{"url_path":"/sec/ix/10-k/2026/item-3","section_key":"item-3","section_title":"Item 3 Key Information","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-06-22","source_url":"https://www.sec.gov/Archives/edgar/data/1070304/0001193125-26-276640-index.html","accession_number":"0001193125-26-276640","cik":"0001070304","ticker":"IX","issuer_name":"ORIX CORP","edgar_url":"https://www.sec.gov/Archives/edgar/data/1070304/0001193125-26-276640-index.html","primary_entity_key":"0001070304","primary_entity_name":"ORIX CORP"},"word_count":6416,"has_tables":true,"body_markdown":"Item 3. Key Information\n\nSELECTED FINANCIAL DATA\n\nThe following selected consolidated financial information has been derived from our consolidated financial statements as of each of the dates and for each of the periods indicated below except for “Number of employees.” This information should be read in conjunction with and is qualified in its entirety by reference to our consolidated financial statements, including the notes thereto, included in this annual report in Item 18, which have been audited by KPMG AZSA LLC.\n\n \n\n \n  \nYear ended March 31,\n \n\n \n  \n2022\n \n  \n2023\n \n  \n2024\n \n \n2025\n \n \n2026\n \n\n \n  \n \n \n  \n \n \n  \n \n \n \n \n \n \n \n \n\n \n  \n(Millions of yen)\n \n\nIncome statement data:\n\n  \n\n  \n\n  \n\n \n\n \n\nTotal revenues\n\n  \n¥\n2,508,043\n \n  \n¥\n2,663,659\n \n  \n¥\n2,814,361\n \n \n¥\n2,874,821\n \n \n¥\n3,330,831\n \n\nTotal expenses\n\n  \n \n2,215,160\n \n  \n \n2,327,736\n \n  \n \n2,453,648\n \n \n \n2,542,995\n \n \n \n2,874,583\n \n\nOperating Income\n\n  \n \n292,883\n \n  \n \n335,923\n \n  \n \n360,713\n \n \n \n331,826\n \n \n \n456,248\n \n\nEquity in Net Income of Equity method investments\n\n  \n \n24,565\n \n  \n \n22,081\n \n  \n \n36,774\n \n \n \n57,182\n \n \n \n123,872\n \n\nGains on Sales of Subsidiaries and Equity method investments and Liquidation Losses, net\n\n  \n \n191,999\n \n  \n \n33,000\n \n  \n \n72,488\n \n \n \n87,705\n \n \n \n111,311\n \n\nBargain Purchase Gain\n\n  \n \n0\n \n  \n \n1,174\n \n  \n \n0\n \n \n \n3,750\n \n \n \n0\n \n\nIncome before Income Taxes\n\n  \n \n509,447\n \n  \n \n392,178\n \n  \n \n469,975\n \n \n \n480,463\n \n \n \n691,431\n \n\nNet Income\n\n  \n \n322,853\n \n  \n \n296,933\n \n  \n \n338,587\n \n \n \n351,635\n \n \n \n458,328\n \n\nNet Income (Loss) Attributable to the Noncontrolling Interests\n\n  \n \n5,477\n \n  \n \n6,561\n \n  \n \n(7,682\n) \n \n \n(389\n) \n \n \n11,821\n \n\nNet Income (Loss) Attributable to the Redeemable Noncontrolling Interests\n\n  \n \n0\n \n  \n \n32\n \n  \n \n137\n \n \n \n394\n \n \n \n(758\n) \n\nNet income attributable to ORIX Corporation Shareholders\n\n  \n \n317,376\n \n  \n \n290,340\n \n  \n \n346,132\n \n \n \n351,630\n \n \n \n447,265\n \n\n \n\n1\n\n##### Table of Contents\n\n \n \nAs of March 31,\n \n\n \n \n2022\n \n \n2023\n \n \n2024\n \n \n2025\n \n \n2026\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n \n \n(Millions of yen, except number of shares)\n \n\nBalance sheet data:\n\n \n\n \n\n \n\n \n\n \n\nNet investment in Leases*1\n\n \n¥\n1,057,973\n \n \n¥\n1,087,563\n \n \n¥\n1,155,023\n \n \n¥\n1,167,380\n \n \n¥\n1,247,491\n \n\nInstallment Loans*1\n\n \n \n3,899,503\n \n \n \n3,905,026\n \n \n \n3,958,814\n \n \n \n4,081,019\n \n \n \n4,173,582\n \n\nAllowance for Credit Losses\n\n \n \n(71,415\n) \n \n \n(65,373\n) \n \n \n(58,110\n) \n \n \n(56,769\n) \n \n \n(80,194\n) \n\nInvestment in Operating Leases\n\n \n \n1,463,202\n \n \n \n1,537,178\n \n \n \n1,868,574\n \n \n \n1,967,178\n \n \n \n2,152,820\n \n\nInvestment in Securities\n\n \n \n2,761,698\n \n \n \n2,852,378\n \n \n \n3,263,079\n \n \n \n3,234,547\n \n \n \n3,308,829\n \n\nProperty under Facility Operations\n\n \n \n561,846\n \n \n \n620,994\n \n \n \n689,573\n \n \n \n771,851\n \n \n \n779,075\n \n\nOthers\n\n \n \n4,607,877\n \n \n \n5,351,619\n \n \n \n5,445,147\n \n \n \n5,701,045\n \n \n \n6,421,173\n \n\n \n\n \n\n \n\n \n \n\n \n\n \n\n \n \n\n \n\n \n\n \n \n\n \n\n \n\n \n \n\n \n\n \n\n \n\nTotal Assets\n\n \n¥\n14,280,684\n \n \n¥\n15,289,385\n \n \n¥\n16,322,100\n \n \n¥\n16,866,251\n \n \n¥\n18,002,776\n \n\n \n\n \n\n \n\n \n \n\n \n\n \n\n \n \n\n \n\n \n\n \n \n\n \n\n \n\n \n \n\n \n\n \n\n \n\nShort-term Debt, Long-term Debt and Deposits\n\n \n¥\n7,142,843\n \n \n¥\n7,964,864\n \n \n¥\n8,446,306\n \n \n¥\n8,732,610\n \n \n¥\n9,163,550\n \n\nPolicy Liabilities and Policy Account Balances\n\n \n \n1,912,698\n \n \n \n1,832,057\n \n \n \n1,892,510\n \n \n \n1,948,047\n \n \n \n1,943,710\n \n\nCommon Stock\n\n \n \n221,111\n \n \n \n221,111\n \n \n \n221,111\n \n \n \n221,111\n \n \n \n221,111\n \n\nAdditional Paid-in Capital\n\n \n \n260,479\n \n \n \n233,169\n \n \n \n233,457\n \n \n \n234,193\n \n \n \n235,239\n \n\nORIX Corporation Shareholders’ Equity\n\n \n \n3,304,196\n \n \n \n3,543,607\n \n \n \n3,941,466\n \n \n \n4,089,782\n \n \n \n4,482,500\n \n\nNumber of Issued Shares\n\n \n \n1,258,277,087\n \n \n \n1,234,849,342\n \n \n \n1,214,961,054\n \n \n \n1,162,962,244\n \n \n \n1,124,106,624\n \n\nNumber of Outstanding Shares*2\n\n \n \n1,193,399,778\n \n \n \n1,170,305,869\n \n \n \n1,151,485,206\n \n \n \n1,136,289,549\n \n \n \n1,098,586,820\n \n\n \n\n \n \nAs of and for the Year Ended March 31,\n \n\n \n \n2022\n \n \n2023\n \n \n2024\n \n \n2025\n \n \n2026\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n \n \n(Yen and dollars, except ratios and number of employees)\n \n\nKey ratios (%)*3:\n\n \n\n \n\n \n\n \n\n \n\nReturn on ORIX Corporation Shareholders’ equity (“ROE”)\n\n \n \n10.0\n \n \n \n8.5\n \n \n \n9.2\n \n \n \n8.8\n \n \n \n10.4\n \n\nReturn on assets (“ROA”)\n\n \n \n2.28\n \n \n \n1.96\n \n \n \n2.19\n \n \n \n2.12\n \n \n \n2.57\n \n\nORIX Corporation Shareholders’ equity ratio\n\n \n \n23.1\n \n \n \n23.2\n \n \n \n24.1\n \n \n \n24.2\n \n \n \n24.9\n \n\nAllowance for credit losses/net investment in leases and installment loans\n\n \n \n1.4\n \n \n \n1.3\n \n \n \n1.1\n \n \n \n1.1\n \n \n \n1.5\n \n\nPer share data and employees:\n\n \n\n \n\n \n\n \n\n \n\nORIX Corporation Shareholders’ equity per share*4\n\n \n¥\n2,768.72\n \n \n¥\n3,027.93\n \n \n¥\n3,422.94\n \n \n¥\n3,599.24\n \n \n¥\n4,080.24\n \n\nBasic earnings per share for net income attributable to ORIX Corporation Shareholders\n\n \n \n263.72\n \n \n \n245.98\n \n \n \n298.55\n \n \n \n307.74\n \n \n \n400.27\n \n\nDiluted earnings per share for net income attributable to ORIX Corporation Shareholders\n\n \n \n263.42\n \n \n \n245.65\n \n \n \n298.05\n \n \n \n307.16\n \n \n \n399.40\n \n\nDividends applicable to fiscal year per share\n\n \n \n85.60\n \n \n \n85.60\n \n \n \n98.60\n \n \n \n120.01\n \n \n \n156.10\n \n\nDividends applicable to fiscal year per share*5\n\n \n$\n0.70\n \n \n$\n0.62\n \n \n$\n0.66\n \n \n$\n0.82\n \n \n$\n0.99\n \n\nNumber of employees\n\n \n \n32,235\n \n \n \n34,737\n \n \n \n33,807\n \n \n \n33,982\n \n \n \n37,286\n \n\n \n\n*1 \n\nThe sum of net investment in leases and installment loans considered non-performing amounted to ¥85,303 million, ¥86,047 million, ¥95,019 million, ¥114,467 million and ¥112,851 million as of March 31, 2022, 2023, 2024, 2025 and 2026, respectively. These sums included: (i) net investment in leases considered non-performing of ¥19,224 million, ¥16,841 million, ¥20,805 million, ¥21,820 million and ¥27,077 million as of March 31, 2022, 2023, 2024, 2025 and 2026, respectively, (ii) non-performing installment loans not\n\n \n\n2\n\n##### Table of Contents\n\n \n\nindividually assessed for credit losses of ¥13,600 million, ¥20,902 million, ¥19,792 million, ¥30,214 million and ¥18,276 million as of March 31, 2022, 2023, 2024, 2025 and 2026, respectively, and (iii) non-performing installment loans individually assessed for credit losses of ¥52,479 million, ¥48,304 million ¥54,422 million, ¥62,433 million and ¥67,498 million, as of March 31, 2022, 2023 2024, 2025 and 2026, respectively. See “Item 5. Operating and Financial Review and Prospects—Results of Operations—Year Ended March 31, 2026 Compared to Year Ended March 31, 2025—Details of Operating Results—Revenues, New Business Volumes and Investments—Asset quality.”\n\n*2\n\nThe Company’s shares held through the Board Incentive Plan Trust, which was established in July 2014 to provide shares at the time of retirement as compensation, are included in the number of treasury stock and excluded from the number of outstanding shares. The Board Incentive Plan Trust held 1,963,282 shares, 2,800,866 shares, 2,727,686 shares, 3,413,000 shares and 3,035,102 shares as of March 31, 2022, 2023, 2024, 2025 and 2026, respectively.\n\n*3 \n\nReturn on ORIX Corporation Shareholders’ equity is the ratio of net income attributable to ORIX Corporation Shareholders for the period to average ORIX Corporation Shareholders’ equity based on fiscal year beginning and ending balances for the period. Return on assets is the ratio of net income attributable to ORIX Corporation Shareholders for the period to average total assets based on fiscal year beginning and ending balances for the period. ORIX Corporation Shareholders’ equity ratio is the ratio as of the period end of ORIX Corporation Shareholders’ equity to total assets. Allowance for credit losses/net investment in leases and installment loans is the ratio as of the period end of the allowance for credit losses on net investment in leases and installment loans to the sum of net investment in leases and installment loans.\n\n*4 \n\nORIX Corporation Shareholders’ equity per share is the amount derived by dividing ORIX Corporation Shareholders’ equity by the number of outstanding shares.\n\n*5 \n\nThe U.S. dollar amounts represent translations of the Japanese yen amounts using noon buying rates for Japanese yen per $1.00 in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York in effect on the respective dividend payment dates.\n\n \n\n3\n\n##### Table of Contents\n\nRISK FACTORS\n\nInvesting in our securities involves risks. You should carefully consider the risks described below as well as all the other information in this annual report, including, but not limited to, our consolidated financial statements and related notes and “Item 11. Quantitative and Qualitative Disclosures about Market Risk.” Our business activities, financial condition and results of operations and the trading prices of our securities could be adversely affected by any of the factors discussed below or other factors. Even if we do not incur direct financial loss as a result of these risks, our reputation may be adversely affected. This annual report also contains forward-looking statements that involve uncertainties. Our actual results could differ from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, the risks faced by us described below and elsewhere in this annual report. See “Forward-Looking Statements.” Forward-looking statements in this section are made only as of the filing date of this annual report.\n\nFor information about our management of the principal risks we face, see “Item 5. Operating and Financial Review and Prospects—Risk Management—Management of Principal Risks.”\n\n1. Risks Related to our External Environment\n\n(1) Global economic weakness and instability or political turmoil could adversely affect our business activities, financial condition and results of operations.\n\nWe conduct business operations in Japan and other areas of Asia, as well as in the Americas, Europe, and Australia. Our business may be affected by general geopolitical, economic and financial conditions in the countries and regions in these areas. More specifically, the uncertainties of policy changes under the second Trump administration in the United States, the geopolitical risks resulting from the prolonged armed conflict between Russia and Ukraine, the tensions and conflicts in the Middle East, the occurrence of wars and riots, fluctuations in commodity market prices, increases in raw material and construction costs, decreases in consumer demand, trade frictions and technology disputes among major trading partners, including the United States and China, and other factors may result in increased uncertainties in our business environment, making it harder to predict the adverse effects of such factors, which could adversely affect our business activities, financial condition and results of operations.\n\n(2) Competition could affect our business\n\nWe compete on the basis of pricing, transaction structure, service quality and other terms. It is possible that our competitors may seek to compete aggressively on the basis of pricing and other terms through their low funding costs or without regard to their profitability. In addition, technological advances and innovation may result in the emergence of new competitors and as a result, we may be forced to adapt our business to compete more effectively. As a result of such aggressive competition by our competitors, our market share or our profitability may decline.\n\n(3) Negative publicity could affect our business activities, financial condition, results of operations and share price\n\nOur business is built upon the confidence of our customers and market participants. Whether based on facts or not, negative publicity about our activities, our industries or the parties with whom we do business could harm our reputation and diminish confidence in our business. In such an event, we may lose customers or business opportunities, which could adversely affect our business activities, financial condition and results of operations, as well as our share price.\n\n(4) Climate change could impact our business\n\nPhysical risks and transition risks associated with climate change may adversely affect the ORIX Group’s business activities, financial condition and results of operations.\n\n \n\n4\n\n##### Table of Contents\n\nPhysical risks may arise from the intensification and increased frequency of extreme weather events and natural disasters, which could result in interruptions to our business due to damage to operating facilities and business locations, as well as increased costs associated with recovery efforts and the implementation of countermeasures. In addition, damage to customers and investees may lead to an increase in credit-related costs, and the value of assets held or invested in could decline.\n\nTransition risks may arise from changes in climate change policies and regulations, technological innovations and shifts in market conditions associated with the transition to a decarbonized society, which could result in constraints on our business activities and increased costs. Transition risks may also cause deterioration in the performance of customers and changes in the business environment of investees, which may lead to increased credit-related costs, and the value of assets held by us or investees may decline.\n\nFor further information, see “Item 4. Information on the Company—Sustainability at ORIX and Our Initiatives.”\n\n(5) Risk related to natural disasters and other calamities could impact our business\n\nUnpredictable events such as earthquakes, storms, floods, tsunamis and other natural phenomena, extreme weather conditions, fires, pandemics, etc. may, among other things, cause unexpectedly large market changes or unanticipated deterioration of economic conditions in a country or a region, or cause major injuries to our personnel or damages to our facilities, equipment and other properties. As a result of such events, our business activities, financial condition and results of operations could be adversely affected.\n\n2. Credit Risk\n\nWe maintain an allowance for credit losses mainly on finance leases and loans. However, we cannot be sure that the allowance will be adequate to cover all future credit losses. This allowance could be inadequate in the case of unexpected adverse changes in the Japanese and overseas economies in which we operate, or unexpected deterioration of specific industries, markets or customers’ business performance. While we constantly strive to diversify risks through portfolio management, we could be required to make additional provisions in the future depending on rapid interest rate fluctuations, economic trends and other factors.\n\nFurthermore, if adverse economic or market conditions affect the value of underlying collateral, secondhand equipment, or other collateral measures, our credit-related costs other than the allowance might increase. If any such event occurs, our business activities, financial condition and results of operations could be adversely affected.\n\n3. Business Risk\n\nWe define business risk as the uncertainty of recovery of investments caused by the negative performance of our businesses or investees, variability in market prices for the types of products or services we offer or the potential degradation or obsolescence of the products or services we offer or a decline in their quality.\n\n(1) We are exposed to risks from expansion of our businesses, acquisitions of companies and assets, entry into joint ventures and alliances with other companies and similar activities with uncertain outcomes\n\nWe are engaged in a broad range of businesses in Japan and overseas and continue to expand such range, including through acquisitions of companies and businesses. The breadth of our business and continued expansion may expose us to new and complex risks that we may be unable to fully control or foresee, and, as a result, we may incur unexpected and potentially substantial costs or losses. Such unexpected costs and losses, which may result from regulatory, technological or other factors, may be particularly acute when we expand our business through acquisitions. In addition, we may not achieve targeted results if our business or business\n\n \n\n5\n\n##### Table of Contents\n\nopportunities do not develop as expected or if competitive pressures undermine profitability. Furthermore, when we acquire companies or businesses to expand our business, we could be required to make large write-downs of goodwill or other assets if the results of operations of an acquired company or business are lower than what we expected at the time we made such acquisition, or if they encounter other financial or operational difficulties.\n\nWe have a wide range of investments in business operations, including operations that are very different from our financial services business. If we fail to manage our investee companies effectively, we may experience financial losses as well as losses of future business opportunities. In addition, we may not be able to sell or otherwise dispose of investments at the times or prices we initially expected or at all. We may also need to provide financial support, including credit support or equity investments, to some investee companies if their financial condition deteriorates.\n\nFrom time to time we also enter into joint ventures and other alliances, and the success of these alliances is often dependent upon the operational capabilities, the financial stability and the legal environment of our counterparties. If an alliance suffers a decline in its financial condition or is subject to operational instability because of a change in applicable laws or regulations, we may be required to pay in additional capital, reduce our investment at a loss, or terminate the alliance.\n\nIf any such events occur, our business activities, financial condition results of operations and reputation may be adversely affected.\n\n(2) We are exposed to risks related to asset value volatility\n\nIn the management of our businesses, we hold various classes of assets and investments, including real estate, aircraft, ships and other assets in Japan and overseas, which we may hold for our own use or lease to our customers. The market values of these assets and investments may be volatile and may decline substantially in the future.\n\nAsset valuation losses are recorded based on the fair market values at the time when revaluation is conducted in accordance with applicable accounting principles. However, losses from the sale of these assets, including as a result of a sudden need for liquidity or to mitigate an adverse credit event at one of our customers, may exceed the amount of recorded valuation losses.\n\nWe estimate the residual value for certain operating leases at the time of contract. Our estimates of the residual value of equipment are based on current market values of used equipment and assumptions about when and to what extent the equipment will become obsolete; however, we may need to recognize additional valuation losses if our estimates differ from actual trends in equipment valuation and the secondhand market, and we may incur losses if we are unable to collect such estimated residual amounts.\n\nIn addition, due to our operation of asset management businesses, if there are changes in the market value of asset such as shares and other securities, it could affect the results of our asset management services, which could lead to reductions in our assets under management and related fees and negatively impact our revenue.\n\nIf any event described above occurs, our business activities, financial condition and results of operations may be adversely affected.\n\n(3) Risks related to our other businesses\n\nWe operate a wide range of businesses in Japan and overseas, including financial services businesses.\n\nEntry into new businesses, and the results of operations following such entry, are accompanied by various uncertainties, and if any unanticipated risk does occur, it may adversely affect our business activities, financial condition and results of operations.\n\n \n\n6\n\n##### Table of Contents\n\n4. Market Risk\n\n(1) Changes in market interest rates and currency exchange rates could adversely affect our assets and our business activities, financial condition and results of operations\n\nOur business activities are subject to risks relating to changes in market interest rates and currency exchange rates in Japan and overseas. Although we conduct asset-liability management (“ALM”), changes in the yield curve and currency exchange rates could adversely affect our results of operations.\n\nWhen funding costs increase due to actual or perceived increases in market interest rates, financing lease terms and loan interest rates for new transactions may diverge from the trend in market interest rates.\n\nChanges in market interest rates could have an adverse effect on the credit quality of our assets and our asset structure. For example, with respect to floating-rate loan assets, if market interest rates increase, the repayment burdens of our customers may also increase, which could adversely affect the financial condition of such customers and their ability to repay their obligations to us. Alternatively, a decline in interest rates could result in an increase in early repayment of loans and a corresponding decrease in our assets, which could adversely impact our revenue generation capabilities.\n\nAlthough we enter into derivative investments to hedge our market interest and currency risks, we may not be able to perfectly hedge against all risks arising from our business operations in foreign currencies and overseas investments. As a result, a significant change in interest rates or currency exchange rates could have an adverse impact on our business activities, financial condition and results of operations.\n\n(2) Our risk management strategy of using derivatives for hedging purposes may not be effective\n\nWe may use derivative instruments to reduce fluctuations in the value of our investments and to hedge against interest rate and currency risks. However, it is possible that this risk management strategy may not be fully effective in all circumstances due to our failure to appraise the value of assets being hedged or execute such derivative instruments properly or at all, or our failure to achieve the intended results of such hedging due to the unavailability of offsetting or roll-over transactions in the event of sudden turbulence in the market or otherwise. Furthermore, our derivatives counterparties could fail to honor the terms of their contracts with us. Our existing derivative contracts and new derivative transactions may also be adversely affected if our credit ratings are downgraded.\n\nIn such instances, our business activities, financial condition and results of operations could be adversely affected.\n\n(3) Fluctuations in market prices of stocks and bonds may adversely affect our business activities, financial condition and results of operations\n\nWe hold investments in shares of private and public company stock and corporate and government bonds in Japan and overseas. The market values of our investment assets are volatile and may fluctuate substantially in the future. A significant decline in the value of our investment assets could adversely affect our business activities, financial condition and results of operations.\n\n5. Liquidity Risk\n\nOur primary sources of financing include: borrowings from banks and other institutional lenders, funding from capital markets (such as through issuances of bonds, medium-term notes or commercial paper (“CP”), securitization of loans receivables and other assets) and deposits. Such sources include a significant amount of short-term debt, such as CP and other short-term borrowings from various institutional lenders and the portion of our long-term debt maturing in the current fiscal year. Some of our financing arrangements include conditions such as compliance with financial covenants.\n\n \n\n7\n\n##### Table of Contents\n\nFor the ORIX Group, an increase in liquidity risk means an increase in the likelihood that it will be difficult to raise new funds and renew existing funding, and/or that funding costs will increase. If our access to liquidity is restricted, or if we are unable to obtain our required funding at acceptable costs, our business activities, financial condition and results of operations may be significantly and adversely affected.\n\nWe obtain credit ratings from ratings agencies. Downgrades of our credit ratings due to reasons such as market turmoil or the worsening of our financial condition could result in increases in our interest expenses and could have an adverse effect on our fund-raising ability by increasing costs of issuing CP and corporate debt securities and borrowing from banks and other financial institutions, reducing the amount of bank credit available to us or decreasing the attractiveness of our equity securities to investors. As a result, our business activities, financial condition and results of operations may be significantly and adversely affected.\n\n6. Compliance Risk\n\nOur efforts to implement and maintain thorough internal controls for appropriate compliance and legal risk management, as well as compliance education programs for our directors, officers and other employees across the ORIX Group, in order to prevent violations of applicable laws, regulations and internal rules may not be fully effective in preventing all violations. In addition, we engage in a wide range of businesses, and our expansion into new businesses through acquisitions may cause our current internal controls to not be fully effective. If we are unable to implement and maintain robust internal controls to prevent any such violations and adjust such controls in response to expansion of our business, we may be subject to sanctions, which could also apply to our officers or employees. Such events could adversely affect our business activities, financial condition, results of operations and reputation.\n\nIn addition, we are also indirectly exposed to compliance risk through our joint venture and alliance partners, investee companies and other business partners or counterparties, whom we may not be able to control. If any of those parties engage in violations of applicable laws or regulations, our business activities, financial condition, results of operations and reputation may be adversely affected.\n\n7. Legal Risk\n\n(1) We are subject to various laws and regulations in Japan and overseas that may affect our business\n\nOur businesses and employees are subject to domestic and international laws, as well as regulatory oversight by government authorities that implement those laws, relating to the various sectors in which we operate and to our business operations generally. These include laws and regulations applicable to specific businesses and industries, such as moneylending, financial instruments exchange, construction, real estate transactions, hotels, insurance, banking and trust services, as well as laws applicable more generally, such as laws and regulations on antitrust, personal data protection, anti-money laundering and anti-bribery and those applicable due to our public listing in Japan and the United States.\n\nRegardless of whether we have violated any laws, if we become the subject of a governmental investigation, litigation or other proceeding in connection with our businesses, our business activities, financial condition, results of operations and reputation may be adversely affected.\n\nFor information on the regulations that apply to our businesses, see “Item 4. Information on the Company—Business Regulation.”\n\n(2) Enactment of, or changes in, laws, regulations and accounting standards may affect our business activities, financial condition and results of operations\n\nEnactment of, or changes in, laws and regulations may adversely affect the way that we conduct our business and the products or services that we may offer, as well as limit our investing and funding activities.\n\n \n\n8\n\n##### Table of Contents\n\nSuch enactment or changes may increase our compliance costs. In recent years, foreign laws and regulations on subject matters such as personal data protection, anti-money laundering, anti-bribery and antitrust have been enacted and strengthened such that they may directly apply to the activities of our businesses, even if conducted outside the relevant jurisdiction. If such pattern continues and it becomes necessary for us to comply with different countries’ regulations, in addition to significantly increasing the number of laws and regulations that we need to comply with, it may also significantly increase our compliance costs.\n\nIf accounting standards are changed, even if such changes do not directly affect our profitability or financial soundness, industries related to our businesses, our clients or the financial market may be negatively affected. As a result of such enactments or changes, our business activities, financial condition and results of operations could be adversely affected.\n\n(3) Contractual deficiencies may affect our business and other initiatives\n\nWhen engaging in business and other transactions, deficiencies, including our failure to execute legally required or binding agreements or our execution of agreements that do not reflect our intentions regarding parties’ contractual obligations, may lead to adverse events such as our being the target of infringement, breach of contract and other legal claims by contractual counterparties and third parties or disruption of our ability to obtain rights we expected as part of such transactions. Such events may adversely affect our business activities, financial condition and results of operations.\n\n8. Information / Cybersecurity Risk and IT Risk\n\n(1) Risks relating to loss, theft, damage or leakage of information\n\nWe maintain various information such as customer information including information on individuals, accounting information and personnel information. If such information is lost, stolen, damaged or leaked due to cyber attacks or other unauthorized acts, the ORIX Group may be subject to investigations, corrective orders or administrative monetary penalties imposed by supervisory or regulatory authorities pursuant to applicable data protection laws and regulations, such as the Act on the Protection of Personal Information of Japan and the General Data Protection Regulation adopted in the EU. In addition, we may be subject to claims for damages or other legal liabilities asserted by affected individuals or business partners.\n\nIf any event described above occurs, our business activities, financial condition and results of operations may be adversely affected.\n\n(2) The impact of cybersecurity attacks or breaches on our information systems and our business generally\n\nWe utilize information systems for managing customer information and financial transactions and for business operations, and in using these diverse information systems, the Company is connected via external networks to organizations within the Group, as well as to employees working remotely from home and subcontractors. Cyber attacks on these information systems or information networks, or other forms of cyber-terrorism could have adverse effects on our operations, by causing, for example, the suspension of certain products or services we provide to our customers or other interruptions of our business activities. In addition to direct impacts of an attack on a given information system, an attack may also result in widespread impacts throughout the network.\n\nCybersecurity risks and the frequency and sophistication of cyber attacks have significantly increased in recent years. The prolonged Russia-Ukraine conflict, as well as conflicts and increasing geopolitical tensions in various regions, including the Middle East and Asia, may heighten the risk of cyber attacks arising from international sanctions or conflicts between states, as well as cyber attacks carried out by other actors seeking to take advantage of such geopolitical conditions. In addition, we also face indirect cybersecurity risks relating to\n\n \n\n9\n\n##### Table of Contents\n\nour customers and other third parties, including counterparties in the financial services industry. For example, vulnerabilities in third-party technology systems may increase the risk that our information systems are exposed to cyber attacks. This may result in significant costs to restore business operations, or regulatory sanctions for violations of relevant laws and regulations, or the potential for damages judgments.\n\nAs a result of the above, our business activities, reputation, financial condition and results of operations may be adversely affected.\n\n(3) Impact of system failures\n\nSystem shutdowns, malfunctions or failures, the mishandling of data or fraudulent acts by employees, vendors or other third parties, or inaccurate information resulting from the use of IT tools could have adverse effects on our operations, by causing, for example, delays in the receipt and payment of funds, disruptions to our financial transactions, the generation of errors in information used by our management for business decision-making and risk management evaluation and planning, the suspension of certain products or services we provide to our customers or other interruptions of our business activities. In such event, our liquidity could be adversely affected.\n\nWe may also incur substantial costs to recover our business functionality and our business activities, financial condition, results of operations and reputation may be adversely affected.\n\n9. Operational Risk and Other Risks\n\n(1) Operational Risk\n\nOur business involves many types of operational risks. Examples include inappropriate sales practices; inadequate handling of client and customer complaints; inadequate internal communication of necessary information; misconduct of officers, employees, agents, franchisees, trading associates, vendors or other third parties; errors in the settlement of accounts and conflicts with employees concerning labor and workplace management.\n\nWhen we offer new products or services, we must ensure that we have the capacity to properly undertake and perform such operations. If we lack such capacity or fail to perform such operations successfully, we may lose the confidence of the market and our customers, which may cause us to suffer decreased profitability or force us to withdraw from such operations.\n\nOur management attempts to manage operational risk and maintain it at a level that we believe is appropriate. However, operational risk is part of the business environment in which we operate, and despite our control measures, our business activities, financial condition results of operations and reputation may be adversely affected at any time due to this risk.\n\n(2) Our risk management may not be effective\n\nWe continuously seek to improve our risk management function. However, due to the rapid expansion of our business or significant changes in the business environment, our risk management may not always be effective. As a result, our business activities, financial condition and results of operations may be adversely affected. For a detailed discussion of our risk management system, see “Item 5. Operating and Financial Review and Prospects—Risk Management.”\n\n(3) We may not be able to hire or retain qualified personnel\n\nOur businesses require a considerable investment in human resources and the retention of qualified personnel in order to successfully compete in markets in Japan and overseas. If we cannot develop, hire or retain\n\n \n\n10\n\n##### Table of Contents\n\nthe necessary qualified personnel, we may incur additional costs to hire specialists or the quality of our products and services may decline, which could prevent us from continuing our business operation in a stable manner and adversely affect our business activities, financial condition and results of operations.\n\nFor further information about our initiatives related to human resources strategy, see “Item 4. Information on the Company—Sustainability at ORIX and Our Initiatives.”\n\n(4) Our internal control over financial reporting in future periods may be found insufficient\n\nWe have established and assessed our internal control over financial reporting in a manner intended to ensure compliance with the requirements of various laws and regulations. However, in such cases as unpredictable problems should occur, the evaluation process of our internal control over financial reporting may be partially unfulfilled, or such problems may cause us to report the presence of material deficiencies in our internal control, which could cause a loss of investor confidence in the reliability of our financial statements and cause our share price to fall. As a result, our business activities, financial condition, results of operations and reputation may be adversely affected.\n\n10. Risks Related to Holding or Trading our Shares and ADRs\n\n(1) Rights of shareholders under Japanese law may be different from those under the laws of other jurisdictions\n\nOur Articles of Incorporation, the regulations of our board of directors and the Companies Act govern our corporate affairs. Legal principles relating to matters such as the validity of corporate procedures, directors’ and officers’ fiduciary duties and shareholders’ rights are different from those that would apply if we were incorporated elsewhere. Shareholders’ rights under Japanese law are different in some respects from shareholders’ rights under the laws of jurisdictions within the United States and other countries. You may have more difficulty in asserting your rights as a shareholder than you would as a shareholder of a corporation organized in a jurisdiction outside Japan. For a detailed discussion of the relevant provisions of the Companies Act and our Articles of Incorporation, see “Item 10. Additional Information—Memorandum and Articles of Incorporation.”\n\n(2)Because ORIX and its directors and executive officers are located outside the United States, investors may have difficulty serving legal process on them in the United States or enforcing U.S. court judgments, including judgments based on U.S. federal securities laws\n\nORIX is a joint stock corporation formed in Japan. Almost all of ORIX’s directors and executive officers are residents of countries other than the United States. Although some of ORIX’s subsidiaries have substantial assets in the United States, substantially all of ORIX’s assets and the assets of ORIX’s directors and executive officers are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon ORIX or ORIX’s directors and executive officers or to enforce against ORIX or those persons, in U.S. courts, judgments of U.S. courts predicated upon the civil liability provisions of U.S. securities laws. ORIX has been advised by its Japanese counsel that there is doubt, in original actions or in actions to enforce judgments of U.S. courts, as to the enforceability in Japan of civil liabilities based solely on U.S. securities laws. A Japanese court may refuse to allow an original action based on U.S. securities laws.\n\nThe United States and Japan do not currently have a treaty providing for reciprocal recognition and enforcement of judgments, other than arbitration awards, in civil or commercial matters. Therefore, if you obtain a civil judgment by a U.S. court, you will not necessarily be able to enforce such judgment directly in Japan.\n\n(3) We may be a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. investors\n\nWe believe that we may have been a passive foreign investment company (a “PFIC”) under the U.S. Internal Revenue Code of 1986, as amended, for the year to which this report relates because of the composition of our\n\n \n\n11\n\n##### Table of Contents\n\nassets and the nature of our income. In addition, we may be a PFIC in the foreseeable future. Assuming this is the case, U.S. investors in our Shares or ADSs will be subject to special rules of taxation in respect of certain dividends or gains on such Shares or ADSs, including the treatment of gains realized on the disposition of, and certain dividends received on, the Shares or ADSs as ordinary income earned pro rata over a U.S. investor’s holding period for such Shares or ADSs, taxed at the maximum rate applicable during the years in which such income is treated as earned, with the resulting tax liability subject to interest charges for a deemed deferral benefit. In addition, in the case of any dividends that are not subject to the foregoing rule, the favorable rates of tax applicable to certain dividends received by certain non-corporate U.S. investors would not be available. See “Item 10. Additional Information—Taxation—United States Taxation.” Investors are urged to consult their own tax advisors regarding all aspects of the income tax consequences of investing in our Shares or ADSs.\n\n(4) If you hold fewer than 100 Shares, you will not have all the rights of shareholders with 100 or more Shares\n\nOne “unit” of our Shares is comprised of one hundred Shares. Each unit of the Shares has one vote. A holder who owns Shares other than in multiples of one hundred will own less than a whole unit (i.e., for the portion constituting of fewer than one hundred Shares.) The Companies Act imposes significant restrictions on the rights of holders of shares constituting less than a whole unit, which include restrictions on the right to vote. Under the unit share system, a holder of Shares constituting less than a unit has the right to require ORIX to purchase its Shares and the right to require ORIX to sell it additional Shares to create a whole unit. However, a holder of ADRs is not permitted to withdraw underlying Shares representing less than one unit, which is equivalent to 100 ADSs, and, as a practical matter, is unable to require ORIX to purchase those underlying Shares. The unit share system, however, does not affect the transferability of ADSs, which may be transferred in lots of any number of whole ADSs.\n\n(5) Foreign exchange fluctuations may affect the value of our securities and dividends\n\nMarket prices for our ADSs may decline if the value of the yen declines against the dollar. In addition, the dollar amount of cash dividends or other cash payments made to holders of ADSs will decline if the value of the yen declines against the dollar.\n\n(6) A holder of ADRs has fewer rights than a shareholder and must act through the depositary to exercise those rights\n\nThe rights of shareholders under Japanese law to take various actions, including voting shares, receiving dividends and distributions, bringing derivative actions, examining a company’s accounting books and records and exercising dissenters’ rights, are available only to holders of record on a company’s register of shareholders. The shares represented by our ADSs are registered in the name of a nominee of the depositary, through its custodian agent. Only the depositary is able to exercise those rights in connection with the deposited shares. The depositary will make efforts to vote the shares represented by our ADSs as instructed by the holders of the ADRs representing such ADSs and will pay to those holders the dividends and distributions collected from us. However, a holder of ADRs will not be able to directly bring a derivative action, examine our accounting books and exercise dissenters’ rights through the depositary unless the depositary specifically undertakes to exercise those rights and is indemnified to its satisfaction by the holder for doing so.\n\n \n\n12\n\n##### Table of Contents"}