Supplementary Explanatory Materials Regarding the Opinion of the Company’s Board of Directors on Shareholder Proposals: GungHo Online Entertainment

GungHo Online Entertainment’s board opposes all shareholder proposals presented by Strategic Capital and LIM Japan Event Master Fund at the 2026 Annual General Meeting. The board’s stance centers on preserving corporate value through prudent financial management and robust governance structures.

For shareholder‑return proposals, the board cites that two proposals would divert roughly 57 % of cash and deposits to dividends or treasury‑share buybacks, deemed excessive relative to the company’s operating environment. GungHo maintains a balanced return policy: a 4 % dividend‑on‑equity (DOE) target alongside a consolidated payout ratio of at least 50 %, with an ordinary dividend of ¥90.00 per share for FY 2025 and a planned treasury‑share acquisition up to ¥5 billion (≈3.9 % of issued shares). The board argues that these measures align with capital efficiency and long‑term value creation.

Governance proposals were rejected on the basis that GungHo already has a strong independent director framework—currently 40 % outside directors, rising to 50 % after the AGM—and that appointing an outside chair or chairman would undermine operational leadership. The board also defends its current dividend determination process, which allows flexibility between shareholder and board resolutions.

Other proposals, including changes to remuneration disclosure, sales‑by‑title reporting, and investigations into alleged misconduct, were dismissed because GungHo’s existing internal controls, external audit procedures, and disclosure practices already meet regulatory standards. The board concluded that none of the proposals would enhance corporate value, justifying its unanimous opposition.