikuji Ikeda possesses extensive knowledge and experience as a management executive at a global company, in addition to his achievements in the fields of production and international business. The Company has appointed Mr. Ikeda as an Outside Director based upon the judgement that his advice and recommendations, given from an independent standpoint, would contribute to the enhancement of the supervisory function of the board and ensuring transparency and fairness in the Company's management.

Mr. Ikeda is also designated as "Independent Director," as we believe that there was, is and will be no likelihood for any conflict of interest arising between him and the Company's general shareholders. Keiichi Kato possesses expert knowledge and experience as an attorney-at-law.

The Company has appointed Mr. Kato as an Outside Director based upon the judgement that his expertise and experience applied in the Company's audits from an independent standpoint would strengthen the Board's supervision, in ensuring legitimacy and adequacy in the Company's management. Mr. Kato is also designated as "Independent Director," as we believe that there was, is and will be no likelihood for any conflict of interest arising between him and the Company's general shareholders.

Yukako Ikukawa

✔

✔

No special interest between Ms. Ikukawa and the Company.

Yukako Ikukawa possesses expert knowledge and experience as a Certified Public Tax Accountant. The Company has appointed Ms. Ikukawa as an Outside Director, based upon the judgement that her expertise and experience applied in the Company's audits from an independent standpoint would strengthen the Board's supervision, in ensuring legitimacy and adequacy in the Company's management.

Ms. Ikukawa is also designated as "Independent Director," as we believe that there was, is and will be no likelihood for any conflict of interest arising between her and the Company's general shareholders.

Audit & Supervisory Committee

Committee's Composition and Attributes of Chairperson

	All Committee	Full-time		Inside Directors			Outside Directors			Chairperson
	Members	Members
Audit &	3	1	1		2			Inside Director
Supervisory
Committee

Appointment of Directors and/or Staff to Support the Audit & Supervisory Committee

Appointed

Matters Related to the Independence of such Directors and/or Staff from Executive Directors

The Board of Directors assigns, through consultation with Audit & Supervisory Committee, two employees who have the knowledge required by the committee, to assist in the committee's execution of duties (the "Assistant Employees"). Assistant Employees perform their duties as directed by the committee and are permitted to assume the office of audit & supervisory board members of the Company's subsidiaries. To ensure independence of such employees, the authority to direct them belongs to the Audit & Supervisory Committee during the period designated by the committee, and they are not subjected to instructions of any Directors who are not the committee members. Any decisions on appointments, changes or personnel affairs regarding the assistant employees are subject to prior consent of the Audit & Supervisory Committee.

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