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Corporate Governance

Basic Concept of Corporate Governance

We have a mission of "making the real estate market better for all participants with IT" and a vision of "becoming an indispensable information infrastructure for the real estate market". We develop the IT services (system application) in-house and develop the business to provide it to real estate companies nationwide as cloud / SaaS.
In order to realize this "mission", it is a major premise that we will continue to be a going concern, and for that purpose, it is indispensable to continuously improve the essential corporate value. In order to continuously improve corporate value, it is necessary to generate profits that exceed the cost of capital and continuously generate cash flow over the medium to long term, and better management is necessary as a mechanism to realize this. We believe that it is important to enhance corporate governance to support making decisions.
In addition, in order to realize innovation in socially new business areas in which we develop our business and to build a competitive advantage as a continuing company, the autonomy of each of our organizations and each individual is indispensable. We have established "Core Values of e-Seikatsu" as a value standard and a code of conduct for developing business aiming at the realization of "Mission" and "Vision", and this philosophy is also positioned to make governance function effectively.

Our Core Values
Keep setting a new standard.
Always question the "norm," learn and unlearn, and formalize the path we have taken.
Be curious, enjoy exploring the unexplored as pioneers, introduce and expand new insights into our organization.
Advance forward with perspective just right.
Think about innovations and improvements that will move the world forward by one step.
Not in the future, not so far, nor today, but from the distance of "TOMORROW".
Light the way forward proactively, not leaving anyone behind, and not stagnating.
Make our history by accumulating trust from others.
The past leads to today, and today leads to the future.
Accumulating trust with our customers step by step, becomes the foundation of "US" and our history.
Love challenges and failures we meet altogether.
Let's welcome the trials and errors with great love, for those who will challenge from now on and those who will watch over the challenge.
Whether it is a small challenge or a big failure, let us accumulate them while supporting each other.
Generate a chemical bond by various talents.
Send out your own WILL and involve colleagues and partners who can fill in your lacking abilities.
When the DNA of specialist's fuse beyond differences in areas and ideas, new "chemical reactions" will be born.
Be gentle and kind, but with firm determination in heart.
Kindness = "friendly" and ease = "comfortable", but it is not a Yes-man.
We will be a dependable presence through clear communication and a system with a "principle".

As mentioned above, we have set the "mission" of "making the real estate market, which is the social infrastructure, better with the power of IT," and are taking on the challenge of solving social issues with the business itself. A mechanism for making fair and decisive decisions toward the realization of the "mission" by regarding shareholders, customers, employees, and everyone involved in the real estate market as "stakeholders" and taking their respective positions into consideration. We will continue to enhance our corporate governance system.

Our Initiatives on the Corporate Governance Code (686KB) (only available in Japanese)

Corporate Governance Report

You can see the latest report (PDF) from the link below.

Report on Corporate Governance (117KB) (only available in Japanese)

Overview of Our Corporate Governance System

We are a company with an Audit and Supervisory Committee. We have adopted the form in order to strengthen management's agile decision-making and supervision authority, and to establish a division of duties and an efficient management and execution system. In addition, as we believe that the management supervision function from an independent standpoint is also important based on the trustee responsibility to shareholders, we have appointed an outside director and a committee member with high level of specialized knowledge and abundant experience in the executive positions of listed corporate groups. All outside directors have been designated as independent officers, and we has secured a highly effective management supervision system by having the directors express their opinions from an independent and objective standpoint.

Guidelines and Independence Criteria for Appointment of Independent Outside Directors (295KB) (only available in Japanese)

1.Board of Directors

The Board of Directors consists of full-time internal directors (excluding directors who are Audit and Supervisory Committee members) and outside directors (Audit and Supervisory Committee members), and meets at least once a month to share information, resolve important matters and supervise the business execution of each director. In addition, executive officers are also present to further enhance internal control by sharing information and communicating with each other.

(1)Number of directors
The Articles of Incorporation stipulate that the number of directors of the Company (excluding directors who are Audit and Supervisory Committee members) is 10 or less, and the number of directors who are Audit and Supervisory Committee members is 5 or less.
(2)Requirements for resolutions on the appointment and dismissal of directors
The articles of incorporation stipulate that shareholders who have one-third or more of the voting rights of shareholders who can exercise their voting rights are present, and the majority of the voting rights are used, and that the Company shall not rely on cumulative voting. There are no special provisions regarding the requirements for the resolution of dismissal, which is different from the Companies Act.
(3)Interim dividend decision-making body
The Articles of Incorporation stipulate that the dividend of surplus (interim dividend) stipulated in Article 454, Paragraph 5 of the Companies Act shall be determined by a resolution of the Board of Directors, not by a resolution of the general meeting of shareholders. The purpose of this is to make the Board of Directors the decision-making body for interim dividends, and to flexibly return profits to shareholders according to the business environment and business performance surrounding the Company.
(4)The decision-making body for the acquisition of treasury stock
The Articles of Incorporation stipulate that the Company may acquire its own shares by a resolution of the Board of Directors without a resolution of a general meeting of shareholders, pursuant to the provisions of Article 165, Paragraph 2 of the Companies Act. The purpose of this is to implement agile capital policy by making the acquisition of treasury stock the authority of the Board of Directors.

2.Management Meeting

The Management Meeting is composed of full-time internal directors (excluding directors who are audit and supervisory committee members), executive officers, and general managers, and is held at least once a week in principle so that prompt management decisions can be made. By discussing management issues of various sizes, we are building a system that enables flexible management strategies in response to the rapidly changing IT industry. In addition, a full-time outside director (audit and supervisory committee member) is also present to receive reports on important matters discussed at the meeting.

3.Audit and Supervisory Committee

The Audit and Supervisory Committee is composed of one full-time outside director/Audit and Supervisory Committee member, and three outside directors/Audit and Supervisory Committee members. Outside officers are working to strengthen and improve the management supervision function and cooperate with other internal organizations as follows.

<Status of efforts to strengthen the functions of the Audit and Supervisory Committee>
(1)We carry out internal audits of the organization in cooperation with the Internal Audit Office.
(2)We have a system in which we attend meetings of the Board of Directors, Management Meetings and other important meetings and receive reports on important matters.
(3)We are coordinating with the accounting auditor by receiving reports on the audit plan and the audit results twice a year.
(4)Opinion exchange meetings are held with the Representative Director and the Internal Audit Office as appropriate.
(5)The Company secures sufficient human resources and systems to support the Audit and Supervisory Committee, such as by assigning dedicated employees to assist the Audit and Supervisory Committee so that the Audit and Supervisory Committee can conduct audits more effectively. We have a system in place for the internal control system to function properly.
(6)Each Audit and Supervisory Committee member audits that there is no violation of laws and regulations, the Articles of Incorporation, and that there is no fact that it infringes the interests of shareholders. In addition, we are striving to strengthen management oversight by exchanging opinions as necessary with each business executive director, important employees, and organizations that promote cross-departmental internal control.

4.Internal Audit

Regarding the internal audit system, the Internal Audit Office has been set up under the direct control of the president, and the dedicated director and staff of the internal audit office are engaged. Based on the annual audit plan, the Internal Audit Office collaborates and cooperates with the Audit and Supervisory Committee, the Accounting Auditor, and the person in charge of security management to carry out business audits, and thoroughly implements legal and appropriate operations and internal control of operations.
We have a system in which we report problems and future issues to the president at any time, and we have a system in which information can be exchanged with the Audit and Supervisory Committee, the Accounting Auditor, and the person in charge of security management as appropriate.

5.Status of Accounting Audit and Amount of Remuneration

Regarding accounting audits, we have concluded an audit contract with Kisaragi Audit Corporation, and in addition to regular audits, we receive appropriate guidance on accounting issues and strive for proper accounting treatment.
For the fiscal year ended March 31, 2022, the names of the certified accountants who executed the work, the names of the assistants involved in the audit work, and the contents of the audit fee are as follows.

(1)Name of the certified accountant who executed the business
Designated employee / business execution employee Koji Ushiro
Designated employee / business execution employee Osamu Sano
(2)Composition of assistants involved in accounting audit work
5 certified accountants
(3)Contents of audit fees
Remuneration based on the work stipulated in Article 2, Paragraph 1 of the Certified Public Accountants Act was 13,000 thousand yen.
There is no remuneration based on operations other than the above.
(4)Policy for deciding whether to dismiss or not reappoint the accounting auditorIf the Accounting Auditor is deemed to fall under any of the items stipulated in each item of Article 340, Paragraph 1 of the Companies Act, the Audit and Supervisory Committee will dismiss the Accounting Auditor based on the agreement of all Audit and Supervisory Committee members. In this case, the Audit and Supervisory Committee members selected by the Audit and Supervisory Committee will report the dismissal of the Accounting Auditor and the reason for the dismissal at the first general meeting of shareholders convened after the dismissal.
The Audit and Supervisory Committee will make decisions regarding dismissal or non-reappointment in consideration of individual circumstances such as the number of years of continuous audits by the accounting auditor.

6.Recent Implementation Status of Efforts to Enhance Corporate Governance of the Company

For the fiscal year ended March 31, 2022, the Board of Directors met 12 times on a regular basis and 5 times on an extraordinary basis, for a total of 17 times, and 50 Management Meetings were held to discuss important business execution decisions and important management matters. In addition, the Audit and Supervisory Committee met 20 times, and in addition to activities such as audit and management supervision policies, the status of internal audits, and the implementation of audit report meetings by audit corporations, the Audit and Supervisory Committee members attended the Board of Directors meetings and serve as directors. We have been rigorously monitoring business execution. The Internal Audit Office conducted business audits of each department of the Company.

Current corporate governance system diagram

The system diagram of our corporate governance is as follows.

Corporate governance system diagram

Outside Director

We have appointed Akira Hirano, Masato Ohmachi, Haruo Narimoto, and Koichiro Ito as outside directors. Mr. Hirano and Mr. Ohmachi have several years of experience in executive positions at group companies of major financial institutions, and they are qualified in terms of background, knowledge, and personal connections. Mr. Narimoto has a wide range of knowledge in the fields of real estate and technology in addition to the legal knowledge cultivated as a lawyer and is expected to contribute to strengthening the supervisory function of business execution. Therefore, he has been appointed as an outside director/an Audit and Supervisory Committee member.

Independent Officer

The Company has designated four outside directors as independent officers.

Concept and Outline of Executive Compensation

At the Board of Directors meeting held on February 22, 2021, the Company resolved a decision policy regarding the content of individual remuneration for directors (excluding directors who are Audit and Supervisory Committee members, hereinafter referred to as "directors"). The decision policy regarding the content of individual remuneration for directors is as follows.
The basic policy is that the remuneration of the directors of the Company (excluding the Audit and Supervisory Committee members shall be the same below) shall be a remuneration system linked to shareholder interests so that it fully functions as an incentive for the sustainable improvement of corporate value.
When determining the remuneration of individual directors, the level is set at an appropriate level based on their respective responsibilities. Currently, as the directors also serve as major shareholders of the Company, improving corporate value and expanding business performance are in line with shareholder interests. As sufficient incentives have been granted for this purpose, the remuneration of directors will be limited to fixed basic remuneration, and there are no plans to award performance-linked remuneration or stock remuneration at this time.
In order to ensure the fairness and transparency of the deliberation process, at the Board of Directors, in which the Audit and Supervisory Committee members, who are outside officers, also participate, the Company comprehensively evaluates the responsibilities and performance of each individual and determines the final remuneration amount, within the range of the remuneration limit approved at the general meeting of shareholders. Since the final remuneration amount is decided after comprehensively evaluating the performance, we judge that the content is in line with the decision policy.
At the 16th Ordinary General Meeting of Shareholders held on June 26, 2015, the maximum amount of compensation for directors (excluding directors who are Audit and Supervisory Committee members) is 500,000,000 yen or less per year (however, the salary for employees of directors who also serve as employees is not included.). It has been resolved that the maximum amount of compensation for directors who are members of the Audit and Supervisory Committee is 200,000 thousand yen or less per year. The number of directors (excluding directors who are Audit and Supervisory Committee members) at the end of the general meeting of shareholders is five. At the end of the general meeting of shareholders, the number of Audit and Supervisory Committee members is four.

Policy on System Development / Efforts to Promote Constructive Dialogue with Shareholders

Basic Policy on General Dialogue with Shareholders:
The Company has appointed CFO, Representative Director and Vice President, as the director in charge of IR, and has the Finance Department of Corporate Group as the contact point for IR inquiries. For institutional investors, we hold financial results briefings and hold interviews as much as possible in response to the requests of shareholders and investors, providing opportunities for constructive dialogue with shareholders.
Means of dialogue other than individual interviews:
The Finance Department, which is the contact point for IR inquiries, actively accepts IR interviews such as telephone interviews and interviews from investors and holds semi-annual financial results briefings for analysts and institutional investors. in which the CEO and IR director explain financial results. In addition, once a month, we disclose the monthly overview, which discloses the sales of the previous month, on our website and the website of the Tokyo Stock Exchange.
Feedback:
In addition to sharing the opinions of shareholders stated in the voting rights exercise form at the general meeting of shareholders among the directors, the content of the question-and-answer session at the financial results briefing is disclosed on the Company's website and an in-house publicity email is sent. Information on IR interviews and visit results from investors is shared with the members of the Management Meeting.
Measures for managing insider information:
In dialogues with investors, if the date on which the dialogue is held falls between the day following the quarterly settlement date and the date of the announcement of the quarterly financial results, the Company avoids using the theme of the latest performance as a "silence period". We also pay attention to the management of insider information.

Takeover Defense Measures

Currently, we have no plans to introduce specific takeover defense measures.

Cross-Shareholdings Policy

We do not hold so-called strategically held shares held for purposes other than investment purposes. In addition, we recognize that it is not necessary to hold strategically held shares in light of the current shareholder composition and business model, and we have no specific plans.
In the future, if it becomes necessary to hold strategically held shares, we will explain that the benefits and risks associated with holding the shares are commensurate with the cost of capital and contribute to the improvement of corporate value. We will formulate policies regarding strategically held shares and standards for ensuring appropriate response to the exercise of voting rights in strategically held shares and will respond in accordance with those standards.

Basic Policy on Internal Control

Our Core Values

We have established "Our Core Values" as our corporate philosophy and we have positioned it as a basis for management and as a code of conduct and value standard for all officers and employees.

Our Core Values
Keep setting a new standard.
Always question the "norm," learn and unlearn, and formalize the path we have taken.
Be curious, enjoy exploring the unexplored as pioneers, introduce and expand new insights into our organization.
Advance forward with perspective just right.
Think about innovations and improvements that will move the world forward by one step.
Not in the future, not so far, nor today, but from the distance of "TOMORROW".
Light the way forward proactively, not leaving anyone behind, and not stagnating.
Make our history by accumulating trust from others.
The past leads to today, and today leads to the future.
Accumulating trust with our customers step by step, becomes the foundation of "US" and our history.
Love challenges and failures we meet altogether.
Let's welcome the trials and errors with great love, for those who will challenge from now on and those who will watch over the challenge.
Whether it is a small challenge or a big failure, let us accumulate them while supporting each other.
Generate a chemical bond by various talents.
Send out your own WILL and involve colleagues and partners who can fill in your lacking abilities.
When the DNA of specialist's fuse beyond differences in areas and ideas, new "chemical reactions" will be born.
Be gentle and kind, but with firm determination in heart.
Kindness = "friendly" and ease = "comfortable", but it is not a Yes-man.
We will be a dependable presence through clear communication and a system with a "principle".

We value the dignity of people, respect their perspectives, and contribute to society with sincerity and a sense of responsibility.
Based on these core values, we recognize that it is an important management responsibility to establish, build and operate a system for proper business execution.
We have established "Basic policy of internal control system". We will continue to strive to develop and build a more appropriate internal control system by reviewing this basic policy as appropriate in response to changes in the environment surrounding the company.

System to Ensure the Appropriateness of Business

The outline of the decisions made regarding the system for ensuring that the execution of duties by directors complies with laws and regulations and the Articles of Incorporation and other systems for ensuring the appropriateness of the company's business is as follows.
The outline of the decisions made regarding the system for ensuring that the execution of duties by directors complies with laws and regulations and the Articles of Incorporation and other systems for ensuring the appropriateness of the company's business is as follows.
In order to properly build, operate and enhance the system specified below, the Audit and Supervisory Committee meets at least once a month to share information and communicate with each other, and based on the "Audit and Supervisory Committee Auditing Standards", oversees the business execution of each director.
(1) System to ensure that the execution of duties by directors and employees complies with laws and regulations and the Articles of Incorporation
(1)-1 We recognize that thorough compliance is indispensable for the survival of a company. In addition to legal compliance, we strive to establish corporate ethics, by promoting the "Our Core Values", which is also the "value standard" for our business execution. We thoroughly comply with the "Compliance Regulations" and make them known through in-house training and educational activities.
(1)-2 The Internal Audit Office, which reports directly to the President, conducts internal audits in collaboration with the Audit and Supervisory Committee and the Accounting Auditor, ensuring legal and appropriate operation and thorough internal management of operations. We also have a system in place to report problems and future issues to the President at any time.
(2) System for storing and managing information related to the execution of duties by directors
Information related to the execution of duties by directors is recorded in documents (paper or electromagnetic media) and stored appropriately in accordance with laws and regulations, the Articles of Incorporation, and internal rules and policies such as "Document Management Regulations" and "Information Security Basic Policy". Directors can view these documents.
The documents include minutes of the general meeting of shareholders, minutes of the Board of Directors, minutes of the Audit and Supervisory Committee, minutes of the Management Meeting, attachments to these minutes, and other important documents related to the execution of duties by directors.
(3) Regulations and other systems for managing the risk of loss
(3)-1 While appropriately operating the "Risk Management Regulations" to recognize and respond to the risk of serious loss due to disasters, failure of core systems, fraud of officers and employees, etc., we are striving to build and maintain the risk management system.
(3)-2 A Chief Security Officer has been appointed to be responsible for security. The IT Service Management Committee and the Security Committee, in which representatives from each department participate, conduct risk analysis related to security, implement countermeasures, and exchange information, in accordance with the basic information security policy and service management basic policy set by the President.
(4) System to ensure efficient execution of duties by directors
(4)-1 Since our founding, we have positioned accurate and prompt corporate management as an important issue, and have endeavored to enhance our corporate governance system, make quick decisions, and build an efficient management system.
(4)-2 The Board of Directors meets at least once a month to share information and communicate with each other, resolve important matters of the Company, and supervise the business execution of each director.
(4)-3 The Management Meeting consisting of full-time directors, executive officers and general managers has been established under the Board of Directors and is held once a week in principle. At the Management Meeting, the matters to be discussed by the Board of Directors are examined in advance, and decisions are made on various management issues within the scope of the authority delegated by the Board of Directors.
(4)-4 The Board of Directors stipulates the division of duties between the management organization, each director and executive officers, and each director and executive officer appropriately executes business based on the division of duties.
(5) System to ensure the appropriateness of business in the corporate group consisting of the Company and its subsidiaries
(5)-1 System for reporting to the Company matters related to the execution of duties by directors of subsidiaries, etc.
The Company stipulates in the "Affiliated Company Management Regulations" that important matters in the subsidiary should be agenda items of the Company's Management Meeting or the Board of Directors. The Company has approved or received reports on matters related to the execution of duties by the directors of subsidiaries.
(5)-2 Regulations and other systems regarding the management of the risk of loss of subsidiaries
The Company has stipulated in the "Affiliated Company Management Regulations" that the main policies and regulations including the "Risk Management Regulations" will be applied to the subsidiaries. The subsidiaries are subject to the security standards and risk management systems established by the Company.
(5)-3 System to ensure efficient execution of duties by directors of subsidiaries
A. The Board of Directors meets at least once a month to share information and communicate with each other, resolve important matters of the company, and supervise the business execution of each director.
B. The Company stipulates in the "Affiliated Company Management Regulations" that important matters in the subsidiary should be agenda items of the Company's Management Meeting or the Board of Directors and strives to build an efficient management system in the subsidiary through decision-making at the Management Meeting.
(5)-4 ystem to ensure that the execution of duties by directors and employees of subsidiaries complies with laws and regulations and the Articles of Incorporation
As a corporate group, the Company and its subsidiaries share the common value standards of the Group (“Our Core Values”) and have oneness. The Internal Audit Office of the Company conducts internal audits not only for the Company but also for its subsidiaries based on the "Internal Audit Regulations" established by the Company.
(6) Matters concerning directors and employees who should assist the duties of the Audit and Supervisory Committee
(6)-1 In addition to holding regular discussion meetings between the Audit and Supervisory Committee members and the representative director about four times a year, and not limited to meetings such as the Board of Directors or the Management Meeting, directors (excluding directors who are Audit and Supervisory Committee members) provide information to Audit and Supervisory Committee members as appropriate.
(6)-2 The Audit and Supervisory Committee Secretariat has been set up under the Audit and Supervisory Committee, and employees who assist the duties of the Audit and Supervisory Committee are in charge of their work.
(7) Matters concerning the independence of the directors and employees of the Secretariat from the directors (excluding directors who are audit and supervisory committee members) and matters concerning ensuring the effectiveness of the instructions of the audit and supervisory committee to the directors and employees of the Secretariat.
(7)-1 The person in charge of the Audit and Supervisory Committee Secretariat shall not receive instructions or orders from directors (excluding directors who are Audit and Supervisory Committee members) regarding the implementation of the business instructed by the Audit and Supervisory Committee.
(7)-2 Regarding the personnel changes of the person in charge of the Audit and Supervisory Committee Secretariat, we will report to the Audit and Supervisory Committee in advance and obtain their approval.
(7)-3 The person in charge of the Audit and Supervisory Committee Secretariat will attend the Audit and Supervisory Committee and report on the implementation details and results of the work instructed by the Audit and Supervisory Committee.
(8) System for reporting to the Audit and Supervisory Committee
(8)-1 System for reporting to the Audit and Supervisory Committee by the directors of the Company (excluding directors who are Audit and Supervisory Committee members) and employees.
A. Full-time Audit and Supervisory Committee members also attend the Management Meeting, and the full-time members report to other Audit and Supervisory Committee members on the agenda and progress of deliberations at the Management Meeting.
B. Directors (excluding directors who are Audit and Supervisory Committee members) and executive officers shall promptly report to the Audit and Supervisory Committee, when matters that have a significant adverse effect on the company's credibility, business performance, etc., or matters that may have a significant adverse effect are discovered.
(8)-2 A system for reporting to the Audit and Supervisory Committee by directors, corporate auditors, employees and employees of subsidiaries, or persons who receive reports from these persons.
A. The Audit and Supervisory Committee will request subsidiaries to report on their business based on the "Audit and Supervisory Committee Auditing Standards."
B. The Company stipulates in the "Affiliated Company Management Regulations" that important matters in the subsidiary should be agenda items of the Company's Management Meeting or the Board of Directors, and the relevant matters will be reported by the subsidiary to the Management Meeting or the Board of Directors. A full-time Audit and Supervisory Committee member will attend this Management Meeting.
C. According to the "Affiliated Company Management Regulations", the Company can use the "Compliance Hotline" system at its subsidiaries as well. When a report is made using this system, the content of the report is notified to the full-time Audit and Supervisory Committee member, who examines whether the investigation is possible, requests the investigation and receives the result, and responds to the Management Meeting. It is stipulated in the "Compliance Hotline Operation Management Regulations" that the content of the report and the summary of the results will be reported.
(9) A system to ensure that the person who made the report in the previous item will not be treated unfavorably because of the report.
Based on the "Compliance Hotline Operation Management Regulations", the Company prohibits any actions that would be disadvantageous to the whistleblower who used the "Compliance Hotline" system in the previous issue.
(10)Matters concerning the policy regarding the processing of expenses or debts incurred in the execution of duties by the Audit and Supervisory Committee (limited to the execution of duties by the Audit and Supervisory Committee)
The Audit and Supervisory Committee members shall settle the expenses incurred in the execution of duties based on the "Accounting Regulations".
(11) Other systems to ensure that audits by the Audit and Supervisory Committee are carried out effectively
(11)-1 Full-time Audit and Supervisory Committee members attend the Management Meeting and receive reports on important matters.
(11)-2 The Audit and Supervisory Committee conducts audits in cooperation with the Accounting Auditor and the Internal Audit Office.
(11)-3 We hold regular discussion meetings between the Audit and Supervisory Committee members and the Representative Director about four times a year.
(12) System to ensure the reliability and appropriateness of financial reporting
In order to ensure the reliability and appropriateness of financial reporting, and to appropriately respond to the internal control evaluation system stipulated in the Financial Instruments and Exchange Act, the Board of Directors has established a basic policy regarding the development and operation of internal controls related to financial reporting. In addition, we will maintain and operate the internal control system, continuously evaluate whether the system is functioning effectively and properly and take necessary corrective measures for deficiencies.

Basic Concept for Eliminating Antisocial Forces

We will endeavor to eliminate antisocial forces that threaten the order of society and the sound activities of companies and will take a resolute stance to systematically respond to all relationships such as business relationships. We adhere to the policy of not having it.
We will endeavor to eliminate antisocial forces that threaten the order of society and the sound activities of companies and will take a resolute stance to systematically respond to all relationships such as business relationships. We adhere to the policy of not having it.

Business Risks

Among the matters related to the business situation and accounting situation of the Group, the main matters that are considered to be risk factors and other matters that are considered to have a significant influence on the judgment of investors are described below. Though we are aware of the possibility of these risks occurring and will endeavor to avoid them and take measures in the event of such risks, we believe that investment decisions regarding the Company's shares must be made after careful consideration of this section and the contents other than this section.
Unless otherwise specified, the following items regarding the future are based on our judgment as of the end of March 2021 and may differ from the actual results due to the inherent uncertainty.

 

(1)About the business environment

①About the spread of the Internet
The cloud solution business developed by the Group is mainly targeted at customers in the real estate industry who use the Internet, and in order to expand the customer base, it is necessary to increase the number of consumers who use the Internet to search for real estate property information. Therefore, we believe that the further spread of the Internet is a basic prerequisite for our growth. So far, the Internet usage situation in Japan has remained at a high level, and the Internet usage in Japan from 13 to 69 years old exceeded 90% in 2019, and the ratio of Internet users has reached 89.8% (Ministry of Internal Affairs and Communications "Reiwa 1st Year Communication Usage Trend Survey"). However, if the number of Internet users decreases or the usage cost rises in the future due to the introduction of new regulations on the occurrence of harmful effects due to the spread of the Internet and the introduction of new regulations and other unexpected factors, the Group's business, financial condition and business results may be affected.
In addition, it is a basic condition for our growth that information communication on the Internet or electronic commerce will continue to spread widely and a comfortable usage environment for Internet users will be realized. If such improvements in the telecommunications infrastructure environment fall far below general expectations, there will be certain restrictions on the business environment and preconditions of the Company, which may affect the financial position and operating results of the Group.
②About cloud business
The cloud is a service that provides systems and applications via the Internet and has been recognized as a new method and concept in the provision of software. It has been called "SaaS" and has become widespread. On the other hand, there is a possibility that competition at the enterprise level dealing with the cloud will intensify in the future. In such a business environment, if the response to new technology in the service does not produce the desired results, or if the customer needs cannot be accurately grasped, or if a more epoch-making concept in other companies, or if a product or service with the above appears, or if the demand for the cloud itself is far below our forecast, the financial condition and operating results of the Group may be adversely affected.
③About the impact of competition on business performance
The Group develops systems and applications that meet the needs of the real estate industry and provides them as cloud and SaaS for the real estate industry. We believe that there are time and financial barriers for a third party to gather new engineers and sales representatives who are familiar with the business know-how of the real estate industry and build a business model similar to that of the Group.
However, it cannot be said that it is technically impossible to reconstruct a system equivalent to that of the Group, and it is an epoch-making process that utilizes the entry of major companies with financial and brand power and completely new concepts and technologies. If a company that develops such a system appears, it may affect the business of the Group. Furthermore, if competition intensifies due to technological innovations and new entrants in the Internet industry, the Group's business, financial position and operating results may be adversely affected.
④Response to technological innovation
The Group develops its business based on Internet-related technologies, but the Internet-related fields are undergoing extremely rapid changes due to the development of new technologies and the introduction of new services based on them. Therefore, if our response to technological innovation is delayed, the competitiveness of the Group may decline.
⑤Trends in the real estate industry
The Group develops system applications such as real estate business support systems for customers in the real estate industry and develops businesses that provide them as cloud and SaaS, and the sales destinations are also concentrated on customers in the real estate industry. We provide services suitable for each business type such as rental brokerage, rental management, and sales brokerage in the real estate industry. The financial condition and business results of the Group depends on the overall economy of the real estate industry and the status of system investment in the real estate industry.
In the future, if the regulatory environment for the real estate industry changes or if there is any change in the response of each company in the industry, the business of the Group may be affected.
⑥Legal regulations
Currently, the Telecommunications Business Law is one of the major laws and regulations related to the Internet in Japan. Since we provide the "mail delivery function" to client companies, we are notifying as the telecommunications carrier. In addition, various discussions are still being held on the ideal way of information distribution and electronic commerce on the Internet.
Other than the above, there are no laws or regulations that regulate the business itself operated by the Company, but in the future, laws and regulations that regulate Internet users, related services and businesses will be enacted, and the interpretation of existing laws and regulations will be changed. In such a case, the business of the Group may be restricted.
In addition, information distribution on the Internet and display items in the field related to real estate may be subject to regulation, in which case the business of the Group may be restricted.

(2)Risks related to our system

We take appropriate measures for network security and take out insurance for personal information leakage, but even if we take these measures, it causes various interferences such as intrusion of computer viruses and hackers. In the event of a loss, it may not be possible to cover all of them. In that case, the business, financial condition and operating results of the Group may be adversely affected.
①Possibility of malfunction of customer service system
In general, it is said that it is impossible to completely eliminate the occurrence of defects with advanced software, and various defects may occur with the Group's cloud and SaaS. We will continue to strive to develop highly reliable systems, and although we have stipulated disclaimers in principle in our contracts, if a fatal defect that interferes with the operation of our services provided via the Internet is discovered and the defect cannot be resolved appropriately, it may adversely affect the Group's credit, financial condition and business results.
②Risks related to natural disasters, accidents, systems, etc.
In the past, the Group had installed a system infrastructure for providing cloud and SaaS for customers on its own server equipment and installed it in an external data center (Chuo-ku, Tokyo). In the current consolidated fiscal year, we are promoting efforts to completely migrate the service infrastructure to the IaaS environment, and as of the end of the current consolidated fiscal year, the project has been completed as planned.
The IaaS is procured from an external IaaS operator and is maintained by the operator. Though we selected the operator that is considered to have the world's top-class stability and robustness, when an unexpected situation such as damage to equipment or restriction of power supply occurs due to a natural disaster such as an earthquake, typhoon, tsunami or volcanic activity that exceeds the expectations of the business operator, or an accident, fire or terrorism, the business activities of the Group may be hindered.
Even if the global epidemic (pandemic) of infectious diseases, such as the spread of new coronavirus infectious diseases that continues from 2020, impedes business performance, we have already established a system for working from home (remote work) for all employees of the company, and we have a system in place to maintain the same service level as before, even for inquiries from customers and support centers. In addition, regarding visits to customers and business negotiations, we have established a system that enables us to develop sales activities that are the same as before by utilizing web conferencing.
However, if a situation occurs in which the business cannot be carried out properly due to an unpredictable epidemic, the financial condition and operating results of the Group may be adversely affected as well.
③Risks of dependence on a specific external IaaS operator
As of the end of this fiscal year, our cloud and SaaS service infrastructure for customers is mainly operated on AWS (Amazon Web Service), which is an IaaS provided by Amazon Inc. in the United States. We have maintained a good relationship with the company, and it is expected that the contractual relationship will continue in a stable manner in the future. If there is a change, it may adversely affect the financial condition and operating results of the Group.
In addition, since we are dealing with the company in US dollars, if there are sudden exchange fluctuations in the future, the financial condition and operating results of the Group may be adversely affected. We will consider introducing measures to reduce foreign exchange risk in the future.

 

(3)Information security management

The Group provides a customer information management system for customers and is entrusted by the customer to manage personal information, accumulated through the operation of that system. In addition, customer information may be obtained through the Company's own website.
The Group manages important customer information such as personal information in accordance with internal standards, manages security for information assets regarding prevention of external leakage of that information, educates employees regarding information management, and conclude a confidentiality agreement with the outsourcers. In May 2009, we obtained "ISO / IEC27001" certification, which is an international standard for information security management systems (hereinafter referred to as ISMS), and in September 2017, we obtained cloud service information security "ISO / IEC27017" certification, which is an international standard for management systems (hereinafter referred to as ISMS), at the Tokyo Headquarters, Osaka Branch, Fukuoka Branch and Nagoya Branch. At this point, we are not aware of any serious accidents or troubles related to information management.
However, it cannot be said that the possibility that this important customer information will be leaked to the outside or misused in some way is not completely excluded. In addition, in preparation for these situations, we have insurance for personal information leakage, but we do not completely cover all losses. Therefore, if these situations occur, there is a possibility that the financial condition and business results of the Company may be adversely affected by claims for damages to the Group or deterioration of the credit of the Company. The Group is a business operator handling personal information under the Personal Information Protection Law and is subject to this law.

(4)About the business structure

①About securing human resources
The Group's basic principle is in-house development in service development work. Going forward, we will continue to expand our business centered on our current business domain, and it is necessary to secure excellent human resources with specialized knowledge and skills in carrying out business operations such as the Group's service strategy and development strategy. If we cannot expand these human resources, it may hinder efficient business development at the speed that the Group thinks.
②About systematic response to business expansion
We are still a small organization, and the internal control system has responded accordingly. In the future, as the scale of the Company expands, we plan to further enhance our internal control system, but we may not be able to respond appropriately and adequately to the organization in response to the expansion of the Group's business.
In preparation for rapid business expansion in the future, it is important to take measures such as training existing employees and increasing personnel through recruitment activities, improve the efficiency of management operations, and maintain and improve organizational efficiency. If these measures do not proceed as planned, business opportunities may be lost, business quality may deteriorate, and the Group's business expansion and business operations may be adversely affected.
Also, because it is a small organization, business processes may be dependent on specific individuals. In the future, we plan to standardize, formalize, and secure alternative personnel as needed, but if it becomes difficult to perform work that depends on a specific officer or employee due to the retirement of the officer or employee or for some other reason, there is a risk of temporarily hindering the business operations of the Group.
③Possibility of proceedings regarding intellectual property rights
The software and programs developed and designed by the Group are independently developed and designed by the Company by improving or combining so-called "known basic technologies", It may infringe the intellectual property rights of a third party. In particular, "business model patents" have already become common in the United States and other countries, and it is expected that the patents will be recognized in Japan in the future, so the importance of dealing with these intellectual property rights is increasing.
The speed of technological progress and expansion of business ideas in the current IT field is extremely fast and difficult to predict, and under the current patent system, there may be limits to research.
In the past or present, there have been no proceedings such as compensation for damages due to the infringement of the intellectual property rights of a third party by the Group, in the future, if a patent that is not recognized by the Company is granted in the business field of the Group, or if it is newly established and infringes the intellectual property rights of a third party, requests for damages, royalties, injunctions may adversely affect the Group's business.

(5) Management of trademark rights

When starting a new service, the Group may apply for or register a trademark for the name of the service or use a general name that is unfamiliar with trademark registration. We are careful not to infringe the trademark right.
Some of the names of services provided in the past have not been approved for trademark registration or have not been applied for registration due to reasons such as the registration of similar trademarks by a third party. We are aware that the Group is taking appropriate measures.
In the past or present, there have been no proceedings such as compensation for damages caused by the Group's infringement of the trademark rights of a third party, there is no guarantee that the content of the Group's investigation will be sufficient, and we cannot guarantee that the Group's views are always legally valid. In the unlikely event that the Group is found to infringe intellectual property rights such as trademark rights of a third party, and as a result, a claim for damages, an injunction, etc. is filed, or due to such matters, the Company's creditworthiness deteriorates, it may adversely affect the financial condition and operating results of the Group.

 

* Details of business risks are described in "Securities Report-22nd Term (April 1, 2nd year of Reiwa-March 31st, 3rd year of Reiwa)".

Implementation Status of Measures Related to Shareholders and Other Stakeholders

Efforts to Activate the General Meeting of Shareholders and Facilitate the Exercise of Voting Rights The notice of convocation of the general meeting of shareholders is sent approximately three weeks before the date of the general meeting of shareholders.
It is possible to exercise voting rights via the Internet and mobile phones.
The notice of convocation is posted on the website without delay after the resolution to convene the General Meeting of Shareholders.
IR activities The "Disclosure Policy" stipulates that accurate and impartial timely disclosure will be continued in accordance with various laws and regulations such as the Financial Instruments and Exchange Act and the rules established by the Tokyo Stock Exchange. We also publish the "Disclosure Policy" on our website.
We plan to hold regular briefings for analysts and institutional investors once every six months. In addition, we accept and hold briefing sessions by individual visits for institutional investors who are premised on long-term holding.
On our website, financial statements, financial results briefing materials, briefing Q&A, financial results numerical data, securities report, general meeting of shareholders convocation notice and resolution notice, annual report (former business report), monthly overview, other timely disclosure materials, etc. are posted.
Corporate Group Leader and Finance Department Manager, Corporate Group is in charge.
Efforts to respect the position of stakeholders We have established a disclosure procedure for providing information to stakeholders in our internal documents, and we are striving for timely and appropriate disclosure as described in the "Timely Disclosure System."
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