ORo : Corporate Governance Report (2022/03/30)

Corporate Governance Report

CORPORATE GOVERNANCE

ORO Co, Ltd.

Last update on March 30, 2022

ORO Co., Ltd.

Atsushi Kawata

(Representative Director & President)

Contact: Corporate Department [phone]

TSE Code: 3983https://www.oro.com/en/ir/

The corporate governance of ORO Co., Ltd. (the "Company") is described below.

I.

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

1.

Basic Views

The Company's basic idea on corporate governance is to manage a corporate structure that can immediately make decisions in accordance with any changes in its social and economical environment in order to continuously raise oRo's corporate value. To achieve this goal, the Company has been working on strengthening its corporate governance as follows, after understanding that the Company should build up a highly transparent and extremely flexible structure and system as well as it should carry out its responsibilities for all its stakeholders, including shareholders, business partners, and employees.

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

The following statements are based on the Corporate Governance Code as revised in June 2021 (including principles for the Prime Market to be applicable from April 4, 2022).

[Supplementary Principle 2.4.1] The Company and the subsidiaries have been actively hiring foreign nationals and midcareer professionals and have appointed several to managerial positions. However, we are yet to disclose actual results. In future, the Company will disclose targets and results for promoting foreign nationals and midcareer hires to managerial positions and, at the same time, work on promoting such employees to managerial positions.

[Supplementary Principle 3.1.3] The Company will collect and analyze the necessary data in the future, on the impact of climate change-related risks and earning opportunities on its business activities, profits and the like, and consider its approach toward enhancing the quality and quantity of disclosure of such data.

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

[Principle1-4] At times when the Company determines that holding shares of other listed companies will contribute to the Group's medium- to long-term development, business alliances or stronger business relationships, the Company may hold such shares in cross-shareholding.

(i) Policy on cross-shareholdings

・The Company may hold shares of other listed companies in cross-shareholdings when the Company determines that such shareholding will contribute to the medium- to long-term enhancement of the Group's corporate value in terms of continuing and strengthening business relationships or developing business in collaboration with the issuing companies over the medium to long term.

・The Company will ensure the economic rationality of cross-shareholding by paying attention to its soundness, identifying appropriately the risks associated with such shareholding, and taking into account the corresponding returns.

(ii) Assessment on the shares in cross-shareholdings

The Board of Directors of the Company assesses the significance and economic rationality of cross-shareholdings.

(ii) Standards for exercising voting rights on cross-shareholdings

The Company determines whether to exercise voting rights on shares in cross-shareholdings after making confirmation on the following points and giving comprehensive consideration on each issuing company and proposal:

・Will the proposal contribute to the increased economic benefit of the Group over the medium to long term?

・Will the proposal enhance the corporate value of the issuing company over the medium to long term and contribute to its sustainable growth?

[Principle 1.7] All related party transactions shall be approved by the Board of Directors before execution, after obtaining legal advice from the Company's corporate attorney as necessary, in accordance with the regulations of the Company's Board of Directors in order to ensure that, among others, such transactions do not damage

the soundness of the management of the Group and are valid in the reasonable judgement of the Group, as well as that terms and conditions of such transactions are adequate when compared with other transactions with outside parties.

[Supplementary Principle 2.4.1]

1. Policies, goals, and status regarding ensuring diversity in the appointment and promotion of core human resources

The Company will create an environment that embraces diverse career paths and work styles so that people with diverse personalities can achieve self-fulfillment, thus enabling the Company to ensure and strengthen the growth potential of its business and the diversity of its organization.

The Company has set a target of increasing the proportion of women in managerial positions to 10% by 2027 (it is 5% as of December 2021).

2. Policies for human resource development and internal environment development to ensure diversity, and status thereof

In accordance with the human resources policy of the Group, the Company excludes decisions based on irrational matters unrelated to the individual's aptitude and ability and treat individuals appropriately

throughout all corporate activities including recruitment, evaluation, personnel assignment, salary increases, and promotions.

As part of our efforts to develop core human resources, the Company will enhance its recruitment and training systems to produce high-caliber human resources with potential to make up the core of our business.

Human Resources Policy of oRo Group is posted on the Company's website:https://www.oro.com/en/corporate/philosophy/

[Principle 2.6] The Company has not adopted a corporate pension plan and so is not positioned as an asset owner of a corporate pension plan.

[Principle 3.1]

(i) The Company's Corporate Philosophy, Medium-term Business Plan and other information are disclosed on its website and through financial results presentation materials and other methods.

(ii) The Company's basic views on corporate governance are based on each of the principles of the Code and are disclosed on its corporate governance report and annual securities report.

(iii) Remuneration for the Company's Directors consists of "basic remuneration," which is fixed

remuneration paid according to their positions and responsibilities, and "stock remuneration," which fluctuates depending on the Company's stock price. Remuneration for Outside Directors consists sorely of fixed remuneration in view of the fact that they are in a position independent from other Directors in executive position. The "basic remuneration" are paid in cash and "stock remuneration" are paid by allotting the shares with restriction on transfer. The Board of Directors shall deliberate and decide on the amount of remuneration for Directors on the basis of the report of the Nomination and Remuneration Committee, within the maximum amount of remuneration resolved at general meeting of shareholders in consideration of such factors as the remuneration levels of other companies, the Company's business results and balance with employee salaries.

(iv) In nominating candidates for Directors, the Company shall make a comprehensive judgment of their personality, experience, ability, knowledge, and other attributes, and will nominate appropriate candidates who can fulfill their duties and responsibilities. Candidates for Directors shall be proposed by the Representative Director & President, and the Board of Directors shall deliberate and decide on the basis of the report of the Nomination and Remuneration Committee.

(v) The professional backgrounds and other details of Director candidates and the explanations with respect to the individual appointments/dismissals are included in the notice of annual general meeting of shareholders.

[Supplementary Principle 3.1.3]

1. The Company's initiatives on sustainability

The Company's Corporate Philosophy is to create what we can proudly present to the world and deliver morehappiness and joy to more people. Under this philosophy, the Company believes that it is important to pursue both the realization of a sustainable society and the sustainable growth of the Group at the same time. By combining technology and creativity, the Company provides new value to the world and contribute to the realization of a sustainable society.

Prior to this policy, the Company established the Sustainability Committee in August 2021. The committee identifies the Group's material issues (materiality), considers establishment of the targets related to the issues, formulation of specific measures and establishment and measurement of various KPIs, and formulates and implements specific measures one by one.

2. Investments in human capital and intellectual properties

The Company promotes "health management" to improve the physical and mental health of employees so that they can work actively staying in good health.

[Supplementary Principle 4.1.1] The Board of Directors of the Company makes decisions on important management matters in accordance with the "Board of Directors Regulations" as well as the matters stipulated by laws and regulations and the Articles of Incorporation. Deliberations and decisions on matters other than those to be decided by the Board of Directors are delegated to the Company's management in accordance with the "Internal Regulations," "Approval Process Regulations," "Segregated Duties Regulations" and "Official Authority Regulations."

[Principle 4.9] The Company shall set the standard to determine the independence of Outside Directors, based on which the Company determines that its Outside Director is independent from the Company if such Outside Director meets the independence standard specified by the Tokyo Stock Exchange and does not fall under any of the following conditions.

• 1. A party whose major business partner is the Group (the Company and its subsidiaries; the same shall apply hereinafter) (*1), or an executive (*2) thereof;

• 2. A major business partner of the Group (*3), or an executive thereof;

• 3. A consultant, a professional in accounting or law who receives a significant amount (*4) of money or property from the Group other than remuneration for Directors or Audit & Supervisory Board Members (if such party is a body such as a corporation or an association, etc., a person who belongs to such body);

• 4. A party who receives a significant amount of donations from the Group, or an executive thereof;

• 5. A major creditor to the Group (*5), or an executive thereof;

• 6. A major shareholder of the Company (*6), or an executive thereof;

• 7. A close relative (*8) of an important person (*7) among those who fall under any of the above items from 1 to 6.

Notes:

*1. "A party whose major business partner is the Group" refers to a party whose transaction amount with the

Group exceeded 2% of such party's annual consolidated revenue for any of the most recent three fiscal years.

*2. "An executive" refers to an executive director, executive officer, corporate officer, or other employee, etc.

(including a person who held such position in the most recent three fiscal years).

*3. "Major business partner of the Group" refers to a party whose transaction amount with the Group exceeded 2% of the Group's annual consolidated revenue for any of the most recent three fiscal years.

*4. "Significant amount" refers to a case in which the amount exceeds 10 million yen per fiscal year in any of the most recent three fiscal years.

*5. "Major creditor to the Group" refers to a creditor from whom the Group owes an amount exceeding 2% of the consolidated total assets of the Group in any of the most recent three fiscal years.

*6. "Major shareholder of the Company" refers to a shareholder who holds 10% or more of the total voting rights of the Company.

*7. "Important person" refers to a person who holds an important position such as, among others, a director, executive officer, corporate officer, and an employee who is in the position of general manager or higher.

*8. "Close relative" refers to a spouse or a relative within the second degree of kinship.

[Supplementary Principle 4.10.1] The Company has established the Nomination and Remuneration Committee as an advisory body to the Board of Directors. In order to ensure the independence and objectivity of the Nomination and Remuneration Committee, a majority of its members are Independent Outside Directors, and the Chairperson is an Independent Outside Director. The Nomination and Remuneration Committee, in response to consultation by the Board of Directors, deliberate on the nominations of Director candidates, succession planning, director remuneration and other matters, and then reports the results to the Board of Directors.

[Supplementary Principle 4.11.1] Composition of the Company's Board of Directors reflects diversity ingender and other areas, as well as balance in knowledge, experience and ability. In order to ensure diversity and balance in knowledge, experience and abilities in the Board of Directors and to demonstrate its effectiveness, the number of its members shall be no more than six Directors (excluding Directors who are Audit and Supervisory Committee Members) and no more than four Directors who are Audit and Supervisory Committee Members. Considering the importance of the role of Outside Directors in the Board of Directors, the proportion of Independent Outside Directors shall account for, in principle, at least one-third of the total number of members in the Board of Directors.

[Supplementary Principle 4.11.2] The status of concurrent positions held by Directors of the Company is disclosed in its Business Report and Reference Materials for General Meeting of Shareholders.

[Supplementary Principle 4.11.3] The Company analyzes and evaluates the Board of Directors once a year to improve its effectiveness. The results of analysis and evaluation on the Board of Directors conducted in the fiscal year 2021 are summarized as follows. No consultants or other external parties were used in the analysis and evaluation of the effectiveness.

1. Evaluation method

In the same manner as conducted last year, a questionnaire was distributed to all Directors and Corporate Auditors, and the Board of Directors discussed the results based on the responses.

2. Summary of evaluation results

The results of the questionnaire confirmed that 9 out of total 14 items were rated as "fully adequate" and "generally adequate."

On the other hand, "explanation on the items on agenda (including advance explanations) at Board of Directors meetings" was indicated as an issue that still needs to be improved. A small number of respondents indicated that there are issues regarding "frequency of Board of Directors meetings," "frequency and content of the reports on risk management system," and "management of conflicts of interest with related parties."

3. Assessment on actions taken on the issues in the last year

To address the issues in the last year, the Company has been working on the following items.

(1) In order to address the issues of "explanations on the items on agenda (including advance explanations)"

and "securing time to review materials in advance," the Company shall strive to ensure that important items are fully discussed at Board of Directors meetings by, when sharing materials for the items on agenda, explaining the detail, background and other circumstances, especially to Outside Officers. Furthermore, the Company shall share such matters with officers as necessary as off-agenda items, so to provide them sufficient time to verify and review each opinion, before they are put on the agenda.

(2) For "providing training opportunities and related financial support," the Company shall strive to provide, not only opportunities to participate in general meetings of employees and kickoff events in the divisions, but also information on outside seminars and online training.

As a result of addressing issues (1) and (2) above, the evaluation result indicated improvement in the issues of "securing time to review materials in advance" and "providing training opportunities and related financial support." On the other hand, "explanations on the items on agenda (including advance explanations)" was rated

as requiring further improvement.

4. Future actions to take on the issues

Given the results of the evaluation, the Board of Directors deliberated and decided to strengthen the efforts in fiscal 2022 with focus on the following items.

(1) To address the issue of "explanations of the items on agenda (including advance explanations)," the

Company shall allocate time for explaining the items on agenda to Outside Officers before the Board of Directors meeting. Time shall be allowed for explanations and questions before the agenda item is resolved at the Board of Directors meeting as a matter to be resolved at the meeting.

(2) To address the issue of "frequency and content of the reports on risk management system," the Company shall enhance the frequency and content of reports from the Risk Management Committee and the Internal Audit Office to the Board of Directors.

[Supplementary Principle 4.14.2] To ensure that Directors of the Company fulfill their expected roles and responsibilities properly, the Company shall provide them, upon their assumption of office, with opportunities to gain knowledge about the Company's business, financials, organizations, etc., and to develop an

understanding of the roles and responsibilities expected as Director. In addition, after their assumption of office, the Company shall provide them with opportunities to be kept updated on an ongoing basis.

[Principle 5.1] (i) The Company has designated Directors in charge of IR and specified that said Directors shall manage all dialogues with shareholders. If a shareholder makes a request to engage in dialogue with the Company, either members of senior management, Directors including Outside Directors shall, in principle, engage in dialogue with such shareholder within a reasonable range, upon taking into consideration the wishesof such shareholder and the main concern of the dialogue. (ii) The Company has assigned personnel in charge of IR in the Corporate Department so that they can, under their leadership and that of Directors in charge of IR, organically cooperate with personnel in charge of accounting, legal affairs, and human resources, as well as with each division to enhance a constructive dialogue with shareholders. (iii) As a measure to increase opportunities for dialogue with shareholders, the Company holds a financial results briefing presented by the top management itself annually, as well as corporate briefings for individual investors. (iv) The Company shall report opinions and concerns ascertained during dialogues with shareholders to the members of senior management and the Board of Directors on a regular basis. (v) When engaging in dialogue with shareholders, the Company shall ensure thorough information management in accordance with its insider trading regulations and shall not disclose undisclosed material information selectively to certain persons.

2.

Capital Structure

Foreign Shareholding Ratio

10% or more and less than 20%

Status of Major Shareholders [Updated]

Name or Company Name	Number of Shares Owned	Percentage (%)
Atsushi Kawata	6,241,031	38.74
Yasuhisa Hino	3,105,512	19.28
Custody Bank of Japan, Ltd. (Trust Account)	870,000	5.40
The Master Trust Bank of Japan, Ltd. (Trust Account)	861,000	5.34
Custody Bank of Japan, Ltd. (Trust Account 9)	693,800	4.31
THE BANK OF NEW YORK MELLON 140051	450,800	2.80
NORTHERN TRUST CO.(AVFC) RE HCR00	427,100	2.65
THE BANK OF NEW YORK MELLON 133652	348,800	2.16
KIA FUND F149	247,800	1.54
Kunio Fujisaki	184,656	1.15

Name of Controlling Shareholder, applicable (excluding Parent Company)if	None
Name of Parent Company, if applicable	None

Supplementary Explanation

-