Solasto : Corporate Governance Report

NOTICE: This document has been translated from the Japanese original for reference purposes only. In theevent of any discrepancy between this translated document, the Japanese original shall prevail．

Corporate Governance Report

Last Update: November 9, 2021

Solasto Corporation

Yoshikazu Fujikawa

President, Representative Director, CEO

Contact: Investor Relations Office, Management Division

Tel: 03-6890-8904

Securities Code: 6197

The corporate governance of Solasto Corporation (the "Company") is described below.

1. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and

Other Basic Information

1. Basic Views

Solasto views corporate governance as a framework for ensuring corporate management that is rapid and effective, stable and fair, and highly transparent. Through the creation and implementation of this framework, we are able to uphold our Management Philosophy, fulfill our Promise to Our Stakeholders, and realize our Management Vision, thus enabling us to continuously improve our corporate value.

Based on this view, we established the Solasto Corporate Governance Policy, a framework and guidelines for corporate governance, at the Board of Directors meeting held on June 30, 2016(Revised on June 1, 2021). We will use this framework to promote initiatives and strive to continuously improve our corporate governance.

Solasto Corporate Governance Policy

https://www.solasto.co.jp/ir/en/corporate/governance.html

Management Philosophy

We strive to enrich the lives of all people by working to ensure the health and vitality of individuals, our partners and society at large, while walking hand-in-hand with our clients in helping to create a more promising future.

Promise to Our Stakeholders

To our clients

We vow to act professionally and with a strong sense of responsibility in serving the needs of our clients. At the same time, we will unwaveringly contribute to enhancing people's quality of life, ceaselessly showing integrity toward each and every individual accessing our services.

To our business partners

We aim to work closely with our business partners in developing mutual respect and sharing ideas, while walking side-by-side and developing together.

To our fellow colleagues

We aim to create a fair and open workplace environment that is upbeat and motivating, and where our employees show pride in their work.

To our communities and society at large

We vow to enrich people's lives and contribute to community progress through the services we provide and by offering a diverse range of work arrangements.

To our shareholders

We will promote sound and highly transparent management practices, with the aim of heightening our enterprise value and achieving consistent growth.

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Management Vision

"The Solasto story has begun.

To provide global quality service in medical outsourcing, elderly and child care To create professional career for Japanese working women."

An innovation leader in medical outsourcing, elderly care and child care, with strong focus on client needs and service quality;

Transforming to a digital company of service industry, constantly renewing service model leveraging state of the art ITs;

Contributing to local communities and all our stakeholders (clients, employees, shareholders, business partners) through continuous growth and strong business performance;

Through talent development and 2X compensation, supporting employees on work-life balance and to build professional life-time careers; and Culture with a value for care, reliability, compliance suited for medical, elderly care and child care.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code] UPDATED

This report is written based on the revised Corporate Governance Code as of June 2021.

[Supplemental Principle 4.11.1 View on the Appropriate Balance between Knowledge, Experience and Skills of the Board as a whole, and also on Diversity and Appropriate Board Size]

Our approach concerning the balance, diversity, and scope of the Board of Directors is outlined in "2.2 Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System)" of this report. Also, our independent outside directors include persons with management experience at other companies. Furthermore, we are planning to include a skills matrix outlining directors' knowledge, experience, and skills in the convocation notice for the Regular General Meeting of Shareholders planned for June 2022. We also plan to reflect this skills matrix in our Corporate Governance Report.

[Disclosure Based on the Principles of the Corporate Governance Code] UPDATED

[Principle 1.4 Cross-Shareholdings]

We do not retain listed stocks for the purpose of strategic shareholding.

[Principle 1.7 Related Party Transactions]

When conducting transactions with executives or major shareholders (transactions between related parties), we consult outside directors as well as attorneys and other third parties as necessary, after which the Board of Directors deliberates and decides on the necessity of the transaction and the adequacy of the details and conditions of the transaction.

[Principle 2.4.1 Ensuring Diversity in the Promotion to Core Human Resources]

We position the promotion of diversity management as a core part of our human resources strategy, and outlined a Diversity Policy in 2020.

We promote diversity through the following six core policies. These policies help ensure that our nearly 30,000 employees respect the diversity and individuality of all others, regardless of race, age, gender, self-identification, sexual orientation, or disability, and provide an environment that allows all employees to participate in the workplace while reflecting their individuality and individual appeal.

Promoting women's workplace advancement

Supporting work-life balance

Promoting employment for persons with disabilities

Opportunities for the elderly

Accepting foreign workers

Promoting understanding of sexual minorities

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Details are outlined in our Diversity Policy and the six pillars of diversity (please refer to the attached at the end of this report).

mid-career hiring>

Mid-career hiring represents over 90% of our annual hiring. Similarly, mid-career hires represent over 90% of our management personnel. The Solasto Group relies on personnel with a diverse range of knowledge and experience in other industries, each applying their respective strengths regardless of age, gender, or nationality, to aggressively engage in our business activities, responsibilities, and goals.

We will continue to promote diversity as a driving force that supports our sustainable growth, and we will continue to secure and utilize a diverse range of human resources.

（https://www.solasto.co.jp/ir/en/sustainability/hizaimu.html）

At 46.2%, we have a high rate of female managers compared to industry averages. However, believing it important to further promote women's advancement in the workplace, we have set a goal of achieving a rate of female managers of 60% by March 2024.

We focus on the workstyles and career development of our human resources, particularly our female employees. As specific measures, we established a career center for supporting women's careers, we promote the hiring of female managers, we have reduced total work hours to promote work-life balance, we created a reduced-time work system that exceeds mandated standards, and we abolished the dependent allowance that serves to foster the gender wage gap.

In 2020, we also created our Diversity Policy as part of efforts to promote comfortable workplace environment for all employees by promoting measures that include advancement for the women who make up 90% of our workforce as well as by providing support for sexual minorities. Specifically, we adopted a special leave system for same-sex partners, fertility treatment, and sex reassignment surgery.

We also have received external evaluations of our efforts. We acquired the Kurumin Mark (2008, 2011, and 2015), which is governed by the Act on Advancement of Measures to Support Raising Next-Generation Children. In May 2021, we also earned 3-Star Eruboshi Certification (highest rating), which recognizes companies for their excellence in initiatives related to promoting the advancement of women in the workplace.

[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]

We do not offer the fund-type or contract-type of defined benefit pension or welfare pension fund assumed under this code.

[Principle 3.1 Full Disclosure]

1. Our Group drafts and publishes our Management Philosophy. Our Management Philosophy is outlined in "1.1 Basic Views " of this report. We publish our corporate strategy and management plan on our website.
2. We indicate our basic approach and basic policies on corporate governance in "1.1 Basic Views" of this report.
3. We indicate policies and procedures related to decisions on compensation for management personnel and directors in "2.1 [Director Remuneration] Policy on Determining Remuneration Amounts and Calculation Methods" of this report.
4. We indicate general policies and procedures concerning the selection of management personnel and the nomination of director and corporate auditor candidates in "2.2 Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions (Overview of Current Corporate Governance System" of this report.
5. We indicate "Reasons for Candidacy" for all directors and corporate auditor candidates in each of the nomination proposals indicated in the Convocation Notice of the 51st Ordinary General Meeting of Shareholders (reference materials), the Convocation Notice of the 52nd Ordinary General Meeting of Shareholders (reference materials), and the Convocation Notice of the 53rd Ordinary General Meeting of Shareholders (reference materials).
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[Supplemental Principle 3.1.3 Disclosures Concerning Sustainability Initiatives]

We indicate information concerning our sustainability initiatives in "3.3 Measures to Ensure Due Respect for Stakeholders" of this report.

[Supplemental Principle 4.1. 1 Scope of delegation to management]

In our Board of Directors Regulations, we clearly outline the matters to be decided or voted on by the Board of Directors. In the Board of Directors Regulations, matters to be decided or voted on by the Board of Directors are defined as matters stipulated by law and our Articles of Incorporation as well as the approval of or changes to general corporate policy, annual and monthly budgets, personnel plans, medium- and long-term management plans, matters concerning our organization and human resources, and other important matters concerning business execution. To promote rapid decisions on matters concerning business execution, other matters are consigned to personnel below the company president in accordance with our organization regulations and work authority regulations.

[Supplemental Principle 4.9 Independent Standards and Qualification for Independent Outside Directors]

Matters concerning the criteria used to judge the independence of outside directors are as outlined in "2.1 [Independent Directors/Corporate Auditors] Matters Relating to Independent Directors/Corporate Auditors" of this report.

[Supplemental Principle 4.10.1 Establishment of Advisory Committee mainly comprised of Independent Outside Directors]

We have established a Nomination, Evaluation, and Compensation Committee (CEO and three outside directors (of which, two are independent outside directors)). Half of Committee members are independent outside directors and the Committee is chaired by an outside director. We indicate information concerning the establishment of advisory committees in "2.1 [Directors] Voluntary Establishment of Committee(s) Corresponding to Nomination Committee or Remuneration Committee" of this report.

[Supplemental Principle 4.11.2 Status of Directors/Corporate Auditors with Concurrent Posts]

No directors other than outside directors or outside corporate auditors serve concurrent positions at other listed companies. Information concerning important concurrent posts held by outside directors or outside corporate auditors is indicated in "2.1 [Directors] Outside Directors' Relationship with the Company (2)" and "2.1 [Corporate Auditors] Outside Corporate Auditors' Relationship with the Company (2)" of this report.

[Supplemental Principle 4.11.3 Analyzing and Evaluating the Effectiveness of the Board of Directors as a Whole]

A summary and results of the efficacy assessment conducted in 2020 for the Board of Directors is as indicated below.

1. Efficacy assessment implementation method and conclusions

• To achieve corporate governance, all members of the Board of Directors (8 members) and the Board of Corporate Auditors (3 members) responded to surveys concerning the structure, implementation status, and deliberation content of the Board of Directors. The Corporate Governance Committee and the Board of Directors then held deliberations based on those results. From those deliberations, we concluded that the Board of Directors is functioning effectively.

2. Results of implemented assessment

• The efficacy assessment survey of each director and corporate auditor resulted in a high rate of responses indicating that the Board was "functioning well" or "functioning properly on average" for most questions.
• Assessment results indicated that members, including outside directors, were provided sufficient information ahead of time in relation to meeting agenda items, and that the number of agenda items, agenda content, and time allocated to deliberate each agenda item were largely within appropriate standards. Results also indicated that meetings featured active discussions and exchanges of opinions from a wide range of perspective. These results confirm that efficacy is being maintained.
• All survey question items included proposals, recommendations, indications of problem points, and other comments. For example, from the results we recognized that while appropriate plans had been drafted concerning corporate strategy and management plans that incorporate a medium- to long-term perspective, there was a need to further expand on deliberations related to these matters. We also identified the importance of continued
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deliberations related to the selection of successors in terms of outlining desired personnel requirements and the high-level creation of personnel nomination and development policies.

3. Other initiatives, etc.

• We also supported directors in their management decisions by creating opportunities for outside directors to exchange opinions with individual executive officers and initiatives to further mutual understanding between outside directors and corporate officers.
• We will continue to hold annual efficacy assessments for our Board of Directors and strive to make further improvements to efficacy.

[Supplemental Principle 4.14.2 Training Policy for Directors and Corporate Auditors]

We provide directors, corporate auditors, and corporate officers with relevant recommendations for participation in external seminars and members with external organizations to promote self-enlightenment by adopting new thinking and interacting with frontline information. The Company covers related expenses in accordance with our internal regulations.

[Principle 5.1 Policy for Constructive Dialogue with Shareholders]

On our website, we indicate our policies evaluated and approved by the Board of Directors on developing structures and implementing initiatives to promote constructive dialogue with shareholders.

(Basic Policy on Investor Relations：https://www.solasto.co.jp/ir/en/basic_policy.html)

2. Capital Structure

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