Relia : Corporate Governance Report

CORPORATE GOVERNANCE	Relia, Inc.
	Last updated: Dec 22, 2021
	Relia, Inc.

Takashi Amino, President & CEO

Contact: Kenichiro Iwamoto, General Manager, Corporate Communications Div.

Code number: 4708

https://www.relia-group.com/english/

The corporate governance of Relia, Inc. is described below.

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

1. Basic Views

The Relia Group's position on Corporate Governance is as follows.

1. We have the utmost respect for the rights of shareholders, and endeavor to ensure that shareholders are treated fairly and their rights are not infringed.
2. We endeavor to create corporate value and employment while maintaining sound corporate management by building fruitful relationships with stakeholders.
3. We ensure transparency in regard to all important matters as well as timely and appropriate information disclosure.
4. In addition to rigorously enforcing regulatory compliance, the Board of Directors and the Audit & Supervisory Board monitor and supervise business operations, thereby working to maximize corporate value.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]
Updated
[Relevant Codes] Statements below are based on revisions made to the Codes in June 2021.
[Supplementary Principle 4-2-1] Bonuses for the management team (executive officers) are linked to performance, but in light of the fact that

executive officers are employees, the Company is not currently considering stock-based remuneration, etc. Incentives are maintained by adopting a human resources system that evaluates the contribution made to the company's mid- to long-term results.

[Supplementary Principle 4-8-1] Information is shared adequately with Outside Directors and Outside Audit & Supervisory Board Members, and through meetings with Outside Directors and Outside Audit & Supervisory Board Members, the Company works to exchange information and share awareness based on an objective standpoint.

[Supplementary Principle 4-8-2] As of the present time, a "lead independent director" has not been designated. However, communication and coordination are conducted through cooperation among Outside Directors and Audit & Supervisory Board Members in accordance with the intent of the Code.

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

[Principle 1-4]

(Policy on cross-shareholdings)

The Company has a policy of not investing in listed shares as cross-shareholdings, in principle. However, there are cases in which investment is made in listed shares for the purpose of securing or maintaining commercial rights through strengthening relationships, etc.

(Verification related to cross-shareholdings)

In the case listed shares are held, through verifying economic rationality based on related transaction income compared to the amount of investment made and through verifying qualitative aspects based on business development and progress in light of the purpose of the investment, the progress of investments is reported to the Board of Directors each quarter and the significance and policy of the shareholding are reviewed. The Company has a policy of selling when the review finds that the significance of the shareholding has diminished. As of the submission date of this report, the Company does not hold any listed shares as cross-shareholdings.

(Basis of exercise of voting rights)

The Company has a policy of not investing in listed shares as cross-shareholdings, in principle, but regarding the exercise of voting rights in the case of such holdings, the Company conducts due diligence on whether it would help increase the value of the company in question, whether the Company's purpose for holding the shares would be achieved, and whether the Company's corporate value would be damaged, and then it makes a judgement on whether or not to approve the proposal on a case-by-case basis.

[Principle 1-7]

(Related Party Transactions)

When transactions exceeding a certain monetary amount are conducted with related parties, the Company has instituted a system by which consideration of the transaction's validity and any problems with transaction terms compared to other transactions is put on the agenda of the internal Case Review Committee.

[Principle 2-4-1]

(Views on ensuring diversity)

In the Sustainability Policy, which was released on May 14, 2021, the Company states, "Growth through expansion of educational opportunities and putting them into practice" and "Create workplaces where diverse personnel can work with a sense of fulfillment" as important issues for business activities, and states "Create EX (employee experience value)" as an important theme in the Mid-term Management Plan 2023, with the aim of improving the quality of the work environment to enable employees with diverse sense of values to exert their abilities to their fullest, and creating meaning and value to working at the Company.

(Autonomous and measurable objectives for ensuring diversity, and the current state of progress towards those objectives)

(1) Female employees

A goal was set in the Company's Mid-term Management Plan 2023 to have female employees make up 20% of management positions by the year ending March 31, 2024, with the year ended March 31, 2021, showing female employees making up 12.0% of management positions. Furthermore, through such initiatives, the Company aims to obtain the highest "Eruboshi (L Star)" certification by the year ending March 31, 2024.

(2) Foreign employees

As the client companies of the Company alone and customers to which the Company alone provides services are all within Japan, the number of foreign employees is extremely small. Consequently, there are no targets with regard to such matters as the proportion of foreign employees in management positions.

(3) Mid-career hires

With the aim of revitalizing its organization by hiring people with diverse experience, the Company hires a certain number of mid-career people every year. In addition, contract workers and part-time workers, if they have made a request and depending on the status of the capabilities they have demonstrated, are appointed to full-time positions. Each and every appointment to management positions is made in accordance with the status of the capabilities demonstrated by the person and regardless of how the person was hired. Therefore, no targets are set for the proportion of such workers in management positions.

(Policy for development of human resources to ensure diversity, policy to prepare the environment within the Company, and status of the efforts)

As specific non-financial targets, making contributions to advancing services through education provided at Relia Operations School, achieving a 20% proportion of female employees in management positions, obtaining Platinum Eruboshi certification, and continually conducting ES survey of all employees and carrying out improvement activities have been set.

Moreover, it has been decided to carry out fundamental revisions to the personnel system in April 2022 with the aim of enabling each and every employee to become a vibrant, brilliantly working human resource who will truly feel growth and acknowledge diverse ways of working.

Details of the Company's initiatives and the status of progress regarding the initiatives are made public at the Company's website (https://www.relia- group.com/english/csr/#detail).

[Principle 2-6]

For contract-type corporate pensions, the Company has established a basic asset management policy, and confirms once yearly that management is being conducted in accordance with the policy. In addition, when there are discrepancies with the policy, the CFO and persons responsible in the Accounting and Finance Division and Human Resources Division discuss appropriate revisions to the management policy and consult with the asset management company. Asset management information is regularly disclosed to pension fund beneficiaries.

[Principle 3-1]

(Enhancement of information disclosure)

1. Company objectives (e.g., business principles), business strategies and business plans Business principles are stated on the Company's website. https://www.relia-group.com/english/about/philosophy/
   Management plan is as stated in the Notification Related to Mid-term Management plan 2023 released May 14, 2021.
2. Basic views and guidelines on corporate governance

This is stated in the "1. Fundamental Views" section of this Report.

1. Board policies and procedures in determining the remuneration of senior management and directors This is stated in the "Incentives" and "Director Remuneration" sections of this Report.
2. Board policies and procedures in the appointment/dismissal of senior management and the nomination of directors and Audit & Supervisory Board member candidates
   Regarding appointment/dismissal of senior management (executive officers), a proposal is created based on an evaluation by Directors and the approval of the Board of Directors is received. Regarding Director and Audit & Supervisory Board Member candidates, full-time Directors and Audit & Supervisory Board Members first hold discussions and draft a proposal, and then the proposal is deliberated on and resolved by the Board of Directors.
3. Explanations with respect to individual appointments/dismissals and nominations based on the above

Regarding senior management (executive officers), personnel transfers when there are appointments are disclosed at appropriate times, and regarding individual appointments/dismissals, approval is made by the Board of Directors from the standpoint of contribution to business results as well as management and responsibility for the future of company. Regarding nominations of Directors and Audit & Supervisory Board Member candidates, a comprehensive judgement is made on aptitude and ability, etc. and approval is carried out by the Board of Directors. For nomination of Audit & Supervisory Board Member candidates, the Audit & Supervisory Board is appropriately involved.

With regard to (4) and (5), the basic policies related to the appointment and dismissal of Directors, regulations and procedures, and other matters will be discussed by the Nomination and Remuneration Council going forward.

[Supplementary Principle 3-1-3]

Through its business activities, the Company aims to realize a "Sustainable & Reliable Society," a society where all people share a sense of reliance with one another, and where such reliance is sustained in the future, and has established a Sustainability Policy, with related details made public at the Company's website (https://www.relia-group.com/english/csr/policy/).

With regard to investments in human capital, as important issues for the Company's business activities, "Growth through expansion of educational opportunities and putting them into practice" and "Create workplaces where diverse personnel can work with a sense of fulfillment" have been set, and "Create EX (employee experience value)" has also been set forth as an important theme in the Mid-term Management Plan 2023. Specific initiatives established by the Company and related data are made public at the Company's website (https://www.relia-group.com/english/csr/#detail).

Moreover, discussions are ongoing with regard to disclosure based on TCFD or equivalent frameworks, with plans aiming for disclosure at the end of June 2022.

[Supplementary Principle 4-1-1]

(Scope of matters delegated to management)

Members of the management team (executive officers) manage the divisions they are responsible for as the division general manager within the scope of authority assigned to them (including approval amounts and business scope).

[Principle 4-9]

(Independence Standards and Qualifications for Independent Directors)

The Company has established the following standards for judging independence.

https://www.relia-group.com/english/about/governance/

[Supplementary Principle 4-10-1]

(Views related to the independence, and authority and responsibilities of the Nomination and Remuneration Council)

The Nomination and Remuneration Council has been established by the Company as an advisory body of the Board of Directors with the aim of strengthening objectivity and accountability regarding the appointment, dismissal, remuneration, and other matters related to Directors.

It is stipulated that, in principle, the chair of the Nomination and Remuneration Council is selected from among Independent Outside Directors. The current Council is made up of four members, of whom two are Independent Outside Directors and one is an Outside Director. As Independent Outside Directors account for half of the members of the Council, and Outside Directors as a whole make up the majority, and the chair is also an Independent Outside Director, it is believed that the independence of the Council is assured.

[Supplementary Principle 4-11-1]

(View on the appropriate balance between knowledge, experience and skills of the Board as whole, and also on diversity and appropriate Board size) The skills and knowledge that should be prepared in order for the Company's Board of Directors to appropriately exert the decision-making function and the function of management supervision have been specified, with the aim of realizing the vision of "Relia will be reborn as the 'No. 1 Reliable Company' for each and every stakeholder" as stated in the Company's Mid-term Management Plan 2023.

The selection of each Director is made in order to secure, by the Board of Directors as a whole, a balance of these skills and knowledge, gender consciousness and internationally mindedness, work experience, and age, and it is also made based on a policy of making the selection with the smallest possible number of people, in order to carry out management with agility and flexibility. Moreover, it is stipulated by statute that the number of Directors shall be no more than 10 members.

Details regarding the skill matrix are made public at the Company's website. https://www.relia-group.com/english/about/governance/

[Supplementary Principle 4-11-2]

(Concurrent duties of Directors and Audit & Supervisory Board Members)

The concurrent duties of the Company's Directors, Audit & Supervisory Board Members and other officers in the listed companies are described below. The Company judges that the situation is such that they are able to appropriately fulfill their roles and responsibilities at the Company.

Audit & Supervisory Board Member Shinichiro Kamada is director and chairman at CENTRAL SECURITY PATROLS Co., Ltd. Outside director at Morio Denki Co., Ltd.

[Supplementary Principle 4-11-3]

(Analysis and evaluation of the effectiveness of the board as a whole and summary of the results)

In order to carry out an analysis and evaluation of the effectiveness of the Board of Directors, an evaluation of each Director in the form of a survey was also conducted for the current fiscal year in April 2021. A summary of the results of the survey is provided below.

Summary of results:

It was recognized that the effectiveness of the Board of Directors has increased, with lively comments, etc., being offered by the members, including Outside Directors. However, it was confirmed that there is a need for the periodic reports on initiatives for ESG and SDGs, on the status of the control of the Group as a whole, and on the status of dialogs with shareholders to be more thorough and substantial; and measures need to be promoted that will contribute to free discussions and meaningful exchanges of opinions, etc., that include participation by Outside Directors in individual cases that are at the deliberation stage; and improvements need to be made for greater thoroughness in distributing materials in advance of meetings.

It will be verified that evaluations of the Board of Directors will continue to be conducted going forward, enabling the Board of Directors to fulfill a role that will lead to the sustainable growth of the Company and increasing its corporate value.

[Supplementary Principle 4-14-2]

(Training policy for Directors and Audit & Supervisory Board Members)

When appointed at the Company, various materials and documents are provided to ensure acquisition of necessary knowledge regarding the Company's business, strategies, finances, organization, and rules, etc.

In addition, at the time of appointment, outside seminar opportunities are provided for the acquisition of knowledge necessary for practicing management to raise corporate value.

After appointment, as necessary, continuing opportunities are also provided to update necessary knowledge for Directors and Audit & Supervisory Board Members.

[Principle 5-1]

(Policy on measures and organizational structures for promoting constructive dialogue with shareholders)

This policy expresses the Company's basic views to dialogue between the Company and shareholders and investors based on the "policy on constructive dialogue with shareholders" in the Corporate Governance Code and from the standpoint of fair disclosure.

1. Constructive dialogue with shareholders and investors contributes to the sustained growth of the Company and to raising its long-term corporate value, and requests for dialogue made by shareholders or investors are addressed by Directors and management within a reasonable scope based on the wishes and main concerns, etc. of shareholders and investors.
2. The President has overall responsibility for dialogue with shareholders and investors, and in the role of assistant to the President, the Corporate Communications Div. engages in dialogue with cooperation from internal divisions as necessary.
3. The Company works to actively and fairly disclose information so that shareholders and investors can judge the Company's long-term corporate value. To this end, along with individual meetings, the Company works to further enhance IR activities through various measures that include enhancing its earnings briefings and website.
4. Opinions and requests to the Company obtained through dialogue are appropriately presented to Directors in a timely manner and utilized in management decision-making.
5. From the standpoint of fair disclosure, the purpose of dialogue is to exchange constructive opinions based on publicly available information. The Company has established the Relia Group Compliance Standard, Insider Trading Prevention Rules, and other internal rules to prevent important internal information that has not been publicly disclosed (insider information) from being divulged externally. When engaging in dialogue, the Company complies with these internal rules and domestic and foreign laws and regulations.

2. Capital Structure

Percentage of Foreign ShareholdersBetween 20% and less than 30%

[Status of Major Shareholders]	Updated
			Name		Shares held (shares)	Percentage
	MITSUI & CO., LTD.					23,707,200	36.33
	CENTRAL SECURITY PATROLS Co., Ltd.		6,193,344	9.49
	GOLDMAN SACHS & CO. REG					5,591,782	8.57
	The Master Trust Bank of Japan, Ltd.(Trust Account)		3,857,000	5.91
	Custody Bank of Japan, Ltd. (Trust Account)		2,777,100	4.26
	Nippon Life Insurance Company					1,459,600	2.24
	SMBC Trust Bank Ltd. (Sumitomo Mitsui Banking Corporation, Pension Fund Trustee)	1,440,000	2.21
	The Nomura Trust and Banking Co., Ltd.(Trust Account)		1,030,200	1.58
	STATE STREET BANK AND TRUST CLIENT OMUNIBUS ACCOUNT OM02 505002	994,200	1.52
	STATE STREET LONDON CARE OF STATE STREET BANK AND TRUST,	873,500	1.34
	BOSTON SSBTC A/C UK LONDON BRANCH CLIENTS - UNITED KINGDOM
	Controlling Shareholder (except for Parent	N/A
	Company)
	Parent Company				N/A
	Supplementary Explanation
		Updated

Regarding the 1,440 thousand shares held by SMBC Trust Bank Ltd. (Sumitomo Mitsui Banking Corporation, Pension Fund Trustee), Sumitomo Mitsui Banking Corporation, as the settlor, retains the right to issue voting instructions.

In the change report submitted for public inspection on August 5, 2021, it was stated that as of July 30, 2021, Sumitomo Mitsui Trust Bank, Limited, Sumitomo Mitsui Trust Asset Management Company, Limited, and Nikko Asset Management Company, Limited held 723 thousand, 1,617 thousand and 2,333 thousand shares, respectively, but the Company was not able to confirm the actual number of shares held as of September 30, 2021, so they were not included in the above information on major shareholders.

In the change report submitted for public inspection on April 7, 2021, it was stated that as of April 1, 2021, Kabouter Management, LLC held 5,513 thousand shares, but the Company was not able to confirm the actual number of shares held as of September 30, 2021, so they were not included in the above information on major shareholders.

3. Corporate Attributes

Listing Stock Market and Market Section

Fiscal Year-End

Type of Business

Number of Employees (Consolidated) as of the End of the Previous Fiscal Year

(Consolidated) net sales for the Previous Fiscal Year

Number of Consolidated Subsidiaries as of the End of the Previous Fiscal Year

Tokyo Stock Exchange, First Section

March

Service industry

More than 1,000

From 100.0 billion yen to less than 1 trillion yen

less than 10 companies

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder

N/A

5. Other Special Circumstances which may have Material Impact on Corporate Governance

N/A

II. Business Management Organization and Other Corporate Governance Systems regarding Decision Making, Execution, and Oversight of Business

1. Organization Composition and Operation

Organization Form

[Directors]

Maximum Number of Directors Stipulated in Articles of Incorporation

Term of Office Stipulated in Articles of Incorporation

Chairperson of the Board

Number of Directors

Appointment of Outside Directors

Number of Outside Directors

Number of Independent Directors Designated from among Outside Directors

Company with Audit & Supervisory Board Members

10

1. year President
   Appointed

Relationship with the Company (1)

Name	Attribute	Relationship with the Company*
a b c d e	f	g h	i	j	k

Junichi Kishigami	From another company
Mikako Yusa	From another company
Isao Kohiyama	From another company	〇
Naonori Kimura	From another company

• 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; "▲" when a close relative of the director fell under the category in the past

1. Executive of a listed company or its subsidiaries
2. Non-executivedirector or executive of a parent company of a listed company
3. Executive of a fellow subsidiary of a listed company
4. A party whose major client or supplier is a listed company or an executive thereof
5. Major client or supplier of a listed company or an executive thereof
6. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from a listed company besides compensation as a corporate officer
7. Major shareholder of a listed company (or an executive of said major shareholder if the shareholder is a legal entity)
8. Executive of a client or supplier of a listed company (which does not correspond to any of d., e., or f.) (the executive himself/herself only)
9. Executive of a company, between which and the company outside officers are mutually appointed (the executive himself/herself only)
10. Executive of a company or organization that receives a donation from a listed company (the executive himself/herself only)
11. Others