Make It Real, Together.

In delivering our corporate vision - client satisfaction is the true value of our company, and the growth of each of our employees creates the value that shapes our future - transcosmos (the Company) views continuous enhancement of our corporate governance as one of our most important managerial priorities. With that in mind, we constantly aim to maximize our corporate value by building positive relationships with all of our stakeholders including shareholders, clients, business partners, local communities and our employees, providing our clients with services that meet and exceed their expectations, clarifying managerial responsibilities and accountabilities, creating a highly transparent management system, and enhancing our oversight and supervision functions.

1. Overview of the Corporate Governance System and Rationales for Adopting the System

The Company has adopted a corporate governance system of a Company with an Audit and Supervisory Committee in order to make appropriate business decisions and operate our business in a time-efficient manner, and to establish a management system that allows the Company to perform appropriate audit and oversight functions. Being a company with an Audit and Supervisory Committee, the Company continues to ensure the effectiveness of our corporate governance by taking into consideration its operational needs.
The Company also has adopted a co-president management structure in order to ensure that timely and effective decision-making and appropriate checks and balances are carried out. In addition, the Company has Management Meeting, a meeting body consisting of Representative Director & Chairman and Representative Directors & Co-presidents, where members discuss material business matters related to management and operations as well as execution policies in light of the Company’s fundamental management policies decided in the Board of Directors’ (Board) meeting.
In addition, with the Audit and Supervisory Committee in place, which consists of outside directors, the Company has been working on to separate its oversight and business execution functions by delegating the Board’s execution authority to directors. Therefore, the Company has a structure in place that enables the Company to further strengthen the Board’s oversight function and to make time-effective decision making.

2. Details of the Company Organization

Directors/Board of Directors

Our board of directors (Board) consists of a total of 16 members, seven of which are outside directors. The Board is responsible for making decisions on material business matters and overseeing the corporate officers’ performance of duties and responsibilities. In addition, in order to enhance the check-and-balance in management function of the Board, and to achieve transparency in the decision-making processes, the Board has appointed six outside directors who have a wealth of knowledge and experience independent directors.
Given that the Company has transformed to a company with an Audit and Supervisory Committee, the Board is now able to delegate its decision-making authority on material business matters to the Management Meeting, which will lead to time-effective decision making and enhancement of oversight functions by the Board.

Audit and Supervisory Committee

The Company’s Audit and Supervisory Committee is composed of three outside directors in order to ensure the objectivity and neutrality of management oversight functions. In addition, all of the outside directors have been appointed as independent directors who have no particular personal or economic relationship with the Company, and all of them are outside directors having considerable knowledge of finance and accounting. The Audit and Supervisory Committee Members will exercise the authority stipulated by laws and regulations to audit the execution of duties by the Board according to the audit policies and audit plans determined by the Audit and Supervisory Committee, including attendance in important meeting groups.

Nomination Committee/Remuneration Committee

The Company’s Nomination Committee and Remuneration Committee respectively consist of five or more directors, the majority of whom are independent outside directors, and the Chairperson of each Committee is appointed from among the independent outside directors.
The Company ensures to maintain its transparency and objectivity with respect to the decision-making process by the Board regarding appointment and removal of directors and directors’ remuneration by putting in place a system under which the Nomination Committee assumes the responsibility of reviewing proposals on appointment and removal of directors and responding to related questions from the Board, and the Remuneration Committee is to review proposals on remuneration levels for directors (excluding those of the directors who are a member of the Audit and Supervisory Committee) and to respond to related questions from the Board.
Our Group carries out a Management Development Project, which aims at developing global talent taking a long-term view. Under the project, the Company develops future business leader candidates through diverse initiatives such as 1) Global Service Talent Development Program, a system for dispatching people overseas based on the recognition that international work experience gives an opportunity for growth; 2) Company-wide Management-level Leader Development Program, which aims at developing a large pool of future management talent as a company, etc.
As for chief executive officer succession planning, the Nomination Committee continuously discusses succession plans including the selection of candidates for a president and other leadership roles based on the ideal vision for our next-generation business leaders, taking into consideration various factors including their financial and technological knowledge and international experience.

Management Meeting

The Company’s Management Meeting consisting of the Representative Directors is the decision-making body of the Company whose role is to discuss the matters which are material to its business management and operations in line with the underlying business policies resolved by the Board or in accordance with the rules of the Management Meeting.

Corporate Officers

Our corporate officers are appointed by the Board’s resolutions. Under the direction of the Representative Directors and in compliance with applicable laws and regulations, our articles of incorporation, company rules and the Board’s resolutions, the corporate officers discharge their duties in line with the executive functions accorded by the Board or the executive directors.

Operation Implementation Meeting

The Operation Implementation Meeting consisting of the Representative Directors, executive directors and corporate officers, is responsible for promoting and overseeing our Group’s business activities, coordinating across the multiple departments, ensuring the effective and smooth operations at our business offices and operations centers, and promoting proper execution of the Company’s businesses.

We have resolved at the Company’s board of directors meeting to develop and maintain a system for ensuring that the Company’s business is always carried out in compliance with the applicable laws and regulations and the Articles of Incorporation (internal control system). In accordance with the resolution, the Company properly maintains and operates the internal control system. The fundamental policies for the internal control system (Fundamental Policy for Internal Control System) are described below:

1. System to ensure that execution of duties by Directors and employees of the Company and its subsidiaries (collectively, the “Group”) complies with laws and regulations, and the Articles of Incorporation

In order to ensure that the execution of duties by the Directors and employees of the Group complies with laws and regulations, and the Articles of Incorporation, and fulfills corporate social responsibility, the Group executes duties based on the transcosmos Group Fundamental Governance Policy and the transcosmos Group Code of Conduct, among others.
The Directors of the Group are supervised to ensure they comply with laws and regulations, and the Articles of Incorporation, and act in accordance with the corporate philosophy. Such supervision is conducted thoroughly through the Group Governance Committee and other bodies established under the Board of Directors of each company and the Board of Directors of the Company.
The Company will further enhance the compliance awareness of the Group’s officers and employees through cross-sectional compliance initiatives, including training sessions on compliance to ensure the proper execution of duties.
The Company will dispatch its officers and employees as Directors or Audit and Supervisory Committee Members to its subsidiaries, and will supervise the proper execution of operations at the subsidiaries through attendance at the subsidiaries’ Board of Directors’ Meetings and other appropriate measures and opportunities.
The Group shall take a resolute stance as an entire organization against organizations and other entities that threaten the order and safety of civil society, based on the Group Code of Conduct and other guidelines, and shall maintain no business or any other relationships with such entities.
The Company has established internal reporting rules within the Group, and has set up and operates an internal reporting system within the Group. This system aims to enhance the effectiveness of self-regulation and strengthen compliance management by preventing or promptly detecting and correcting any organizational or individual violations of laws and internal regulations related to the operations of the Group.

2. System for the storage and management of information in relation to the execution of duties by the Directors

Directors conduct important decision-making and reports in accordance with the Board Rules.
Documents and other information related to the execution of Directors’ duties shall be appropriately stored and managed in accordance with the Approval Request Rules, Document Management Rules, Contract Handling Rules, Information Management Rules, Information Security Control Rules, and the Fundamental Cybersecurity Policy, among others.

3. Rules for managing the Group’s risk of loss and other systems

The Group Governance Committee oversees the risk management of the Group, under the transcosmos Group Fundamental Governance Policy, etc.
Each department of the Group will conduct risk management in relation to its respective sector and build a system to report matters promptly to the Group Governance Committee in case a risk of loss is discovered. In addition, to facilitate the collection of risk information, the Company will familiarize them to promptly report any risk of loss they discover through the organization.
The Internal Audit Office of the Company, under the direction and orders of the Representative Director and the Audit and Supervisory Committee, will prepare an audit plan based on careful consideration of the audit items and methods for the Company Group as stipulated under the Internal Audit Rules. The office will conduct audits in accordance with the plan and report the audit results to the Representative Director and the Audit and Supervisory Committee.
If any breach of laws, regulations, or the Articles of Incorporation is found through an audit by the Internal Audit Office of the Company, or if any business act which may lead to a risk of loss due to other causes is found, the matter shall be reported immediately to the Representative Director and the Audit and Supervisory Committee.
The Group will establish an internal reporting desk accessible to all officers and employees of the Group in order to set up and operate an internal reporting system within the Group, thereby creating a framework that allows for internal reporting of fraudulent activities. The Group will guarantee internal reports are processed properly by ensuring a direct channel for the Audit and Supervisory Committee Members of the Company to receive them, thereby strengthening compliance management.
The Group will enhance information management by establishing the Group Information Security Policy and the Group Fundamental Information Security Policy.

4. System to ensure the efficient execution of duties by the Directors of the Group

The Group formulates the Medium-term Business Plan and annual plans to achieve swift and highly effective corporate management, aiming to instill the Group’s management vision. In addition, to achieve these goals, specific plans are established for each business area handled by the Directors and subsidiaries, and regular reviews and feedback on progress are provided to ensure an efficient framework for executing operations.
As needed, management meetings and other bodies composed of senior executives are established to decide on important management matters delegated to them by the Board of Directors. Furthermore, by appointing Corporate Officers, etc., we aim to execute operations dynamically and enhance the efficiency of the Directors’ duties.

5. System to ensure the appropriateness of the Group’s business

The Group ensures the appropriateness of its operations by adhering to the Group’s common policies such as transcosmos Group Fundamental Governance Policy, transcosmos Group Code of Conduct, and the approval standards of the transcosmos Group. In addition to establishing the aforementioned framework, the Group also develops a system for submitting approval requests to the Company and for reporting on matters related to the execution of duties by the Directors and employees of subsidiaries.

6. Matters related to employees and Directors appointed for the support of the Audit and Supervisory Committee, and matters related to ensuring the independence of said employees and Directors from other Directors (excluding Directors who are Audit and Supervisory Committee Members), and the effectiveness of instructions to the said Directors and employees

The Internal Audit Office assists the work of the Audit and Supervisory Committee in line with the instructions of and under the supervision of the Audit and Supervisory Committee. Transfers, evaluation, and disciplinary measures of the major employees of the Internal Audit Office shall be carried out with the prior consent of the Audit and Supervisory Committee.
The Company does not have Directors who are to assist the work of the Audit and Supervisory Committee.

7. System for reporting to the Audit and Supervisory Committee by Directors and employees, and other systems for reporting to the Audit and Supervisory Committee

Directors and employees shall report to the Audit and Supervisory Committee regularly on the following items, and Directors who are Audit and Supervisory Committee Members will attend the Board of Directors’ Meetings and other important meetings for briefing.

• Matters to be resolved and matters to be reported at the Board of Directors’ Meetings
• Monthly, quarterly, and annual business results, earnings forecasts, and financial conditions
• Details of significant disclosure materials
• Significant organizational and personnel changes
• Matters that may cause material loss to the Company
• The Company’s significant accounting principles, accounting standards, and any changes thereto
• Activities of the Internal Audit Office and the Compliance Promotion Department
• Other significant matters for approval, or for resolution

There shall be established a system for promptly reporting if any other event determined by the Audit and Supervisory Committee to require reporting occurs.

8. System for the officers and employees of the Group to report to Audit and Supervisory Committee

The officers and employees of the Group will promptly make an appropriate report when requested by the Audit and Supervisory Committee to report on matters related to the execution of duties. However, in the case of facts that may cause material loss to the Group, such as material breach of laws and regulations, etc., these will be immediately reported to the Audit and Supervisory Committee as soon as they are found, and the Company will establish the necessary systems to facilitate this.
The section in charge of the internal reporting system within the Group of the Company shall report to the Audit and Supervisory Committee of the Company, as appropriate, on the status of internal reporting by the officers and employees of the Group.

9. System to ensure that those who made reporting to the Audit and Supervisory Committee shall not be given disadvantageous treatment

The Company prohibits giving disadvantageous treatment to those who have made the reporting in the preceding two paragraphs to the Audit and Supervisory Committee due to the said reporting.

10. Matters related to the policy for processing of expenses and liabilities arising from the execution of duties by Audit and Supervisory Committee Members

If Audit and Supervisory Committee Members request the Company for advance payment, etc. of expenses in accordance to Article 399-2, paragraph (4) of the Companies Act concerning the execution of their duties, the Company shall promptly process the said expenses or liabilities, except for the cases where the expenses and liabilities by the said request are deemed not necessary for the execution of duties by Audit and Supervisory Committee Member.

11. Other system to ensure that audits by Audit and Supervisory Committee will be effectively conducted

The Directors and employees will work to deepen their understanding of the audits by Audit and Supervisory Committee and to improve the environment for the audits by Audit and Supervisory Committee.
The Representative Directors will exchange opinions regularly with the Audit and Supervisory Committee and establish a system to help Audit and Supervisory Committee communicate efficiently with the Internal Audit Office and perform effective auditing services.

12. System to conduct timely and appropriate disclosures

The Company will keep the officers and employees well informed of the measures to conduct timely and appropriate disclosures, among other matters, in accordance with the Timely Disclosure Rules, and establish a reporting line of disclosure information within the Group. The propriety of the details will be secured, and timely and appropriate disclosures will be achieved at the Management Meetings.

To achieve sustainable growth and enhance medium-to long-term enterprise value of the Group, we have established the Group Governance Committee, a body which oversees transcosmos Group governance, under the Board of Directors. The Group Governance Committee is composed of all internal directors and chaired by Representative Directors & Co-presidents.
Under the Group Governance Committee, we also have the following expert committees that are responsible for respective risk areas: Security Committee, Compliance Committee, Risk Management Committee, and Incident Committee. Each expert committee oversees risks in their respective areas in a systematic and functional approach, and reports to the Group Governance Committee as necessary.
We constantly assess and enhance the Group Governance System to adapt to the changing global business environment as well as promote and uphold higher levels of business ethics.

Meetings & Structure		Roles & Responsibilities
Group Governance Committee		The Group Governance Committee oversees the transcosmos Group governance. The committee discusses and executes governance decisions and confirms governance conditions.
	Security Committee	The Security Committee is responsible for security documentation, planning, execution, and enhancement of plans for promoting security measures, security education and training, and security audits and self-inspection. The committee works on strengthening and maintaining Group-level security systems by managing security incidents and other matters that are considered necessary.
	Compliance Committee	The Compliance Committee develops policies on material matters related to compliance and business ethics, develops and maintains management systems and structures, raises compliance awareness among officers and employees, manages compliance risks, conducts education and training sessions as well as monitors and supervises compliance activities of Group companies. Through these activities, the committee establishes sound business ethics and ensures legal compliance by taking initiatives for maintaining and enhancing our Group-wide compliance.
	Risk Management Committee	The Risk Management Committee is responsible for crisis management within the Group including disasters, pandemic, wars, and terrorism. The committee develops Group-wide risk management systems, decides and approves material policies and manuals, manages risks in its responsible areas, judges risk levels, and makes decisions to set up a disaster management headquarters based on the risk levels. The committee works toward enhancing Group-wide risk management capabilities and managing crisis swiftly and appropriately by monitoring, advising, directing, and guiding Group companies' crisis management activities.
	Incident Committee	The Incident Committee oversees material incident management procedures in a systematic and functional approach. The committee reports to the Group Governance Committee, supports and guides incident management headquarters, monitors the effectiveness of preventive measures, and manages matters raised through internal reporting systems. The committee works toward enhancing incident management procedures and strengthening the Group-wide risk management collaborating with other expert committees when cross-cutting review is necessary.