Fundamental Corporate Governance Policy

Basic Policy

The primary goal of our business operations is to fulfill our social responsibilities to all of our stakeholders, including our direct customers, shareholders, employees, trading partners, bondholders and local communities. In order to achieve this goal, we will strengthen our management practices and construct a corporate governance system designed to accelerate decision-making and ensure proper execution of business while increasing efficiency and transparency.

Corporate Governance System

Overview of our Governance System

The LIFULL Board of Directors has established a corporate officer system to further stimulate discussions of the Board of Directors. The Board of Directors is comprised of 7 members including 4 outside directors who form the core of the management and aim to accelerate decision-making and improve the validity, efficiency and transparency of business initiatives.
In principle, the Board of Directors convenes once per month and, in addition to making decisions on basic policies and other important matters, supervises the execution of business by the managing officers in line with these decisions. In addition, a Management Committee consisting mainly of the full-time directors and managing officers convenes each week to make proposals to the Board of Directors on matters related to strategic decision making and deliberate decisions to be made by the Board of Directors in advance .
Meetings of the Audit & Supervisory Board are generally convened once per month wherein Audit & Supervisory Board members exchange opinions on issues discussed at the meeting of the Board of Directors and the status of company management, draw up auditing plans including auditing policies and determine important auditing-related matters.

Reasoning for this System

Internal regulations stipulate that the chairperson of the Board of Directors shall be the Representative Director, and the Representative Director shall also serve as an executive director. The Company has currently implemented this scheme to prioritize business execution, but it is the aim of the Company to separate decision-making and supervision from business execution in the future.
Under the current system, oversight of management is performed by strengthening the cooperation between Directors and Corporate Auditors and effectively utilizing the functions of Corporate Auditors in our decision-making processes.

Policies and Procedures for the Board of Directors to Appoint Executives and Nominate Candidates for Directors or Corporate Auditors

Director and Corporate Auditor candidates are nominated based on the following criteria: A wealth of professional experience and understanding of the business of the Company; outstanding business sense; outstanding leadership, ability to take action; planning skills as well as a personality fitting of an executive of the Company.
The Audit & Supervisory Board evaluates and provides feedback on Director and Corporate Auditor candidates nominated by the Representative Director. The Representative Director selects candidates for Director and Corporate Auditor and receives feedback from the Audit & Supervisory Board based on their evaluation. After considering this feedback, the Representative Director nominates candidates appropriately who are approved for election at the General Shareholders' Meeting by the Board of Directors.

Independence Standards for Outside Directors

The Board of Directors of the Company recognizes outside directors and outside corporate auditors (*1) who are independent of the management of the Group, fair and objective as independent directors as defined by the Tokyo Stock Exchange.
We have established the following selection criteria for outside directors in order to enable the selection of highly independent outside directors. However, if the Board of Directors reasonably determines that a candidate is suitable for the post of outside director, the criteria set out in this policy shall not exclude the candidate from being selected. A candidate selected in this manner cannot be appointed as an independent director. Persons selected for a post as outside director should do their best to maintain their independence until stepping down.

a. A person who executes business on behalf of the Company or its affiliated companies (*2)
b. A person who has an important business relationship with the Company (*3) or who executes business on behalf of such a person*2
c. A person who is a major shareholder (directly or indirectly holding 10% or more of the voting rights) of the Company or who executes business on behalf of such a person (*2)
d. A person who executes business on behalf of a major investor (directly or indirectly holding 10% or more of the voting rights) of the Company or its affiliated companies (*2)
e. A consultant, an accounting expert, or a legal expert who receives a considerable amount of cash or other assets (*4) other than remunerations as a director of the Company or its affiliated companies (when a party who receives such assets is an organization, such as a corporation or an association, this shall refer to a person who is associated with that organization)
f. A person to whom any of (a) to (e) above have applied in the past three years
g. A person who is a close relative of a person to whom any of (a) to (e) above apply (*5)

*1 As we do not create distinctions on the independence of directors and corporate auditors, we collectively refer to them as "outside officers."
*2 A person who executes business on behalf of the Company or its affiliated companies includes directors (other than outside directors), executives, and corporate officers and employees, etc.
*3 “A person who has an important business relationship” as defined in Article 2, Paragraph 3, Item 19 of the Ordinance for Enforcement of the Companies Act
*4 “A considerable amount of cash or other assets” is defined as cash or other assets of ¥10 million or more received in the previous fiscal year other than those received as remuneration as a corporate officer
*5 “A close relative” is defined as relatives and those sharing a means of livelihood

Conflicts of Interest

●Process by which the Board of Directors Avoids and Manages Conflicts of Interest
The Board of Directors approves and reports any conflicts of interest appropriately according to legal standards.

●Information Regarding Conflicts of Interest

1. Cross-Board Membership
   Disclosed as appropriate in the Securities Report (Yukashoken Hokokusho)
2. Cross-Shareholdings
   The Company does have any strategically held shares.
   The Company's holding policy for strategically held shares is limited to business alliances which reasonably contribute to the expansion and growth of the existing businesses and new business opportunities of LIFULL and the LIFULL Group. The Management or Board of Directors make judgements on the suiability of potential invesments in accordance with internal standards.
3. Existance of Controlling Shareholders
   Disclosed as appropriate in news releases
4. Related Party Disclosures
   Disclosed as appropirate in the Securities Report (Yukashoken Hokokusho)

Utilize directors who are not executive officers involved in business execution

No applicable items.

Evaluating the Performance of the Board of Directors

Since June 2016, the Board of Directors has undergone annual assessments and evaluations to determine its effectiveness. Each of the Directors and Corporate Auditors receives and completes a questionnaire, and the results of this questionnaire as well as areas for improvement are reported and discussed at a subsequent meeting.

The effectiveness of the Board of Directors is evaluated based on the following:
a. a Number of members and composition of the Board of Directors
b. Appropriateness of the standards for the Board of Directors
c. Facilitation of meetings
d. The mid-term strategy of the Board of Directors and discussion of executive candidates

For the latest analysis and evaluation of the effectiveness of the Board of Directors, a summary of the results has been published in the Corporate Governance Report.

Executive Support System

LIFULL has created a Board Meeting Support Team in order to provide ample opportunity for discussion in meetings which serves the following functions:

• Create the annual schedule for the Board of Directors.
• Share the agenda items appropriately with outside directors in order to provide ample opportunity for discussion in meetings.
• Ensure appropriate time for reviewing materials to provide ample opportunity for discussion in meetings.
• Share agenda item materials 4 business days prior to meetings for directors to review to provide ample opportunity for discussion in meetings.

Provide the following support to executives to provide ample opportunity for discussion in meetings.

• Resident corporate auditors also attend management meetings for the purpose of not only confirming the discussions and decisions made within meetings, but also provide their own opinions on agenda items

The Company also has established an internal auditing office (4 members) which reports directly to the representative director and acts independently of the audited departments. The Internal Audit Office ascertains the risks related to the Company itself as well as our subsidiaries and carries out internal audits based on the internal audit plan that is formulated by taking importance and urgency into consideration. The office reports the internal audit results to the Representative Director and, as necessary, the Audit & Supervisory Board members; discusses the business management system, etc. of the departments and sections subject to auditing thoroughly; and provides information regarding the audits.
If the Audit and Supervisory Board members should require support personnel for logical reasons, the Company will assign the appropriate personnel. These personnel will not receive instructions or orders regarding auditing work from anyone other than Audit and Supervisory Board members. In addition, the appointment, removal, evaluation and relocation of these personnel shall be reported in advance to the resident corporate auditor(s) and receive the approval of the Audit and Supervisory Board.

Executive Training

The executives all possess abundant experience as well as professional knowledge and understanding in their respective areas. In order to maximize the benefits of their knowledge and experience in forming and executing the Company's business strategy, we provide them with the following training:

• Explanation of the Company and its businesses for newly appointed executives held by a member of Corporate Planning on dates separate from Board of Directors meetings
• Opportunities to explain the Mid-Term Management Plan and business strategies of the Company for outside directors on dates separate from Board of Directors Meetings
• Reports to outside directors on overviews and strategies of subsidiaries held by executives of subsidiaries of the Company on dates separate from Board of Directors Meetings

Current Executives　(As of September 30, 2021)

Board of Directors

＞Executive Profiles

Diversity of Directors

The Company has set a male-female ratio for the Board of Directors as a key performance indicator for the promotion of diversity and inclusion.　＞Sustainability Issues and Goals

Reasons for Nominating Outside Directors and Outside Audit & Supervisory Board Members

Director	TAKAHASHI Masato	Mr. Takahashi has worked for Recruit Holdings Co., Ltd. and possesses extensive experience in the real estate information business. He has produced results in B-to-C businesses and has extensive knowledge in the field of e-commerce.	15 of 17 Board of Directors Meetings
Director	KOBAYASHI Masatada	Mr. Kobayashi has worked for many years at Rakuten, Inc. since its founding and has gained abundant experience as a director for several Rakuten Group companies.	16 of 17 Board of Directors Meetings
Director	NAKAO Ryuichiro	Mr. Nakao served as a director of an affiliated company of Recruit Holdings Co., Ltd. overseeing the housing and technology sectors and has experience in business development and activation of the organization.	17 of 17 Board of Directors Meetings
Director	OKUBO Kazutaka	Mr. Okubo is familiar with governance and finance as a certified public accountant in a major accounting firm and has abundant expertise and experience in compliance and CSR, having served as an expert committee member at government offices and as secretary of business circles.	17 of 17 Board of Directors Meetings
Full-Time Outside Audit & Supervisory Board Member	SHISHIDO Kiyoshi	Mr. Shishido has numerous years of experience working in the integrated trading company industry at Mitsubishi Corporation and also served as director of affiliates of the Mitsubishi group.	17 of 17 Board of Directors Meetings 17 of 17 Audit & Supervisory Board Meetings
Audit & Supervisory Board Member	HANAI Takeshi	Mr. Hanai has many years of professional experience in the financial sector and as a director and auditor of affiliates of the Rakuten Group.	15 of 17 Board of Directors Meetings 16 of 17 Audit & Supervisory Board Meetings
Audit & Supervisory Board Member	NAKAMORI Makiko	While Ms. Nakamori’s corporate management experience comes solely from holding outside director positions, as a certified public accountant, she has considerable knowledge of matters relating to finance and accounting.	15 of 17 Board of Directors Meetings 16 of 17 Audit & Supervisory Board Meetings
Audit & Supervisory Board Member	MATSUSHIMA Kie	Although Ms. Matsushima has not been involved with corporate management other than as an outside officer, she has considerable experience and broad insight as an attorney-at-law	13 of 13 Board of Directors Meetings 13 of 13 Audit & Supervisory Board Meetings (After appointment on December 23, 2020)

Remuneration for Directors and Audit & Supervisory Board Members

Determination Process for Remuneration of Directors and Auditors

Policies for determining remuneration for directors and corporate auditors are described in the Corporate Governance and Securities Reports.
As directors are responsible for increasing value provided by the Company, the basic remuneration policy for directors is to secure and maintain an appropriate level for the execution of duties compared to the wage level of employees. Remuneration for full-time directors is based on sharing interests such as profits and risks due to changes in the Company's business performance and stock prices with shareholders with consideration to mid- to long-term contributions to business performance and improvement of corporate value. Remuneration for other officers consists solely of basic remuneration for their duties.
Remuneration for directors is determined by their LIFULL Group Vision Achievement Score (LVAS), a proprietary evaluation system that incorporates evaluation criteria, including 1) altruistic contributions, referring to contributions to society; 2) degree of growth and innovation; 3) contributions to the Group; and 4) embodiment of the organization’s vision. The amount calculated based on each officer's LVAS is paid as monthly remuneration over the following period.
Furthermore, remuneration amounts for each director and Auditory & Supervisory Board member are determined by the Board of Directors with approval from the Audit & Supervisory Board within the limits determined at the General Meeting of Shareholders with consideration given to Company performance, management duties, economic conditions and other factors.

Total Remuneration

(For FY 2021/9)

Directors (Outside Officers)	6 persons (3 persons)	¥120,498 thousand (¥21,375 thousand)
Audit & Supervisory Board Members (Outisde Officers)	5 persons (5 persons)	¥ 39,812 thousand (¥39,812 thousand)
Total (Outside Officers)	9 persons (7 persons)	¥ 160,310 thousand (¥160,310 thousand)

Budget for Director Remuneration: 240,000 thousand yen / Year
Budget for Auditor Remuneration: 50,000 thousand yen / Year

Internal Auditing Office and Compliance

Fundamental Policy

We have established a Fundamental Policy for the Construction of an Internal Auditing System for the LIFULL Group to ensure sound and efficient management with consideration to all stakeholders. Based on this policy, we have built, maintained and are managing internal auditing systems which meet legal standards, provide for efficient and effective business operations as well as financial reporting.

Due Diligence on Business Partners

For LIFULL, we have implemented a system of checks by our Legal department, Business Partner Screening team and purchasing teams to prevent risks of illegal transactions.

Elimination of Antisocial Organizations

The LIFULL Group has established the following fundamental policy to take a resolute stance against antisocial forces that threaten social order and safety and have no relationship with such forces or the like.

(I) Basic Concept of the Fundamental Policy on Antisocial Organizations
A) The Group will not conduct any transactions with antisocial organizations
B) For no reason shall the Group engage in any conveniences provided by antisocial organizations such as back-door transactions or funding.
C) The Group will not respond to any unreasonable demands from antisocial organizations and will legally respond to unreasonable civil and criminal demands in a systematic manner.
D) If the Group is suspected or found guilty of transactions with antisocial organizations, we will immediately take measures to terminate the relationship.
E) In addition to maintaining close communications with law enforcement, Tokyo Center for Removal of Criminal Organizations, legal advisors and other external professional organizations, we will take steps to protect our employees from unreasonable demands from antisocial organizations.

(II) Maintenance of Internal Measures to Eliminate Antisocial Organizations
A) Establishment of Response Team against Antisocial Organizations
The Company's General Administration department will respond to antisocial organizations and centrally manage related data. We will also implement internal measures across departments to respond to unreasonable demands by antisocial organizations.
B) Collaboration with External Organizations
As an action against antisocial organizations, we have joined the Tokuboren (the Federation on Special Organized Crimes with the Jurisdiction of the Tokyo Metropolitan Police Department) and collect data related to antisocial organizations as well as maintain close relationships with other specialized organizations such as local law enforcement, the Tokyo Center for Removal of Criminal Organizations and legal advisors.
C) Internal Research
In accordance with Article 14 Item 2 of the Tokyo Center for Removal of Criminal Organizations "Act on Prevention of Unjust Acts by Organized Crime Group Members," in addition to training for the prevention of unreasonable demands for responsible parties, all of our employees receive training on the prevention of unreasonable demands.

Internal Reporting Mechanisms

According to the Whistle-Blower Protection Act, the Company has established both internal and external reporting mechanisms to quickly identify and resolve fraud, legal violations and unethical actions.
Full-time, part-time, contract, dispatched and outsourced employees working for the Company and its subsidiaries and affiliates all have access to these mechanisms and internal and external contact points.

Risk Management

Risk Management System

We have established a Risk Management Committee chaired by the Representative Director and a risk management system has been established wherein all risks that could have a significant impact on the Group are centrally managed. In order to ensure that we maintain a sound financial position and steadily achieve higher earnings by streamlining our operations, we have also established a department specializing in the maintenance of internal control systems and a system to check and improve the maintenance of internal regulations and the status of operations.

Business Cotinuity Plan

We have formulated a business continuity plan (BCP) with established responsibilities and processes to minimize the effects of emergencies and ensure the continuity of our primary businesses and quick recovery. In addition to conducting regular training to ensure the execution level in an emergency, we have also reviewed scenarios with flow changes to procedures and responsibilities, and the Internal Audit Office audits the BCP at the required timing.

Anti-Corruption

Considerations on Anti-Corruption

The Company complies with all laws and regulations, sound business practices and social conventions for fair business activities and works to prevent all forms of corruption including extortion and bribery.
The Company has solidified its basic stance on fraud in its internal regulations and continues to strive to prevent bribery.

Operations Assessed for Risks Related to Corruption

(1) Operations Assessed for Risks Related to Corruption
The Company has strengthened its system of checks through its Risk Management and Disciplinary Action Committees and has constructed a system to prevent corruption-related risks.
(2)Significant Risks Related to Corruption Identified through Risk Assessments
There are no significant risks related to corruption identified through risk assessments.

Communication and Training about Anti-Corruption Policies and Procedures

(1) Directors
The Company ensures the eligibility of Directors in accordance with all laws and regulations, and the regulations for executives also stipulate the policy on the prevention of corruption which is communicated to new officers.

(2) Employees
The Company's regulations on employment and disciplinary actions stipulate the anti-corruption policy which are communicated appropriately to employees joining the Company.

Examples of Grounds for Disciplinary Action / Dismissal

• Embezzlement of Company funds or goods
• Theft of Company funds or goods
• Receiving money or goods as a result of unfair gains in the workplace
• Bribing a public official etc.

Internal Reporting Mechanisms

The internal reporting mechanisms cover overall compliance including corruption and bribery, etc.

Corporate Governance Reports

>Corporate governance reports (in Japanese only)