P.64 Corporate Governance Structure (2)

Corporate

Corporate Governance Structure

Governance

Corporate Governance Structure

Initiatives to Strengthen the Supervisory Function of the Board of Directors To accelerate decision-making and ensure transparency and fairness within the Board of Directors, in June 2020, the number of board members was reduced from 17 to 9. In June 2023, one additional outside director was appointed to further strengthen the board’s supervisory function, resulting in a 10-member structure. Furthermore, we added two more outside directors in June 2026. Now the Board has 50% outside directors (6 of 12 members). We report all nine outside directors and outside auditors as independent officers in accordance with the Tokyo Stock Exchange regulations. Diversity in the Board of Directors We maintain the Board’s diversity by appointing six outside directors who have extensive experience and knowledge in corporate management, finance and accounting, human resource management, and legal affairs and compliance. We appointed two more female directors in June 2025 and added another one in June 2026. Now one-third of the Board are female directors (4 of 12 members). We will continue to establish a more diverse structure of the Board by further enhancing diversity in areas such as gender, career background, and age. Main agenda items discussed by the Board of Directors Growth strategies, Reporting the progress and discussions for updating the Medium- business strategies, Term Business Plan 2026, discussions on important business strategies, investment proposals and discussions on investment proposals Financial results, Verification reports on cross-shareholdings and consideration on performance their sale, consideration on acquisition of treasury shares, monthly, management, quarterly, and annual financial results, budget-related matters, and capital policy IR/SR activity status reports Sustainability Committee report, internal audit results report, Internal Sustainability, audit, Reporting System status report, risk management status report, and and compliance activities to strengthen group compliance Appointment and remuneration of executives, reports on matters deliberated by the Nomination Advisory and Compensation Advisory HR, governance, Committees, reports on the results of the BOD effectiveness evaluation and other and progress of improvement measures, discussions on the policy for responding to takeover proposals, reports on cybersecurity activities, and reports on activities for generative AI and DX

Nomination Advisory Committee and Compensation Advisory Committee

We have a Nomination Advisory Committee and a Compensation Advisory Committee. Independent outside directors constitute a majority of each Committee’s members and each Committee is also chaired by an outside director to ensure the independence and objectivity of the Committees. The Nomination Advisory Committee, upon consultation from the Board of Directors, deliberates from an objective and fair perspective and based on policies established by the Board on matters such as the appointment and removal of directors, succession planning for the president and representative direc- tor, and the status of training for potential successors. Similarly, the Compensation Advisory Committee deliberates on matters such as the company’s director compensation structure and levels, based on policies established by the Board, and submits its recommendations to the Board of Directors. In FY2025, the Nomination Advisory Committee met five times, and the Compensation Advisory Committee met four times. The Nomination Advisory Committee actively deliberates on the policy for the ratio of independent outside directors on the Board and on revising the independence criteria for indepen- dent directors. The Compensation Advisory Committee actively deliberates on reviewing the design of the stock compensation system and the composition of directors’ compensation.

Board of Corporate Auditors

Two standing statutory auditors actively establish the audit environment and gather information, and they monitor and verify the status of the internal control system’s design and operation daily, in cooperation with the internal audit depart- ment and others. The standing statutory auditors hold regular meetings with the president to exchange opinions on management policies, risks the company should address, and important audit issues. They also attend important meetings, review important approval documents, and receive reports on business execution from directors in charge. Furthermore, the standing statutory auditors strive to share information obtained in the course of their duties with the out- side auditors. The outside auditors consist of three individuals: a lawyer, a company executive, and a certified public accountant, and a system has been established to fulfill the role of monitor- ing the management from an independent and neutral position.

Internal Audits

The Internal Audit Division, which is under the direct supervi- sion of the president, performs internal audits on the relevant divisions of TBS and group companies based on the audit plan for the fiscal year as reported to the Board of Directors, and evaluates the suitability, effectiveness, and efficiency of the operation of the TBS Group. It reports the audit results to the president, and conducts a follow-up audit of the relevant divi- sions and companies on improvement of matters identified in the first audit. The results of audits for a fiscal year are report- ed to the Board of Directors. The Internal Audit Division also evaluates internal controls pertaining to financial reporting based on the Financial Instruments and Exchange Act. The standing statutory auditors and the Internal Audit Division generally hold a meeting every two weeks in order to share information concerning the establishment and imple- mentation of internal controls. Outside auditors receive reports from the Internal Audit Division on matters covered in internal audits, as needed. 64

Main agenda items discussed by the Board of Directors

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| Growth strategies, business strategies, investment proposals | Reporting the progress and discussions for updating the Medium-Term Business Plan 2026, discussions on important business strategies, and discussions on investment proposals |

| Financial results, performance management, capital policy | Verification reports on cross-shareholdings and consideration on their sale, consideration on acquisition of treasury shares, monthly, quarterly, and annual financial results, budget-related matters, and IR/SR activity status reports |

| Sustainability, audit, and compliance | Sustainability Committee report, internal audit results report, Internal Reporting System status report, risk management status report, and activities to strengthen group compliance |

| HR, governance, and other | Appointment and remuneration of executives, reports on matters deliberated by the Nomination Advisory and Compensation Advisory Committees, reports on the results of the BOD effectiveness evaluation and progress of improvement measures, discussions on the policy for responding to takeover proposals, reports on cybersecurity activities, and reports on activities for generative AI and DX |