Skylark : Corporate Governance Report_20220330

コーポレートガバナンス

CORPORATE GOVERNANCE

[TRANSLATION]

This document has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail. The Company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

March 30, 2022

SKYLARK HOLDINGS CO., LTD.

Chairman, President & CEO Makoto Tani

The status of the Company's corporate governance is as follows

Ⅰ ． Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information

１．Basic Approach

Under its Corporate Philosophy of "Creating Richness with Value to Society" and its Purpose of "Contributing to Life Enrichment and Advancement of Society by Creating the Future of Dining," the Skylark Group operates approximately 3,100 outlets, mainly table service restaurants, patronized by a cumulative total of approximately 300 million customers annually. The Group aims to offer great-tastingfood at affordable prices with good service in its comfortable restaurants to as many people as possible. The Company considers continuously enhancing its corporate value by contributing to society through this food-relatedbusiness to be its most important management task. The Company aims to operate a corporate group that is trusted not only by its customers, but by all of its stakeholders, including its shareholders, business partners,local communities and employees.

To achieve these objectives, the Company has established the Skylark Group Charter of Corporate Behavior, and shares it among all executives and employees, observes laws and international rules and their spirit, and strives to behave with a social decency. The Company also works to enhance corporate governance by implementing various initiatives to ensure thesoundness, effectiveness and transparency of management.

<< General Policies on Corporate Governance Basic Policy on Corporate Governance >>

1. Respect the rights of shareholders and ensure equality.
2. Consider the interests of stakeholders, including shareholders, and cooperate appropriatelywith them.
3. Appropriately disclose Company information and ensure transparency.
4. Ensure the effectiveness of supervisory functions for business execution through the Boardof Directors.
5. Conduct constructive dialogues with shareholders who have an investment policy thatmatches their medium-to-long-terminterests.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]

The Company implements / complies with all of the principles of the Corporate Governance Code.

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[Disclosure Based on the Principles of the Corporate Governance Code]

The following is based on the Corporate Governance Code after the revision in June 2021 (Although Supplementary Principle 4-10-1 is aimed at the prime market, the Company isdisclosing information in advance.)

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The Company has no past record of holding shares of other listed companies as cross- shareholdings, and has no plans to do so at this time. When considering the possibility of holding shares of other listed companies as cross-shareholdingsin the future, the Company will formulate a policy regarding reduction of cross-shareholdingsof shares of other listed companies, and appropriately discuss the matter before executing such cross-shareholdings.In such cases, the Company will appropriately disclose the policy, the results of validation of the propriety ofindividual holdings, and the criteria for exercising voting rights for cross-shareholdings.

1-7 Related Party Transactions>

In its list of proposals for the Board of Directors, the Company defines significant related party transactions as matters to be resolved by the Board of Directors, and also defines transactions of directors that qualify as competing and/or conflict of interest transactions as matters to be resolved by and reported to the Board of Directors. The Company monitors such transactions, and discloses details of significant related party transactions in the notes to non-consolidatedfinancial statements, etc. In addition, we also conduct a quarterly survey and monitor relatedparty transactions with regard to directors.

2-4-1 Ensuring Diversity in the Promotion of Core Human Resources>The Skylark Group regards human resources as one of its most important business management resources, and engages in diversity management. Details of specific initiatives are listed below.

・The Company's website: https://www.skylark.co.jp/company_e/csr/diversity.html

The Company does not operate either fund-type or contract-type defined benefit pensions or employees' welfare pension funds, and has adopted a defined contribution pension plan. Accordingly, although reserve funds are managed by the employees themselves, the Company does educate employees with regard to asset management under the defined contribution pensionplan, given the fact that it impacts employee asset formation.

1. Corporate philosophy and business plans, etc.

Based on its Corporate Philosophy of "Creating Richness with Value to Society", the Company has established a strategic vision for 2025: "Establishing a solid business foundation, being the best restaurant in each community through a continuous challenge of all employees, and achieving sustainable business growth-Allfor the Smiles of our Customers." In order to achieve this strategic vision, the Company has formulated the following management plan, with the aimof achieving growth by making maximum use of its robust business platform.

[FY2022 Management Policy]

The Company's business environment is uncertain. In addition to the fact that it is largely affected by the COVID-19pandemic, there is also the decrease in the size of the labor force due to the issues of low birthrate and population aging, increases in raw material costs and energy costs, and unclear domestic and overseas political and economic conditions. At the same time, many new demands are emerging, such as increased opportunities for delivery and take-outdue to changes in consumer lifestyles caused by the COVID-19pandemic, growing demand for specialty stores, and motivation to use family restaurants as a place for enjoying alcoholicbeverages.

In order to respond quickly to such changes in the market, the Company will strengthen its

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コーポレートガバナンス

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management base and promote the maximum utilization of business resources, looking ahead to the post-COVID-19 era. In addition, we will continue to provide corporate value and further contribute to society through "food services" that cover all aspects of customers' daily lives, witha core focus on dining out and also including ready to eat and home-cookedmeals..

1. Driving Digital Transformation (DX)
2. Strengthening ESG Initiatives
3. Fundamental Review and Revision of Group-wide Costs, Investment and Productivity
4. Provision of Products and Services Demanded During the COVID-19 Pandemic
5. Strengthening Delivery and Takeout Services
6. Reorganizing Store Portfolio / and Conversion of Brands by Utilizing Strengths as a Multi-Brand Group
7. Remodeling Stores in response to New Dining Out Needs and Making Maximum EffectiveUse of the Business Resources of Existing Stores
8. Enhancing Organizational Structure and QSC to Improve Operational Quality ofRestaurants
9. Thorough Measures to Prevent the Spread of Infection Among Customers and Employees
10. FY2022 Financial Targets

・Revenue: 336.0 billion yen (up 27.0% year on year)

・Operating profit: 10.0 billion yen (down 45.1% year on year)

・Net income: 4.0 billion yen (down 54.2% year on year)

2. Basic views and policies on corporate governance

Details of basic views and policies on corporate governance are listed in section I. 1 of this report.

3. Matters regarding remuneration for executive management personnel and directors

1. Policy regarding determination of remuneration

The Company's policy for remuneration and other compensations for directors is designed to contribute to the continuous improvement of operating results/corporate value and the sharingof value with shareholders.

Remuneration for directors (excluding outside directors) of the Company consists of fixed basic remuneration and performance-linked remuneration that varies depending on company performance. Performance-linked remuneration consists of year-end bonuses based on consolidated business results for each business year, and remuneration in which the amount paidis linked to the stock price for a certain period (hereinafter referred to as "phantom stock").

From the standpoint of ensuring independence, remuneration for outside directors and auditors is not linked to company performance, and only basic remuneration is paid.

Details regarding remuneration for officers are listed in our securities report. https://ir.skylark.co.jp/library/yuho.html(Japanese text only)

1. Decision process for determining remuneration

The Board of Directors determines the amounts of remuneration and other compensation for directors and methods for calculating such remuneration, etc. based on proposals from the Remuneration Committee, which is an advisory organization of the said Board. From its independent and objective standpoint, the Remuneration Committee decides on individual proposals for basic remuneration based on individual performance and capabilities, within the remuneration amount limits resolved at the General Meeting of Shareholders and pursuant to the remuneration regulations and remuneration system for board members. The Committee also appropriately deliberates on remuneration, etc., for directors, such as by deciding on individualproposals for year-end bonuses considering the Group's operating results.

The Remuneration Committee is chaired by the Chairman, President & CEO, with membership consisting of the chairperson and at least two other members appointed by resolution of the Board of Directors. Currently, membership consists of the chairperson and two independent outsidedirectors, engaging in independent and objective discussions.

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4. Matters regarding appointment and dismissal of executive management and nomination ofcandidates for directors and auditors

1. Policy on appointment and dismissal of executive management and nomination ofcandidates for directors and auditors

To respond to the rapidly changing restaurant market, we nominate candidates for directors and auditors with diverse knowledge, experience and skills, regardless of whether they are frominside or outside the Company.

For internal director candidates, we nominate those who can contribute to society through the restaurant business and demonstrate leadership to continuously improve corporate value, based on consideration of the balance between their knowledge and experience / performance in areassuch as overall family restaurant management, financial strategy, and marketing strategy.

For outside director candidates, we nominate those who have extensive experience in various companies and organizations, including those in the restaurant industry.

For auditor candidates, we nominate people who can properly audit directors' execution of duties based on their knowledge of corporate management and their knowledge and experience in areassuch as accounting, finance, law, and risk management.

1. Procedures for the appointment and dismissal of executive management and nomination of

director and auditor candidates

When nominating director and auditor candidates, the Nomination Committee deliberates and makes proposals to the Board of Directors from the standpoint of maximizing the corporate valueof the Skylark Group.

The Nomination Committee is chaired by the Chairman, President & CEO, with membership consisting of the chairperson and at least two other members appointed by resolution of the Board of Directors. Currently, membership consists of the chairperson and two independent outsidedirectors, engaging in independent and objective discussions.

5. Explanations regarding individual appointments and dismissals of executive managementand nominations of director and auditor candidates

For reasons regarding the appointment of directors and auditors, please refer to the "Reasons for Appointment of Directors and Auditors" appendix of this report.

3-1-3 Initiatives on Sustainability, Investment in Human Capital andIntellectual Property, etc.>

(1) Sustainability Initiatives

The Company recognizes that its business activities are related closely to the Sustainable Development Goals (SDGs). In December 2020 the Company established a Sustainability Committee to enhance its ESG initiatives, such as by implementing measures in line with global goals set by the United Nations, and bolstered its organizational structure to drive the fulfillment of responsibilities to help create a sustainable society. Moving forward, the Company will continue to fulfill its responsibilities with regard to global environmental conservation and contributing to the development of a sustainable society through products, services and businessactivities, from procurement and production to restaurant management.

Details of specific sustainability-related initiatives are listed below. ・Integrated Report (Online Version): https://www.skylark.co.jp/company_e/i_report/2020/esg.html

・Integrated Report (PDF Version): https://ssl4.eir-parts.net/doc/3197/ir_material_for_fiscal_ym11/105457/00.pdf#page=48

(2) Investment in Human Capital and Intellectual Property, etc.

In terms of human capital, the Group is working to create workplaces where diverse human resources can work actively, and to improve work-life balance and support the health of itsemployees. Details of specific human capital-relatedinitiatives are listed below.

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• The Company's website: For Employees "https://www.skylark.co.jp/company_e/csr/"
• This report [Disclosure Based on the Principles of the Corporate Governance Code / Supplementary Principle 2-4-1]
  With regard to intellectual property, the Group regards trademarks relating to logos and menus for restaurants operated by the Group as extremely important for brand image and marketing, and seeks to appropriately manage and operate trademarks in specialized departments withinthe Group.
  Details of the Group's brand portfolio are listed below. ・Integrated Report: https://ssl4.eir- parts.net/doc/3197/ir_material_for_fiscal_ym11/105457/00.pdf#page=45

4-1.1: Scope of Matters Delegated to Management>

The Company has clearly stipulated matters to be submitted for discussion by the Board of Directors in the Board of Directors Regulations and the list of proposals for the Board of Directors, established by the Board itself. In addition to matters provided for by law and in the Company's articles of incorporation, this also includes matters relating to basic management policy, formulation of medium- to long-termbusiness plans, and other important matters in businessmanagement.

4-9: Criteria and Qualifications for Determining the Independence of IndependentOutside Directors>

1. Outside directors must not qualify under any of the following

1. Executive persons of the Company or its subsidiaries
2. Persons for whom the Company is a major transaction partner (when transactions with theCompany account for more than 1% of the transaction partner's consolidated net sales); and/or executive persons thereof
3. Major transaction partners of the Company (when transactions with the person account formore than 1% of the Company's consolidated net sales, or when products and services provided by the person are indispensable to the Company's business activities); and/or executive persons thereof
4. Executive persons of the main financial institutions from which the Company borrows funds
5. Consultants, certified public accountants or legal specialists who obtain large amounts ofcash or other property, other than officers' remuneration, from the Company (in cases in which persons obtaining the properties are corporate bodies, associations or other organizations, persons who belong to said organizations)
6. Major shareholders of the Company (shareholders who either directly or indirectly own 10%or more of the voting rights of all of the Company's shareholders); and/or executive persons thereof
7. Executive persons of the Company's parent company, and directors or auditors of theCompany's parent company who are not executive persons
8. Executive persons of any of the Company's fellow subsidiaries
9. Persons who have qualified under Item (4) above in the past, persons who have qualifiedunder Item (1) above at some time during the past 10 years, and/or persons who have qualified under Items (2), (3) and (5) through (8) above at some time recently (during the past year)
10. Close relatives of persons who qualify under any of Items (1) through (9) above (excluding non-importantpersons)

2. Even if a person falls under any one of the items in 1. above, the person may still benominated as a candidate for independent outside director of the Company if that person is deemed to be suitable as an independent outside director of the Company in light of his or her personality, insights, and ability, etc. In such cases, the Company shall explain to external parties regarding the reasons why the person is considered to be suitable as an

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