Basic Philosophy on Corporate Governance

VECTOR INC. believes that increasing the efficiency and soundness of management and building a fair and highly transparent management system are essential for achieving stable growth and development. In particular, strengthening corporate governance is regarded as a critical management issue for the Company, as we handle new information on the products and services of client companies. These efforts are reviewed as required to boost their effectiveness.
We will continue to strengthen corporate governance as we strive to become an even more trusted company.

VECTOR INC. operates as a company with a Board of Directors and an Audit and Supervisory Committee. The Board of Directors (consisting of nine directors, including five outside directors) is chaired by the Company chairman and representative director, and is responsible for making decisions on important business execution and overseeing the execution of duties by the directors. The Audit and Supervisory Committee is independent from the Board of Directors, and it is responsible for monitoring its business execution. Audit and Supervisory Committee members attend meetings of the Board of Directors and exercise voting rights, enabling them to effectively oversee the execution of duties by the directors. In addition, the Group convenes meetings of the Compliance Risk Committee comprised of the heads of subsidiaries and core business units. This committee evaluates and manages risk such as compliance risk, operational risk and financial risk, responds as required, and disseminates risk-related information in an effort to bolster the Group’s corporate governance.

The Company will undertake necessary revisions going forward to enhance the effectiveness of corporate governance in line with changes in the social environment and the enactment or revision of laws and regulations.

Cooperation between Audit and Supervisory Committee members, accounting auditors, and internal audit divisions

The Audit and Supervisory Committee engages in appropriate cooperation with the accounting auditors and Internal Audit Department, enabling flexible auditing. Additionally, directors who are Audit and Supervisory Committee members maintain close coordination with internal audit personnel to conduct efficient audits in investigating the Company’s operations and assets, as well as in carrying out other duties. They also receive regular reports from the internal audit personnel regarding the status of the Company’s internal control system and the results of related audits.
Directors who are Audit and Supervisory Committee members, along with internal audit personnel, each hold regular meetings with the accounting auditor to report on internal audit overviews, discuss audit plans and the results of completed accounting audits, and exchange opinions.

Board of Directors

The Company’s Board of Directors consists of four full-time directors and five external directors. In addition to regular monthly Board meetings, ad hoc meetings are held as needed to oversee the status of business execution.

Independent Accounting Auditor

The Company has entered into an audit agreement with Crowe Toyo & Co. and undergoes audits based on Japan's Companies Act and the Financial Instruments and Exchange Act. Appropriate audits are conducted as necessary.

The Company has integrated planning and management functions into VECTOR INC., the parent company. The management of subsidiaries is an important point of consideration from a compliance perspective since the Company’s policy is to increase the number of subsidiaries as business expands.
In light of this, the Company’s management policy for subsidiaries is as follows, in principle.

• Subsidiaries shall either be newly established or spun off in an incorporation-type demerger, and in the absence of any special reasons, the subsidiary shall have total decision-making authority.
• In addition to integrating planning and management functions into Vector’s Business Management Headquarters, the Company shall adopt an operational management system for subsidiaries so as to identify results immediately.
• The Internal Audit Department shall periodically conduct internal audits of subsidiaries and affiliates, and provide necessary guidance and support to ensure the soundness of each company.