Overview of corporate governance system and objectives

The Company has adopted the corporate auditor system for its corporate governance. To strengthen monitoring functions and ensure the maintenance of sound management, at least half of the corporate auditors are drawn from outside the Company. Furthermore, in accordance with the objective standards provided under the Company's internal decision-making authority rules, the Board of Directors, which sets management policy, is clearly separated from the decision-making bodies responsible for the execution of operations. This system aims to enhance the efficiency and balance of management decision-making and operational execution.

The Board of Directors comprises five directors, including one outside director. The Company has four corporate auditors, three of whom, including one standing corporate auditor, are drawn from outside the Company. The directors are appointed for a term of one year, the same as for companies adopting the committee system.

In principle, the Board of Directors convenes monthly, and each of the directors, including the outside director, engages in vigorous discussion and exchange of opinions aimed at enhancing their mutual oversight functions. With regard to matters concerning basic policy on the system of compensation for directors and corporate auditors, the Company has voluntarily established the Compensation Committee as an advisory body that submits reports to the Board of Directors. This system is designed to ensure management objectivity and transparency.

In principle, the Board of Auditors convenes monthly, and conducts accounting and operational audits based on the audit plan. The corporate auditors attend meetings of the Board of Directors to audit the execution of duties of the directors.

The Board of Directors has passed a resolution establishing the Company's Basic Policy on Building an Internal Control System. The Company is building such systems to ensure auditing and supervisory functions are strictly maintained and to confirm that all business activities comply with all relevant laws and regulations and the Company's Articles of Incorporation, as well as to enhance the efficiency of the directors' exercise of duties.

To ensure a rigorous compliance system, the Company clearly specifies the importance of compliance in its management guidelines and The Group Code of Conduct. The Company has established the Internal Control Committee and an internal compliance reporting (whistleblower) system, through which Company-wide compliance measures are integrated laterally across organizational reporting lines. With regard to the management and operation of the Company's information systems, which form the foundation of efficient operational functions, the Company has established the Information System Management Committee to oversee information systems on a Company-wide basis.

To ensure the maintenance of a robust risk management system, Company-wide risk management measures are integrated laterally across organizational reporting lines. This is achieved through the reinforcement of relevant internal organizational divisions, and the establishment of the Internal Control Committee and an internal compliance reporting (whistleblower) system.

Organization, personnel and procedures for internal audits and audits by corporate auditors; and coordination between internal audits, audits by corporate auditors and independent audit firm

Internal audits are carried out by the Auditing Division, which currently comprises one person and reports directly to the president. The Auditing Division performs regular monitoring, reviews and evaluations (internal evaluations) of internal control systems, including those of Group companies—taking into account the relative importance of and risk inherent in each part of the organization—and provides reports and recommendations to the president. The Auditing Division's functions are carried out while sharing information with the Board of Auditors and the independent audit firm.

Audits by the corporate auditors are carried out by four corporate auditors, three of whom are drawn from outside the Company. Nobuhiro Saito, a corporate auditor, has many years' experience working at financial institutions, and possesses extensive expertise in finance and accounting-related matters. The finance and accounting expertise of two other corporate auditors, Norikazu Yahagi and Ryuji Matsuda, is outlined in the section below covering outside directors and corporate auditors.

Information on audits by the independent audit firm is provided in the section below covering the statutory audit firm.

Each quarter, the corporate auditors and the statutory audit firm coordinate their activities through mutual reporting and exchange of opinions. An appropriate forum is convened for the exchange of opinions, and the matters discussed during these meetings are reflected in the performance of audit operations.

Appropriate reporting to the director responsible for internal control on the aforementioned audit activities is carried out through the Board of Directors and the Internal Control Committee.

Personal, financial, business or other relationships constituting conflicts of interest between the Company and its outside director or outside corporate auditors

The Company has one outside director and three outside corporate auditors.

Makoto Naruke was appointed as outside director based on his extensive and broad experience and knowledge as a senior corporate executive. At meetings of the Board of Directors, Naruke offers recommendations and advice to ensure the adequacy and appropriateness of decision-making.

Ryoichi Kobayashi was appointed as an outside auditor based on his abundant experience and extensive knowledge gained through serving as an officer at several companies. Kobayashi offers his opinions at meetings of the Board of Directors and Board of Auditors as appropriate. The Company has notified the Tokyo Stock Exchange regarding the status of Kobayashi as an independent officer pursuant to the rules for listed companies stipulated by the stock exchange.

Norikazu Yahagi has served as an outside corporate auditor at several companies, including IBM Japan, Ltd., where he served as a standing corporate auditor. He was appointed as an outside auditor based on his extensive expertise on internal control, finance and accounting-related matters, and based on his experience in serving as a full-time director of the Japan Corporate Auditors Association. Yahagi offers his opinions at meetings of the Board of Directors and Board of Auditors as appropriate. The Company has notified the Tokyo Stock Exchange regarding the status of Yahagi as an independent officer pursuant to the rules for listed companies stipulated by the stock exchange.

Ryuji Matsuda holds qualifications as an attorney and certified public accountant (CPA). He was appointed as an outside corporate auditor based on his extensive expertise in finance and accounting-related matters. Matsuda offers his opinions at meetings of the Board of Directors and Board of Auditors as appropriate. The Company has notified the Tokyo Stock Exchange regarding the status of Matsuda as an independent officer pursuant to the rules for listed companies stipulated by the stock exchange.

The outside director and outside corporate auditors work closely with the Auditing Division, the corporate auditors and the statutory audit firm, and are subject to appropriate reporting and engage in an exchange of opinions at meetings of the Board of Directors, Board of Auditors, Internal Control Committee and other forums.

There are no conflict-of-interest relationships between the Company and the outside director or between the Company and the outside corporate auditors.

Overview of compensation system for directors and corporate auditors

• (i)Total compensation paid to directors and corporate auditors, total compensation for each category of director and corporate auditor, and the total number of directors and corporate auditors

• (ii)Decision-making policies on remuneration, etc., for directors and corporate auditors

The remuneration for directors consists of monetary compensation as a basic consideration and non-monetary compensation such as stock options. The decisions on directors' remuneration, etc., are reviewed every year by taking into account the business performance of the Company for the fiscal year concerned and their contribution to the business performance. To ensure the objectivity and transparency of the annual review of directors' remuneration, the president of the Company determines the amount of remuneration and the distribution among the directors within the scope of the total remuneration amount approved by a General Meeting of Shareholders in accordance with a report by the Compensation Committee, an advisory body. Stock options are determined by the Board of Directors, also in accordance with a report by the Compensation Committee.

The remuneration for corporate auditors is only monetary compensation in light of the independence of corporate auditors from the corporate management of the Company. Corporate auditors' remuneration is also reviewed every year. The amount of remuneration and the distribution among the corporate auditors are determined through consultations among the corporate auditors within the scope of the total remuneration amount approved by a General Meeting of Shareholders.

Matters relating to the Company's holdings of shares

Matters relating to shares held by the Company, which has the largest balance-sheet value of investments in shares within the Square Enix Group, are as follows:

• (i)Number of companies in which shares are held and total amount presented on the balance sheets for investments in shares for purposes other than purely investment purposes:

There are no applicable items.

• (ii)Companies in which shares are held, investment category, number of shares, amount presented on the balance sheets and investment purpose for investments in shares for purposes other than purely investment purposes:

There are no applicable items.

• (iii)Total amount presented on balance sheets for the fiscal years ended March 31, 2010 and March 31, 2011; and total dividends received, total gain on sale of shares and total loss on revaluation of shares for the fiscal year ended March 31, 2011 for investments in shares for purely investment purposes:

• (iv)Companies in which shares are held, number of shares, amount presented on the balance sheets for investments in shares for which the purpose of investment has changed from "purely investment purposes" to "purposes other than purely investment purposes":

There are no applicable items.

• (v)Companies in which shares are held, number of shares, amount presented on the balance sheets for investments in shares for which the purpose of investment has changed from "purposes other than purely investment purposes" to "purely investment purposes":

There are no applicable items.

Names of certified public accountants (CPAs) and name of statutory audit firm that conducted audits of the Company

The Company retains Ernst & Young ShinNihon as its statutory audit firm pursuant to the Companies Act and the Financial Instruments and Exchange Law to perform independent third-party accounting audits. The Company cooperates fully with the statutory audit firm to ensure its smooth performance of duties.

The following CPAs conducted audits of the Company during the fiscal year ended March 31, 2011.

Overview of liability limitation agreements

The Company has liability limitation agreements in place with its outside director and outside corporate auditors in accordance with Article 427, Paragraph 1, of the Companies Act to limit liabilities provided under Article 423, Paragraph 1, of the Companies Act. These agreements limit the liability of the outside director and each outside corporate auditor to ¥10 million or the legally specified amount, whichever is greater, on condition that the director or corporate auditors have performed their duties in good faith and without gross negligence.

Prescribed number of directors

The Company's Articles of Incorporation stipulate that the number of directors shall not exceed 12.

Resolution requirements for the election of directors

The Company's Articles of Incorporation stipulate that resolutions for the election of directors shall be made by the majority of votes of shareholders exercising their voting rights at the General Meeting of Shareholders where shareholders in attendance hold one-third or more of outstanding voting rights.

Bodies able to determine dividends paid from retained earnings

The Company's Articles of Incorporation stipulate that matters provided under Article 459, Paragraph 1, of the Companies Act may be determined by the Board of Directors unless legally stipulated otherwise. The objective of this provision is to expand the range of options enabling flexible execution of capital policies.

Exemption from liability of directors and corporate auditors

Pursuant to Article 426, Paragraph 1, of the Companies Act, the Company's Articles of Incorporation stipulate that a director (including former directors) may be exempted from liability for actions related to Article 423, Paragraph 1, of the Companies Act, up to the limit provided by law, through a resolution passed by the Board of Directors. This provision aims to ensure the maintenance of an environment in which directors may exercise their duties to the maximum of their abilities and are able to fulfill the roles expected of them.

Matters requiring special resolutions at the General Meeting of Shareholders

The Company's Articles of Incorporation stipulate that the special resolutions provided under Article 309, Paragraph 2, of the Companies Act may be passed by a majority of two-thirds or more of the votes of shareholders present at the General Meeting of Shareholders where shareholders in attendance hold one-third or more of outstanding voting rights. The objective of this relaxation of special resolution requirements is to ensure the smooth proceedings of the General Meeting of Shareholders.

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