Basic Views on Corporate Governance The Company positions its corporate governance as a management control function aimed at maximizing corporate value for all stakeholders, with a primary focus on our shareholders. Based on a structure centered around the Board of Directors and the Audit & Supervisory Board, we have introduced an executive officer system. Through this structure, we strive to ensure management soundness by clarifying management responsibilities, accelerating business execution, enhancing the transparency of management decision-making, and strengthening compliance. Please see below for details. Functions and Roles of the Board of Directors and Audit & Supervisory Board (129 KB) Compliance and Risk Management (68 KB) Independence Criteria for Outside Officers (94 KB) Corporate Governance Structure The Nikko Group has adopted the structure of a Company with an Audit & Supervisory Board, ensuring management soundness by separating the supervisory and executive functions. To ensure the objectivity and neutrality of the management oversight function, our structure is primarily based on a Board of Directors that includes three independent outside directors and an Audit & Supervisory Board that includes three outside Audit & Supervisory Board members. Furthermore, to enhance management transparency and strengthen compliance, we continue to advance initiatives to continuously strengthen our governance. These initiatives include conducting annual evaluations of the Board of Directors' effectiveness since FY2017 and establishing the Sustainability Committee in 2023. Governance Structure Diagram Roles and Composition of Each Supervisory Body Organization Board of Directors Audit & Supervisory Board Nomination and Remuneration Committee Composition 5 inside members + 3 outside members Representative Director and President is the chair 1 inside member + 3 outside members Internal, full-time Audit & Supervisory Board Member is the chair 1 inside member + 2 outside members Representative Director and President is the head Purpose and Authority Resolution of matters including determination of the basic management policies Supervision of the execution of duties by Executive Officers, etc. Supervision of the duties of Directors and Executive Officers Preparation of audit reports Determination of the agenda details regarding the appointment and dismissal of an accounting auditor Deliberation of agenda details regarding appointment and dismissal of Directors to be submitted to Ordinary General Shareholders’ Meeting Formulation of successor nurturing plan Deliberation of policies regarding remuneration, etc. of Directors and Executive Officers Deliberation of policies regarding performance evaluation of Directors and Executive Officers Deliberation of policies regarding appointment and dismissal of Executive Officers to be submitted to the Board of Directors Ratio of Independent Outside Officers 33% 75% 67% Number of Meetings in FY 2023 13 15 3 Office Corporate Planning Department Audit & Supervisory Board Office Corporate Planning Department Inside Directors Independent Outside Directors History of Strengthening Governance 2000 Carried out reform of the Board of Directors, introduced the executive officer system 2004 Increased the number of outside Audit & Supervisory Board members from two to three 2006 Established the Internal Audit Office and developed internal control system 2006 Established the Compliance and Risk Management Committee 2007 Shortened the term of directors from two years to one year 2015 Appointed an outside director 2016 Increased the number of outside directors to two 2017 Carried out the effectiveness evaluation of the Board of Directors 2018 Introduced the performance-linked bonus and stock compensation (shares with restriction on transfer) system 2021 Increased the number of outside directors to four including a female director (three outside directors including female director in 2023) 2021 Established the Nomination and Remuneration Committee (optional) 2023 Established the Sustainability Committee
