Governance

Compliance Implementation Framework

1. NEC Group Compliance

The Company has established the NEC Group Compliance Policy, under which the CRCO takes a comprehensive view of all compliance issues and, through the Risk Control and Compliance Committee, deliberates on and promotes specific measures to address these issues.

In addition, the Company formulates and implements various initiatives designed to enforce compliance, including instilling knowledge of the NEC Group Code of Conduct. Furthermore, the Company provides the necessary support, coordination, and guidance to ensure that risk management in the business and corporate staff departments is implemented systematically and effectively.

2. Group Internal Audit Division

Members of the Group Internal Audit Division include experts in internal audits. The division conducts audits to ensure that the NEC Group is operating lawfully, properly, and efficiently. It also points out problems and proposes improvements.

3. Compliance Promotion at Consolidated Subsidiaries

• The presidents of our consolidated subsidiaries take ownership of planning and implementing compliance measures with guidance and support from the Corporate Legal Department, corporate departments, and relevant departments.
• In regard to consolidated subsidiaries outside Japan, the Regional Headquarters (RHQ) around the world further strengthen compliance, including among local subsidiaries.
• NEC has also established channels for reporting compliance-related issues regularly, and as the need arises, from the consolidated subsidiaries in and outside Japan to the Headquarters in Japan.

Basic Policy on Internal Control Systems

Strategy

Risks and Opportunities in Compliance

The principal risks and opportunities identified by NEC for this theme are as follows:

Thorough Compliance Rooted in Uncompromising Integrity

1. Impact on the Environment and Society

1.1. Negative Impact
The occurrence of violations of competition laws, bribery, etc. causes major losses to the NEC Group’s reputation over a long period

1.2. Positive Impact
Avoid undermining trust with zero compliance incidents

2. Financial Risks and Opportunities

2.1. Risk
The occurrence of violations of competition laws, bribery, etc. leads to major losses.
There are adverse effects over the medium to long term, such as being subject to debarment measures

2.2. Opportunity
Avoid losing business opportunities with zero compliance incidents

Response to Risks and Opportunities

To address the identified risks and opportunities, NEC is implementing the following initiatives.

Competition Law Compliance

Eliminating serious compliance violations is part of the “strengthening of the non-financial foundation that supports the sustainable growth of the Company and society,” one of the initiatives under Mid-term Management Plan 2025. To this end, we are working to prevent cartels, bid-rigging, and other violations of competition laws. Furthermore, in the NEC Group Code of Conduct the Company has stipulated guidelines for fair competition and strives to thoroughly prevent violations of competition laws.

1. Competition Policy

The Company has established the NEC Group Competition Policy, formulating basic considerations on compliance with competition laws in and outside Japan to reduce the risk of violations, and broadly disseminates information about this policy within NEC Group companies around the world.

Competition Policy

2. Training for Consolidated Subsidiaries Outside Japan

In fiscal year 2026, we conducted training focused on compliance with competition laws in multiple languages, primarily for employees of subsidiaries outside Japan operating in the EMEA region. This training promoted understanding of the risks of violating competition law and the measures required for compliance.

Preventing Bribery and Corruption

The NEC Group Code of Conduct covers prevention of bribery and corruption; response to entertainment, gifts, donations, and political activities; prohibition against involvement in antisocial acts; prohibition on insider trading; and prohibition of any act contrary to the Company’s interests. In this way, NEC strives to prevent all forms of bribery and corruption.

1. Anti-Bribery Guideline

The Legal and Compliance Division has formulated the Anti-Bribery Policy and the Anti-Bribery Guideline and disseminates/shares them throughout the Company. The guidelines stipulate the roles of managing directors and specific methods for preventing bribery. These roles and methods include bribery risk assessments regarding a division’s business and operations, including procedures if risk is deemed to be high, and internal approval procedures that include anti-bribery due diligence regarding retained parties¹ or partners employed in the Company’s business activities.

1. Our anti-bribery policy follows a risk-based approach. It defines third parties engaged to provide sales promotion, order acquisition support, or licensing and permit acquisition services, which are assumed to have a relatively high risk of bribery, as “retained parties.”

2. Establishment and Operation of Various Guidelines

Furthermore, as nations around the world work on strengthening their anti-bribery laws, NEC has also developed a “Guideline for Provision of Gifts, Hospitality, Travel Expenses and Donations,” and provides guidance, support, instructions and the like to relevant internal divisions and consolidated subsidiaries in and outside Japan.

Checking on routine operations is an important part of preventing corruption, and therefore guidelines and rules have been established by the General Affairs Department for hospitality, gifts, and donations, such as political donations; the planning divisions of each business division for marketing expenses; and the Management & Supply Chain DX Development Department for procurement expenses. At the same time, expenditures requested by Company divisions are checked to ensure there are no problems.

In addition, to thoroughly enforce the prohibition of any act intended for personal benefit or third-party interests contrary to the legitimate interests of the Company, NEC and its consolidated subsidiaries in and outside Japan have established and operate necessary procedures, such as guidelines for required procedures in the event of conflicts of interest.

3. Training for Consolidated Subsidiaries Outside Japan

In fiscal year 2026, we conducted training focused on anti-bribery and anti-corruption in multiple languages, primarily for employees of subsidiaries outside Japan operating in the EMEA region. This training promoted understanding of the risks of bribery and corruption and how to address them.

Compliance Training and Education

1. Compliance Training

NEC and its consolidated subsidiaries in and outside Japan conduct annual compliance training for all corporate officers, employees (including fixed-term contract, contract, and part-time employees), and dispatched workers.

Compliance training was conducted through fiscal year 2026 web-based training programs. Completion rates were as follows:

• NEC Corporation: 96.1%
• Consolidated subsidiaries in Japan: 95%
• Consolidated subsidiaries outside Japan: 96%

Annually, when participating in this training, each corporate officer and employee pledges to consistently maintain unwavering integrity based on the Principles and act in accordance with the NEC Group Code of Conduct. They also declare the actions they will take to make compliance part of the corporate culture. Furthermore, NEC uses training for new employees and trainings for each management layer for new officers and new division managing directors as opportunities to emphasize the importance of conduct that complies with the NEC Group Code of Conduct.

2. Compliance Education

In July 2016, NEC was notified by the Japan Fair Trade Commission of violations of the Antimonopoly Act related to business transactions with Tokyo Electric Power Co., Ltd. (now Tokyo Electric Power Company Holdings, Inc.) involving electric power security communications equipment. NEC was notified again of similar violations in February 2017 involving wireless digital emergency firefighting equipment, and also for business transactions with Chubu Electric Power Co., Ltd. involving electric power security communications equipment. In order to keep these three events fresh in mind and to use them as a basis for reflection, we established November 18, the date on which we received an on-site inspection by the Japan Fair Trade Commission regarding the transaction involving wireless digital emergency firefighting equipment, as NEC Compliance Day, and will conduct activities to foster compliance and integrity.

2.1. Messages from Senior Management
Based on the belief that the attitude of executives is fundamental to practicing compliance and integrity, NEC’s president, corporate officers, division managing directors, and the presidents of consolidated subsidiaries in and outside Japan communicate messages on occasions such as NEC Compliance Day to underscore the importance of compliance to all employees. This includes adherence to the NEC Group Code of Conduct. NEC also ensures the passing down of lessons learned from past incidents by distributing video interviews with corporate officers.

Risk Management

Compliance Policy

In its Principles, the NEC Group subscribes to “Uncompromising Integrity and Respect for Human Rights,” and conducts continuous company-wide activities involving everyone from corporate officers to employees with management firmly based on compliance. In addition, annual compliance training is provided to all corporate officers, employees (including fixed-term contract, contract, and part-time employees), and dispatched workers.

We aim to establish compliance within our corporate culture by ensuring that each corporate officer and employee acts with integrity (judgment and behavior) in accordance with the NEC Group Code of Conduct. The Code is available in Japanese, English, Chinese, Portuguese, and Spanish. By deploying it to consolidated subsidiaries outside Japan and publishing it on the Company intranet and external websites (Japanese and English), we are promoting a corporate culture in Japan and overseas that places the highest priority on compliance. The necessity of revising the Code is reviewed annually, and when revisions are deemed necessary, they are made following approval by the Board of Directors. If a violation is found, the person or persons associated with the violation will be dealt with according to employee regulations, and consideration will be given to reflecting the violation in the performance evaluation of the relevant division.

To implement effective compliance measures, the managing directors of each division take the initiative and assume responsibility for considering and implementing the optimal measures for their divisions, with support from the corporate divisions.

Monitoring

1. Internal Audit

The Group Internal Audit Division conducts organization-specific audits across the NEC Group on a cycle that generally covers all organizations approximately once every three years. Through document reviews, face-to-face interviews, and other methods, the division confirms compliance with applicable requirements, including adherence to the NEC Group Code of Conduct.

2. Anti-Bribery Due Diligence for Retained Parties or Partners

When engaging retained parties or collaborating with partners, NEC evaluates bribery risks by reviewing corruption levels in the countries where operations are conducted and collecting information through compliance databases and other sources. Approval levels, including those involving relevant corporate staff divisions, are established based on the level of bribery risk and the transaction value. Because bribery risks may change over time, NEC also emphasizes the importance of continuous monitoring and the periodic re-performance of anti-bribery due diligence. Additionally, NEC requires the execution of contracts containing anti-bribery provisions or the submission of written pledges prohibiting bribery.

3. Monitoring of Competition Law Violations

In addition, we monitor email to detect signs of competition law violations at an early stage.

Furthermore, we confirm the competition law risk status of the NEC Group, and according to the risks relevant to each company, we adopt regulations and implement measures necessary for preventing violations of competition laws.

Whistleblowing System

1. NEC Compliance & Integrity Hotline (Whistleblowing System for Employees and Business Partners)

The NEC Group maintains a whistleblowing system covering compliance matters, including the prevention of corruption. The reporting channel under this system, the NEC Compliance & Integrity Hotline, was created by integrating multiple previous hotlines (the Compliance Hotline, HR Hotline, and reporting channels at consolidated subsidiaries outside Japan) to improve user convenience. The integrated hotline continues to support early response to a wide range of risks by using a third-party service provider capable of handling reports in multiple languages as a contact point, and it accepts reports not only from NEC employees but also from its consolidated subsidiaries inside and outside Japan and business partners. The identity of whistleblowers who contact the hotline and the nature of their reports are guaranteed confidentiality by the personnel in charge. In addition, whistleblowers may choose to report anonymously, and they will never suffer retaliation for having made a report. In the unlikely event that such retaliation takes place and is confirmed, necessary corrective measures will be taken.

Reports received are investigated by the compliance department in cooperation with the relevant divisions and, where necessary, with assistance from external experts, while ensuring the thorough protection of whistleblowers.

If a problem is confirmed as a result of the investigation, NEC implements corrective actions in accordance with Company regulations, including taking appropriate measures against the parties involved and developing and implementing measures to prevent recurrence. Feedback is also provided to the whistleblower in accordance with applicable laws and regulations. The status of internal reports is also regularly reported to the Board of Directors and the Audit Committee.

In fiscal year 2026, the number of reported cases was 478. The reported cases included ethical behavior violations, violations of the NEC Group Code of Conduct or Company rules and fraud. All cases have been appropriately handled.

In addition, we have established the “Audit Committee Hotline,” a whistleblowing system that allows whistleblowers to report fraudulent corporate officer activities to the Audit Committee. NEC and its consolidated subsidiaries in Japan have taken steps to ensure the protection of confidentiality and the prevention of retaliation by establishing internal rules regarding the whistleblowing system and promote employee awareness through training programs and other eans.

The status of enhancement and operation of the NEC Compliance & Integrity Hotline (including the whistleblowing systems of NEC Corporation subsidiaries) is regularly reported by the Group Internal Audit Division to the Board of Directors and the Audit Committee.

Internal Evaluation

1. Survey on Compliance Promotion Initiatives

We conduct a survey of all corporate officers and employees in conjunction with compliance training in order to evaluate the status of initiatives on compliance promotion and awareness of compliance. The results of the questionnaire surveys are posted as feedback on the intranet portal and are useful for proposing and implementing measures to further enforce compliance.

Furthermore at NEC, we provide the basic structure of corporate taxation and other related matters on our intranet.
When new tax laws and regulations or rules are announced, we promptly notify the relevant departments and conduct training sessions as necessary.

Metrics and Targets

FY2031 KPIs

(Scope: NEC Corporation unless otherwise specified, Period: April 2026 to March 2031)
M: Indicates the main non-financial targets related to materiality.

M: Number of serious cartel and bid-rigging incidents: 0
M: Number of serious bribery incidents: 0

FY2027 Goals

M: Eliminate serious compliance violations (number of serious violations: 0)

• Implement compliance training for all employees
• Increase awareness of the whistleblowing system

FY2026 Goals and Results

1. FY2026 Goals

M: Eliminate serious compliance violations (number of serious violations: 0)

• Implement compliance training for all employees
• Increase awareness of the whistleblowing system

2. FY2026 Results

• Number of serious cartel and bid-rigging incidents: 0
• Number of serious bribery incidents: 0

Number of, Details on and Measures for Handling Compliance Violations

Compliance violations in fiscal year 2026 were as follows:

• There were zero cases of serious involvement with cartels and/or bid-rigging.
• There were zero major issues regarding bribery or competition law violations requiring public disclosure. NEC incurred no fines or convictions related to bribery or competition law violations.
• There were zero criminal penalties imposed on the Company due to accusations of insider trading from the Securities and Exchange Surveillance Commission.
• There were zero major conflicts of interest requiring public disclosure.

Compliance Initiatives

Tax Policy and Tax Governance

1. Tax Policy

Under the NEC Group Code of Conduct, NEC Corporation is committed to ensuring that all corporate officers and employees comply with the following principles:

• Act with integrity by understanding the cultures and customs of each country and region and by upholding high ethical standards and social norms, in addition to complying with international rules, relevant laws and regulations, and internal policies including this code of conduct; and
• Maintain accurate and fair records in all areas, including finance and accounting, and strictly refrain from any fraudulent accounting practices or any other conduct that could harm the company.

We apply the same principles to tax matters and seek to optimize our tax position from a medium- to long-term perspective while ensuring full compliance with applicable tax laws and regulations.

2. Tax Governance

To provide a common framework for managing tax risk and tax policies, NEC has established the NEC Group Tax Governance Policy, which defines the principles of tax governance applicable throughout the Group. We do not undertake tax planning solely for the purpose of tax avoidance without any business purpose or business substance.
Likewise, we do not engage in profit-shifting practices designed to avoid taxation through the use of tax havens.

The CFO of NEC Corporation is responsible for tax governance across the NEC Group. The CFO, who is a member of the Board of Directors, reports any changes to the NEC Group Tax Governance Policy and any significant tax risks to the Audit Committee.

The results of our tax filings and tax audits are reported to the CFO as appropriate, and we take necessary actions to address tax-related issues and are committed to the ongoing prevention of misconduct and non-compliance.

NEC Group Tax Governance Policy
Regional Taxation and Related Items

3. Intercompany Transactions

To ensure appropriate management of tax risk in a global business environment, the NEC Group applies the arm’s length principle to intercompany transactions, in line with the OECD² Transfer Pricing Guidelines. We seek to comply with the spirit as well as the letter of internationally recognized tax principles and guidance, including the OECD BEPS³ Action Plan, and make timely and appropriate tax payments in accordance with applicable tax laws, regulations, and tax treaties in the jurisdictions in which we operate. We do not undertake any transactions or tax planning arrangements intended to facilitate improper tax avoidance.

2. Organization for Economic Co-operation and Development
3. Base Erosion and Profit Shifting

4. Relationship with Tax Authorities

NEC endeavors to minimize tax uncertainties by maintaining a transparent and cooperative relationship with tax authorities, including engaging in advance consultation and providing relevant information in a timely manner upon request.

Transparency of Financial Information

NEC complies with the Financial Instruments and Exchange Act and all applicable laws and regulations in preparing and disclosing its Annual Securities Report. Tax-related disclosures required by applicable laws and regulations are also included in the Annual Securities Report.

Starting from fiscal year 2017, NEC has disclosed its consolidated financial results in accordance with International Financial Reporting Standards (IFRS). By adopting IFRS, NEC aims to enhance the international comparability of financial information in capital markets and further improve the transparency of its financial disclosures.

Periodic Rotation and Re-engagement of the Accounting Auditor

To prevent accounting fraud, NEC operates in accordance with the regulations such as those that are based on the Certified Public Accountants Act, as outlined below.

• Engagement partners may not be engaged for more than seven accounting periods in duties that entail conducting audits of the Company. Lead engagement partners may not be engaged for more than five accounting periods in duties that entail conducting audits of the Company.
• For two accounting periods after being replaced, engagement partners may not be engaged in duties that entail conducting audits of the Company. For five accounting periods after being replaced, lead engagement partners may not be engaged in duties that entail conducting audits of the Company.

Response to Political Activities

Please see below for more details.

Major Contributions to Political Organizations (Data Collection)