{"url_path":"/sec/lgps/10-k/2026/item-401","section_key":"item-401","section_title":"Item 401 of Regulation S-K.","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-07-13","source_url":"https://www.sec.gov/Archives/edgar/data/2040290/0001493152-26-032936-index.html","accession_number":"0001493152-26-032936","cik":"0002040290","ticker":"LGPS","issuer_name":"LOGPROSTYLE INC.","edgar_url":"https://www.sec.gov/Archives/edgar/data/2040290/0001493152-26-032936-index.html","primary_entity_key":"0002040290","primary_entity_name":"LOGPROSTYLE INC."},"word_count":5142,"has_tables":true,"body_markdown":"Item 401 of Regulation S-K.\n\n \n\n**B.\nCompensation**\n\n \n\n**Compensation\nof our Executive Officers, Directors and Corporate Auditors**\n\n \n\nIn\naccordance with the Companies Act and our articles of incorporation, the amount of compensation for our directors and corporate auditors\nis decided by first setting the maximum amount of total compensation for all of our directors and corporate auditors through a resolution\nadopted by our shareholders at a shareholders meeting. Our board of directors then, after receiving the recommendation from the Nominating\nand Compensation Committee, decides on the amount of compensation for each director based on certain criteria established by the Company,\nand the amount of compensation for each corporate auditor is decided through discussions among the corporate auditors.\n\n \n\nAs\nfor the compensation for executive officers, excluding directors, our board of directors generally takes into account the recommendation\nfrom the Nominating and Compensation Committee to determine and approve it.\n\n \n\nRemuneration to our executive officers is comprised of base compensation.\nIn addition, one of our executive officers receives a portion of his remuneration in the form of performance share units (“PSUs”)\nunder the Company’s performance-based stock compensation plan. Under the plan, eligible directors (excluding outside directors),\nexecutive officers who are not directors, and directors of subsidiaries who are not directors of the Company may receive Common Shares\nand cash following the end of the performance period based on the achievement of predetermined performance targets and their service during\nthe performance period. The number of shares and amount of cash to be delivered are determined based on the level of achievement of the\nperformance targets, the participant’s service period, position adjustment factors, and the prescribed allocation ratio of 67% in\nshares and 33% in cash. Awards are subject to forfeiture under certain circumstances, including resignation without justifiable reason,\nserious misconduct, or violation of the terms of the plan, and are also subject to the Company’s Compensation Recovery Policy.\n\n \n\nBased\non the level of achievement of the performance targets for the performance evaluation period ended March 31, 2026, awards under the plan\ncorresponding to an aggregate of 97,495 shares are expected to be delivered, consisting of 57,612 shares to one executive officer and\n39,883 shares to directors of subsidiaries. The final number of shares and the amount of cash to be delivered will be determined by a\nresolution of our board of directors following the filing of this annual report. No awards were made under the plan in the fiscal year\nended March 31, 2025. In the fiscal years ended March 31, 2026 and 2025, no executive officer was paid over JPY100 million. The Company\ndid not grant any stock options and did not provide discretionary bonuses during the fiscal years ended March 31, 2026 and 2025.\n\n \n\n67\n\n \n\n \n\nThe\nfollowing table summarizes the total amount of remuneration paid to each category of our directors and corporate auditors for the fiscal\nyear ended March 31, 2026, including by the type of remuneration and the number of persons in each category.\n\n \n\n**(in\nthousands, except stock options and number of persons in category)**\n\n**Category\nof directors and corporate auditors**\n \n\n**Total\namount of**\n\n**remuneration**\n  \nBase\ncompensation  \n\n**Number\nof persons**\n\n**in\ncategory**\n \n\nExecutive directors (1) \n¥213,731,160  \n¥213,731,160  \n 6 \n\nIndependent directors (2) \n¥20,644,500  \n¥20,644,500  \n 6 \n\nCorporate auditors (3) \n¥10,600,008  \n¥10,600,008  \n 3 \n\n \n\n(1)\nConsists of Messrs. Yasuyuki Nozawa, Satoshi Oyamatsu, Kentaro Tachibana, Shinya Sato, and Taiji Ito.\n\n \n\n(2)\nConsists of Messrs. Tamotsu Moriyama, Seishi Miyajima, Izumi Takemoto, Hajime Yamashita, John A. Stapleton, and Ms. Katharyn Field.\n\n \n\n(3)\nOur full-time corporate auditor is Ms. Yuki Ide (Ito).\n\n \n\n(4)\nConsists of Ms. Ruriko Takeuchi and Mr. Ryu Ishida.\n\n \n\n**Performance-Based\nStock Compensation Plan**\n\n \n\nOn\nJune 30, 2025, we adopted a performance-based stock compensation plan (the “Plan”) for directors (excluding independent directors),\nexecutive officers, and directors of subsidiaries who do not currently serve as directors of the Company. The purpose of the Plan is\nto align incentives with the long term interest of shareholders.\n\n \n\n*Performance\nEvaluation Period.*The period for evaluating performance goals shall be one year (from April 1, 2025 through March 31, 2026).\n\n \n\n*Plan\nStructure.*Under the Plan, eligible participants are awarded compensation comprising of a combination of Common Shares and cash.\nThe number of shares and amount of cash granted are determined based on: the degree of achievement of pre-established performance targets;\nthe length of service during the applicable evaluation period; and adjustments for changes in the participant’s position.\n\n \n\n*Limits\nand Conditions.*The total amount of the monetary claims and cash to be granted under the Plan for each Performance Evaluation Period\nshall not exceed JPY 200 million (excluding salaries for Directors who also serve as employees), and the total number of Common Shares\nto be delivered shall not exceed 500,000 shares per Performance Evaluation Period. Shares are issued or treasury shares disposed of at\na price determined by the closing price on the NYSE American (or other applicable U.S. exchange) on the trading day prior to the relevant\nBoard resolution, converted to Japanese yen. Awards may be prorated for mid-year appointments or early resignations for justifiable reasons.\n\n \n\n*Adjustments\nand Forfeitures.*If a participant resigns without justifiable reason, engages in misconduct, or otherwise fails to meet the Plan’s\nconditions (e.g., competition, regulatory violations, or failure to complete delivery procedures), all rights under the Plan are forfeited.\nIn the event of death, the successor may receive a cash payment equivalent to the calculated value of shares based on the closing price\non the date of retirement. In the case of reorganizations (e.g., merger, share exchange, stock split, share acquisition demands), cash\nmay be delivered instead of shares, based on the market value as of the date of shareholder or Board approval.\n\n \n\n*Clawback\nProvision.*The Plan includes a clawback clause allowing us to reclaim all or part of the shares or cash delivered if, within one\nyear of delivery (or other period set by the Board), it is determined that serious accounting irregularities, gross negligence, or intentional\nmisconduct by a participant materially harmed our financial condition or performance.\n\n \n\nBased on the performance evaluation period ended March 31, 2026, awards\ncovering an aggregate of 97,495 shares are expected to be delivered under the Plan, subject to a resolution of our board of directors\nfollowing the filing of this annual report.\n\n \n\n68\n\n \n\n \n\n**C.\nBoard Practices**\n\n \n\n**Corporate\nGovernance Practices**\n\n \n\nWe\nare a “foreign private issuer” as defined under the federal securities laws of the United States and the NYSE American listing\nstandards. Under the federal securities laws of the United States, foreign private issuers are subject to different disclosure requirements\nthan U.S.-domiciled public companies. We intend to take all actions necessary for us to maintain our status as a foreign private issuer\nunder the applicable corporate governance requirements of the Sarbanes-Oxley Act, the Exchange Act and other applicable rules adopted\nby the SEC and the NYSE American listing standards. Under the SEC rules and the NYSE American listing standards, a foreign private issuer\nis subject to less stringent corporate governance requirements. Subject to certain exceptions, the SEC and the NYSE American permit a\nforeign private issuer to follow its home country practice in lieu of their respective rules and listing standards. In general, our articles\nof incorporation and the Companies Act govern our corporate affairs.\n\n \n\nIn\nparticular, as a foreign private issuer, we will follow Japanese law and corporate practice in lieu of the corporate governance provisions\nset out under Part 8 of the NYSE American LLC Company Guide. Of particular note, the following rules under Part 8 of the NYSE American\nLLC Company Guide are exempt from Japanese law requirements:\n\n \n\n \n●\nSection\n802(a) of the NYSE American LLC Company Guide requires that at least a majority of a listed company’s board of directors be\nindependent directors. Under our current corporate structure, the Companies Act does not require a majority of our board of directors\nto be independent directors. However, as of July 13, 2026, following the conclusion of our annual meeting, our board of directors\nis comprised of six directors, two of which are considered “independent,” as determined in accordance with the applicable\nsections of the NYSE American LLC Company Guide.\n\n \n \n \n\n \n●\nSection\n803B(2)(a) of the NYSE American LLC Company Guide requires a listed company to have an audit committee composed entirely of not less\nthan three directors, each of whom must be independent. Under Japanese law, a company may have a statutory auditor (referred to as\nthe corporate auditor) or a statutory board of corporate auditors.      We have a three-member board of\ncorporate auditors, which meet the requirements for general exemptions of Rule 10A-3(c)(3) under the Exchange Act. See “Management-Board\nof Corporate Auditors” below for additional information.\n\n \n \n \n\n \n●\nSection\n805(a) of the NYSE American LLC Company Guide requires, among other things, that a listed company’s compensation committee\nbe comprised of at least two members, each of whom is an independent director as defined under such rule. In accordance with generally\naccepted practices for companies listed in Japan (not a requirement under Japanese law), our board of directors has established a\nnominating and compensation committee comprised of at least three directors, a majority of whom are independent directors as qualified\nunder Japanese law (the “Nominating and Compensation Committee”), to advise our board of directors, when consulted, with\nrespect to the compensation of our directors and executive officers. Our board of directors collectively participates in the discussion\nand determination of compensation for our directors and executive officers (subject to the maximum aggregate compensation amount\nresolved by our shareholders meetings) and other compensation-related matters, and the Nominating and Compensation Committee will\nprovide advice on this matter when consulted by the board of directors. In addition, our corporate auditors discuss and determine\nthe compensation of each corporate auditor (subject to the maximum aggregate compensation amount resolved by our shareholders meetings)\nwithout the involvement of our board of directors.\n\n \n\n69\n\n \n\n \n\n \n●\nSection\n804(a) of the NYSE American LLC Company Guide requires that a listed company’s nominating and corporate governance committee\nbe comprised solely of independent directors. In accordance with generally accepted practices for companies listed in Japan (not\na requirement under Japanese law), our board of directors has established the Nominating and Compensation Committee to advise our\nboard of directors, when consulted, with respect to nominees for election or re-election to our board of directors or for appointment\nto fill any vacancy, as well as recommend to our board of directors with respect to the appointment of our executive officers. Our\nboard of directors collectively participates in the nomination process of potential directors and executive officers and oversees\nour corporate governance practices, and the Nominating and Compensation Committee will provide advice for the nomination of directors\nwhen consulted by the board of directors.\n\n \n \n \n\n \n●\nSection\n123 of the NYSE American LLC Company Guide recommends a quorum of at least 33 1∕3% of the shares issued and outstanding and\nentitled to vote and requires that, if less is specified, NYSE American should be consulted before filing the original listing application.\nIn accordance with Japanese law and generally accepted business practices, our articles of incorporation provide that there is no\nquorum requirement for a general resolution of our shareholders. However, under the Companies Act and our articles of incorporation,\na quorum of not less than one-third or more of the total number of voting rights is required in connection with the election of directors,\ncorporate auditors and certain other matters.\n\n \n\nThe\nCompany avails itself of these exemptions. More specifically, the Company does not have a compensation committee or a nominating and\ncorporate governance committee that satisfies the requirements set out under Part 8 of the NYSE American LLC Company Guide. Therefore,\nfor as long as the Company remains a “foreign private issuer,” the Company will not have the same protections afforded to\nshareholders of companies that are subject to all of these corporate governance requirements.\n\n \n\nAdditionally,\nthe Company avails itself under the “controlled company” exemptions and intends to continue to do so as long as it meets\nthe requirements for such exemption. The “controlled company” exception to the rules of the NYSE American provides that a\ncompany of which more than 50% of the voting power is held by an individual, group or another company, a “controlled company,”\nneed not comply with certain requirements of the corporate governance rules of the NYSE American. As of July 13, 2026, Yasuyuki Nozawa\ncontrols approximately 68.83% of the aggregate voting power of our outstanding Common Shares.  Accordingly, we are a “controlled\ncompany” within the meaning of the corporate governance standards of the NYSE American.\n\n \n\nAs\na “controlled company” (which is a company of which more than 50% of the voting power is held by an individual, group or\nanother company), we may elect not to comply with certain corporate governance standards, including the requirements: (1) that a majority\nof our board of directors consist of independent directors; (2) that our board of directors have a compensation committee that is comprised\nentirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and (3) that\nour board of directors have a nominating and corporate governance committee that is comprised entirely of independent directors with\na written charter addressing the committee’s purpose and responsibilities. For so long as we qualify as a controlled company, we\nintend to take advantage of these exemptions. Accordingly, our shareholders may not have the same protections afforded to shareholders\nof companies that are subject to all of these corporate governance requirements.\n\n \n\nIn\nthe event that we cease to be a “foreign private issuer” under the rules of the NYSE American and cease to be a “controlled\ncompany” under the rules of the NYSE American and our Common Shares continue to be listed on the NYSE American, the Company’s\nBoard of Directors will take all action necessary to comply with the corporate governance rules of the NYSE American, including, but\nnot limited to, establishing certain committees composed entirely of independent directors, subject to a permitted “phase-in”\nperiod.\n\n \n\n70\n\n \n\n** **\n\n**Board\nof Directors**\n\n \n\nOur\nboard of directors has the ultimate responsibility for the administration of our affairs. Our board of directors meets no less than once\nevery month. Under the Companies Act and our articles of incorporation, our Company shall have no more than 15 directors on our board\nof directors. As of July 13, 2026, our board of directors was comprised of six directors, including two independent directors. Directors\nare identified and recommended by the Nominating and Compensation Committee, nominated at the board level and elected at general meetings\nof the shareholders. The term of office of any director expires at the close of the ordinary general meeting of shareholders held with\nrespect to the last fiscal year ended within one year after such director’s election to office. Our directors may, however, serve\nany number of consecutive terms.\n\n \n\nOur\nboard of directors appoints from among its members one or more representative directors, who serve as head administrator(s) over the\nCompany’s affairs and represent the Company in accordance with the resolutions of our board of directors. Our board of directors\nmay appoint from among its members a chairman, a president or one or more deputy presidents, senior managing directors, or managing directors.\n\n \n\n**Qualification**\n\n \n\nUnder\nour articles of association, a director is not required to hold any shares in the Company by way of qualification. A director who is\nnot a shareholder of the Company is nevertheless entitled to attend the general meetings.\n\n \n\n**Board\nof Corporate Auditors**\n\n \n\nWith\nrespect to the requirements of Rule 10A-3 under the Exchange Act and Part 8 of the NYSE American LLC Company Guide relating to listed\ncompany audit committees, we chose to rely on exemptions under these rules that are available to foreign private issuers with a board\nof corporate auditors meeting certain requirements. As permitted under the Companies Act, we have elected to structure our corporate\ngovernance system as a company with a separate board of corporate auditors instead of an audit committee of our board of directors. Our\narticles of incorporation provide for no more than three corporate auditors. Under the Companies Act, nomination of corporate auditors\nby the board of directors is subject to the approval of the board of corporate auditors, which also has the right to require the board\nof directors to nominate designated candidates (including the incumbent corporate auditors) for the position of corporate auditors, and\ncorporate auditors are elected at general meetings of shareholders by a majority of shareholders entitled to vote, where a quorum is\nestablished by shareholders holding one-third or more of the voting rights of those who are entitled to vote are present at the shareholders’\nmeeting. The normal term of office of any corporate auditor expires at the close of the annual general meeting of shareholders held with\nrespect to the last fiscal year ended within four years after such corporate auditor’s election to office. Our corporate auditors\nmay, however, serve any number of consecutive terms. Corporate auditors may be removed by a special resolution of a general meeting of\nshareholders.\n\n \n\nOur\ncorporate auditors are not required to be certified public accountants. Our corporate auditors may not concurrently serve as directors,\nemployees or accounting advisors (kaikei sanyo) of our Company or any of our subsidiaries or serve as corporate officers of our subsidiaries.\nUnder the Companies Act, at least one-half of the corporate auditors of a company must be persons who satisfy the requirements for an\noutside corporate auditor set forth in the Companies Act, and at least one of the corporate auditors must be a full-time corporate auditor.\n\n \n\nThe\nfunction of our board of corporate auditors and each corporate auditor is similar to that of independent directors, including those who\nare members of the audit committee of a U.S. public company. Each corporate auditor has a statutory duty to supervise the administration\nby the directors of our affairs, to examine our financial statements and business reports to be submitted by a representative director\nat the general meetings of shareholders, and to prepare an audit report. Our corporate auditors are obligated to participate in meetings\nof our board of directors and, if necessary, to express their opinion at such meetings, but are not entitled to vote. Our corporate auditors\nmust inspect the proposals, documents and any other materials to be submitted by our board of directors to the shareholders at the shareholders’\nmeeting. If a corporate auditor finds a violation of statutory regulations or our articles of incorporation, or another significant improper\nmatter, such auditor must report those findings to the shareholders at the shareholders’ meeting.\n\n \n\n71\n\n \n\n \n\nFurthermore,\nif a corporate auditor believes that a director has engaged in, or is likely to engage in, misconduct or acts that are significantly\nimproper, or that there has been a violation of statutory regulations or our articles of incorporation, the corporate auditor: (i) must\nreport that fact to our board of directors; (ii) can demand that a director convene a meeting of our board of directors; and (iii) if\nno such meeting is convened in response to the demand, can convene the meeting under the corporate auditor’s own authority. If\na director engages in, or is likely to engage in, an activity outside the scope of the objectives of the Company or otherwise in violation\nof laws or regulations or our articles of incorporation, and such act is likely to cause significant damage to the Company, then a corporate\nauditor can demand that the director cease such activity.\n\n \n\nOur\nboard of corporate auditors has a statutory duty to prepare an audit report based on the audit reports issued by the individual corporate\nauditors and, in the case of audit reports related to financial statements, the independent auditors of the Company each year, and submit\nsuch audit reports to a relevant director. A corporate auditor may note an opinion in an audit report issued by our board of corporate\nauditors, if the opinion expressed in such corporate auditor’s individual audit report is different from the opinion expressed\nin the audit report issued by our board of corporate auditors. Our board of corporate auditors is empowered to establish the audit principles,\nthe method of examination by our corporate auditors of our affairs and financial position, and any other matters relating to the performance\nof our corporate auditors’ duties.\n\n \n\nAdditionally,\nour corporate auditors must represent the Company in: (i) any litigation between the Company and a director; (ii) dealing with shareholders’\ndemands seeking a director’s liability to the Company; and (iii) dealing with notices of litigation and settlement in a derivative\nsuit seeking a director’s liability to the Company. A corporate auditor can file court actions relating to the Company within the\nauthority of our corporate auditors, such as an action to nullify the incorporation of the Company, the issuance of shares, or a merger,\nor to cancel a resolution at a shareholders’ meeting.\n\n \n\n**Differences\nin Corporate Governance from NYSE American**\n\n \n\nCompanies\nlisted on the NYSE American must comply with certain standards regarding corporate governance under Part 8 of the NYSE American LLC Company\nGuide. However, listed companies that are foreign private issuers, such as we will be, are permitted to follow home country practice\nin lieu of certain provisions of Part 8 of the NYSE American LLC Company Guide.\n\n \n\nThe\nfollowing table shows the significant differences between the corporate governance practices followed by U.S. listed companies under\nPart 8 of the NYSE American LLC Company Guide and those followed by the Company.\n\n \n\n**Corporate\nGovernance Practices**\n\n**Followed\nby NYSE American-**\n\n**listed\nU.S. Companies**\n\n \n\n**Corporate\nGovernance Practices**\n\n**Followed\nby LogProstyle**\n\n \n \n \n\n1.\nA NYSE American-listed U.S. company must have a majority of directors meeting the independence requirements under the NYSE American\nLLC Company Guide.\n \n\nFor\nJapanese companies, including LogProstyle, which employ a corporate governance system based\non a board of corporate auditors (the board of corporate auditor system), the Companies Act\nhas no independence requirement with respect to directors. The task of overseeing management\nand independent auditors is assigned to the members of the board of corporate auditors, who\nare separate from LogProstyle’s management.\n\n \n\nAll\nmembers of board of corporate auditors must meet certain independence requirements under the Companies Act.\n\n \n\n72\n\n \n\n \n\n \n \n\nFor\nJapanese companies with a board of corporate auditors, including LogProstyle, at least half\nof the members of such board must be “outside” corporate auditors. Such “outside”\ncorporate auditors of the board of corporate auditors must meet additional independence requirements\nunder the Companies Act. An “outside” corporate auditor of the board of corporate\nauditors means a member of the board of corporate auditors who, among other things, (i) has\nnot been a director or employee, including a manager, of LogProstyle or any of its subsidiaries\nwithin 10 years prior to assuming the position of a member of the board of corporate auditors,\n(ii) (in case of a person who has formerly served as a member of the board of corporate auditors\nof LogProstyle or any of its subsidiaries within 10 years prior to assuming the position\nof a member of the board of corporate auditors) has not been a director or employee, including\na manager, of LogProstyle or any of its subsidiaries within 10 years prior to assuming such\nformer position of a member of the board of corporate auditors and (iii) is not currently\nspouse or relative within two degrees of a director or important employee, including a manager,\nof LogProstyle.\n\n \n\nAs\nof March 31, 2026, LogProstyle had three members of the board of corporate auditors, two of whom were “outside” members\nof the board of corporate auditors.\n\n \n\n**Corporate\nGovernance Practices**\n\n**Followed\nby NYSE American**\n\n**-listed\nU.S. Companies**\n\n \n\n**Corporate\nGovernance Practices**\n\n**Followed\nby LogProstyle**\n\n \n \n \n\n2.\nA NYSE American-listed U.S. company must have an audit committee composed entirely of independent directors, and the audit committee\nmust have at least three members.\n \n\nLogProstyle\nemploys the board of corporate auditor system as described above. Under this system, the\nboard of corporate auditors is a legally separate and independent body from the board of\ndirectors. The main function of the board of corporate auditors is similar to that of independent\ndirectors, including those who are members of the audit committee of a U.S. company: to monitor\nthe performance of the directors, and review and express opinions on the method of auditing\nby LogProstyle’s independent auditors and on such independent auditors’ audit\nreports, for the protection of LogProstyle’s shareholders.\n\n \n\nAs\nof March 31, 2026, LogProstyle had three members of the board of corporate auditors.\n\n \n\nEach\nmember of the board of corporate auditors serves a four-year term of office. In contrast, the term of office of each director of\nLogProstyle is one year.\n\n \n\nWith\nrespect to the requirements of Rule 10A-3 under the U.S. Securities Exchange Act of 1934 relating to listed company audit committees,\nLogProstyle relies on an exemption under that rule which is available to foreign private issuers with board of corporate auditors\nmeeting certain requirements.\n\n \n \n\n3.\nA NYSE American-listed U.S. company must have a nominating/corporate governance committee composed of entirely independent directors\nand the compensation committee must have at least two members.\n \nLogProstyle’s\ndirectors are elected at a general meeting of shareholders. The members of the board of corporate auditors are also elected at a\ngeneral meeting of shareholders of LogProstyle. A proposal by LogProstyle’s board of directors to elect a member to the board\nof corporate auditors must be approved by a resolution of its board of corporate auditors. LogProstyle’s board of directors\ncollectively participates in the discussion and determination of the nomination and compensation of the board and officers, it established\na Nominating and Compensation Committee to advise its board of directors, when consulted with respect to nomination and compensation\nmatters.\n\n \n\n73\n\n \n\n \n\n**Corporate\nGovernance Practices**\n\n**Followed\nby NYSE American**\n\n**-listed\nU.S. Companies**\n\n \n\n**Corporate\nGovernance Practices**\n\n**Followed\nby LogProstyle**\n\n \n \n \n\n4.\nA NYSE American-listed U.S. company must have a compensation committee composed entirely\nof independent directors and the compensation committee must have at least two members.\n\n \n\nA\ncompensation committee must also have authority to retain or obtain the advice compensation and other advisers, subject to prescribed\nindependence criteria that the committee must consider prior to engaging any such adviser.\n\n \n\nThe\ntotal amount of compensation for LogProstyle’s directors and the total amount of compensation\nfor the members of the LogProstyle’s board of corporate auditors are proposed to, and\nvoted upon by, a general meeting of shareholders. Once the proposal for each of such total\namount of compensation is approved at the general meeting of shareholders, each of the board\nof directors and board of corporate auditors allocates the respective total amount among\nits respective members. The board of directors established a Nominating and Compensation\nCommittee provides advice on the matter of compensation for directors and executive officers,\nsubject to the total amount of compensation approved at the general meeting of shareholders,\nwhen consulted by the board of directors.\n\n \n\nThere\nare no procedural or disclosure requirements with respect to the use of compensation to consultants, independent legal counsel or\nother advisors.\n\n \n\n**Nominating\nand Compensation Committee**\n\n \n\nWhile\nwe do not have a compensation committee or a nominating and corporate governance committee that satisfies the requirements set out under\nPart 8 of the NYSE American LLC Company Guide because we will be a “foreign private issuer” and a “controlled company”\nwithin the meaning of the corporate governance standards of NYSE American, our board of directors had opted to, as permitted under the\nCompanies Act, establish an advisory nominating and compensation committee to assist it to:\n\n \n\n \n●\nidentify\nand recommend nominees for election or re-election to our board of directors or for appointment to fill any vacancy;\n\n \n \n \n\n \n●\nrecommend\nto our board of directors with respect to the appointment of our executive officers; and\n\n \n \n \n\n \n●\nreview\nand recommend to our board of directors with respect to the compensation of our directors and executive officers.\n\n \n\nUnder\nthe charter of the Nominating and Compensation Committee, the Nominating and Compensation Committee shall consist of at least three directors\nwith a majority of independent directors and the members shall be appointed by the board of directors. As of July 13, 2026, the Nominating\nand Compensation Committee consists of the representative director and the two independent directors.\n\n \n\n**Limitation\nof Liability of Directors and Corporate Auditors**\n\n \n\nOur\narticles of incorporation include limitation of liability provisions for directors and corporate auditors, pursuant to which our board\nof directors can authorize the Company to exempt the directors and corporate auditors from liabilities arising in connection with any\nfailure to execute their respective duties in good faith or due to simple negligence (excluding gross negligence and willful misconduct),\nwithin the limits stipulated by applicable laws and regulations, including Article 426, Paragraph 1 of the Companies Act.\n\n \n\n74\n\n \n\n \n\nIn\naccordance with our articles of incorporation and pursuant to the provisions of Article 427 of the Companies Act, we are authorized to\nenter into agreements with non-executive directors (as defined under the Companies Act, for which our independent directors are qualified)\nand corporate auditors to limit his or her liability to the Company for any losses or damages arising from the conduct specified under\nArticle 423 of the Companies Act; provided, that, the amount of such limited liability is the amount stipulated in applicable laws and\nregulations, whichever is higher. As of the date of this annual report, we have entered into limited liability agreements with all of\nour independent directors and corporate auditors.\n\n \n\n**Code\nof Business Conduct and Ethics**\n\n \n\nOur\nboard of directors has adopted a code of business conduct and ethics, which is applicable to all of our directors, corporate auditors,\nofficers, and employees (including our principal executive officer, principal financial officer, principal accounting officer or controller,\nand other persons performing similar functions).\n\n \n\n**D.\nEmployees**\n\n \n\n**Employees**\n\n \n\nAs\nof March 31, 2026, we and our subsidiaries had approximately 160 full-time employees and 100 part-time employees. The following table\nshows the number of the employees categorized by areas of operations as of March 31, 2026:\n\n \n\nFunction/Department \nNumber \n\nManagement \n 21 \n\nFinance and Accounting \n 9 \n\nSales and Marketing \n 62 \n\nBusiness Operation and Others \n 163 \n\nHuman Resources \n 3 \n\nGeneral Affairs \n 2 \n\nTotal\namount \n 260 \n\n \n\nNone\nof our employees is represented by a union. We consider our relations with our employees to be good.\n\n \n\n**E.\nShare ownership**\n\n \n\nFor\ninformation regarding the share ownership of our directors and executive officers, please see “Item 7.A. Major Shareholders.”\n\n \n\n**F.\nDisclosure of a registrant’s action to recover erroneously awarded compensation**\n\n \n\n**Compensation\nRecovery Policy**\n\n \n\nIn\naccordance with Rule 10D-1 under the Exchange Act and Section 811 of the NYSE American Company Guide, the Board has adopted a compensation\nrecovery policy to provide for the recovery of erroneously awarded incentive-based compensation.\n\n \n\nIncentive-based\ncompensation under the Plan is subject to recovery under this policy. The Company will comply with the requirements\nof Rule 10D-1 with regarding to any such compensation, including the recovery of incentive-based compensation received by current or\nformer executive officers during the three completed fiscal years preceding a required accounting restatement due to the Company’s\nmaterial noncompliance with financial reporting requirements under the federal securities laws.\n\n \n\n75"}