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GOVERNANCE

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CORPORATE GOVERNANCE

CORPORATE

GOVERNANCE

01.Overview of Corporate Governance
02.Organization Chart
03.Outside Director Interview
04.Overview of Board Member's Compensation System
05.Status of Shareholders
06.Compliance & Risk Management

01.Overview of Corporate Governance

Basic Policy on Corporate Governance
Having adopted "Empower Data, Innovate the Business, Shape the Future" as its business vision, WingArc1st aims to realize a better society by adding value to data and bringing about innovation. On the basis of our "Build the Trust" concept, we have positioned "producing results that exceed the expectations of other parties" and "being trusted" as core values of the Group while working to achieve sustainable business development and improvements in corporate value. Essential to that goal is prompt decision making in response to changes in the business environment, ensuring management soundness, efficiency, and thorough legal compliance. We are therefore striving to establish an appropriate corporate governance system.

02.Organization Chart

The company has adopted its current corporate governance system (Organizational structure: Company with Audit & Supervisory Board) to ensure the transparency and soundness of its management and to accelerate decision-making. We have established an executive officer system to divide business execution functions and decision-making/supervision functions, as well as a Nomination and Compensation Committee composed mainly of independent outside directors to strengthen the supervisory functions over management.

Organization Chart

Composition of the Board of Directors

Main Committee Responsibilities

Inside Director

Chairman (of the Board of Directors)
Hiroyuki Uchino

Mar. 2004	President of the Company
May 2018	Chairman of the Company

President
Executive Officer and CEO
Jun Tanaka

Sep. 2004	Joined the Company
May 2012	Director of the Company
May 2018	President, Executive Officer
May 2021	President, Executive Officer and CEO

Director,
Executive Officer and CTO
Ko Shimazawa

Jul. 2009	Joined Four-Clue Inc. (now WingArc1st Inc.)
Apr. 2016	Executive Officer, CTO and General Manager of the Technical Headquarters of the Company
Mar. 2021	Executive Officer, in charge of Business Supervision and CTO of the Company
May 2021	Director of the Company

Director,
Executive Officer and CFO
Taisuke Fujimoto

Aug. 2007	Joined WingArc1st Inc.
Mar. 2010	General Manager of the Finance and Accounting Department of the Company
Apr. 2016	Executive Officer, CFO and General Manager of Administrative Headquarters of the Company
May 2021	Director of the Company

Outside Director

Outside Director
Kotaro Yamazawa

Reasons for appointment and other details

Outside Director
Takao Yajima

Reasons for appointment and other details

Outside Director
Shunsuke Okada

Reasons for appointment and other details

Outside Director
Kaori Iizumi

Reasons for appointment and other details

Outside Auditor

Outside Auditor
Nagako Oe

Reasons for appointment and other details

Outside Auditor
Yoshitaka Asaeda

Reasons for appointment and other details

Outside Auditor
(Full-time)
Shigeki Iwashita

Reasons for appointment and other details

Skills Matrix

03.Outside Director Interview

Outside Directors Mr. Kotaro Yamazawa / Mr. Takao Yajima

Outside Director(Right)Mr. Kotaro Yamazawa

Outside Director(Left)Mr. Takao Yajima

Solid governance through a high degree of transparency and active discussions.
The Company is working on further improving corporate value in a rapidly changing industry.

We conducted an interview with outside directors Mr. Yamazawa and Mr. Yajima aimed at the society WingArc1st strives to create. In addition to the roles expected of them, they also spoke of their evaluation of the Company's corporate governance system and medium-term management policy, as well as the challenges and expectations the Company has to overcome in the future.

The Company's corporate governance system is very sound.
Strengthening a system that supports future advancements.

――First, please introduce yourself and tell us about the roles expected of you as an outside director.

Mr. Yamazawa：After graduating from university, I worked at the Bank of Japan for 30 years, and then the Japan Exchange Group (JPX) for 10 years. Afterwards, having served as an outside director and special advisor for several companies, I became an auditor of WingArc1st in 2018, and then an outside director the following year. As you can see from my background, I am not an expert in the IT field. However, I believe my role on the Board is to lead discussions in the areas of corporate governance and markets, as well as investor relations, legal affairs, and risk control.

Mr. Yajima：I joined Matsushita Electric Industrial Co., Ltd. (currently Panasonic Corporation) as a new graduate, and then worked at Sanyo Electric Co., Ltd. and then Yanmar Co., Ltd. Throughout that period, I worked in the information field for a long time, and held positions such as head of Management Information Systems (MIS) and Chief Information Officer (CIO). I have been serving as WingArc1st's outside director since 2021. I believe my role is to strengthen the Company's management and business based on my knowledge in the information and IT digital fields. When viewed from a global perspective, developments in digital IT in Japan are still lagging behind. I hope that WingArc1st can become a leading company and help promote the digitalization of IT in Japan.

――How would you evaluate WingArc1st's corporate governance system following its listing on March 2021?

Mr. Yamazawa：While I have personally worked as an auditor for several companies, I feel that WingArc1st is a company that takes corporate governance seriously and is carrying out the operations of the Board of Directors in accordance with the Companies Act. I feel comfortable discussing issues with them because they adopt a stance of discussing and resolving issues at board meetings diligently and earnestly while disclosing information in a transparent way, more than any other company.

Mr. Yajima：I feel that the Chairman of the Board of Directors is incredibly objective and calm in his decisions at board meetings, and that he manages meetings well. A good balance of outside directors has also been appointed, and I feel that each director leads discussions in their area of expertise and actively engages in conversations with internal managers and departments of their respective areas before attending meetings.

Mr. Yamazawa：The fact that the Chairman of the Board of Directors is not the President, Mr. Tanaka, but the Chairman, Mr. Uchino, who is not an Executive Director, has the effect of stimulating discussions at board meetings. In baseball terms, it is the CEO's (executive side) job up until the pitcher throws the ball, and then once the ball arrives, it is the job of the Board of Directors (supervisory side) to determine whether it's a strike or a ball. It is difficult to carry out both simultaneously. That's why I believe the current composition of the Board of Directors is very sound.

――What are some of the future challenges in corporate governance?

Mr. Yamazawa：Corporate governance is an endless journey that is renewed by the social environment and corporate environment. In other words, there are always challenges, but the challenge for WingArc1st is to strengthen group governance, which will become necessary in diversifying and globalizing business in the future. Likewise, the development of human resources who can fulfill these roles.

Mr. Yajima：That's right. It is also desirable to strengthen the system to ensure that correct information is obtained from the site should other problems arise. To build a system that we can proudly call fair to stakeholders, employees, customers, and the community as a whole. I believe this is the challenge for the future.

Steadily headed towards achieving the medium-term management policy.
Strengthening user perspectives to contribute to solving social issues.

――How would you evaluate the medium-term management policy and its progress? Please let us know the challenges the Company needs to overcome as well.

Mr. Yajima：Sales and profits are steadily growing, and there is no doubt the Company is progressing better than planned. If I had to give a challenge, it would be for the Company to further strengthen its structure to respond quickly and accurately to policies and user needs in the digital IT field, which is changing at an extraordinary speed. I believe it will be necessary to make decisions faster and in shorter cycles than previous management cycles, and to establish a solid management and improvement system for development and supply.

Mr. Yamazawa：The numerical targets set in the current medium-term management policy are big stretch goals and not easily achieved. An aggressive style where people work together to try to go just beyond their reach. I would say this is a good way of setting goals for a company's growth. We hope to achieve these goals steadily, as society's needs continue to increase, including the promotion of corporate DX and wave of investment in IT stemming from labor shortages.

――How would you evaluate WingArc1st's strengths and business strategies in its focus areas of invoiceAgent and the cloud domain?

Mr. Yajima：Sales have increased in each segment, and there are good reviews from user companies. So far, I can evaluate the Company as very successful, but in the future, it will be important to have a broader perspective. For example, how will WingArc1st's solutions be positioned within client companies, and what benefits do they create for clients and society? I believe the key to growth is whether or not the Company can penetrate and deploy its products to companies and society while thoroughly understanding the user's point of view.

Mr. Yamazawa：invoiceAgent is a service that best fits the Company's purpose and could become the flagship that transforms B2B DX. For this reason, I believe the Company should strive for its growth first and foremost. To expand market share, the strategy is to start with large companies and gradually expand to their customers. I hope that the Company can achieve this and create a larger platform that can fulfill its social mission, such as contributing to solving social issues known as "2024 problems", including labor shortages.

Commitment to promoting diversity and fostering entrepreneurship to achieve further growth

――Please let us know your thoughts about the future challenges in growing each business segment.

Mr. Yamazawa：I can think of three challenges. First is enhancing diversity in human resources. Since the Company produces products that have long been supported, oftentimes there is a sense of homogeneity in the meetings. In the future, the development of new products and the creation of new businesses will require diverse opinions from people with different backgrounds. Given that there is still no proper participation of female board members on the Board of Directors, I think the Company should focus on diversity.
Second is strengthening the company's global capabilities, which I mentioned earlier. Rather than immediately aiming for the overseas market, I believe having a global perspective can stimulate the improvement and reexamination of products.
Third is training personnel to shift to the "Yatsugatake (mountain range)" model of developing diverse businesses. Fostering entrepreneurship is necessary when developing new businesses and services. I believe that steadily carrying this out within the Company can lead to the next advancement.

Mr. Yajima：If I were to give a challenge from a perspective different from Mr. Yamazawa, I believe what's needed in the future is the ability to determine when IT will suddenly be adopted in the manufacturing sites in Japan. In Japan, the power of manufacturing sites, which has supported the country since the war, has been very solid. For that reason, labor costs at manufacturing sites are high, and efforts for IT, which takes time to develop and does not immediately reduce costs, were perceived as a temporary increase in costs that put a pressure on management. However, because of labor shortages, there will come a time in the future when manufacturing sites will be forced to rapidly adopt IT. Ascertaining this and contributing to the adoption of IT in manufacturing sites at the right moment. I see that as a major turning point for the growth of IT companies in Japan.

――How would you evaluate the Company's sustainability initiatives?

Mr. Yajima：The Company has established and implemented its basic policy. In future, WingArc1st, as an IT company, will have to constantly consider how to incorporate a sustainability perspective into its management.

Mr. Yamazawa：Indeed. I myself believe that WingArc1st contributes to overall sustainability, by helping reduce CO₂ emissions through paperless operations and achieving workstyle reform by promoting remote work. The Company has also delivered advanced initiatives by establishing its Sustainability Promotion Committee and involving employees in activities, not just executives. As I stated earlier, I hope the Company makes efforts to nurture female employees and to train people to become managers and officers.

Transforming at a tremendous speed, propelled by solid technology and professionalism.
Look forward to WingArc1st as it leads the digital IT industry.

――Lastly, please give a message to our shareholders.

Mr. Yajima：With global affairs changing rapidly, the digital IT field in which the Company operates continues to change at a rapid pace. We are more than aware of this, and I want to guide WingArc1st so that it continues to grow and leads the industry as a company essential to society. I am committed to fulfilling this as my responsibility as an outside director, and look forward to your continued support of WingArc1st.

Mr. Yamazawa：At present, WingArc1st's business is being boosted by tailwinds, and it has the business structure to monetize that. Furthermore, we have also spotted seeds for the future. Precisely because of this, I invite shareholders to look forward to WingArc1st in the times to come.
Moreover, I believe that the biggest difference and edge WingArc1st has over other companies are its people. The best foundation that supports WingArc1st's business is its people's strong commitment to the Company, high level of professionalism, and high skill and quality level. While these do not necessarily appear on the balance sheet or the profit loss statement, we have the greatest confidence in this foundation. As we continue to demonstrate this to our investors and stakeholders, we look forward to your continued support.

Evaluation of the Effectiveness of the Board of Directors

WingArc conducted an evaluation of the effectiveness of the Board of Directors through an external organization from October to November 2024. The evaluation objectives, methodology, and results are summarized as follows:

Objectives of the evaluation
To achieve the Company's vision, it is essential to make decisions quickly in response to changes in the business environment, ensure sound and efficient management, and comply thoroughly with laws and regulations. For this reason, we are committed to establishing an appropriate corporate governance system. We conduct an analysis and evaluation of the effectiveness of the Board of Directors to ensure that it can effectively fulfill its intended role.

Evaluation methodology
The evaluation of the Board of Directors for FY2025 was conducted through a survey of all directors. To ensure objectivity, we utilized an external organization to design the survey and conduct its analysis and evaluation. We confirmed the particulars considered important for the Board of Directors to effectively fulfill its role, such as the composition and management of the Board of Directors and deliberations regarding strategy. In addition, we also confirmed the Board's involvement in issues related to sustainability and other associated areas.

Results of the evaluation
The Board of Directors was rated highly for its appropriate ratio of independent outside directors and for carrying out decision-making through free and open discussions, and was evaluated as functioning effectively. In particular, it was confirmed that the Board of Directors has a shared understanding of the company's management philosophy, business environments, and issues, as well as mutual understanding among directors of their roles and responsibilities. To address discussions on strategy, which had been an issue in the previous period, appropriate opportunities were provided to carry out more thorough discussions. At the same time, we recognize the need to further deepen our discussions on global environmental issues, including climate change, and sustainability issues, such as fair and proper transactions with business partners, from the perspective of improving corporate value over the medium to long term. In light of these issues, we will continue to strive for continuous improvement to further enhance the effectiveness of the Board of Directors.

04.Overview of Board Member's Compensation System

The Group's compensation system for directors and executive officers (hereafter, "directors") was established to fulfill two objectives:

to raise awareness of the contributions of managing directors and executive officers in expanding business performance and increasing medium to long-term corporate value
to fulfill appropriate governance functions towards the execution of business duties for non-managing directors.

Compensation System	Compensation Table	Applicable to		Policy for Determining Compensation
Compensation System	Compensation Table	Managing directors	Non-managing directors	Policy for Determining Compensation
(a) Basic Compensation Ratio in compensation： 50% to 80%	Table of Pre-determined Compensation Based on Duties	○	○	Managing directors are paid a monthly pre-determined compensation based on the grade assigned to their duties in the execution of the business. Compensation for non-managing directors is determined through a comprehensive assessment of a director's social status, degree of contribution to the Company, and circumstances of appointment.
(b) Performance-based Bonus Ratio in compensation： 15% to 25%^*1	Quantitative assessment (80%) Consolidated revenue: Consolidated profit for period 50%　　：　　50%	○	×	Performance-based bonuses are paid once a year to managing directors (bonuses are not paid to non-managing directors). The calculation method for the bonus paid to each individual is stipulated in the rules established by the Nomination & Compensation Committee. In particular, bonuses for each managing director are based on an evaluation consisting of quantitative items, such as consolidated revenue and profit attributable to equity holders of the parent, and qualitative items relating to the execution of business duties. The standard ratio of quantitative to qualitative items in bonus evaluations is 8:2. This bonus ranges from 15% to 25% of an individual's total compensation (a+b+c), and is designed so that the higher an individual's position, the higher the ratio of the bonus.
	Qualitative assessment (20%)	○	×
(c). Performance-based Stock Compensation Ratio in compensation： 15% to 25%^*1	Fixed grants (50%)	×	○	The objectives of performance-based stock compensation are to clarify the link between director compensation and the Group's performance, and to raise awareness of contributions to improving business performance and medium to long-term corporate value. Managing directors are paid annual "performance-based grants" based on the degree of achievement of performance targets, while non-managing directors are paid annual "fixed grants" based on their position. The indicators related to performance are consolidated revenue and consolidated EBITDA. This bonus ranges from 15% to 25% of an individual's total compensation (a+b+c), and is designed so that the higher an individual's position, the higher the ratio of the bonus. The shares granted under this system will be held continuously until one year has passed after a director's resignation.
	Performance-based grants (50%) Consolidated revenue: Consolidated EBITDA 50%　　：　　50%	○	×

*1 The higher an individual's position, the higher the ratio of the bonus.
*2 Neither (a) nor (b), nor (c) is paid to non-managing directors.

Actual Board Member's Compensation

05.Status of Shareholders

Shareholder Composition

	Financial Institution	Financial Services Provider	Other Corporation	Foreign Corporation	Individual and Other Entity	Total
Number of shareholders	13	20	32	172	3,187	3,424
Number of shares held	5,464,764	494,400	13,469,481	10,073,886	5,201,675	34,704,206
Ratio^*2	15.75%	1.42%	38.81%	29.03%	14.99%	100.00%

*1 As of end February 2025
*2 The holding ratio is calculated after deducting treasury stock (228,664 shares).

Status of Majority Shareholders

Shareholder Name	Number of shares held	Ratio^*2
IW.DX Partners Inc.	7,643,470	22.02%
Toshiba Digital Solutions Corporation	4,604,700	13.27%
The Master Trust Bank of Japan, Ltd. (Trust Account)	2,714,100	7.82%
Custody Bank of Japan, Ltd. (Trust Account)	1,755,300	5.06%
Monolith LLP	1,400,000	4.03%
NORTHERN TRUST CO.(AVFC) RE UKUC UCITS CLIENTS NON LENDING 10 PCT TREATY ACCOUNT	1,034,700	2.98%
THE NOMURA TRUST AND BANKING CO.,LTD. AS THE TRUSTEE OF REPURCHASE AG FUND 2024-09 (LIMITED OT FINANC IN RESALE RSTRCT)	604,300	1.74%
Suzuyo & Co., Ltd.	537,300	1.55%
JP MORGAN CHASE BANK 380684	517,600	1.49%
GOLDMAN, SACHS & CO. REG	500,233	1.44%
Others	13,392,503	38.59%
Grand total (excluding own stocks)	34,704,206	100.00%

*1 As of end February 2025
*2 The holding ratio is calculated after deducting treasury stock (228,664 shares).

06.Compliance & Risk Management

We are developing an internal compliance and risk management system and are carrying out various initiatives.

COMPLIANCE & RISK MANAGEMENT

Name	Structure			Basic Policy on Structure
Board of Directors	8 in total	Chairman	Inside (Hiroyuki Uchino)	The Group believes that the Board of Directors and the Audit & Supervisory Board should be made up of directors with abundant experience, insight, and expertise in management and business.
		Inside Directors	4
		Outside Director	4
		Those who are Independent Outside Directors	3
Audit & Supervisory Board	3 in total	Chairman	Outside (Shigeki Iwashita)
		Internal Auditor	0
		Outside Auditor	3
		Those who are Independent Outside Auditors	3
Nomination & Compensation Committee	5 in total	Chairperson	Inside (Hiroyuki Uchino)	The committee comprises three to seven members. Members are elected, by a Board of Director's resolution, from among the representative directors and Chairman of the Board of Directors, independent outside directors, and independent outside auditors. The majority of the committee members are outside directors.
		Inside Directors	2
		Outside Director	3
		Those who are Independent Outside Directors	3
Sustainability Committee	5 in total	Chairperson	Inside (Sustainability Officer)	The Committee is chaired by the Sustainability Officer, and is comprised of the President, the Executive Officer in charge of finance, the Executive Officer in charge of technology, and the Executive Officer in charge of marketing.
		Inside Managing Officer	5 (of which 3 are directors)
		Outside Officer	0
		Those who are Independent Outside Officers	0

Name	Role
Nomination & Compensation Committee	The Nomination & Compensation Committee was established as an independent body to ensure transparency in the appointment and dismissal of directors, in their evaluation and remuneration, and in the succession plan for the President and CEO. The Board of Directors decides on the appointment and dismissal of directors, remuneration, and other related actions, after prior consultation with the committee.
Sustainability Committee	The Sustainability Committee aims to maximize the effects of the Group's sustainability activities while ensuring that management and employees have a shared understanding. The Sustainability Committee holds monthly meetings to share trends in sustainability and discuss the status of the Group's efforts to address the expectations of stakeholders.
Risk and Compliance Committee	The Risk and Compliance Committee, chaired by the President of the Company, was established to manage risks related to business, including compliance risks associated with the violation of laws, regulations and notices, and unethical practices. The Committee strengthens the company's compliance with laws, regulations, and articles of incorporation. In addition, we have put in place a compliance consultation line to facilitate the early detection of violations of laws and regulations and appropriate responses.
Information Security Committee	The Information Security Committee was established as a subordinate body of the Risk and Compliance Committee to develop basic policies and implementation procedures regarding the management of information assets, conduct evaluations and analyses, and handle the leakage of information assets and other incidents. The Committee aims to manage and operate the company's information assets properly.

Director/Auditor		Managing Director	Nomination & Compensation Committee Member	Business Management/ Corporate Strategy	Cloud/ Software	R&D/ Develop ment	DX/Data Business	Marketing/ Branding	Security/ Risk Management/ Legal Affairs	Financial Accounting/ Taxation	Internal Control Governance	Sustaina bility
Hiroyuki Uchino	Inside		●	●	●		●
Jun Tanaka	Inside	●	●	●	●	●	●	●				●
Ko Shimazawa	Inside	●		●	●	●	●		●			●
Taisuke Fujimoto	Inside	●		●	●				●	●	●	●
Kotaro Yamazawa	Outside		●	●					●	●	●	●
Takao Yajima	Outside		●	●	●	●	●	●
Shunsuke Okada	Outside			●	●		●
Kaori Iizumi	Outside		●	●				●	●
Nagako Oe	Outside								●		●
Yoshitaka Asaeda	Outside									●	●
Shigeki Iwashita	Outside									●	●

Classification	Number of officers	Total compensation	Total compensation by type
Classification	Number of officers	Total compensation	Base compensation (Cash)	Performance-based bonus (Cash)	Performance-based stock bonus (Non-cash)
Director (Outside director)	7 (3)	￥366M (￥35M)	￥191M (￥27M)	￥77M (－)	￥97M (￥7M)
Auditor (Outside auditor)	3 (3)	￥28M (￥28M)	￥28M (￥28M)	－　 (－)	－　 (－)
Total (Outside officer)	10 (6)	￥394M (￥63M)	￥219M (￥55M)	￥77M (－)	￥97M (￥7M)

CORPORATE GOVERNANCE

01.Overview of Corporate Governance

02.Organization Chart

Inside Director

Outside Director

Outside Auditor

03.Outside Director Interview

The Company's corporate governance system is very sound. Strengthening a system that supports future advancements.

Steadily headed towards achieving the medium-term management policy. Strengthening user perspectives to contribute to solving social issues.

Commitment to promoting diversity and fostering entrepreneurship to achieve further growth

Transforming at a tremendous speed, propelled by solid technology and professionalism. Look forward to WingArc1st as it leads the digital IT industry.

Evaluation of the Effectiveness of the Board of Directors

04.Overview of Board Member's Compensation System

05.Status of Shareholders

Shareholder Composition

Status of Majority Shareholders

06.Compliance & Risk Management

Organization Chart

Composition of the Board of Directors

Main Committee Responsibilities

Skills Matrix

Actual Board Member's Compensation

Outside Director

Outside Director

Outside Director

Outside Director

Outside Auditor (Full-time)

Outside Auditor

Outside Auditor

Outside Director

CORPORATE

GOVERNANCE

The Company's corporate governance system is very sound.
Strengthening a system that supports future advancements.

Steadily headed towards achieving the medium-term management policy.
Strengthening user perspectives to contribute to solving social issues.

Transforming at a tremendous speed, propelled by solid technology and professionalism.
Look forward to WingArc1st as it leads the digital IT industry.

Outside Auditor
(Full-time)