Corporate Governance

Under its corporate philosophy of “Earn the trust of society through corporate activity based in integrity,” the Group recognizes that the primary objective of corporate governance is to become a company trusted by society and all stakeholders by contributing to the development of the economic community through corporate activities based on strict compliance.

Through such efforts, the Group aims to realize corporate management that embodies transparency, fairness, and efficiency.

Based on this fundamental approach to corporate governance, the Company is committed to enhancing its corporate governance framework in accordance with the following basic principles, in order to achieve sustainable growth and enhance medium- to long-term corporate value through transparent, fair, prompt, and decisive decision-making.

In order to strengthen the supervisory function of the Board of Directors and enhance corporate governance, the Company has adopted a structure as a Company with an Audit and Supervisory Committee.

The Company has adopted a structure as a Company with an Audit and Supervisory Committee, under which three of the four directors who are members of the Audit and Supervisory Committee are outside directors. All directors who are members of the Audit and Supervisory Committee attend meetings of the Board of Directors, as well as important meetings and committees, including the Compliance Committee.

In addition, the Company has established a reporting framework to the Audit and Supervisory Committee in order to ensure the effectiveness and independence of audits.

Furthermore, to enhance the effectiveness of the audit function, the Company has established the Audit and Supervisory Committee Office as a dedicated department to assist the Audit and Supervisory Committee in the performance of its duties.

In addition, the Company has introduced an executive officer system to promote the separation of supervisory and executive functions. The Company has also established the Compliance Committee and the Risk Management Committee, which include external experts as members, in order to further strengthen its supervisory functions.

Through these arrangements, the Company has adopted its current corporate governance structure with the aim of realizing corporate management that embodies transparency, fairness, and efficiency.

The Company has established a policy regarding the determination of the amount of directors’ remuneration and the method for calculating such remuneration. Under this policy, in accordance with the Company’s management philosophy of “Earn the trust of society through corporate activity based in integrity,” director remuneration is designed not only to function as consideration for the fulfillment of roles and responsibilities, but also to effectively serve as an incentive for the improvement of medium- to long-term corporate performance and the enhancement of corporate value.

Specifically, remuneration for directors (excluding directors who are members of the Audit and Supervisory Committee and outside directors) consists of fixed basic remuneration and performance-linked non-monetary remuneration (restricted stock compensation). Remuneration for outside directors and directors who are members of the Audit and Supervisory Committee consists solely of basic remuneration, from the perspective of ensuring their independence.

The authority to determine the policy regarding the amount of remuneration or the method for calculating such remuneration for directors rests with the Board of Directors and the Audit and Supervisory Committee. Based on this policy, the remuneration structure and remuneration levels are reviewed as necessary in light of the management environment and business performance, and the allocation to each individual director is determined according to the scope and significance of the role associated with each position, as well as each director’s assigned duties, responsibilities, and authority.

With respect to remuneration for directors (excluding directors who are members of the Audit and Supervisory Committee), at the 48th Annual General Meeting of Shareholders of AIFUL CORPORATION held on June 24, 2025, Agenda Item No. 1 (Approval of the Share Transfer Plan) approved a maximum annual remuneration amount of 500 million yen (excluding salaries for the employee portion of directors concurrently serving as employees). At the time of this resolution, the number of such directors was six.

At the same General Meeting of Shareholders, within the above remuneration limit, it was also resolved that monetary claims to be granted as restricted stock compensation to directors (excluding directors who are members of the Audit and Supervisory Committee, outside directors, and domestic non-residents) would be limited to 50 million yen per year (excluding salaries for the employee portion of directors concurrently serving as employees), and that the total number of shares to be issued or disposed of would be limited to 333,000 shares per year. At the time of this resolution, the number of eligible directors was six.

In addition, with respect to remuneration for directors who are members of the Audit and Supervisory Committee, the same General Meeting of Shareholders resolved that such remuneration would be limited to 80 million yen per year. At the time of this resolution, the number of directors who were members of the Audit and Supervisory Committee was four.

The basic remuneration (fixed remuneration) for directors (excluding directors who are members of the Audit and Supervisory Committee) is paid as a fixed monthly amount. The Company has established remuneration tables by remuneration rank, and specific criteria for determining remuneration ranks are defined for each position. Basic remuneration is determined based on the amount corresponding to the applicable remuneration rank.

Performance-linked remuneration is intended to enhance motivation to improve business performance and increase share value, thereby contributing to the enhancement of corporate value. The indicators used to determine the amount of performance-linked remuneration (variable portion) are calculated by applying individual evaluation multipliers and company performance multipliers to the base amount corresponding to each remuneration rank, and such remuneration is paid once annually at a designated time.

The individual evaluation multipliers and company performance multipliers reflect the performance of the business units for which each director is responsible. Accordingly, in addition to the overall management environment, key indicators include operational indicators—such as business assets and collection performance for each business segment—and management indicators—such as operating revenue, ordinary profit, and ROA. Each director’s performance is evaluated based on the degree of achievement against targets for the business units under their responsibility.

The amount of performance-linked remuneration for each director is determined, as described in Section 5 below, following consultation with and recommendations from the Personnel Committee, which is established to ensure fairness and transparency in evaluation and is composed of directors appointed by the President and CEO.

Performance-linked remuneration is provided as non-monetary remuneration (restricted stock compensation) in order to enhance the linkage between business performance and share value. Specifically, within the remuneration limits approved by the General Meeting of Shareholders, monetary claims granted as performance-linked remuneration and determined in accordance with the above process are contributed in kind, and restricted shares are allocated to eligible directors. The restriction period extends from the date of allotment until the date on which the relevant director ceases to hold any position as a director or executive officer of the Company

In addition, a certain percentage of the performance-linked remuneration is paid as non-monetary remuneration, etc. (restricted stock remuneration) to enhance the linkage between business performance and stock price. Specifically, within the limit of the amount of compensation resolved at the General Meeting of Shareholders, the Company grants restricted transferable shares to eligible directors by having them contribute in kind a certain percentage of monetary claims related to the performance-linked compensation determined in accordance with the above process. The transfer restriction period shall be set from the date of receipt of the allotment to the date on which the Eligible Director retires from any position of Director or Executive officer of the Company.

The ratio of monetary remuneration and performance-linked remuneration for directors is determined by reference to remuneration levels at companies of comparable business scale and in related industries and business categories. Based on this benchmarking, the Personnel Committee conducts deliberations, and the President and CEO, acting under the delegation described in Section 5 below, determines the remuneration for each individual director in accordance with the Committee’s recommendations.

With respect to the determination of individual director remuneration, the Board of Directors has delegated authority for the specific details to Mr. Mitsuhide Fukuda, President and CEO, based on a resolution of the Board. The scope of this delegated authority includes determining the amount of basic remuneration for each director and allocating performance-linked remuneration based on evaluations of business performance in the areas overseen by each director.

The reason for such delegation is that the President and CEO is best positioned to understand the performance of the businesses under each director’s responsibility and to conduct evaluations closely aligned with such responsibilities.

In order to ensure the appropriate exercise of this authority, the Board of Directors requires that, with respect to the determination of performance-linked remuneration, draft proposals be submitted to the Personnel Committee for consultation and recommendation, and that opinions be obtained from the Audit and Supervisory Committee. The President and CEO must determine remuneration in accordance with such recommendations and opinions.

The Board of Directors has determined that the individual remuneration of directors for the relevant fiscal year is consistent with the policy resolved by the Board, based on the alignment between the methods used to determine remuneration and the resulting remuneration amounts, and in light of the recommendations from the Personnel Committee and the opinions obtained from the Audit and Supervisory Committee.

Regarding categories of portfolio stock, namely portfolio stock held for purposes other than pure investment and portfolio stock held for the purpose of pure investment, stock held based on the judgement that such holding will contribute to the medium- to long-term development of the Company through the maintenance and strengthening of stable and medium- to long-term business relationships with business partners are categorized as portfolio stock held for purposes other than pure investment. Furthermore, the Company does not, in principle, hold portfolio stock other than portfolio stock held for purposes other than pure investment.

When stock in listed companies is held, each year the Board of Directors carefully examines whether the purpose of holding specific stocks is appropriate,

whether the benefits and risks associated with holding specific stocks is reasonable given the cost of capital, etc., conducts investigations from the perspective of maintaining and strengthening relationships with business partners.