Japan Securities Finance : Notice of Opinion of the Company’s Board of Directors

This is the English translation of the document originally written in Japanese for non-Japanese convenience. Although Japan Securities Finance intends to faithfully translate the Japanese-written documents into English version, the accuracy and correctness of translation are not guaranteed, so you are kindly encouraged to refer to the original Japanese version of the document.

January 10, 2023

To All Shareholders:

Company: Japan Securities Finance Co., Ltd.

Representative Executive Officer & President: Shigeki Kushida (Code No. 8511, TSE Prime)

Contact: Kentaro Hibi, General Manager, Corporate Governance Office (E-mail :[e-mail])

NOTICE OF CONVENING DATE AND TIME, LOCATION AND AGENDA

MATTERS FOR THE EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS, AND OPINION OF THE COMPANY'S BOARD OF DIRECTORS REGARDING THE SHAREHOLDER PROPOSALS

As disclosed in the "Notice of Shareholder Request for Convening of an Extraordinary General Meeting of Shareholders" dated November 22, 2022, Japan Securities Finance Co., Ltd. (hereinafter, "the Company") has received a request from a shareholder of the Company (hereinafter, the "Proposing Shareholder") for the convening of an extraordinary general meeting of shareholders.

In response thereto, in its "Notice of the Establishment of a Record Date for the Extraordinary General Meeting of Shareholders" dated December 6, 2022, the Company provided notice establishing December 21, 2022 as the record date for voting rights, and calling for the convening of an extraordinary general meeting of shareholders (hereinafter, the "Extraordinary General Meeting of Shareholders").In addition, at a meeting of the board of directors convened today, a resolution as set forth below was adopted regarding the convening date and time, location and agenda matters for Extraordinary General Meeting of Shareholders as well as the opinion of the Company's board of directors regarding the shareholder proposals.

Furthermore, pursuant to Article 306, Paragraph 1 of the Companies Act, the Company is planning on filing a petition with the Tokyo District Court for the appointment of a general meeting of shareholders inspector regarding the Extraordinary General Meeting of Shareholders.

1. Date and Time, Location for the Extraordinary General Meeting of Shareholders

(1) Date and Time	10:00 a.m. on Tuesday, February 7th, 2023
(2) Location	Conference Room, Japan Securities Finance Co., Ltd.

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1. Agenda Matters for the Extraordinary General Meeting of Shareholders
2. 1. Election of persons who will be charged to investigate the status of the operations and property of the Stock Company as set forth in Article 316, Paragraph 2 of the Companies Act. (1)
   2. Election of persons who will be charged to investigate the status of the operations and property of the Stock Company as set forth in Article 316, Paragraph 2 of the Companies Act. (2)
   3. Election of persons who will be charged to investigate the status of the operations and property of the Stock Company as set forth in Article 316, Paragraph 2 of the Companies Act. (3)

A summary of the various matters for resolution and the reasons for the proposals are as stated in the full text of the "Request for Convening of an Extraordinary General Meeting of Shareholders (with Revision History)" received from the Proposing Shareholder on December 22, 2022 and attached hereto as an annex, and so please refer thereto. According to the Proposing Shareholder, the "Request for Convening of an Extraordinary General Meeting of Shareholders (with Revision History)" is the revised wording of the "Request for Convening of an Extraordinary General Meeting of Shareholders" dated November 21, 2002, which was disclosed by the Company in the "Notice of Shareholder Request for Convening of an Extraordinary General Meeting of Shareholders" dated November 21, 2022, by the Proposing Shareholder.

1. Opinion of the Board of Directors regarding the Shareholder Proposals

As the result of careful consideration of the matters for resolutions of the extraordinary general meeting of shareholders, the Company's board of directors opposes all the matters for resolutions.

Since 2019, in response to the environmental changes surrounding the Company in recent years, the Company has positioned the enhancement and strengthening of corporate governance and the strengthening of profitability / improvement of capital efficiency as two urgent issues for management, and has amassed sincere managerial efforts, and while these efforts are still in development, they have been tied to certain results.

We absolutely ask for the deep understanding of all shareholders regarding the Company's policies, way of thinking and achievements.

Hereunder we will provide a specific explanation regarding the Company's opinion.

1. Company's efforts regarding the appointment of a management team

In 2019, as a company with a nominating committee, etc., we introduced a system that separated oversight and execution in an effort to further enhance and strengthen corporate

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governance. Efforts as follows centered on the nominating committee have also been made to improve the effectiveness of the appointment of the management team related to the matters for resolution at the Extraordinary General Meeting of Shareholders.

1. Thinking regarding composition, etc. of the board of directors and process for nomination of candidates
   Last year, the Company revalidated the composition, etc. of its board of directors. As a result thereof, based on the changing environment it has sought multifaceted skills from directors such as digitalization and internationalization, and has reached the conclusion that it is important to have a balance between the number of people engaged in oversight and execution and to have diversity in age and gender, so at the 112th ordinary general meeting of shareholders convened in June of 2022, it added two new outside directors, adopting a system where the board of directors is comprised of a total of seven directors; five outside directors and two internal directors. Besides adding such important skills such as knowledge of business management especially industry, knowledge of in fields of technological innovation such as DX and unique financial services, efforts have also been made to diversify age composition.
2. Thinking regarding appointment of executive officers and appointment process

The thinking on the appointment of executive officers was comprehensively verified last year from the perspective of building an executive system for moving forward with the Medium- Term Management Plan. From the past the Company, based on the public role and uniqueness of securities finance services, has marshalled such talents as "someone who is fully aware of the public role and capable of executing business" and "someone who has wide knowledge of the overall securities and financing market," but has newly added "internationalism," "extensive knowledge and experience regarding business administration and risk management" and "extensive knowledge and experience regarding finance and accounting" as expected talents.

Under this arrangement, in the nomination of specific candidates for executive officers, nominations of persons with the required talents have been made on an individual basis from a long list of candidates who come from inside the Company, who come from the public sector, and who come from the securities and finance sectors, and in this process the respective members of the nominating committee gain a deep understanding of the qualities and character of the respective executive officers through deliberations at the board of directors and in the preceding explanations.

Under this framework, efforts were made in the past to appoint executive officers from internal personnel and to develop human resources to that end, but in executive personnel matters for 2022, a person from a private financial institution who gain experience as a department manager and executive officer at the Company after joining the Company was promoted to managing executive officer. In the future as well, in addition to aggressive efforts

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to foster and promote internal personnel, including persons hired mid-career, the policy will be to endeavor to appoint people from the outside who are capable of expanding our security finance services and otherwise enhancing corporate value.

Under the next Medium-Term Management Plan currently be considered by the board of directors, the enhancement of organizational transformation power through the development of human resources, the securing of diversity and the like is positioned as one important topic to be addressed, as a strategic issue to facilitated the advancement of the Company's continued growth and improved corporate value. The diversification of management personnel is also considered to be greatly significant in the advancement of this organizational transformation.

1. Succession plan for president and representative executive officer
   A succession plan has been established for the Company's officers with regard to these

qualities required of officers. In particular, the president and representative executive officer who takes charge of management as the leader of the executive officers, must be able to oversee the execution of business and improve corporate value, and as the representative of a corporation that plays a public role, is required to have high ethical standards and other qualities. Moreover, the nominating committee and board of directors have established opportunities, and have ongoing discussions, regarding efforts to collect information on candidates and others, and to conduct interviews or discussions as needed.

Based on the efforts of foregoing sections (1) through (3), from the perspective of committing to continued improvement in corporate value, the further strengthening of corporate governance and the strengthening of the Company's stability, at the time of the start of the 7th Medium-Term Management Plan from FY 2023, our thinking at the current stage is as follows regarding the consideration of a future successor for Shigeki Kushida, the current Representative Executive Officer & President.

First, as our basic point of view are the following two points, founded on our thinking regarding the Company's business portfolio:

• With a strong awareness of the Company's public role as infrastructure for the securities market, position the licensed margin trading business as the pillar of the business portfolio; and,
• Based on the fact that the margin trading business is highly impacted by market fluctuations , etc., continuously strive to improve security finance services and trust services and otherwise diversify sources of income, and make efforts to achieve management goals with the awareness that capital efficiency can be better than in the past.

Moreover, in the future development of the Company's business, of the foregoing two points, our public role will continued to be important, but at the same time, we have heightened

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the importance of knowledge and experience related to securities and finance business which in recent years has included technological innovation and the like.

As such, due to the characteristics of the Company's business and under the Company's future vision of what it wants to become, the nominating committee will consider as the future successor Shigeki Kushida, the current Representative Executive Officer & President, someone who satisfies the qualities of foregoing section (3) based on a long list centering on people from within the Company, include those have been hired mid-career, and the policy at this time is not to include persons from the public sector. Furthermore, since the company will continue to play an important public role, with the overall composition of the executive officer team, as addressed above in foregoing section (2), we will nominate people who have the required qualities, on an individual basis, from a long list of candidates who come from inside the Company, who come from the public sector, and who come from the securities and finance sectors. In addition, premised on this sense of direction, through the process of executing the medium-term management plans in the following and subsequent terms, the policy in the future will be to seek a sustainable and smooth succession while taking the time required develop the executive officer team inclusive of the representative executive officer and president. Additionally, the policy will also call for continued consideration to be given to ensuring transparency in the nominating process.

Based on the foregoing, the Company's board of directors believes there is no need to appoint a person to investigate the status of the operations and property of the stock company as set forth in Article 316, Paragraph 2 of the Companies Act (hereinafter, "Investigator") to again investigate circumstances leading up to the appointment of officers in the past.

2. Achievements and results

In recent years, the Company, pursuant to various managerial measures, has steadily increased its ROE through the accumulation of efforts under the current Medium-Term Management Plan. This fiscal year (2022), the management goal is to achieve an ROE of 4%, the interim goal under the medium-term management policy, and at present the estimated ROE based on the provisional calculation of the current fiscal year's earnings is 4.17%, which is steadily progressing towards the achievement of the interim goal, and we believe that we have been able to establish a foothold for achieving the 2025 fiscal year goal of 5%. Please see the " Company's efforts" Section at the end hereof for the details of the measures undertaken by the Company.

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