Corporate Governance

Corporate Governance Policy

Chapter 1 Basic Approach to Corporate Governance

Digital Garage, Inc. (hereinafter referred to as “the Company”) shall work to enhance and strengthen its corporate governance to realize transparent, fair, rapid and decisive decision-making in order to live up to the trust of its shareholders and other stakeholders, as well as to achieve sustainable growth and increase corporate value over the medium to long term, in accordance with the following “Principle” and “Credo”.

≪Principle≫
Think for yourself and question authority.

≪Credo (Behavioral Philosophy)≫

• TENACITY　Have a strong will
• OPENNESS　Question your common sense
• TENACITY　Stay straight
• AGILITY　Be agile
• COURAGE　Be brave

Chapter 2    Corporate Governance System

1. Institutional Design

The Board of Directors makes important management decisions and supervises the directors in the execution of their duties, and the Audit and Supervisory Committee audits the directors’ performance of their duties. In addition, the Management Committee, consisting of directors and corporate officers appointed by the President Executive Officer, meets regularly to ensure that decisions are made quickly in the execution of operations.

2. Board of Directors

（1）Roles and Responsibilities of the Board of Directors

Based on its fiduciary responsibility to shareholders and in accordance with laws and regulations, the Articles of Incorporation, and the Rules of the Board of Directors, the Board of Directors shall fulfill the following roles and responsibilities: (1) make management strategies, plans, and other important management decisions; (2) create an environment that supports appropriate risk-taking by the directors and others; and (3) supervise the execution of duties by the directors in a highly effective manner.

（2）Composition of the Board of Directors

The number of directors (excluding directors who are members of the Audit and Supervisory Committee) shall not exceed ten and the number of directors who are members of the Audit and Supervisory Committee shall not exceed five. In order to effectively fulfill the roles and responsibilities of the Board of Directors, we will strive to ensure that the Board of Directors is composed of diverse human resources, recognizing that diverse perspectives, such as those of women and foreign nationals, will contribute to the promotion of business and supervision of management, in addition to having a well-balanced level of knowledge, experience, and skills as a whole. In addition, the Company shall strive to ensure that the number of outside directors is at least one-third of the entire Board of Directors.

（3）Election and dismissal of directors (excluding members of the Audit and Supervisory Committee and outside directors)

(i) Directors (excluding members of the Audit and Supervisory Committee and outside directors) must be of excellent character and insight and must have the knowledge and experience to carry out the Company’s management accurately, fairly and efficiently.
(ii) In light of the above, the President Executive Officer shall draft a candidate for Director and submit it to the Advisory Committee for consultation, and the Board of Directors shall decide on the candidate’s proposal based on the report of the Advisory Committee by a resolution of the Board of Directors.
(iii) If circumstances arise that require the dismissal of a Director, the Board of Directors shall decide on a dismissal proposal. The dismissal of a Director shall be made in accordance with the provisions of the Companies Act, etc.

（4）Remuneration of directors (excluding members of the Audit and Supervisory Committee and outside directors)

(i) The remuneration of directors (excluding members of the Audit and Supervisory Committee and outside directors) shall consist of basic remuneration and stock-based remuneration as a medium- to long-term incentive, and stock-based remuneration shall consist of stock options as stock-based compensation and restricted stock.
(ii) The amount and details of remuneration for each director shall be within the limits of the total amount and the number of shares issued, as resolved at the general meeting of shareholders, and shall be drafted by the President Executive Officer and submitted to the Advisory Committee for consultation, and the Board of Directors shall decide on the proposed remuneration based on the report of the Advisory Committee by resolution.

（5）Establishment of the Advisory Committee on Nomination and Renumeration of Directors

The Board of Directors shall establish an Advisory Committee on the nomination and renumeration of directors. The Advisory Committee shall consist of at least three members who are directors, a majority of whom shall be independent outside directors. The Advisory Committee shall report on the nomination and remuneration proposals drafted by the President Executive Officer.

（6）Evaluation of the Board of Directors

The Board of Directors shall annually analyze and evaluate the effectiveness of the Board as a whole and disclose a summary of its findings.

（7）Operation of the Board of Directors

The Company shall send Board of Directors’ meeting materials in advance and provide advance explanations, etc., depending on the content of the agenda item, so that constructive discussion and exchange of ideas can take place at Board of Directors’ meetings. In addition to Board of Directors’ materials, the Company shall provide sufficient information as necessary. In addition, the schedule for the Board of Directors meetings is determined in advance, and the number of items to be discussed and the frequency of meetings are set appropriately to ensure sufficient time for deliberation.

3. Outside Directors

（1）Election and dismissal of outside directors
(i) The outside directors must have excellent character and insight, and must be able to provide advice on general management based on their own knowledge and appropriately reflect the opinions of minority shareholders and other stakeholders to the Board of Directors from an independent perspective.
(ii) In light of the above, the President Executive Officer shall draft a proposal for an Outside Director and submit it to the Advisory Committee, and the Board of Directors shall decide on the candidate’s proposal based on the report of the Advisory Committee.
(iii) If circumstances arise that require the dismissal of a Director, the Board of Directors shall decide on a dismissal proposal. The dismissal of a Director shall be made in accordance with the provisions of the Companies Act, etc.

（2）Criteria for determining the independence of outside directors
The Company’s outside directors shall be elected from among persons who have no conflict of interest with the Company and who do not have a conflict of interest with general shareholders, referring to the requirements of the Companies Act and the criteria for determining independence established by the Tokyo Stock Exchange, etc., while noting that they are expected to play an objective and appropriate supervisory or auditing role based on their own knowledge and experience.

（3）Remuneration of Outside Directors (excluding members of the Audit and Supervisory Committee)
(i) The remuneration of Outside Directors (excluding members of the Audit and Supervisory Committee) shall consist solely of basic remuneration.
(ii) The amount of remuneration for each outside director (excluding members of the Audit and Supervisory Committee) shall be within the total amount resolved at the General Meeting of Shareholders and shall be drafted by the President Executive Officer and submitted to the Advisory Committee for consultation, and the amount of remuneration proposed by the Advisory Committee shall be determined by a resolution of the Board of Directors based on the report of the Advisory Committee.

4. Audit and Supervisory Committee

（1）Roles and Responsibilities of the Audit and Supervisory Committee
Based on its fiduciary responsibility to shareholders, the Audit and Supervisory Committee shall actively and positively exercise its authority under laws and regulations, and fulfill its roles and responsibilities, including auditing the execution of duties by directors and the selection and dismissal of the accounting auditor, from a neutral and objective standpoint.

（2）Composition of the Audit and Supervisory Committee
The majority of the Audit and Supervisory Committee members shall be outside directors in accordance with the provisions of the Companies Act, and in order to effectively fulfill the roles and responsibilities of the Audit and Supervisory Committee, the Audit and Supervisory Committee shall be composed of members with well-balanced knowledge, experience, and expertise in such fields as finance and accounting, legal affairs, and corporate management.

（3）Election and dismissal of directors who are members of the Audit and Supervisory Committee
(i) Directors who are members of the Audit and Supervisory Committee must be of excellent character and insight, and must have knowledge and experience in accurately, fairly and efficiently performing audits of the execution of duties by directors.
(ii) Based on the foregoing, the President Executive Officer shall draft and submit to the Advisory Committee the candidates for Director as members of the Audit and Supervisory Committee, and upon obtaining the consent of the Audit and Supervisory Committee, the Board of Directors shall decide on the candidates based on the report of the Advisory Committee.
(iii) If circumstances arise that require the dismissal of a Director who is a member of the Audit and Supervisory Committee, the Board of Directors shall decide on the dismissal proposal. The dismissal of a Director shall be made in accordance with the provisions of the Companies Act, etc.

（4）Remuneration of directors who are members of the Audit and Supervisory Committee
(i)The remuneration of Directors who are members of the Audit and Supervisory Committee shall consist solely of basic remuneration.
(ii) The amount of remuneration for each Director who is a member of the Audit and Supervisory Committee shall be determined by consultation of the Audit and Supervisory Committee Members within the total amount resolved at the General Meeting of Shareholders.

5. Director Support Structure and Training

Directors shall strive to acquire and sharpen the knowledge necessary to properly perform their expected roles and responsibilities. To this end, the Company shall provide training opportunities for Directors on an ongoing basis.

6. Accounting Auditors

The Company recognizes that the accounting auditor has an important responsibility to ensure the reliability of financial reporting and takes appropriate action to ensure that the accounting auditor conducts appropriate audits.

7. Internal Control System

The board of directors shall establish and maintain internal control systems and risk management systems in an appropriate manner to create an environment that supports appropriate risk-taking by directors and others and shall oversee whether or not these systems are being operated effectively.

8. Internal Reporting System

For the purpose of early detection and correction of any misconduct by officers and employees, the Company shall establish an internal reporting system, provide for the confidentiality and protection of information providers and prohibit the handling of prejudicial information in its internal rules, and ensure that all officers and employees are aware of the system. The Board of Directors shall oversee whether or not the Internal Reporting System is being operated effectively.

Chapter 3    Relationship with Stakeholders

1. Relationship with shareholders

(1) Securing shareholder rights
The Company shall treat all shareholders equally in proportion to their interests and take appropriate action to ensure that the rights of shareholders are substantially secured.

（2）General meeting of shareholders
The Company shall recognize that the General Meeting of Shareholders is the highest decision-making body of the Company and shall create an appropriate environment for the exercise of its rights and shall take the following measures
(i) The Company will strive to create an environment in which shareholders can exercise their voting rights in an appropriate manner and provide information, including setting an appropriate date for the General Meeting of Shareholders.
(ii) The Company shall endeavor to send out the notice of the General Meeting as soon as possible to allow the shareholders sufficient time to consider the proposals for the General Meeting, and shall disclose the details of the notice on the Company’s website and other media prior to sending it out.
(iii) The Company shall analyze the results of the approval or disapproval of the Company’s proposals and consider necessary responses, such as through dialogue with shareholders.

（3）Dialogue with shareholders
In order to promote constructive dialogue with our shareholders, we will strive to develop systems and initiatives in accordance with the following basic policy
(i) The officer in charge of information disclosure shall be the officer in charge of all dialogue with shareholders, and to the extent reasonable, the directors shall handle dialogue with shareholders. In addition, the officer in charge of information disclosure shall be in charge of the relevant departments within the Company and shall coordinate with other departments on a daily basis.
(ii) We will strive to understand the structure of our shareholders and enhance the means of dialogue (individual interviews in Japan and abroad, holding financial results briefings and individual investor briefings, etc.).
(iii) The opinions expressed in the dialogue with shareholders shall be fed back to the Board of Directors for the purpose of enhancing corporate value.
(iv) In dialogue with shareholders, efforts should be made to prevent the divulgence of undisclosed material facts in accordance with the internal rules “Rules for Preventing Insider Trading”.

（4）Enhancement of information disclosure
The Company discloses information in accordance with laws and regulations in an appropriate manner and proactively engages in the provision of information other than that required by laws and regulations. In addition, from the perspective of fairness in disclosing information to domestic and foreign investors, the Company will strive to disclose and provide information in English to a reasonable extent.

（5）Basic Capital Policy
Since trends in capital policy can have a significant impact on the interests of shareholders, the Company shall explain its basic capital policy at the general meeting of shareholders, financial results briefings, individual meetings, and other occasions for dialogue with shareholders.

（6）Policy on strategic stock holdings
The Company shall establish the following policies for holding listed shares as policy holdings.
(i) As a company that creates useful “contexts” for the world, we will hold shares in the Company for the purpose of collaborating with various companies based on long-term, stable strategic alliances.
(ii) The Board of Directors shall periodically review the purpose and medium- to long-term economic rationale for each policy-holding stock.
(iii) In exercising the voting rights of policy-holding shares, the Company shall exercise them in an appropriate manner after comprehensively considering whether or not they will contribute to the improvement of the corporate value of the issuing company and the Company over the medium to long term.

（7）Takeover defense measures
The Company has not introduced any takeover defense measures. In the event of a large-scale purchase of the Company’s shares, etc., the Company will strive to actively collect and disclose information in a timely and appropriate manner in order to secure the Company’s corporate value and the common interests of its shareholders, and will take appropriate measures to the extent permitted by the Financial Instruments and Exchange Law, the Companies Act, other relevant laws and regulations and the Company’s Articles of Incorporation.

（8）Transactions between related parties
The Company shall properly monitor transactions with related parties by approving and reporting on such transactions at the Board of Directors’ meeting to ensure that such transactions do not harm the Company or the common interests of shareholders.

2. Relationship with stakeholders other than shareholders

In order to achieve sustainable growth and create medium- to long-term corporate value, we will work in appropriate cooperation with various stakeholders, including employees, customers, business partners, creditors, and local communities, as well as our shareholders. In addition, we will strive to respond appropriately to issues surrounding sustainability, including social and environmental issues, and to ensure diversity, including the promotion of women’s activities within the company.

Chapter 4    Others

1. Revision and abolition

Any revision or abolition of the Basic Policy shall be subject to a resolution of the Board of Directors, except for minor changes, etc.

Supplementary provisions

1.Implementation of the Basic Policy

This basic policy will take effect on February 12, 2016.
This basic policy will be revised and come into effect on September 29, 2016.
This basic policy will be revised and come into effect on June 17, 2017.
This basic policy will be revised and come into effect on February 21, 2020.
This basic policy will be revised and come into effect on June 23, 2020.
This basic policy will be revised and come into effect on June 23, 2021.

• Corporate Governance Report, June 30, 2023[PDF]
• Corporate Governance Report, June 30, 2022[PDF]
• Corporate Governance Report, December 24, 2021[PDF]
• Corporate Governance Report, June 24, 2021[PDF]
• Corporate Governance Report, June 3, 2021[PDF]
• Corporate Governance Report, June 24, 2020[PDF]

Digital Garage Inc.
Kaoru Hayashi, Representative Director,
President Executive Officer and Group CEO

Compliance Statement

The corporate philosophy of Digital Garage is to create new business opportunities and contribute to the betterment of society through providing digital contexts that connect multiple elements from various domains via Internet business.

In order to achieve this and ensure our sustainable growth, each and every employee is called upon to understand changes in society and ensure that our actions resonate with our environment, in the spirit of the “first penguin.”* We recognize the irreplaceable roles that our employees play in our efforts and the importance of providing them with a rewarding working environment that they are proud to be a part of. In addition, individuals must also commit to regulatory compliance.

In June 2006, Digital Garage established a compliance program outlining standards for individual business conduct with integrity and efficiency based on our shared ethical values.

In order to exercise the aforementioned corporate philosophy, every staff member at Digital Garage is committed to adhering to the compliance program guidelines as detailed in the following seven articles in our code of conduct.

Code of Conduct

1. Hold high ethical standards and conduct business in compliance with laws
2. Respect fundamental individual rights and diversity and maintain a healthy work environment free from discrimination and harassment
3. Promote harmonious co-existence with society and conduct environmentally-responsible business activities
4. Foster transparency of business and fair and free competition
5. Maintain fair and healthy relationships with government and other public offices
6. Disclose necessary corporate information to stakeholders fairly and openly
7. Manage and utilize corporate assets and information appropriately and effectively

* A term derived from an ecological behavioral trait of penguins. It describes the courage and bravery of the penguin who is the first to jump and find food in the ocean, where predators may lurk. The rest of the penguins, hesitant and cautious, follow the first penguin’s lead. Thus, the first penguin refers to a brave pioneer that takes on a challenge in spite of uncertainty and potential difficulties. *The original Japanese document is the authoritative version.

Basic Information Security Policy

Digital Garage (DG) regards the information we possess and our information systems (computers, networks, etc.) for executing business by DG and our subsidiaries (“DG Group”) as “information assets.” We make best efforts for information security to safely handle these assets.

Operational structure for information security

Group CEO and directors in charge of information security appoint a chief information security officer (CISO), who serves as a central information hub in security management throughout the overall DG Group. Because the DG Group implements different business formats in each segment and different security risks must be dealt with in each company, the group is taking required security measures and acquires external certifications. CISO also conducts reviews for multifaceted confirmation of the security structure. A structure is set up in which, if a serious security incident occurs in the DG Group, CISO serves a central role to promptly work with DG’s management and respond appropriately to the problem.

Certifications

The DG Group is qualified to obtain third-party certifications according to the special characteristics of our businesses. DG has received PrivacyMark certification for our personal information protection management system complying to JIS Q 15001. DG and our subsidiaries have received certification as a group for ISO/IEC 27001:2013, an international standard for information security management systems (ISMS), and JIS Q 27001:2014, a Japanese standard. Our subsidiaries that handle credit card information have also received Payment Card Industry Data Security Standard (PCI DSS) certification, the international security standard of credit card industry for the safe handling of credit card information.

See here for a list of certifications acquired by our subsidiaries.

Measures against cyber attacks

The DG Group recognizes the threat of increasingly diverse, sophisticated cyber attacks, and is taking continual measures against such attacks. These include incorporating multilayer defense and the latest defense technologies into our systems. We also educate officers and employees about threats to guard against attacks involving internal parties (targeted attacks, etc.).

Business continuity

DG believes our social mission is to provide a range of online services. In the event of a disaster, cyber terrorism, system failure, or other serious danger, we will first ensure securely and accurately safekeeping customer information and continuing our services to the maximum level possible, at the same time the safety of our officers and employees and their family members.

Setting and promoting understanding of information security rules

DG establishes information security rules and continually promotes thorough understanding of them among officers and employees by conducting security training for new hires, as well as annual security training. An employee who breaches laws, ordinances, this Basic Information Security Policy, information security-related rules, or internal regulations will be subject to penalties in compliance with the company regulation manual, etc.

Code of Conduct

Officers and employees at Digital Garage strictly adhere to information security provisions and carry out compliance-based management in accordance with related laws and ordinances, business practices, our Code of Conduct, and other requirements, as well as contractual security obligations.

We set information security objectives to maintain an appropriate level of information security and work to reliably achieve them.

We conduct ongoing activities related to the Basic Information Security Policy and have established a risk management cycle to counter new threats. We work to constantly review and continuously improve this policy.

Established February 20, 2007
Revised July 1, 2015
Revised August 2, 2019
Revised April 1, 2022

Kaoru Hayashi
Representative Director, President Executive Officer and Group CEO
Digital Garage, Inc.

General Policy on Addressing Antisocial Forces

Our company stipulates how its employees, executives, and other personnel shall address antisocial forces, or racketeers, defined in Article 8 of the “Compliance Program.”

Article 8 (Prohibition of Offering Profit to Antisocial Forces) All personnel, including employees and executives, shall sever all ties with antisocial forces and organizations that pose a threat to the order or safety of civil society and shall not facilitate their activities.

To fulfill the above imperative, our company hereby declares its “General Policy on Addressing Antisocial Forces” as follows:

1. Undue claims from antisocial forces shall be responded to by the entire organization, led by the President.
2. The safety of any employee responding to undue claims from antisocial forces shall be ensured.
3. Daily efforts shall be made in order to develop close ties with external institutions specialized in preparation for any undue claims from antisocial forces.
4. No business or other connection shall be established with antisocial forces and any undue claims by antisocial forces shall be refused.
5. Undue claims by antisocial forces shall be responded to legally from both civil and criminal aspects.
6. No behind-the-scenes deals shall be arranged in any way to cover up any matter, even if undue claims by antisocial forces are due to a scandal involving our business or employees.
7. No financial support shall be given to antisocial forces in any manner.

Enacted on July 1, 2008

Kaoru Hayashi
President and Group CEO
Digital Garage, Inc.

Basic Policies on Anti-Money Laundering and Combating the Financing of Terrorism

1. Management Policy

Digital Garage, Inc. (hereinafter referred to as the “Company”) and our subsidiaries and affiliated companies (hereinafter collectively referred to as the “Group”) shall build and maintain an appropriate internal management system and develop a system for sharing information within the Group in order to prevent money laundering and financing of terrorism (hereinafter referred to as “Money Laundering, etc.”). In addition, the specified business operators in the Group develop an appropriate internal control system using a risk-based approach that takes into account the circumstances of the specified business operators to comply with all applicable laws, regulations, guidelines and requirements issued by regulatory authorities in Japan and overseas regarding Money Laundering, etc.

2. Developing Internal Management System and System for Sharing Information

The Group regards the prevention of Money Laundering, etc. as one of our most important management issues, and the management team shall be deeply involved in the improvement of our systems. In addition, the Group will establish and operate the systems such as meeting bodies that regularly share information with the specified business operators.

3. Measures Taken by Specified Business Operators

The specified business operators of the Group thoroughly implement the following measures to prevent Money Laundering, etc., based on the risks identified and assessed by the Group and each company.

1. Appropriate confirmation at the time of transaction including identity verification.
2. Appropriate customer management measures including ongoing customer management based on the above results.
3. Conduct appropriate and periodic filtering and monitoring of transaction.
4. Prompt notification of questionable transactions when “suspicious transactions” are detected.
5. Creation and preservation of necessary records related to Money Laundering, etc.

4. Training of Executives and Employees

The Group shall enhance the expertise and awareness of its executives and employees by conducting regular training programs to prevent Money Laundering, etc.

5. Cooperation with External Organizations

In order to implement appropriate measures to prevent Money Laundering, etc., the Group regularly cooperates with external organizations including the relevant authorities and obtains the latest information to improve our systems.

6. Verification of Compliance

The Group monitors the status of compliance with laws and regulations related to the prevention of Money Laundering, etc., and the effectiveness of the measures taken, and continuously improve our system based on the results of such monitoring.

Enacted on March 29, 2024
KAORU HAYASHI
Representative Director, President Executive Officer and Group CEO
Digital Garage, Inc.

List of Certifications Obtained by DG and Our Subsidiaries