Corporate governance report

Basic View of Corporate Governance, Capital Structure,
Corporate Profile and Other Basic Information

1.Basic Views

Reason for Non-compliance with the Principles of the Corporate Governance Code

The Company continues to take on the challenge of creating new value that leads to the happiness of people around the world in accordance with the Marvelous Handbook, which sets out the fundamental principles of our business activities. In order to contribute to the creation of a sustainable society through our business activities, we recognize ESG and SDGs as important management issues and are committed to addressing them. The Group's initiatives are disclosed on the "Sustainability" page of our IR website.
https://corp.marv.jp/english/vision/csr.html
We recognize that the impact of climate change-related risks and profit opportunities on our business activities and earnings is an important issue in our sustainability efforts, and we will consider this issue in the future, along with specific methods to address it.

Our independent officers have outstanding knowledge, and regardless of “a meeting consisting of only independent outsiders”, active discussions from the independent standpoint in the discussions at the current board of directors participate and contribute to. We believe that sharing of recognition to outside officers is achieved through prior distribution of meeting materials by the division in charge of the board of directors and prior explanation of important proposals. In addition, there is nothing to prevent the exchange of information between independent officers on a daily basis.

The Company will consider the analysis, evaluation and disclosure of the effectiveness of the Board with the practical method.

【Disclosure Based on the Principles of the Corporate Governance Code】Updated

When we hold listed shares for purposes other than net investment purposes, we are basically targeting the stock price of companies that will enhance corporate value, as mutual business collaboration is high. When holding listed shares politically, we will thoroughly investigate whether the purpose for possession is appropriate, whether the benefits and risks associated with holding are commensurate with the cost of capital, and we will verify the appropriateness of possession each year at the Board of Directors. If it is judged that the significance of policy holding is not necessarily sufficient, we will try to reduce such shares. Also, when exercising the voting rights of the shares held by the policy, the basic policy is to determine whether or not the investee companies will improve the corporate value and the shareholder value over the medium to long term, taking account of the corporate governance improvement situation and the compliance system, etc. Above, we will make various judgments and judge comprehensively.

The Company sets the manual of deal of party transactions for both conflict interest and related parties to establish the dealing flow, the basis of judging importance, and the basis of necessity of decision in the Board of Directors. Accounting & Finance department judges the importance on disclosure of related parties. After that, Legal department secondary judges whether the dealing condition is equal to the independent third party and afterwards the Company holds the Board of Director if necessary. Also, the dealings with related parties are reported in the Board of Directors quarterly regardless of the importance of disclosure.

In order to realize our management philosophy of “Creating new entertainment to provide “Wonder” and “Excitement” to the world,” the Group strives to promote diversity by utilizing diverse human resources of different genders, ages, nationalities, and other attributes and turning them into corporate strengths. As of the end of March 2024, the ratio of female managers was 14.5%, the ratio of foreign managers was 12.9%, and the ratio of mid-career hires to managers was 92.7%. Recognizing that the percentage of women in management positions is low, the Group has formulated the General Business Owner's Action Plan (integrated with the Act on Promotion of Women's Employment and the Act on Advancement of Measures to Support Raising Next-Generation Children) in order to create an environment where women can easily continue to work, and has set a goal of increasing the percentage of women in management positions to 15% or more by March 31, 2026. With regards to the appointment of foreign nationals and mid-career hires, we believe that we have secured a certain level of diversity in our workforce, as our group has overseas subsidiaries and conducts business globally, and we are in an industry with high mobility of human resources. The human resource development policy and internal environment policy for ensuring diversity are disclosed on the “Sustainability” page of our IR website.
https://corp.marv.jp/english/vision/csr.html

Although we have not adopted the corporate pension system, we have introduced a corporate type defined contribution pension plan to enhance employee's retirement asset formation and welfare system. In the existing definite contribution pension system, the Company does not act as an asset owner in terms of the system structure, but when introducing the corporate pension system, in order to demonstrate the functions expected of the asset owner, We will make appropriate efforts in terms of personnel management and operation, and we will disclose it.

（１）

Company Objectives, Business Strategies and Business Plans
The Group establishes “ Marvelous Bible” and discloses “ Managing Policy”, “ Mission”, “ Vision” and “Action Guidelines” in its website (url: https://corp.marv.jp/vision/bible.html)

（２）

Basic Views and Guideline on Corporate Governance
Basic View of Corporate Governance of the Company is described in １．Basic Views in this Report. The Company also discloses in its website and asset securities reports.

（３）

Remuneration for Directors
The Company's remuneration system for directors is designed to function adequately as an incentive to sustainably increase corporate value. Specifically, the remuneration system for executive directors consists of base remuneration as fixed remuneration, performance-linked bonuses, and a performance-linked stock compensation plan called the “Board Benefit Trust (BBT)”. In light of their duties, outside directors, who are responsible for supervisory functions, are paid only the basic remuneration. Performance-linked bonus is the amount of base remuneration for individual directors, The amount of the bonus fluctuates according to the sum of the evaluation points obtained by weighting the degree of achievement of consolidated net sales, operating income, and net income against the budget at the beginning of the fiscal year, etc., as determined for each fiscal year. The bonus amount fluctuates in accordance with the sum of the evaluation points obtained by weighting the degree of achievement of consolidated sales, operating income, net income, etc. against the initial budget, etc., as determined for each fiscal year. In cases where a significant contribution to business performance is deemed to have been made through an increase in net assets or business funds due to alliances, partnerships, capital increases, etc., or through the creation of new businesses or new intellectual property, a special incentive bonus may be paid in addition to the bonuses mentioned above. The amount and other details of such bonuses shall be determined by the Board of Directors after consultation with and resolution of the Nomination and Remuneration Committee. However, if consolidated operating income, etc., falls below the budget at the beginning of the fiscal year, etc., no payment is made. The total amount of bonuses, including fixed remuneration, is within the limit of remuneration approved at the general meeting of shareholders. The basic bonus amount for each fiscal year, the amount of the bonus for each fiscal year based on the degree of achievement of the budget at the beginning of the fiscal year, and other basic figures for the calculation of the bonus amount are determined by the Board of Directors after consulting and passing a resolution of the Nomination and Remuneration Committee. The amount of bonuses actually paid to individual directors in each fiscal year will be determined by the Board of Directors after the end of the fiscal year in which the bonuses are paid. After this decision is made, a lump-sum payment will be made once a year. Performance-linked stock compensation is based on the Directors' Stock Benefit Regulations, and is calculated by multiplying the base points, which are determined by a ratio determined by the Board of Directors and proportionally distributed in consideration of the maximum total number of points (100,000 points) to be granted per fiscal year as approved at the General Meeting of Shareholders, by a performance evaluation coefficient determined according to the status of consolidated operating income and other items in the budget at the beginning of the fiscal year, as well as an individual evaluation coefficient based on individual evaluations. The points are awarded by multiplying the base points, which are calculated proportionally by a ratio determined by the Board of Directors, by a performance evaluation coefficient determined in accordance with the status of achievement of consolidated operating income, etc. in the budget at the beginning of the fiscal year and by an individual evaluation coefficient based on individual evaluation. However, if consolidated operating income, etc. falls below the budget at the beginning of the fiscal year, etc., it will not be granted. The basic figures for calculating the number of points, such as performance indicators and coefficients for each fiscal year will be decided by the Board of Directors after consulting with and passing a resolution of the Nomination and Remuneration Committee. The number of points to be granted to individual directors in each fiscal year will be determined by the Board of Directors after the end of the fiscal year in which the points are to be granted. After this decision is made, points will be awarded on June 30 in principle, and on or after July 1, the first day after his retirement, if he is no longer related to the company in principle, the points will be converted into one share of common stock per point. However, if the requirements stipulated in the Directors' Share Payment Regulations are met, a certain percentage of shares of the Company's common stock will be paid in cash equivalent to the market value of the Company's common stock instead.

（４）

Policies and Procedures for Nominating Directors and Auditors
The Company selects the Nominee of Directors and Managing Staff with the ability to make precise and speedy decision, to manage risks properly and to execute the duties including supervising other employees. Also, to keep balance between the Business Unit, the Company appoints. Regarding the decision procedure, decisions are made by the Board of Directors after discussion and recommendations by the Nomination and Remuneration Committee, which mainly consists of Outside Directors. Also, the Company selects an Auditor with high experience in accounting and finance and deep insight of business of the Company and business management. And, the Board of Directors appoints an Auditor with full agreement of Audit Committee. In addition, in the event that there is a fraudulent or serious violation of laws or regulations in executing the duties of executives, we will decide to dismiss.

（５）

Explanation of Individual Appointments for Directors and Auditors
The Company individually discloses significant factors considered in the selection of nominees in the Notice of Convocation of the Annual Shareholders’Meeting. Regarding dismissal, we also decide to dismiss the proposal to the general meeting of shareholders, and we will disclose the reason for the dismissal of the person concerned by notifying the general meeting of shareholders.

The Group sets Rules and Delegation of Authority Rules to allocate authority which specifically defines the appropriate allocation of authority related to decision, consideration, and approval to all the Board of Directors, Manager’s meeting, President, and Heads of all business units.

The Company has established and disclosed the "Standards for Independence of Outside Directors and Auditors" as described in the "Matters Relating to Independent Directors/Auditors" section of this report. In addition, the Company endeavors to select persons who can be expected to contribute to the constructive deliberations of the Board of Directors in an open, active, and constructive manner.

In order to strengthen the independence, objectivity, and accountability of the Board of Directors' functions, the Company has voluntarily established the Nomination and Remuneration committee, an independent advisory committee under the Board of Directors, with a majority of its members being independent outside directors. The Committee is responsible for supervising the selection of the Company's executive structure and the decision-making process regarding executive compensation and other matters. The committee obtains the objective opinions of the independent outside directors when considering particularly important matters such as nominations and compensation.

The Board of Directors, after comprehensively considering the current size of the Board for accurate and prompt decision-making, takes care to ensure that each function of the Company and each business unit is covered in a well-balanced manner, and that the Board is composed in a way that is optimal for the Company in terms of the knowledge, experience, ability and other skills of each Director, as well as diversity. Also, the Company’s Board is mutually checked for management, and composed of in total of 13 members, 9 Directors including 5 Outside Director and 4 Auditors including 3 Outside Auditors. 6 of them are Independent Officer. In addition, three of the independent outside directors have management experience at other companies. The skills possessed by each director are disclosed on the Company's IR website.
https://corp.marv.jp/english/vision/governance.html

The Company discloses positions concurrently held by each director and auditor nominee in the Annual Securities Report and the Notice of Convocation of the Annual Shareholders’Meeting. Also, the companies which nominees are in positions are in reasonable range such as the Company’s subsidiary, which don’t affect to fulfill their responsibility in the Company.

The Company provides, at the Company’s cost, the directors and auditors with opportunities to acquire knowledge of laws and regulations as required for executing their duties and to better understand the Company’s business and organizational, as well as other training opportunities

The Company’s takes following policies to encourage a constructive discussion with Shareholders.

（１）

The Company appoints Officer supervises the Administration Unit to be responsible for the matters of IR, and the department in charge is Corporate Planning Department.

（２）

To support the communication with Shareholders, Corporate Planning Department collects and controls the information from Accounting & Finance department and other departments involved. In the meantime, Corporate Planning Department communicates often with other department related to IR, to encourage active dialog with Shareholders.

（３）

The Company discloses a video presentation of financial results and its presentation materials by the representative directors on a quarterly basis, and holds individual meetings with analysts, institutional investors, and other stakeholders on a regular basis. Also, the Company actively discloses IR related items such as all documents except legal disclosure and videos of major briefings

（４）

The Company effectively share and accept the Shareholders’ opinion which the Company obtains from the dialog by distributing and making feedback to Officers and departments

（５）

The Company sets Rules of preventing Insider dealing to avoid the risk in the dialog, and control the information to disclose. And the Company sets the quiet period quarterly from the next day of account close to the date of announcement of financial result to prevent a divulging of information.

2.Capital Structure

【Status of Major Shareholders】 Updated

Supplemental Explanation

3.Corporate Attributes

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

5.Other Special Circumstances Which May Have Material Impact on Corporate Governance

Business Management Organization and Other Corporate Governance Systems
Regarding Decision Making, Execution of Business, and Oversight in Management

Organizational Composition and Operation

【Directors】

Relation with the Company (1) Updated

Relation with the Company(2) Updated

Voluntary Committee’s Name, Composition and Chairman Attributes

Supplemental Explanation

【Auditors】

Cooperation Among Auditors, Accounting Auditors, and Internal Audit Department

Outside Auditors’Relationship with the Company(1)

Outside Auditors’Relationship with the Company(2)

【Independent Directors/Auditors】

Matters Relating to Independent Directors/Auditors

【Incentives】

Supplementary Explanation Updated

Supplementary Explanation

【Remuneration for Directors】

Supplementary Explanation Updated

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods

The Company's remuneration system for directors is designed to function adequately as an incentive to sustainably increase corporate value. Specifically, the remuneration system for executive directors consists of base remuneration as fixed remuneration, performance-linked bonuses, and a performance-linked stock compensation plan called the “Board Benefit Trust (BBT)”. In light of their duties, outside directors, who are responsible for supervisory functions, are paid only the basic remuneration. Performance-linked bonus is the amount of base remuneration for individual directors, The amount of the bonus fluctuates according to the sum of the evaluation points obtained by weighting the degree of achievement of consolidated net sales, operating income, and net income against the budget at the beginning of the fiscal year, etc., as determined for each fiscal year. The bonus amount fluctuates in accordance with the sum of the evaluation points obtained by weighting the degree of achievement of consolidated sales, operating income, net income, etc. against the initial budget, etc., as determined for each fiscal year. In cases where a significant contribution to business performance is deemed to have been made through an increase in net assets or business funds due to alliances, partnerships, capital increases, etc., or through the creation of new businesses or new intellectual property, a special incentive bonus may be paid in addition to the bonuses mentioned above. The amount and other details of such bonuses shall be determined by the Board of Directors after consultation with and resolution of the Nomination and Remuneration Committee. However, if consolidated operating income, etc., falls below the budget at the beginning of the fiscal year, etc., no payment is made. The total amount of bonuses, including fixed remuneration, is within the limit of remuneration approved at the general meeting of shareholders. The basic bonus amount for each fiscal year, the amount of the bonus for each fiscal year based on the degree of achievement of the budget at the beginning of the fiscal year, and other basic figures for the calculation of the bonus amount are determined by the Board of Directors after consulting and passing a resolution of the Nomination and Remuneration Committee. The amount of bonuses actually paid to individual directors in each fiscal year will be determined by the Board of Directors after the end of the fiscal year in which the bonuses are paid. After this decision is made, a lump-sum payment will be made once a year. Performance-linked stock compensation is based on the Directors' Stock Benefit Regulations, and is calculated by multiplying the base points, which are determined by a ratio determined by the Board of Directors and proportionally distributed in consideration of the maximum total number of points (100,000 points) to be granted per fiscal year as approved at the General Meeting of Shareholders, by a performance evaluation coefficient determined according to the status of consolidated operating income and other items in the budget at the beginning of the fiscal year, as well as an individual evaluation coefficient based on individual evaluations. The points are awarded by multiplying the base points, which are calculated proportionally by a ratio determined by the Board of Directors, by a performance evaluation coefficient determined in accordance with the status of achievement of consolidated operating income, etc. in the budget at the beginning of the fiscal year and by an individual evaluation coefficient based on individual evaluation. However, if consolidated operating income, etc. falls below the budget at the beginning of the fiscal year, etc., it will not be granted. The basic figures for calculating the number of points, such as performance indicators and coefficients for each fiscal year will be decided by the Board of Directors after consulting with and passing a resolution of the Nomination and Remuneration Committee. The number of points to be granted to individual directors in each fiscal year will be determined by the Board of Directors after the end of the fiscal year in which the points are to be granted. After this decision is made, points will be awarded on June 30 in principle, and on or after July 1, the first day after his retirement, if he is no longer related to the company in principle, the points will be converted into one share of common stock per point. However, if the requirements stipulated in the Directors' Share Payment Regulations are met, a certain percentage of shares of the Company's common stock will be paid in cash equivalent to the market value of the Company's common stock instead.

The Company provides the agenda and related information prior to the meeting, collects documents and information, and has a individual hearing meeting to support Outside Directors and Auditors when in necessary by the corporation of standing statutory auditor and Corporate Planning Department.

The Company establishes both the Board of Directors and Audit Committee. The Board of Directors consists of 9 Directors including 6 Outside Directors and 4 Auditors including 3 Corporate Auditors to hold monthly regular Board Meeting and temporary Board meeting as needed. The execution of duties is reported on the Board on the regulation of allocation of authority to be deliberated in the Managers’ Meeting, and depending on the item, President and general manager decide to make it speedy. Auditors enhances the mutual check system by attending in the Board of Directors and other important meetings to audit the execution of duties of Directors objectively and referring to the important document according to the report from CPA and Director, etc.
The remuneration of Directors is composed of monthly remuneration, performance-linked incentives to motivate Directors for raising the value of the company, and BBT（＝Board Benefit Trust）. The performance-linked incentives based on the consolidated operating profit of a fiscal year, past records, and are decided at the Board of Directors, after discussion and recommendations of the Nomination and Remuneration Committee which mainly consists by Outside Directors.

The Company adopts current system in the reason of recognition that the mutual checking is sufficiently works by 6 Outside Directors and 3 Corporate Auditors.