Compliance

Approach to Compliance

CHANGE Group (hereinafter, "our Group" or simply "we") recognizes "compliance" and "thorough prevention of corruption" as essential themes for the sustainable enhancement of corporate value.

Our Group's concept of "compliance" involves (1) adhering to laws as a minimum, (2) complying with internal regulations, and (3) fully respecting social norms. Our concept of "corruption prevention" involves thoroughly eliminating all forms of corrupt activities, including (1) bribery, (2) facilitation payments, and (3) insider trading.

In our Group's "Basic Sustainability Policy," we clearly state the "thorough adherence to compliance" and the "thorough elimination of all forms of corrupt activities, including bribery, illegal political donations, and facilitation payments." The "Group Common Compliance Regulations" are resolved by the boards of directors of each Group company.

Our Group thoroughly eliminates the following acts as forms of corruption prevention. However, these are not exhaustive and are judged according to our Group's policies.

Bribery

• Offering, proposing, or promising money, entertainment, gifts, or other inappropriate benefits, whether directly or indirectly, to gain undue advantage in transactions, etc.
• Inappropriately bearing expenses that should be borne by public officials or employees of other companies
• Paying gratuities to public officials or employees of other companies to expedite administrative processes

Facilitation payments

• Offering entertainment or gifts that may arouse social suspicion or distrust, regardless of whether there is a quid pro quo (something in return)
• Offering entertainment or gifts to business partners, etc., that deviate from sound business practices or social norms, regardless of whether there is a quid pro quo

Insider trading

• Employees, etc., trading in specific securities of the Company or other companies after learning important facts in the course of their duties and before such facts are made public
• Disclosing important facts to others except when necessary for the performance of duties

Compliance Promotion System

Multifaceted Risk Assessment

To promote thorough compliance and corruption prevention, we conduct multifaceted risk assessments through the following committees:

1. Information Security Committee (chaired by the Chairman and Executive Officer, holds discussions on compliance risks in the information security field twice a month)
2. Health Committee (chaired by the Chairman and Executive Officer, holds discussions on labor disaster risks and labor-related legal risks once a month, with representatives from each department and an industrial physician as members)
3. Management Meeting (chaired by the Representative Director, President and Executive Officer, holds discussions on compliance risks related to overall business promotion once a month)

Our Legal Department is responsible for conducting compliance education for employees, implementing compliance measures, monitoring compliance adherence within the Company, and formulating and executing recurrence prevention measures for compliance violations.

Management Supervisory Department and Internal Audit Department

Our Management Supervisory Department is responsible for overseeing compliance regulations and anti-bribery rules, disseminating them to employees, and implementing operational matters as stipulated in the regulations.

Additionally, our Internal Audit Department oversees the internal reporting (whistle blowing ) regulations, similarly disseminating them to employees and implementing operational matters as stipulated in internal rules and regulations.

Board of Directors

Our Board of Directors regularly receives reports and supervises the operational status based on compliance regulations.

Communication to All Employees

Our Group continuously conducts educational activities on compliance for all employees to instill compliance awareness throughout the Group.

Specifically, we conduct various educational training (e-Learning) on compliance, corporate ethics, and corruption prevention for all employees, and provide opportunities for management to directly convey the importance of compliance at group-wide meetings of each company.

Compliance Training

Regarding Employee Education on Compliance

Our Group maintains and disseminates compliance regulations on an intranet site accessible to employees at all times.

Additionally, our Group conducts "compliance training" for all employees, striving to steadily improve their compliance awareness.

Our Group's "compliance training" clarifies that compliance includes (1) adhering to laws as a minimum, (2) complying with internal regulations, and (3) fully respecting social norms. It educates necessary mindset and social and internal rules for handling actual situations and past cases that occurred within our Group.

Furthermore, our Group has developed separate programs for "training on compliance with insider trading regulations," "training on respect for human rights," "training on prevention of bribery, corruption, etc.," "training on data security and privacy," "training on prevention of unfair competition," and "training on internal reporting channels," and implements them as appropriate.

When new graduates or mid-career employees join, these educational training courses are conducted individually, and the compliance promotion departments centrally manages the training records of all employees.

Training for All Employees

Our Group conducts "training on prevention of bribery, corruption, etc." for all employees, covering (1) understanding the basic anti-corruption requirements imposed on companies by laws and international norms when conducting business, (2) understanding the adverse effects of corruption risks on our Group, (3) refraining from offering bribes, gifts, or entertainment to public officials or their equivalents, directly or through third parties, and (4) conducting transactions fairly and appropriately, especially in dealings with government and public agencies.

Internal Reporting System (Whistleblowing System)

Our Group has established an internal reporting (whistleblowing) channel where all employees can report any compliance-related questions or issues, including legal violations and corruption prevention, regardless of whether the incident has occurred or is likely to occur, with the option to report anonymously.

Additionally, to facilitate easy reporting and consultation by whistleblowers, we have prepared reporting routes to internal contact persons, Auditors, and external third parties (lawyers) outside our Group. To enhance the effectiveness of the internal reporting system, our Group has established internal reporting regulations that require board approval for amendments, strictly stipulating "confidentiality of whistleblowers and report contents," "prohibition of any adverse treatment or retaliation against whistleblowers," and "confidentiality obligations of report recipients."

Furthermore, all received reports and consultations are promptly reviewed, reported to the compliance officer, and a system is in place to conduct detailed investigations. In fiscal year ended March 31, 2024, there were no internal reports that had a significant impact on the entire Group.

Data

The number of employee disciplinary actions and dismissals due to violations of our Group's anti-corruption policy, costs related to fines, penalties, and settlements related to corruption, and the amount of political donations are as follows: