TIS : Corporate Governance Report(June 27, 2022)

[TRANSLATION]

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

Corporate Governance Report

Last Update:June 27, 2022 TIS Inc.

Yasushi Okamoto, President Contact: Corporate Management Dept., Corporate Planning SBU +81-3-5337-4569 Securities Code: 3626 https://www.tis.com/ir/

The corporate governance of TIS Inc. (hereafter, "TIS" and "the Company") is described below.

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

1. Basic Views

TIS will constantly strive to achieve the highest level of corporate governance and will work to maintain and further enhance its approaches to corporate governance. Management believes that the key to good corporate governance is to ensure transparency and fairness in decision-making processes, make full and effective use of management resources, and raise the integrity of management practices through swift and accurate assessment of situations, from the viewpoint of promoting sustainable corporate growth and boosting medium- and long-term corporate value. Accordingly, management at the Company is committed to upholding good corporate governance in line with the following basic principles.

1. To respect the rights of shareholders and to ensure equality.
2. To consider the interests of stakeholders, including shareholders, and work with stakeholders in an appropriate manner to achieve stated goals.
3. To disclose corporate information appropriately and ensure transparency.
4. To engage in constructive dialogue with shareholders based on a medium- to long-term investment perspective.

Note that management has laid out basic views on corporate governance for TIS under Basic Policy on Corporate Governance, and the Company discloses the content of this policy on its website. https://www.tis.com/ir/policy/governance/

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

TIS complies with all principles of the Corporate Governance Code.

Disclosure Based on the Principles of the Corporate Governance Code

Principle 1-4Cross-Shareholdings

(1) Policy on cross-shareholdings

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While TIS has made reduction of domestically listed shares a priority issue and adheres to this as much as possible in accordance with Company-defined basic policy on corporate governance, the Company holds shares in other companies, including start-ups and venture companies, only when management believes that it will contribute to the sustainable growth and higher medium- to long-term corporate value of the Company and the Group. Specifically, when cooperation, co-creation and stable partnerships with such companies are deemed essential to continuous creation of business opportunities and utilization of technologies to actively promote business development particularly in the areas of financial inclusion, urban concentration and regional decline, low-carbon/decarbonization and health concerns, which are all social issues where the TIS INTEC Group can help to realize a more sustainable society, then such cross-shareholdings are considered investments consistent with the Group's growth strategy and defined as strategic shareholdings.

In verifying the rationale behind retaining these holdings, management has divided them into the three categories described below and considered their value to TIS and the TIS INTEC Group using the method assigned to each category:

Capital alliance partners

After an acquisition, shares are held for a predetermined period of time to establish a foundation for the strategic alliance. After that period, the capital alliance is qualitatively reviewed to determine status and ongoing viability as a collaborative business venture. When it is deemed that the significance of the shareholding is diminished, any listed shares are sold based on market conditions and other factors. For any privately held shares, measures are discussed with the issuer and sold as soon as a buyer is found.

Customers

A percentage of total business-related revenue and dividend income from the issuer and companies affiliated with the issuer is calculated on a balance sheet basis to determine whether the respective shareholding exceeds 10%. Based on the result and other qualitative evaluation, such as any expected future transactions, when the significance is deemed diminished, any listed shares are sold based on market conditions and other factors. For any privately held shares, measures are discussed with the issuer and sold as soon as a buyer is found.

Others

A process is undertaken to determine whether or not business transaction volume with the issuer in the last fiscal year increased by 5% or more compared with the average of the past three fiscal years. When the significance of shareholding is deemed diminished based on the result - except when difficulties in securing personnel or technology necessary for the operation are anticipated - any listed shares are sold based on market conditions and other factors. For any privately held shares, measures are discussed with the issuer and sold as soon as a buyer is found.

In addition, as TIS pursues reduction of cross-shareholdings in line with the aforementioned policy and corporate stance, management seeks to push the cross-shareholdings on a balance sheet basis as a percentage of consolidated net assets below the 10% benchmark. Toward this end, the balance sheet amount

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of cross-shareholdings as of March 31, 2022, dropped by ¥8,294 million, to ¥54,359 million, mainly through reduction in nine issues (¥7,538 million), of which eight were completely sold off, and changes in market value due to stock market conditions. Consequently, the aforementioned ratio declined 4.5 points to 17.9% as of March 31, 2022, but if strategic shareholdings are excluded from the calculation, the ratio falls to 11.7%.

(2) Criteria for exercising voting rights for cross-shareholdings

TIS appropriately exercises voting rights for the listed shares in its possession after comprehensively determining whether such action will contribute to the sustainable corporate growth and higher medium- to long-term corporate value of the TIS INTEC Group and investee company, taking into consideration policy advice from proxy advisory firms.

(3) Number of issues held by the Company for purposes other than portfolio investment and total amounts recorded on the balance sheet

Note: In the consolidated fiscal year ended March 31, 2022, TIS acquired five new issues (¥646 million), mostly venture companies with which it has formed capital alliances, seeking to build strategic partnerships aimed at promoting open innovation.

(Supplementary Principles 1-4-1,1-4-2 Relationships with strategic shareholders (those who hold a company's shares for the purpose of cross-shareholding))

When strategic shareholders, that is, cross-shareholders, of TIS indicate that they intend to sell Company shares, TIS responds appropriately and in such a way so as not to hinder the sale. In addition, the Company will not execute transactions with strategic shareholders if such transactions lack an economic rationale.

(Principle 1-7 Related Party Transactions)

Board of Directors' Approval on Related Party Transactions

In the event of competing transactions or conflict-of-interest transactions between the Company and its directors, subsidiaries or other related parties, prior approval by the Board of Directors will be required to ensure that such transactions do not harm the Company or the common interests of shareholders. In the event a director finds him/herself in a conflict-of-interest situation, he/she will inform the Board of Directors immediately and obtain approval from the Board of Directors before proceeding with the transaction.

Disclosing Related Party Transactions

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Details on related party transactions are provided to the Board of Directors on a regular basis, with a summary included in notes to consolidated financial statements in the Yuka Shoken Hokokusho (annual securities report filed in Japanese by companies listed in Japan) as well as in notes to non-consolidated financial statements presented in notices of convocation for General Shareholders Meetings, in accordance with provisions set forth under related laws and regulations.

(Supplementary Principle 2-4-1：Ensuring Diversity in Promotion to Core Human Resources, Etc.) Thoughts on ensuring diversity

TIS INTEC Group aims to create value by solving social issues in Japan and overseas with its IT technologies and contribute to people's happiness going beyond the expectations of society through its business. The Group positions "Diversity & Inclusion" as an important management theme to realize the environment where human resources with individual qualities take advantage of their differences, strengths and opinions and create new value in the changing environment and society.

To promote the diversity management, it is important to instill views of the top management and ensure diversity in core human resources (executive officers and managers) responsible for planning strategies and running the organization. TIS INTEC Group will promote the active promotion, human resource development, and the development of related programs and infrastructure in order to create a culture which enables its people to fully exercise their capabilities and express their humanity, and actively participate regardless of any differences in gender, nationality, career and experience, ability/disability, age, sexual orientation/gender identity, values and workstyle, and the like.

Status of ensuring diversity and voluntary and measurable goals

(1) Promotion of women to core human resources

For ensuring diversity in gender, each of Group companies formulates Action Plan to Promote Women's Participation, taking its issues into consideration, and promotes the promotion of women to core human resources. TIS has set goals of raising percentage of female employees in management positions from 10.8% to 12.8% and female director ratio from 6.5% to 9.0% toward April 2024, and will continue to develop related programs and environment and promote the development and promotion of high-quality human resources who will support and lead its business.

(2) Promotion of foreign nationals to core human resources

For ensuring diversity in foreign nationals, the Group promotes its alliances with top-class local IT companies in ASEAN regions and the recruitment and promotion of local human resources at overseas subsidiaries based on the business portfolio of global strategies led by TIS.

The Group has positioned the expansion of global operations as a growth engine and taken a robust approach to M&A opportunities and capital and business alliances. In the fiscal 2021, ended March 31, 2021, the scale of global operations was about ¥69 billion (net sales of subsidiaries and equity method affiliates in ASEAN regions), and an office network and number of employees exceeded 100 companies and 4,000 employees respectively in ten countries.

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The operations are carried out by TIS employees and local employees of Group companies together, and diverse nationalities work for local alliance companies. Diversity is ensured in the environment where diverse human resources who contribute to management/operational decisions for the entire global operations actively participate.

Going forward, aiming to achieve a goal for global operations for the fiscal 2027, ending March 31, 2027 (consolidated net sales of ¥100 billion), we will promote the recruitment and promotion of local human resources with foreign nationalities and acquisition of local companies, etc., and ensure diversity in human resources who will contribute to management/operational decisions.

(3) Promotion of midcareer hires to core human resources

For ensuring diversity in career and experience, each of Group companies plans midcareer hiring, taking its human resource needs into consideration.

TIS strengthens the recruitment and promotion to core human resources for realizing the business portfolio under the medium-term management plan and accelerating the structural transformation of its business.

The Company has calculated the planned number of midcareer hires based on the targeted number of core human resources expected to be necessary as of the end of the fiscal 2024, ending March 31, 2024, and set a challenge of midcareer hires ratio in management positions from 29.1% to a maximum of 34% in March 2023. The goal will be reset year by year based on the re-evaluation of human resource portfolio plan in conjunction with the business plan and the actual number of midcareer hires.

Policy on human resource development for ensuring diversity

To build a comfortable working environment where diverse human resources actively participate with motivation, the Group will promote the sophistication of organizational management. In addition, the Group will make active investments in education and develop programs to support growth of its employees so that they can learn from various experiences.

Policy on internal environmental improvement for ensuring diversity

Focusing on differences in working mindset, living environment and operational environment of its employees, the Group strives to build a working environment where diverse human resources can fully exercise their capabilities as self-disciplined professionals. The Group will promote the workstyle reform and improve the environment for flexible workstyle, including the office, infrastructure, and human resource system and rules corresponding to "diverse needs for working".

The Group's initiatives for ensuring diversity are described on "Corporate Sustainability Initiatives" page in the corporate website.

https://www.tis.com/group/sustainability/social /

(Principle 2-6 Roles of Corporate Pension Funds as Asset Owners)

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