IR Japan Holdings, Ltd.

Changes to laws and systems related to IR/SR activities, such as Japan's Stewardship Code (third revision, June 2025) and the Corporate Governance Code (revised June 2021), directly affect the Group's business. While amendments that call for more robust IR/SR activities would work favorably, unexpected legal or regulatory changes that reduce the necessity of the Group's services could adversely affect its financial position and business performance.

Due to the nature of a consulting business specialized in IR/SR activities, the Group handles shareholder information for numerous companies, and if a personal information leak were to occur due to unforeseen circumstances, business operations could be disrupted through claims for damages or loss of social credibility. As a countermeasure, in addition to maintaining Privacy Mark certification (obtained July 2006), the Group obtained ISO/IEC 27018:2019 certification in August 2024, strengthening its personal information protection framework.

Due to the nature of a business that handles customer information and confidential information, increasingly sophisticated and elaborate cyberattacks, unauthorized access, and computer virus intrusions could result in information leaks or the destruction, tampering, or shutdown of critical data and systems. Consolidated subsidiary IR Japan maintains ISO/IEC 27001:2013 and JIS Q 27001:2014 certification (obtained August 2019) and has established a management framework based on its basic information security policy.

Consolidated subsidiary IR Japan, as a Type I Financial Instruments Business Operator, is subject to various regulations under the Companies Act, the Financial Instruments and Exchange Act, and other laws, and if officers or employees violate laws and regulations, there is a risk of losing customers due to administrative sanctions, business restrictions imposed by regulatory authorities, or reputational damage. The Group established a Group Compliance Office in July 2023 and strengthened its management and oversight framework alongside the formulation of a conflict of interest management policy (March 2023).

The Type I Financial Instruments Business registration held by consolidated subsidiary IR Japan carries the risk of revocation or administrative sanctions such as business improvement orders if officers or employees violate laws and regulations. If the registration were revoked, continuation of core businesses, including the shareholder registry administration business, would become impossible, potentially causing a material impact on the Group's overall financial position and business performance.

The Group's IR/SR Consulting services primarily target indirect departments of listed companies, and when economic conditions or the business environment deteriorate, these departments tend to prioritize cost reductions, leading to a tendency to curtail service adoption and demand price reductions. Such environmental changes could directly affect the Group's net sales and profitability.

The proprietary data and analytical know-how accumulated over many years serve as a key source of competitive advantage in business operations, and if a third party were to imitate the Group's services, worsening competitive conditions could disrupt business operations. The Group manages various internal regulations and manuals as confidential information and strives to protect trade secrets.

Representative Director, President and CEO Shiro Terashita has significant influence over the determination of management strategy and business execution, and if he were to become unable to perform his duties, business continuity could be disrupted. As a countermeasure, a different individual (Yukihiko Aoyama) has been appointed as Representative Director and President of consolidated subsidiary IR Japan, and the Group is working to build an organizational management structure and develop personnel to avoid excessive dependence.

IR Japan, as a Type I Financial Instruments Business Operator, is obligated to maintain a capital adequacy ratio of at least 140% at all times; falling below 120% subjects it to a business method change order, and falling below 100% subjects it to a business suspension order. The Group strives to maintain a stable level while considering the amount of dividends to the parent company, but if the ratio were to decline, business operations could be significantly disrupted.

With the expansion of investment banking and related operations, advisory services such as M&A and proxy advisory for unlisted companies and shareholders of privately held or family-owned businesses have increased, creating a risk of uncollectible accounts receivable if a specific business partner becomes insolvent or defaults. While the Group has established a credit review framework and takes measures to secure receivables, such as receiving retainer fees at the start of transactions, risk exposure is expanding along with the growth of business operations.