We have established the following Corporate Governance Guidelines to communicate our basic philosophy and policies regarding Corporate Governance to our stakeholders.

Chapter 1 General Provisions

Article 1 (Basic Approach to Corporate Governance)

To achieve our mission of “Circulate all forms of value to unleash the potential in all people,” Mercari Group aims to　“unleash” the potential in all people by using technology to create an ecosystem that circulates all forms of value (both tangible and intangible). In order to collaborate with various stakeholders to achieve this mission, the Company will pursue the best Corporate Governance and continually strive to enhance it.

As part of our efforts to pursue and enhance the best Corporate Governance, we have chosen to establish a company with three committees (Nominating Committee, Compensation Committee, and Audit Committee). By clarifying the separation of the supervisory and the executive functions, we will build a system that supports swift and decisive decision-making as well as active and sound risk-taking of the executive function while strengthening the supervisory function of the Board of Directors.

Chapter 2 Stakeholder Relations to Achieve the Group’s Mission

Article 2 (Dialogue with Shareholders and Investors)

The Company conducts timely and fair information disclosure, and by having constructive dialogue with shareholders and investors, also strives to enhance corporate value over the mid- to long-term.

The Board of Directors has established the following policy on approaches to dialogue with shareholders and investors in order to engage in constructive dialogue with shareholders and investors.

1. IR will be in charge of dealing with shareholders and investors, and the Executive Officer in charge of IR will be in charge of overall dialogue.
2. To promote constructive dialogue with shareholders and investors, IR will establish a collaborative system with relevant internal departments to exchange opinions and share information.
3. IR will consider the opinions and concerns of shareholders and investors that have been identified through dialogue. We will also provide feedback to Executive Officers, management, and relevant internal departments regarding such opinions and concerns.
4. Through IR activities, we will strive to earn understanding among shareholders and investors by explaining mid- to long-term management strategies and promptly disclosing information that will have a significant impact on investors’ investment decisions.
5. We will provide training on the management of insider information to those in charge of dialogue with investors. Additionally, we will conduct dialogue with investors in an appropriate manner in compliance with relevant internal rules.

Article 3 (Shareholder Meeting)

The Company recognizes that the Shareholder Meeting is the Company’s highest decision-making body as well as an opportunity for dialogue between the Company and its shareholders, therefore, we will strive to provide shareholders with an explanation that is easy to understand and sufficient time for dialogue.

The Company will implement the following initiatives to ensure that shareholders have sufficient time to consider the matters that are the purpose of the Shareholder Meeting and to allow shareholders to properly exercise their voting rights. We will also strive to provide information on the Shareholder Meeting as soon as possible and to enhance the content of such information.

1. We make sure that the schedule for the Shareholder Meeting allows shareholders to properly exercise their voting rights.
2. We will strive to provide early notice of the convocation of the Shareholder Meeting so that shareholders have sufficient time to consider the matters that are the purpose of the Shareholder Meeting. The information will be disclosed on the web pages of the Company and the Tokyo Stock Exchange before the convocation notice is sent.
3. We strive to improve the environment for shareholders to exercise voting rights by preparing and disclosing English translations of convocation notices, exercising voting rights via the internet, and participating in electronic voting platforms.

Article 4 (Capital Policy)

As the Company is currently still growing, we prioritize capital investments in our mid- to long-term growth. On the other hand, we are also striving to realize both returns for our shareholders and ample retained earnings in the long term. Additionally, in cases where the implementation of a capital policy will shift control or greatly dilute shares, the necessity and rationality of the policy will be discussed in depth by the Board of Directors, after which we will follow the Companies Act, the Financial Instrument and Exchange Act, and Tokyo Stock Exchange regulations, and upon thorough explanation to shareholders, we will proceed in a legal and fair manner.

Article 5 (Shareholder Return Policy)

The Company considers the simultaneous pursuit of shareholder returns, the strengthening of our financial structure, and the securing of our competitiveness to be key management issues. At present, the Group is still growing. As such, we seek to accumulate substantial retained earnings that can be channeled into investment, thereby expanding and further optimizing our business. In the future, we will consider how we can return this profit to investors while giving due consideration to the fiscal year results of each business.

Article 6 (Cross-Shareholdings)

As a general rule, the Company does not retain cross-shareholdings. However, we may hold shares only if it is determined that an alliance with the holding company through holding shares will contribute to the business benefits of the Group or enhance our corporate value.

Regarding cross-shareholdings, the Board of Directors will annually scrutinize the rationality of the purpose of the stockholding and whether the benefits associated with stockholding are in line with the target level of capital efficiency. As a result of verification, shares that are determined to have no significance or rationale for holding will be sold at any time.

When exercising voting rights related to cross-shareholdings held by the Company, the Company will decide whether to approve or disapprove each individual proposal, taking into consideration whether it will contribute to the enhancement of the mid- to long-term corporate value of the investee company and the Company.

Article 7 (Related Party Transactions)

The Company confirms the necessity of any transaction by related parties beforehand, as well as the conditions and the propriety of the method for deciding to conduct such transactions. For transactions that are considered to have a particularly significant impact on the Company or the common interests of its shareholders, the Board of Directors will adequately deliberate regarding their necessity and appropriateness.

If Directors and Executive Officers wish to engage in conflict of interest transactions or competitive transactions, they shall obtain prior approval from the Board of Directors and report important facts regarding such transactions to the Board of Directors.

Article 8 (Collaboration with Stakeholders Other Than Shareholders and Investors)

We recognize that the Company’s sustainable growth and enhancement of corporate value over the mid- to long-term are the result of collaboration with various stakeholders, including customers, business partners, society, and employees, and we will strive to build appropriate cooperative relationships with our stakeholders.

Chapter 3 Corporate Governance Structure

Article 9 (Role of the Board of Directors)

The Board of Directors is responsible for establishing efficient and effective Corporate Governance for shareholders and all other stakeholders in order to achieve the Group’s mission, and for achieving the Company’s sustainable growth and enhancing its corporate value over the mid- to long-term.

The Board of Directors discusses and examines the basic content of management policies and strategies aimed at achieving the Group’s mission, and presents the overall direction to the Executive Officers.

The Board of Directors shall delegate decision-making on business execution to Executive Officers, except for basic management policies and other matters stipulated by laws, the Articles of Incorporation, and the Board of Directors regulations, and shall establish a system to support appropriate risk-taking in business execution.

The Board of Directors shall receive reports on the status of business execution from Executive Officers, etc., and shall exercise highly effective supervision over business execution from an objective standpoint to ensure fairness and transparency in management.

Article 10 (Composition of the Board of Directors)

In promoting management aimed at the Group’s sustainable growth and enhancement of corporate value, our basic policy is to structure the Board of Directors in consideration of the balance of knowledge, experience, and abilities necessary to realize highly effective supervision of management by the Board of Directors and to ensure the diversity of the Board of Directors as a whole.

In order to enhance the effectiveness of the supervisory function of the Board of Directors, the majority of Directors shall be Outside Directors and business executors (Executive Officers) shall be included in the Directors.

To ensure that the Board of Directors functions in the most effective and efficient manner, the appropriate number of Directors shall be between 8 and 14.

Article 11 (Directors)

In order for the Board of Directors to fulfill its responsibilities and roles as a Monitoring Board as stipulated in Article 9, the Directors will make their best efforts to ensure quality discussions, effective decision-making, and effective supervision of business execution at the Board of Directors meetings from mid- to long-term and diverse perspectives.

Directors shall collect sufficient information to execute their duties, actively express their opinions based on their wide range of insight and engage in constructive discussions at the Board of Directors meetings.

The selection policy and requirements for Director candidates shall be determined separately by the Nominating Committee.

Article 12 (Outside Directors)

Outside Directors make the most of their own expertise and experience and actively provide opinions and proposals to enhance the quality of discussions at the Board of Directors meetings from an objective standpoint such as from the perspective of various stakeholders, including shareholders and contribute to the exercise of the supervisory function of the Board of Directors.

Outside Directors must meet the independence standards established by the Company, and must continue to meet these requirements even after assuming office.

To ensure that Outside Directors have enough time and effort to execute their duties at the Company, it is desirable that they do not concurrently serve as Directors or Officers of more than four (4) listed companies, including the Company.

Article 13 (Chair of the Board of Directors)

The Chair of the Board of Directors is selected from among the CEO or Outside Directors. In order to ensure the effectiveness of the Board of Directors as a Monitoring Board, the Chair of the Board of Directors sets appropriate agendas, promotes high-quality discussions, and operates the Board of Directors effectively and efficiently.

Article 14 (Executive Officer)

Executive Officers receive authority regarding business execution from the Board of Directors, and execute business based on swift and bold decision-making and sound risk-taking.

The Representative Executive Officer and CEO is the highest Executive Officer responsible for business execution, delegated by the Board of Directors, and is responsible for making decisions regarding business execution to achieve the Group’s mission, enhance corporate value, and secure the rights of stakeholders.

The selection policy and requirements for Executive Officer candidates shall be determined separately.

Article 15 (Nominating Committee)

The Nominating Committee deliberates on Director evaluations, Director candidates, Executive Officer candidates, and succession plans for the CEO, and determines policies regarding the appointment and dismissal of Directors and Executive Officers and proposals regarding the appointment and dismissal of directors.

The Nominating Committee consists of at least three (3) members and the majority of the members are Outside Directors. Additionally, the Chair of the Nominating Committee is selected from among the Outside Directors by resolution of the Board of Directors.

Article 16 (Compensation Committee)

The Compensation Committee deliberates and determines the policy for determining the compensation of Directors and Executive Officers, as well as the details of the compensation of individual Directors and Executive Officers, in a fair and transparent manner.

The Compensation Committee consists of at least three (3) members and the majority of the members are Outside Directors. Additionally, the Chair of the Compensation Committee is selected from among the Outside Directors by resolution of the Board of Directors.

Article 17 (Audit Committee)

The Audit Committee audits the execution of duties by Directors and Executive Officers, prepares audit reports, evaluates and selects accounting auditors, and improves the quality of audit through cooperation with the Internal Audit Division.

The Audit Committee consists of at least three (3) members, including persons with considerable knowledge of finance and accounting, and the majority of the members are Outside Directors. Additionally, the Chair of the Audit Committee is selected from among the Outside Directors by resolution of the Board of Directors.

Article 18 (Support Structure)

A secretariat will be established to support the activities of the Board of Directors, Nominating Committee, and Compensation Committee. The secretariat, in cooperation with related departments, provides support such as formulating annual plans, preparing and distributing materials, and providing various necessary information to outside directors.

To assist the activities of the Audit Committee, we will establish an Audit Committee Office consisting of full-time personnel who execute duties under the direction and orders of the Audit Committee.

Article 19 (Board Evaluation)

Each year, the Board of Directors analyzes and evaluates the effectiveness of the Board of Directors as a whole, including each committee, discusses initiatives for improvement, and publishes a summary of the results on the Company’s website.

Article 20 (Director Training)

The Company provides Directors with opportunities to share information and receive the training necessary to properly fulfill their roles and responsibilities as Directors.

During the onboarding program, newly appointed Outside Directors will have the opportunity to deepen their understanding of the Group by providing explanations and information regarding management philosophy, corporate culture, business content, financial status, organizational structure, etc.

After assuming office as a Director, we will continue to provide training opportunities for Directors to acquire the necessary knowledge and skills, as appropriate, based on their responsibilities, abilities, and experience.

Chapter 4 Revision

Article 21 (Revision)

Revision to these guidelines will be made by resolution of the Board of Directors.

 

 

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