Cautionary Statement
Statements made in this document with respect to Sony’s current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Sony. Forward-looking statements include, but are not limited to, those statements using words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,” “project,” “anticipate,” “aim,” “intend,” “seek,” “may,” “might,” “could” or “should,” and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management’s assumptions, judgments and beliefs in light of the information currently available to it. Sony cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore investors should not place undue reliance on them. Investors also should not rely on any obligation of Sony to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Sony disclaims any such obligation. Risks and uncertainties that might affect Sony include, but are not limited to:
Sony’s ability to maintain product quality and customer satisfaction with its products and services;
Sony’s ability to continue to design and develop and win acceptance of, as well as achieve sufficient cost reductions for, its products and services, including image sensors, game and network platforms, smartphones and televisions, which are offered in highly competitive markets characterized by severe price competition and continual new product and service introductions, rapid development in technology and subjective and changing customer preferences;
Sony’s ability to implement successful hardware, software, and content integration strategies, and to develop and implement successful sales and distribution strategies in light of new technologies and distribution platforms;
the effectiveness of Sony’s strategies and their execution, including but not limited to the success of Sony’s acquisitions, joint ventures, investments, capital expenditures, restructurings and other strategic initiatives;
changes in laws, regulations and government policies in the markets in which Sony and its third-party suppliers, service providers and business partners operate, including those related to taxation, as well as growing consumer focus on corporate social responsibility;
Sony’s continued ability to identify the products, services and market trends with significant growth potential, to devote sufficient resources to research and development, to prioritize investments and capital expenditures correctly and to recoup its investments and capital expenditures, including those required for technology development and product capacity;
Sony’s reliance on external business partners, including for the procurement of parts, components, software and network services for its products or services, the manufacturing, marketing and distribution of its products, and its other business operations;
the global economic and political environment in which Sony operates and the economic and political conditions in Sony’s markets, particularly levels of consumer spending;
Sony’s ability to meet operational and liquidity needs as a result of significant volatility and disruption in the global financial markets or a ratings downgrade;
Sony’s ability to forecast demands, manage timely procurement and control inventories;
foreign exchange rates, particularly between the yen and the U.S. dollar, the euro and other currencies in which Sony makes significant sales and incurs production costs, or in which Sony’s assets, liabilities and operating results are denominated;
Sony’s ability to recruit, retain and maintain productive relations with highly skilled personnel;
Sony’s ability to prevent unauthorized use or theft of intellectual property rights, to obtain or renew licenses relating to intellectual property rights and to defend itself against claims that its products or services infringe the intellectual property rights owned by others;
risks related to catastrophic disasters, geopolitical conflicts, pandemic disease or similar events;
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the ability of Sony, its third-party service providers or business partners to anticipate and manage cybersecurity risk, including the risk of unauthorized access to Sony’s business information and the personally identifiable information of its employees and customers, potential business disruptions or financial losses; and
the outcome of pending and/or future legal and/or regulatory proceedings.
Risks and uncertainties also include the impact of any future events with material adverse impact. The continued impact of developments relating to the situations in Ukraine and Russia and in the Middle East, as well as the series of changes in U.S. tariff policy, could heighten many of the risks and uncertainties noted above.
Important information regarding risks and uncertainties is also set forth elsewhere in this annual report, including in “Risk Factors” under “Item 3. Key Information,” “Item 4. Information on the Company,” “Item 5. Operating and Financial Review and Prospects,” “Legal Proceedings” included in “Item 8. Financial Information,” Sony’s consolidated financial statements referenced in “Item 8. Financial Information” and “Item 11. Quantitative and Qualitative Disclosures about Market Risk.”
In this document, Sony Group Corporation and its consolidated subsidiaries are together referred to as “Sony” or “Sony Group.”
At a meeting of Sony Group Corporation’s Board of Directors held on May 14, 2025, Sony Group Corporation decided on a plan for the execution of a partial spin-off of Sony Financial Group Inc. (“SFGI”), a wholly-owned subsidiary engaged in the Financial Services business, as of October 1, 2025 (the “Partial Spin-off of the Financial Services business”). In accordance with the resolution, the Financial Services business was classified as a discontinued operation and has been excluded from the reporting segments. Consequently, the figures for comparative periods have been re-presented (refer to Note 33 of the consolidated financial statements).
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TABLE OF CONTENTS
Item 1. Identity of Directors, Senior Management and Advisers
Item 2. Offer Statistics and Expected Timetable
Item 3. Key Information
A. [Reserved]
B. Capitalization and Indebtedness
C. Reasons for the Offer and Use of Proceeds
D. Risk Factors
Item 4. Information on the Company
A. History and Development of the Company
B. Business Overview
C. Organizational Structure
D. Property, Plant and Equipment
Item 4A. Unresolved Staff Comments
Item 5. Operating and Financial Review and Prospects
A. Operating Results
B. Liquidity and Capital Resources
C. Research and Development
D. Trend Information
E. Critical Accounting Estimates
Item 6. Directors, Senior Management and Employees
A. Directors and Senior Management
B. Compensation
C. Board Practices
D. Employees
E. Share Ownership
F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
Item 7. Major Shareholders and Related Party Transactions
A. Major Shareholders
B. Related Party Transactions
C. Interests of Experts and Counsel
Item 8. Financial Information
A. Consolidated Statements and Other Financial Information
Legal Proceedings
Dividend Policy
B. Significant Changes
Item 9. The Offer and Listing
A. Offer and Listing Details
B. Plan of Distribution
C. Markets
D. Selling Shareholders
E. Dilution
F. Expenses of the Issue
Item 10. Additional Information
A. Share Capital
B. Memorandum and Articles of Association
C. Material Contracts
D. Exchange Controls
E. Taxation
F. Dividends and Paying Agents
G. Statement by Experts
H. Documents on Display
I. Subsidiary Information
J. Annual Report to Security Holders
Item 11. Quantitative and Qualitative Disclosures about Market Risk
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Item 12. Description of Securities Other Than Equity Securities
A. Debt Securities
B. Warrants and Rights
C. Other Securities
D. American Depositary Shares
Item 13. Defaults, Dividend Arrearages and Delinquencies
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Item 15. Controls and Procedures
Item 16. [Reserved]
Item 16A. Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Services
Audit and Non-Audit Fees
Audit Committee’s Pre-Approval Policies and Procedures
Item 16D. Exemptions from the Listing Standards for Audit Committees
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Item 16F. Change in Registrant’s Certifying Accountant
Item 16G. Corporate Governance
Item 16H. Mine Safety Disclosure
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Item 16J. Insider Trading Policies
Item 16K. Cybersecurity
Item 17. Financial Statements
Item 18. Financial Statements
Item 19. Exhibits
Signatures
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Identity of Directors, Senior Management and Advisers
Not Applicable
Offer Statistics and Expected Timetable
Key Information
[Reserved]
Capitalization and Indebtedness
Reasons for the Offer and Use of Proceeds
Risk Factors
This section contains forward-looking statements that are subject to the Cautionary Statement appearing on page 2 of this annual report. Risks to Sony are also discussed elsewhere in this annual report.
Sony must overcome increasingly intense competition, which could lead to lower revenue or operating margins.
Sony has several business segments in different industries with many product and service categories, which cause it to compete with many existing and new competitors ranging from large multinational companies to highly specialized entities that focus on only one or a few businesses and also, potentially, with outsourced manufacturing service partners that currently supply products to Sony. These competitors may have greater financial, technical, labor and marketing resources available to them than those available to Sony. Sony’s financial condition and operating results depend on its ability to efficiently anticipate and respond to these established and new competitors.
The competitive factors Sony faces vary depending on the nature of the business. For example, in the Game & Network Services (“G&NS”), Music and Pictures segments, Sony competes for talent, such as game creators, artists, songwriters, actors, directors and producers, and for entertainment content that is created, acquired, licensed and/or distributed. Competition for talent and appealing content can lead to lower profitability if the higher costs required for such talent and content acquisition cannot be recouped through greater sales. In addition, the evolution of innovative technologies such as artificial intelligence (“AI”) and the use of them by competitors may impact Sony’s existing business models. In the G&NS, Music and Pictures segments, operating results can be impacted by worldwide consumer acceptance of their products, which is difficult to predict, and by alternative forms of entertainment and leisure activities available to consumers, as well as by competing products released or sold at or near the same time.
In the G&NS, Entertainment, Technology & Services (“ET&S”) and Imaging & Sensing Solutions (“I&SS”) segments, Sony competes on the basis of various factors including price and function, and price competition can lead to lower margins when costs cannot be reduced at a proportional rate. Even for those products where Sony believes it has a strong competitive advantage, such as image sensors, it is possible that its competitors’ technological capabilities will accelerate such that Sony would be unable to maintain its advantageous market position. Additionally, in terms of consumer electronics products, to produce products that appeal to changing and increasingly diverse consumer preferences, including constantly changing consumer interest in minimizing energy consumption and selecting materials with environmental considerations in mind for both products and packaging, or to overcome the fact that a relatively high percentage of consumers already possess similar products, Sony must develop superior technology, anticipate consumer tastes, and rapidly develop attractive and differentiated products with competitive prices and features. Sony faces increasingly intense pricing pressure from competitors, retailer consolidation, new sales/distribution channels, and shorter product cycles in a variety of consumer product categories. If Sony is unable to maintain its advantageous market position in the fields in which it has a technological or other competitive advantage, Sony is unable to effectively
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anticipate and counter the ongoing price erosion that frequently affects its consumer products or the cost pressures affecting its businesses, there is a change in existing business models or consumer preferences, or the average prices of Sony’s products decrease faster than Sony is able to reduce manufacturing costs, Sony’s operating results and financial condition may be adversely impacted.
To remain competitive and stimulate customer demand, Sony must invest in research and development to achieve product and service innovations and successfully manage frequent introductions of such new products and services.
To strengthen the competitiveness of its products and services, Sony continues to invest in research and development (“R&D”), particularly in growth areas such as the G&NS and I&SS segments. However, Sony may not be successful in investing in R&D if it fails to identify products, services and market trends with significant growth potential. In addition, Sony’s investments may not yield the innovation or the expected results quickly enough, or competitors may lead Sony in technological innovation. This may hinder Sony’s ability to commercialize new and competitive products and services.
Sony must continually introduce and enhance products and services, and stimulate and sustain customer demand for them. Sales of these products and services are particularly sensitive to consumer demand in the year-end holiday season. In the G&NS segment, the successful introduction and penetration of gaming platforms, including game streaming, is a significant factor driving sales and profitability, and this success is affected by the ability to provide customers with attractive software line-ups and online services. However, there is no assurance that major contributors to this effort, such as third-party software developers and publishers, will continue to develop and release software, and transaction terms for software and related services with such contributors may be subject to change. In addition, Sony believes that integrating its hardware, software, including AI, entertainment content and network services and minimizing their energy consumption, as well as investing in R&D to effect such integration, is essential in generating revenue growth and profitability. However, this strategy depends on its ability to further develop AI and network services technologies, coordinate and prioritize strategic and operational issues among Sony’s various business units and sales channels, continually introduce enhanced, energy efficient and competitively priced hardware that is seamlessly connected to energy efficient network platforms with user interfaces that are innovative and attractive to consumers and also standardize technological and interface specifications industry-wide and across Sony’s networked products and business units. In addition, the G&NS, Music and Pictures segments must invest substantial amounts, which may include significant upfront investments, in internally developed software titles, artist advances, music catalogs, motion picture productions, television productions and broadcast programming before knowing whether their products will receive customer acceptance. Furthermore, underperformance of Pictures’ products in the initial distribution market is correlated with weak performance in subsequent distribution markets, which would have an adverse effect on Sony’s results in the year of initial release as well as future years.
The successful introductions of, and transitions to, new products and services depend on a number of factors, such as the timely and successful completion of development efforts, market acceptance, planning and executing an effective marketing strategy, managing new product introductions, managing production ramp-up issues, the availability of application software for new products, quality control and the concentration of consumer demand in the year-end holiday season. If Sony cannot achieve the expected results from its investment in R&D, adequately manage frequent introductions of new products and services and obtain consumer acceptance of its new products and services, or if Sony is not successful in implementing its integration strategy, Sony’s reputation, operating results and financial condition may be adversely impacted.
Sony’s strategic initiatives, including acquisitions, joint ventures, investments, capital expenditures and restructurings, may not be successful in achieving their strategic objectives.
Sony actively engages in acquisitions, joint ventures, capital expenditures and other strategic investments to acquire new technologies, efficiently develop new businesses and enhance its business competitiveness. For example, in the fiscal year ended March 31, 2025, Sony acquired additional shares of KADOKAWA Corporation. In the fiscal year ended March 31, 2026, Sony acquired shares of Bandai Namco Holdings Inc. (“Bandai Namco”) and acquired an additional equity interest in Peanuts Holdings LLC (“Peanuts Holdings”).
In some cases, the completion of mergers, acquisitions and joint ventures is subject to certain closing conditions, including regulatory approvals. As a result of anti-trust laws and regulations and anti-trust regulatory authorities becoming stricter, regulatory reviews following the signing of a definitive agreement may take longer than expected, or Sony may fail to obtain regulatory approvals. Also, closing conditions for mergers and acquisitions, which are set forth in definitive agreements, may not be satisfied due to unanticipated changes in
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the strategies or financial conditions of the organizations to be merged or acquired, leading to mergers and acquisitions not proceeding as expected, or the definitive agreements being changed or terminated. As a result, Sony may lose business opportunities and may not realize some or all of the initially expected results of mergers and acquisitions. As of the date of this report, mergers, acquisitions and joint ventures for which Sony has already signed definitive agreements and whose completions are subject to regulatory approvals include the establishment of a joint venture through a strategic partnership in the home entertainment field between Sony Corporation and TCL Electronics Holdings Limited and its subsidiaries (collectively, “TCL”), for which definitive agreements were signed in March 2026.
While Sony performs a comprehensive analysis and evaluation of merged or acquired organizations prior to their merger or acquisition from various perspectives such as technology, accounting, tax, finance, human resources (“HR”), and legal, Sony’s financial results may be adversely affected by factors including the significant cost of the acquisition and/or integration expenses, IT and information security risks introduced from newly merged or acquired organizations, failure to achieve initially expected synergies, failure to generate expected revenue and cost improvements, loss of key personnel and assumption of liabilities.
When establishing joint ventures and strategic partnerships, Sony’s financial and operating results may be adversely affected by strategic or cultural differences with partners, conflicts of interest, failure to achieve synergies, additional funding or debt guarantees required to maintain the joint venture or partnership, requirements to buy out a joint venture partner, sell its shares or dissolve a partnership, insufficient management control including control over cash flow, loss of proprietary technology and know-how, impairment losses and reputational harm from the actions or activities of a joint venture that uses the Sony brand. For example, Sony Honda Mobility Inc. (“Sony Honda Mobility”), a joint venture between Sony Group Corporation and Honda Motor Co., Ltd. (“Honda”), decided to discontinue the development and launch of its electric vehicle models and downsize its business as a result of Honda’s reassessment of its automobile electrification strategy announced in March 2026. Consequently, Sony recorded an additional 44.9 billion yen loss of equity method investment in the fiscal year ended March 31, 2026. Refer to Note 8 of the consolidated financial statements for details.
Sony invests heavily in production facilities and equipment, including fabrication facilities used to make image sensors for smartphones and other products. Sony may not be able to execute these capital expenditures as planned or recover these capital expenditures in part or full or in the planned timeframe due to the competitive environment, lower-than-expected consumer demand, changes in the financial condition or business decisions of Sony’s major customers, or delays in the procurement of production facilities and equipment. Sony invested 227.4 billion yen and 246.7 billion yen of capital in the fiscal years ended March 31, 2025 and 2026, respectively, mainly for the purpose of increasing image sensor production capacity.
Further, Sony is implementing initiatives for restructuring and transformation to enhance profitability, business autonomy and shareholder value or to clearly position each business within the overall business portfolio. However, the expected benefits of these initiatives, including the expected level of profitability, may not be realized due to internal and external impediments or market conditions worsening beyond expectations. If Sony is not successful in achieving its restructuring and transformation initiatives, Sony’s operating results, financial condition, reputation, competitiveness or profitability may be adversely affected.
Sony’s sales and profitability may be affected by the operating performance of wholesalers, retailers, other resellers and third-party distributors.
Sony is dependent for the distribution of its products on wholesalers, retailers, other resellers and third-party distributors, many of whom also distribute competitors’ products. For example, in some cases, the Pictures segment depends on third parties to theatrically exhibit its motion pictures, and to operate cable, satellite, internet and other distribution systems to distribute its motion pictures and television programming. A decline in the licensing fees received from these third parties may adversely affect the Pictures segment’s sales. The Pictures segment’s various television networks are also distributed on third-party cable, satellite and other distribution systems and the failure to renew, or the renewal on less favorable terms of, television carriage contracts (broadcasting agreements) with these third-party distributors may adversely affect the Pictures segment’s ability to generate advertising and subscription sales through these networks.
Sony invests in programs to incentivize wholesalers, retailers, and other resellers and third-party distributors to position and promote Sony’s products, but there is no assurance that these programs will provide a significant return or incremental revenue by persuading consumers to buy Sony’s products instead of competitors’ products.
The operating results and financial condition of many wholesalers, retailers, other resellers and third-party distributors have been adversely impacted by competition, especially from online retailers, and weak economic
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conditions. If their financial condition continues to weaken, they stop distributing Sony’s products, or uncertainty regarding demand for Sony’s products or other factors cause them to reduce their ordering, marketing, subsidizing, or distributing Sony’s products, Sony’s operating results and financial condition may be adversely impacted.
As a global company, Sony is subject to a wide range of laws and regulations in many countries and a growing focus on sustainability efforts, including corporate social responsibility from external stakeholders including shareholders, consumers, local communities and non-governmental organizations (“NGOs”). Those laws and regulations, as well as external stakeholder and regulator focus, might change in significant ways, leading to an increase in the costs of Sony’s operations, a curtailment of Sony’s activities, and/or an adverse effect on Sony’s reputation.
As a global company, Sony is subject to the laws and regulations of many countries throughout the world that affect its business operations in a number of areas, including advertising, promotions, consumer protection, import and export requirements, anti-corruption, anti-trust, environmental protection (including decarbonizing regulations in connection with actions against climate change and regulations on the use and/or spillage of hazardous substances such as specific organic fluorine compounds), data privacy and data protection, product security, content and broadcast regulation, development and utilization of AI, intellectual property, labor, occupational health and safety, product liability, taxation (including taxes from certain revenue on digital services), foreign investment, government procurement, foreign exchange controls, and economic sanctions.
Compliance with these laws and regulations may be onerous and expensive. These laws and regulations continue to develop and may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance and doing business. Any such developments could occur frequently and without warning and could make Sony’s products or services less attractive to its customers, delay or prohibit introduction of new products or services in one or more regions or cause Sony to change or limit its business practices. For example, imposition of restrictive trade measures such as tariffs and export controls in the United States and elsewhere, as well as retaliatory actions against such measures, could result in increased customs duties applicable to Sony’s products or increased costs for procuring parts and components, and could limit or prohibit the sales of Sony’s products and services to certain of its current or potential customers, which may adversely affect Sony’s operating results and financial condition. In addition, changes in laws or regulations or the judicial interpretation thereof that Sony relies on or Sony is subject to in conducting its operations, including online operations, as well as Sony’s failure to anticipate such changes, may subject Sony to greater risk of liability, increase the costs of compliance, or limit Sony’s ability to engage in or expand certain operations or lead to discontinuance of certain operations. In addition, regulators in Europe and other countries are moving forward with legislation related to AI. As Sony develops and uses AI, there is a possibility that the cost of complying with these laws and regulations may increase.
Violation of applicable laws or regulations by Sony, its officers or employees, third-party suppliers, business partners or agents may subject Sony to monetary fines, penalties, legal judgments, restrictions on business operations and/or reputational damage. Additionally, there is a growing global focus by regulators and external stakeholders on sustainability efforts, including those relating to climate change and respect for human rights in supply chains, as well as increasing regulatory obligations of public disclosures regarding these matters. For example, there is increased attention on labor practices, including work environments at electronic component and product manufacturers and original equipment manufacturers/original design manufacturers (OEM/ODM) operating in Asia. Increased regulation or public pressure in this area could cause Sony’s compliance costs to increase, particularly since Sony uses many parts, components and materials to manufacture its products and relies on suppliers to provide these parts, components and materials. A finding of non-compliance, or the perception that Sony has not responded appropriately to growing external stakeholder concern for such issues, whether or not Sony is legally required to do so, may adversely affect Sony’s reputation, operating results and financial condition.
Sony must manage its large volume of and widespread procurement from third-party suppliers and business partners to control inventory levels, availability, costs and quality of parts, components, materials, software and network services within volatile markets.
Sony’s products and services rely on a large volume of third-party suppliers and business partners for parts, components, materials, software and network services, including semiconductors, chipsets for PlayStation® game consoles and mobile products, liquid crystal display (“LCD”) panels and the Android OS that is used in mobile products, televisions and services. As a result, external suppliers’ and partners’ supply shortages, fluctuations in pricing, quality issues, discontinued support, changes in business terms or prioritization of customers outside the
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electronics area or of Sony’s competitors can adversely affect Sony’s operating results, brand and reputation. For example, since the latter half of the fiscal year ended March 31, 2026, a global surge in demand for memory semiconductors has led to price increases and supply shortages. Although Sony is striving to minimize the impact by securing procurement at reasonable prices through discussions with third-party suppliers and measures in product design and sales strategy, worsened or prolonged price increases or supply shortages could adversely affect the operating results of the G&NS, ET&S and I&SS segments. Reliance on third-party software and technologies may make it increasingly difficult for Sony to differentiate its products from competitors’ products. Also, shortages or delayed shipments of critical parts or components may result in a reduction or suspension of production at Sony’s or its business partners’ manufacturing sites, particularly where Sony is substantially reliant on one supplier, where there is limited production capacity for custom parts or components, or where there are initial manufacturing capacity constraints for products, parts or components that use new technologies.
Sony places orders for parts and components in line with production and inventory plans determined in advance based on its forecast of consumer demand, which is highly volatile and difficult to predict. Inaccurate forecasts of consumer demand or inadequate business planning can lead to a shortage or excess inventory, which can disrupt production plans and result in lost sales opportunities or inventory adjustments, respectively. Sony writes down the value of its inventory when the underlying parts, components or products have become obsolete, when inventory levels exceed the amount expected to be used, or when the value of the inventory is otherwise recorded at a value higher than net realizable value. Such lost sales opportunities, inventory adjustments, or shortages of parts and components have had and may have an adverse impact on Sony’s operating results and financial condition.
Sony’s sales, profitability and operations are sensitive to global and regional economic and political trends and conditions.
Sony’s sales and profitability are sensitive to economic trends in its major markets, such as inflation. In the fiscal year ended March 31, 2026, 10.6%, 32.6% and 22.7% of Sony’s sales were attributable to Japan, the U.S. and Europe, respectively. These markets may be subject to significant economic downturns, resulting in an adverse impact on Sony’s operating results and financial condition. An actual or expected deterioration of economic conditions in any of Sony’s major markets may result in a decline in consumers’ consumption and adverse impacts on the businesses of commercial customers, resulting in reduced demand for Sony’s products and services.
In addition, Sony’s operations are conducted in many countries and regions around the world, and these international operations, particularly in certain emerging markets, can create challenges. For example, in the ET&S, I&SS and G&NS segments, production and procurement of products, parts and components in China and other Asian countries and regions increase the time necessary to supply products to other markets worldwide, which can make it more difficult to meet changing customer demand in a timely manner. Further, in certain countries and regions, Sony may encounter difficulty in planning and managing operations due to unfavorable political or economic factors, such as armed conflicts, deterioration in foreign relations, changes in trade and tariff policies, non-compliance with expected business conduct and a lack of adequate infrastructure. If international or domestic political and military instability disrupts Sony’s business operations or those of its business partners, Sony’s operating results and financial condition may be adversely affected. Additionally, if such uncertain situations lead to price increases or supply shortages of materials and components, or prolonged lead times for shipping or increased transportation costs due to logistics disruptions, Sony’s production and transportation costs may increase, and Sony’s operating results and financial condition may be adversely affected. For example, as a response to the worsening of the situation in Ukraine and Russia that began in the fiscal year ended March 31, 2022, as of the date of this report, Sony has suspended its business in Russia. If this situation worsens further in the future, it could create global uncertainty, possibly leading to the worsening of Sony’s businesses in other regions or a deterioration in global economic conditions resulting in an adverse impact on Sony’s operating results and financial condition. In addition, worsened or prolonged price increases for crude oil and the impact on crude oil supply due to the rapid deterioration of the situation in the Middle East from the latter half of the fiscal year ended March 31, 2026 may adversely affect the operating results of the G&NS, ET&S and I&SS segments.
Foreign exchange rate fluctuations can affect Sony’s operating results and financial condition.
Sony’s operating results and financial condition are sensitive to foreign exchange rate fluctuations because many of Sony’s products are sold in countries other than the ones in which they were developed and/or manufactured. For example, within Sony’s electronics area, R&D and headquarters’ overhead costs are incurred mainly in yen, and manufacturing costs, including material costs, costs of procurement of parts and components,
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and costs of outsourced manufacturing services, are incurred mainly in U.S. dollars and yen. Sales are recorded in yen, U.S. dollars, euros, Chinese renminbi, and local currencies of other areas, including emerging markets. Consequently, foreign exchange rate fluctuations have had and may have an adverse impact on Sony’s operating results, especially when the yen weakens significantly against the U.S. dollar, when the yen strengthens significantly against the euro, or when the U.S. dollar strengthens against emerging market currencies. Sony’s operating results may also be adversely impacted by foreign exchange rate fluctuations since Sony’s consolidated statements of income are prepared by translating the local currency denominated operating results of its subsidiaries around the world into yen. Furthermore, as Sony’s businesses have expanded in China and other areas, including emerging markets, the impact of fluctuations of foreign currency exchange rates in these areas against the U.S. dollar and yen has increased. Mid- to long-term changes in exchange rate levels may interfere with Sony’s global allocation of resources and hinder Sony’s ability to engage in R&D, procurement, production, logistics, and sales activities while maintaining profitability.
Although Sony seeks to reduce its exposure to foreign exchange risk by hedging a portion of its net short-term foreign currency exposure shortly before the transactions occur, such hedging activity may not offset, or may offset only a portion of, the adverse financial effects of unfavorable movements in foreign exchange rates over the limited time the hedges are in place.
Moreover, since Sony’s consolidated statements of financial position are prepared by translating the local currency denominated assets and liabilities of its subsidiaries around the world into yen, Sony’s equity capital may be adversely impacted when the yen strengthens significantly against the U.S. dollar, the euro and/or other foreign currencies.
Ratings downgrades or significant volatility and disruption in the global financial markets may adversely affect the availability and cost of Sony’s funding.
Sony’s credit ratings may be adversely impacted by unfavorable operating results and a decline in its financial condition. Any credit rating downgrades may, in turn, result in an increase in Sony’s cost of funding and may have an adverse impact on Sony’s ability to access commercial paper (“CP”) or mid- to long-term debt markets on acceptable terms.
Additionally, global financial markets may experience significant levels of volatility and disruption, generally putting downward pressure on financial and other asset prices and impacting credit availability. Historically, Sony’s primary sources of funds have been cash flows from operations, the issuance of CP and mid- to long-term debt, as well as borrowings from banks and other institutional lenders. There can be no assurance that such sources will continue to be available on acceptable terms or be sufficient to meet Sony’s needs.
As a result, Sony may seek other sources of financing to fund operations, such as the draw-down of funds from contractually committed lines of credit from financial institutions or the sale of assets, in order to repay CP and mid- to long-term debt as they become due, and to meet other operational and liquidity needs. However, such funding sources may also not be available at acceptable terms or be sufficient to meet Sony’s requirements. As a result, Sony’s operating results, financial condition and liquidity may be adversely affected.
Sony’s success depends on the ability to recruit, retain and maintain productive relations with diverse people who embrace a challenging spirit and possess the ambition to grow.
In order to continue to create content, develop services, design, manufacture, market, and sell products, in increasingly competitive markets, personnel with a high level of expertise and broad experience are essential. Accordingly, Sony must attract, retain and maintain productive relations with both internal and external key personnel, including management professionals, creative talent who drive new value creation, and technology professionals with expertise in AI and other technologies. However, such key personnel are in high demand. In addition, business divestitures, restructuring or other transformation initiatives may lead to an unintended loss of experienced employees or know-how. Actual or threatened work slowdowns or stoppages related to unionized workers, particularly in the entertainment field, could lead to delayed releases or cost increases. Furthermore, in Japan, with a declining workforce due to the falling birthrate and aging population, intensifying competition among companies for specialized talent, and rising labor costs, it may become difficult to secure the necessary talent if Sony’s HR system is inadequate in its design and operations. If these incidents occur or if Sony is unable to attract, retain and maintain productive relations with employees with high levels of expertise and broad experience as well as key management professionals, Sony’s operating results and financial condition may be adversely affected.
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Sony’s intellectual property might be subject to unauthorized use or theft and it might encounter restrictions in its use of intellectual property owned by third parties.
Sony’s intellectual property might be subject to unauthorized use or theft. For example, digital technology, the availability of digital media, global internet penetration and the proliferation of AI technology, including generative AI, impact Sony’s ability to protect its copyrighted content from unauthorized duplication, digital theft and counterfeiting, putting pressure on legitimate sales of products and services. Sony has incurred and will continue to incur expenses to help protect its intellectual property rights; however, Sony’s various initiatives to prevent such unauthorized use or theft of intellectual property might not achieve their intended result, which could adversely affect Sony’s competitive position and the value of its investment in R&D. Additionally, Sony’s intellectual property rights may be challenged or invalidated, or such intellectual property rights may not be sufficient to provide Sony with competitive advantages.
Many of Sony’s products and services are designed, developed or manufactured under the license of patents and other intellectual property rights owned by third parties. Based upon past experience and industry practice, Sony believes it will be able to obtain or renew licenses relating to various intellectual property rights that its business needs in the future; however, such licenses may not be available at all or on acceptable terms, and as a consequence Sony may need to redesign or discontinue its marketing, selling or distribution of such products and services.
Claims have been and may be asserted against Sony that its products or services, including third-party parts, components, software and network services used in Sony’s products or services, infringe the intellectual property rights of other parties. Such claims may be asserted by competitors or by other rights holders, particularly as products and services evolve to include new technologies and enhanced functionality. Such claims might require Sony to enter into settlement or license agreements, pay significant damage awards, face an injunction or refrain from marketing, selling or distributing certain of its products and services.
The failure to prevent unauthorized use or theft of Sony’s intellectual property rights by third parties, the failure to enter into licenses for necessary third-party intellectual property rights, the invalidation of Sony’s intellectual property rights or the settlement of an infringement claim against Sony by others may adversely impact Sony’s reputation, operating results and financial condition.
Changes in consumer behavior resulting from new technologies and distribution platforms, as well as increasing concentration of digital music distributors and creation of content by distributors themselves, may adversely affect operating results in the Music and Pictures segments.
Technology, particularly digital technology, used in the Music and Pictures segments continues to evolve, rapidly leading to alternative methods and platforms for the discovery and consumption of digital content. These technological advancements have changed consumer behavior and empowered consumers to seek more control over when, where and how they consume digital content.
The impact of the prevalence of digital streaming networks and other new media on traditional television and in-theater motion picture viewership could adversely affect the operating results of the Pictures segment.
Furthermore, as more music and video content is consumed over digital streaming networks, digital music distributors are becoming increasingly concentrated, which may decrease the competitiveness of Sony’s music content and adversely affect its pricing. In addition, digital music and video distributors may increase the amount of content they create for their own services by leveraging technologies such as generative AI, which may reduce the demand for content created or produced by Sony. If Sony is unable to adequately respond to these changes or fails to effectively adapt to new market changes, Sony’s operating results and financial condition may be adversely impacted.
Sony’s facilities and operations are subject to damage and disruption as a result of catastrophic disasters, outages, pandemic diseases, or similar events that could lead to supply chain, manufacturing and other business disruptions and have an adverse impact on Sony’s operating results.
Sony’s headquarters and many of Sony’s state-of-the-art manufacturing sites, including those for image sensors, are located in Japan, where the risk of earthquakes is relatively high. If large-scale earthquakes or other natural disasters occur in Japan, buildings, facilities and inventories could be damaged, and Sony’s business activities, operating results and financial condition could be negatively affected by interruptions in production activities and the recording of recovery costs. In addition, as climate change contributes to rising temperatures, the increased severity and frequency of extreme weather conditions could adversely affect the risks and uncertainties noted above.
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In addition, offices and facilities used by Sony, its suppliers, external service providers and other business partners for network, information and telecommunications system infrastructure, R&D, procurement of materials, manufacturing, motion picture and television production, logistics, sales, and online and other services are located throughout the world and are subject to possible destruction, temporary inoperability, or other disruptions as a result of unforeseen catastrophes such as natural disasters, pandemic diseases, terrorist acts, armed conflicts, large-scale power outages and large-scale fires. If any of these facilities or offices were to suffer significant damages as a result of any such catastrophe, it may cause suspension of Sony’s business activities and/or delays in design, development, production, shipments or revenue recognition, and may require substantial expenses for the repair or replacement of such facilities or offices. In addition, price increases for raw materials, parts and components, and lower demand from commercial customers may have an adverse impact on Sony’s operating results and financial condition.
Sony’s brand image, reputation and business may be harmed and Sony may be subject to legal claims if there is a breach or other compromise of Sony’s information security or that of its third-party service providers or business partners.
Sony, its third-party service providers, suppliers and other business partners make extensive use of information technology including AI to support business operations, and to provide network and online services to customers. These operations and services, as well as Sony’s business information, may be compromised by malicious actors, including state-sponsored organizations, criminals and criminal organizations, or intentionally or inadvertently compromised by employees of third-party service providers, suppliers, other business partners or Sony. Such organizations or individuals may use a variety and combination of techniques, such as installing malicious software, exploiting vulnerabilities in information technology, using social engineering to mislead officers, employees or business partners into disclosing credentials and sensitive information, coordinating distributed denial-of-service attacks to render services unavailable, and using AI systems to discover vulnerabilities and to execute more automated, targeted, and coordinated cyberattacks. The increasing adoption of AI by Sony, its business partners, and other third-parties may introduce new vulnerabilities and attack opportunities for malicious actors. If suppliers and other business partners are subjected to cyberattacks, they may become unable to supply parts, materials, and services to Sony, which could consequently impact Sony’s businesses. Sony has previously been the subject of cyberattacks. For further details, refer to “Item 16K. Cybersecurity.”
As cyberattacks become increasingly sophisticated and automated, and as tools and resources become more readily available, there can be no guarantee that Sony’s actions, security measures and controls designed to prevent, detect or respond to outside intrusion, limit access to data, prevent loss, destruction, alteration, or exfiltration of business information, or limit the negative impact from such attacks can provide absolute security. In addition, Sony’s officers and employees work both in the office and remotely. Although Sony takes measures to ensure that appropriate information security protections are in place for the remote workforce, there can be no guarantee that Sony’s actions, security measures and controls designed to prevent, detect or respond to outside intrusion, limit access to data, prevent loss, destruction, alteration, or exfiltration of business information, or limit the negative impact from such attacks, can provide absolute security. As a result, Sony’s business information, including personally identifiable information, may be lost, destroyed, disclosed, misappropriated, altered, or accessed without consent, and Sony’s information technology systems or operations, or those of its service providers or other business partners, may be disrupted. Malicious adversaries may also use unauthorized access to Sony’s networks as a platform to compromise Sony’s third-party business partners without Sony’s knowledge.
An information security incident could result in significant remediation costs for Sony. In addition, a disruption to Sony’s network and online services, information technology, or other compromise of its information security may have serious consequences to its business and operations, including lost revenues, damage to relationships with business partners and other third parties, disclosure, alteration, destruction or use of proprietary information and the failure to retain or attract customers. Moreover, such disruptions and breaches may result in a diversion of management’s attention and resources. Further, it may result in adverse media coverage, which may harm Sony’s brand image and reputation. Sony may also be subject to legal claims or legal proceedings, including regulatory investigations and actions. Sony’s cyber insurance may not cover all expenses and losses and, accordingly, such breaches or other compromises of Sony’s information security or that of its third-party service providers or business partners may have an adverse impact on Sony’s operating results and financial condition.
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Sony’s reputation, operating results and financial condition may be adversely affected as a result of adverse outcomes of litigation and regulatory actions.
Sony faces the risk of litigation and regulatory actions in different countries in connection with its operations. Legal proceedings, including regulatory actions, may seek to recover very large indeterminate amounts or to limit Sony’s operations, and the possibility that they may arise and their magnitude may remain unknown for substantial periods of time. For example, legal proceedings, including regulatory actions, may result from antitrust scrutiny of market practices for alleged anti-competitive conduct. A substantial legal liability or adverse regulatory outcome and the substantial cost to defend the litigation or regulatory actions may have an adverse effect on Sony’s reputation, operating results and financial condition.
Sony is subject to financial and reputational risks due to product quality, product security, and liability issues.
Sony’s products and services, such as consumer electronics products, non-consumer products, parts and components, semiconductors, software and network services are becoming increasingly sophisticated and complicated as rapid advancements in technologies occur and as demand increases for mobile products and online services. Also, many of Sony’s products are connected to the internet, and regularly communicate with services provided by Sony or third parties.
Sony’s efforts to adapt to rapid advancements in technologies and increased demand for mobile products and online services, while also maintaining product quality and product security, may not be successful and may increase exposure to product liability. As a result, Sony may incur both reputational damages and expenses in connection with, for example, product recalls and after-sales services. In addition, Sony may not be successful in introducing after-sales upgrades, enhancements or new features to existing products and services, or in enabling existing products and services to continue to conveniently and effectively integrate with other technologies and online services. Moreover, cyberattacks targeting internet-connected products have increased significantly. For example, customer information and Sony or third-party technical information may be misappropriated, the functionality of Sony’s products and services may be impaired, or Sony’s products may be used in denial-of-service attacks. There can be no guarantee that Sony’s security measures will prevent products from being compromised.
As a result, the quality of Sony’s existing products and services may not remain satisfactory to consumers and become less marketable, less competitive or obsolete, and Sony’s reputation, operating results and financial condition may be adversely affected. Moreover, allegations of security vulnerability, health and safety issues related to Sony’s products and services, or lawsuits related to product quality, health issues arising from products or product safety, regardless of merit, may adversely impact Sony’s operating results and financial condition, either directly or as a result of the impact on Sony’s brand image and reputation as a producer of high-quality products and services. These issues are relevant to Sony’s products sold directly to customers, whether manufactured by Sony or a third party, and also to products of other companies that are equipped with Sony’s components, such as semiconductors.
Sony’s financial results and condition may be adversely affected by its employee benefit obligations.
Sony recognizes a net defined benefit liability or asset for its defined benefit pension plans based on (i) the present value of defined benefit obligations (“DBO”) under each pension plan less (ii) the fair value of plan assets, in accordance with the accounting guidance for defined benefit plans. If the fair value of plan assets is in excess of the present value of DBO, the amount of any asset to be recognized is limited to the present value of any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan. Any decrease in the fair value of plan assets or increases in the present value of DBO due to a lower discount rate and changes in certain other actuarial assumptions may increase or decrease the net defined benefit liability or asset and may have an adverse effect on Sony’s financial results and condition.
Also, Sony’s financial results and condition could be adversely affected by future pension funding requirements pursuant to the Japanese Defined Benefit Corporate Pension Plan Act (the “Pension Plan Act”). Under the Pension Plan Act, Sony is required to conduct a periodic actuarial revaluation and to ascertain whether certain financial criteria have been met after the annual accounting closing. In the event that the fair value of plan assets falls below the actuarial reserve required by law and the shortfall may not be recovered within a certain moratorium period permitted by laws and/or special legislative decree, Sony may be required to make an additional contribution to its plans, which may reduce cash flows. Similarly, if Sony is required to make an additional contribution to a foreign plan to meet any funding requirements in accordance with local laws and regulations in each country, Sony’s cash flows might be adversely affected. If Sony is required to increase cash
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contributions to its pension plans when actuarial assumptions, such as an expected long-term rate of return of the plan assets, are updated for purposes of determining statutory contributions, it may have an adverse impact on Sony’s cash flows.
Further losses in tax jurisdictions where Sony has assessed deferred tax assets as unrecognized, the inability of Sony to fully utilize its deferred tax assets, limitations on the use of its deferred tax assets under local law, exposure to additional tax liabilities or changes in Sony’s tax rates could adversely affect Sony’s operating results and financial condition.
Sony is subject to income taxes in Japan and numerous other jurisdictions, and in the ordinary course of its business there are many situations where the ultimate tax determination can be uncertain, because of the transfer pricing for its intercompany transactions, and because Sony is subject to continuous review by tax authorities of numerous jurisdictions. The calculation of Sony’s tax provision and the carrying value of tax assets, including net operating loss carryforwards and tax credit carryforwards, require significant judgment and the use of estimates, including estimates of future taxable income. At the end of each reporting period, Sony reassesses unrecognized deferred tax assets and determines whether these assets should be recognized. As of March 31, 2026, the unrecognized deferred tax assets amounted to 277.5 billion yen. An increase in unrecognized deferred tax assets may have an adverse impact on Sony’s operating results and financial condition.
Deferred tax assets are evaluated on a jurisdiction-by-jurisdiction basis. As of March 31, 2026, Sony had unrecognized deferred tax assets, principally at some subsidiaries in Japan and overseas. Additionally, deferred tax assets could expire unused or otherwise not be realizable for a variety of reasons including the lack of sufficient taxable income in the appropriate jurisdiction. Sony’s operating results and financial condition could be adversely affected when the deferred tax assets expire unused.
In some jurisdictions, the use of net operating loss carryforwards or tax credits to reduce taxable income in a subsequent period is limited to a fixed percentage of taxable income or may only be used to offset taxes on income from certain sources. Thus, it is possible that even with significant net operating loss carryforwards or tax credits, Sony could record and pay taxes in a jurisdiction where it has taxable income.
Sony’s future effective tax rates may also be unfavorably affected by changes in both the statutory rates and the mix of earnings in countries with differing statutory rates or by other factors such as changes in tax laws and regulations or their interpretation, including minimum tax requirements and limitations or restrictions on various tax deductions and credits, including deductions for royalties and interest.
In addition to the above, Sony’s businesses may be subject to new forms of gross basis taxation and transactional taxes, including digital service taxes. Although such taxes may not directly impact Sony’s effective tax rate, they may nevertheless have an adverse impact on its operating results and financial condition.
Sony could incur asset impairment losses for goodwill, content assets and other intangible assets or other non-current assets.
Sony has a significant amount of goodwill, content assets, other intangible assets and other non-current assets, including production facilities and equipment. A decline in financial performance, market capitalization, reduced estimates of future cash flows, changes in global economic conditions or changes in estimates and assumptions used in the impairment analysis, which in many cases requires significant judgment, could result in impairment losses against these assets. Events or changes in circumstances which would indicate impairment include unfavorable variances from or adjustments to established business plans, significant changes in forecasted results or volatility inherent to external markets and industries. The increased levels of global competition and the faster pace of technological change to which Sony is exposed can result in greater volatility of these estimates, assumptions and judgments, and increase the likelihood of impairment losses. Any such loss may adversely affect Sony’s operating results and financial condition. For example, in the G&NS segment in the fiscal year ended March 31, 2026, considering the business environment, as a result of reviewing the future projections for the business operated by Bungie, Inc. (“Bungie”), Sony determined that sufficient future cash flows were not expected to be generated to recover the carrying amount of the assets, and recognized impairment losses of 120.1 billion yen against Bungie’s intangible and other assets. Refer to Note 12 of the consolidated financial statements for details.
Holders of American Depositary Shares have fewer rights than shareholders and may not be able to enforce judgments based on U.S. securities laws.
The rights of shareholders under Japanese law to take actions, including voting their shares, receiving dividends and distributions, bringing derivative actions, examining Sony’s accounting books and records, and
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exercising appraisal rights, are available only to shareholders of record. Because the depositary, through its custodian agents, is the record holder of the shares underlying the American Depositary Shares (“ADSs”), only the depositary can exercise those rights in connection with the deposited shares. The depositary will make efforts to vote the shares underlying ADSs in accordance with the instructions of ADS holders and will pay the dividends and distributions collected from Sony. However, ADS holders will not be able to bring a derivative action, examine Sony’s accounting books and records, or exercise appraisal rights through the depositary.
Sony Group Corporation is incorporated in Japan with limited liability. A majority of Sony’s directors and corporate executive officers are non-U.S. residents, and a substantial portion of the assets of Sony Group Corporation and the assets of Sony’s directors and corporate executive officers are located outside the U.S. As a result, it may be more difficult for investors to enforce against Sony Group Corporation or such persons, judgments obtained in U.S. courts predicated upon civil liability provisions of the federal and state securities laws of the U.S. or similar judgments obtained in other courts outside Japan. There is doubt as to the enforceability in Japanese courts, in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities predicated solely upon the federal and state securities laws of the U.S.
Prior notification under the Foreign Exchange and Foreign Trade Act of Japan may be required in the case of an acquisition by a foreign investor of a certain portion of our shares.
Because Sony is engaged in certain businesses designated by the Foreign Exchange and Foreign Trade Act of Japan (the “FEFTA”) and its related cabinet orders and ministerial ordinances (collectively, the “Foreign Exchange Regulations”), if a foreign investor intends to consummate an acquisition of shares of common stock of Sony Group Corporation and that acquisition constitutes an “inward direct investment” under the Foreign Exchange Regulations, the foreign investor, subject to certain exemptions, must file a prior notification of such inward direct investment with the Minister of Finance and any other competent Ministers. Under the Foreign Exchange Regulations, an “inward direct investment” includes an acquisition by a foreign investor of shares of common stock of Sony Group Corporation, the consummation of which results in such foreign investor, in combination with any existing shareholding, directly or indirectly holding 1% or more of the total number of issued shares of common stock or the total number of voting rights of Sony Group Corporation, unless certain exemptions apply.
If such prior notification is filed, the proposed acquisition may not be consummated until the prescribed screening period expires. In some cases, the Ministers may extend the screening period, and may recommend or order any modification or the abandonment of such acquisition. In addition, if certain conditions – including those prescribed in light of the national security of Japan – under the Foreign Exchange Regulations are met, the Ministers may order the foreign investor to divest the shares acquired or take other measures. Consequently, any proposed acquisition by a foreign investor of shares of common stock of Sony Group Corporation that constitutes an “inward direct investment” may not be consummated in an expected time frame in accordance with an intended plan, or at all.
Additionally, if a foreign investor directly or indirectly holds 1% or more of the total voting rights of Sony Group Corporation and, at a general meeting of shareholders, consents to certain proposals having a material influence on the management of Sony Group Corporation such as the (i) election of such foreign investor or any of its related persons (as defined in the Foreign Exchange Regulations) as a director of Sony Group Corporation or (ii) transfer or discontinuation of its business, such consent, subject to certain exemptions, also constitutes an “inward direct investment” requiring prior notification. If such prior notification is filed, such consent cannot be given until the prescribed screening period expires. As a result, such foreign investors may have difficulties giving such consent in accordance with an intended plan, or at all.
The discussion above is not exhaustive of all possible foreign exchange controls considerations that may apply to a particular investor, and potential investors are advised to satisfy themselves as to the overall foreign exchange controls consequences of the acquisition, ownership and disposition of shares of common stock or voting rights of Sony Group Corporation by consulting their own advisors. For a more detailed discussion on the requirements and procedures regarding the prior notifications under the Foreign Exchange Regulations, refer to “Exchange Controls” in “Item 10. Additional Information.”
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Information on the Company
History and Development of the Company
Sony Group Corporation was established in Japan in May 1946 as Tokyo Tsushin Kogyo Kabushiki Kaisha, a joint stock company (Kabushiki Kaisha) under Japanese law. It changed its name to Sony Kabushiki Kaisha (“Sony Corporation” in English) in January 1958, and changed its name again to Sony Group Kabushiki Kaisha (“Sony Group Corporation” in English) in April 2021 in order to focus on its role as the headquarters of the Sony Group.
In December 1958, Sony Group Corporation was listed on the Tokyo Stock Exchange (“TSE”). In June 1961, Sony Group Corporation issued American Depositary Receipts (“ADRs”) in the U.S.
In March 1968, Sony Group Corporation established CBS/Sony Records Inc. in Japan, as a 50-50 joint venture company between Sony Group Corporation and CBS Inc. in the U.S. In January 1988, the joint venture became a wholly-owned subsidiary of Sony Group Corporation, and in April 1991, changed its name to Sony Music Entertainment (Japan) Inc. (“SMEJ”). In November 1991, SMEJ was listed on the Second Section of the TSE.
In September 1970, Sony Group Corporation was listed on the New York Stock Exchange (the “NYSE”).
In August 1979, Sony Group Corporation established Sony Prudential Life Insurance Co., Ltd. in Japan, as a 50-50 joint venture company between Sony Group Corporation and The Prudential Insurance Company of America. In April 1991, the joint venture changed its name to Sony Life Insurance Co., Ltd. (“Sony Life”). In March 1996, Sony Life became a wholly-owned subsidiary of Sony Group Corporation.
In July 1984, Sony Magnescale Inc., a subsidiary of Sony Group Corporation, was listed on the Second Section of the TSE. The subsidiary changed its name to Sony Precision Technology Inc. in October 1996 and then to Sony Manufacturing Systems Corporation in April 2004. In April 2012, Sony Manufacturing Systems was merged into Sony EMCS Corporation. Sony EMCS Corporation changed its name to Sony Global Manufacturing & Operations Corporation in April 2016.
In July 1987, Sony Chemicals Corporation, a subsidiary of Sony Group Corporation, was listed on the Second Section of the TSE. The subsidiary changed its name to Sony Chemical & Information Device Corporation in July 2006, and changed its name again to Dexerials Corporation in October 2012.
In January 1988, Sony Group Corporation acquired CBS Records Inc., the music business division of CBS Inc. in the U.S. The acquired company changed its name to Sony Music Entertainment Inc. in January 1991 and then to Sony Music Holdings Inc. in December 2008.
In November 1989, Sony Group Corporation acquired Columbia Pictures Entertainment, Inc. in the U.S. In August 1991, Columbia Pictures Entertainment, Inc. changed its name to Sony Pictures Entertainment Inc. (“SPE”).
In November 1993, Sony Group Corporation established Sony Computer Entertainment Inc. in Japan. Sony Computer Entertainment Inc. changed its name to Sony Interactive Entertainment Inc. in April 2016.
In October 1995, Sony/ATV Music Publishing LLC (“Sony/ATV”) was formed as a 50-50 joint venture company between Sony Group Corporation and Michael Jackson. In September 2016, the joint venture became a wholly-owned subsidiary of Sony Group Corporation. In January 2021, Sony/ATV changed its name to Sony Music Publishing (US) LLC.
In January 2000, acquisition transactions by way of a share exchange were completed such that three subsidiaries which had been listed on the TSE - SMEJ, Sony Chemicals Corporation (currently Dexerials Corporation), and Sony Precision Technology Inc. (currently Sony Global Manufacturing & Operations Corporation) - became wholly-owned subsidiaries of Sony Group Corporation. In September 2012, Sony Group Corporation completed the sale of certain of its chemical products businesses, including Sony Chemical & Information Device Corporation (currently Dexerials Corporation) to Development Bank of Japan Inc.
In October 2001, Sony Ericsson Mobile Communications AB (“Sony Ericsson”), a 50-50 joint venture company between Sony Group Corporation and Telefonaktiebolaget LM Ericsson (“Ericsson”) of Sweden, was established. In February 2012, Sony acquired Ericsson’s 50% equity interest in Sony Ericsson. As a result of the acquisition, Sony Ericsson became a wholly-owned subsidiary of Sony and changed its name to Sony Mobile Communications AB.
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In October 2002, Aiwa Co., Ltd. (“Aiwa”), then a TSE-listed subsidiary, became a wholly-owned subsidiary of Sony Group Corporation. In December 2002, Aiwa was merged into Sony Group Corporation.
In June 2003, Sony Group Corporation adopted the “Company with Three Committees” corporate governance system in line with the revised Japanese Commercial Code then effective. (Refer to “Board Practices” in “Item 6. Directors, Senior Management and Employees.”)
In April 2004, Sony Group Corporation established Sony Financial Holdings, Inc. (“SFH”), a financial holding company, in Japan. Sony Life, Sony Assurance Inc. (“Sony Assurance”), and Sony Bank Inc. (“Sony Bank”) became subsidiaries of SFH. In October 2007, SFH was listed on the First Section of the TSE in conjunction with the global initial public offering of shares of SFH by Sony Group Corporation and SFH. In September 2020, SFH became a wholly-owned subsidiary of Sony Group Corporation through Sony’s tender offer for the common shares and the related stock acquisition rights of SFH and the subsequent procedures for the purchase of all of SFH’s remaining common shares. In October 2021, SFH changed its company name to SFGI. In May 2023, Sony Group Corporation announced that it had begun an assessment of the Partial Spin-off of the Financial Services business and the listing of the shares of SFGI, and in February 2024, Sony Group Corporation obtained approval from the Minister of Economy, Trade and Industry of Japan regarding its Corporate Restructuring Plan for the Partial Spin-off of the Financial Services business based on the Act on Strengthening Industrial Competitiveness of Japan. In May 2025, Sony Group Corporation decided to submit a resolution for the execution of the Partial Spin-off of the Financial Services business, as of October 1, 2025, to the Board of Directors in early September 2025. In September 2025, SFGI shares of common stock were listed on the Prime Market of the TSE, which was a condition for the execution of the Partial Spin-off of the Financial Services business. In October 2025, the execution of the Partial Spin-off of the Financial Services business was completed. As a result of the execution, Sony Group Corporation held 16.40% of shares of common stock of SFGI, and SFGI ceased being a consolidated subsidiary, and became an affiliated company of Sony Group Corporation.
In April 2004, S-LCD Corporation (“S-LCD”), a joint venture between Sony Group Corporation and Samsung Electronics Co., Ltd. of Korea for the manufacture of amorphous thin film transistor LCD panels, was established in Korea. Sony’s stake in S-LCD was 50% minus 1 share. In January 2012, Sony sold all of its shares of S-LCD to Samsung Electronics Co., Ltd.
In August 2004, Sony combined its worldwide recorded music business, excluding its recorded music business in Japan, with the worldwide recorded music business of Bertelsmann AG (“Bertelsmann”), forming a 50-50 joint venture, SONY BMG MUSIC ENTERTAINMENT (“SONY BMG”). In October 2008, Sony acquired Bertelsmann’s 50% equity interest in SONY BMG. As a result of the acquisition, SONY BMG became a wholly-owned subsidiary of Sony. In January 2009, SONY BMG changed its name to Sony Music Entertainment (“SME”).
In December 2005, Sony Communication Network Corporation, a subsidiary of Sony Group Corporation, was listed on the Mother’s market of the TSE, and was later listed on the First Section of the TSE in January 2008. It changed its name to So-net Entertainment Corporation in October 2006, and changed its name again to So-net Corporation (“So-net”) in July 2013. In January 2013, Sony Group Corporation acquired all of the common shares of So-net through a tender offer and subsequent share exchange and, as a result of the acquisition, So-net became a wholly-owned subsidiary of Sony Group Corporation. So-net was renamed Sony Network Communications Inc. (“SNC”) in July 2016.
In June 2012, an investor group including Sony Corporation of America (“SCA”) established DH Publishing, L.P. (“EMI”) to own and manage EMI Music Publishing, which it then acquired. This acquisition resulted in Nile Acquisition LLC (“Nile”), of which SCA owned 74.9% and the Estate of Michael Jackson (the “Estate”) owned 25.1%, acquiring approximately 40% of the equity interest in EMI. In July 2018, Sony completed the acquisition of the Estate’s equity interest in Nile, resulting in Sony owning approximately 40% of the equity interest in EMI. In November 2018, Sony completed the acquisition of the remaining approximately 60% equity interest in EMI, resulting in EMI becoming a wholly-owned subsidiary of Sony. In January 2021, Nile changed its name to Sony Music Publishing LLC (“SMP”). SMP encompasses both the former Sony/ATV and EMI.
In April 2013, Sony Olympus Medical Solutions Inc. (“SOMED”), a medical business venture between Sony Group Corporation and Olympus Corporation, was established in Japan. Sony’s stake in SOMED is 51%.
In July 2014, Sony Group Corporation sold its personal computer (“PC”) business operated under the VAIO brand to Japan Industrial Partners, Inc.
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In July 2014, pursuant to a separation of Sony’s businesses into distinct subsidiaries, the television business was split out and began operations as Sony Visual Products Inc.
In October 2015, the video and sound business was split out and began operations as Sony Video & Sound Products Inc. (“SVS”).
In April 2016, the imaging and sensing solutions business was split out and began operations as Sony Semiconductor Solutions Corporation (“SSS”).
In April 2017, the imaging products and solutions business was split out and began operations as Sony Imaging Products & Solutions Inc. (“SIPS”), which completed the sequential separation of Sony’s business units into distinct subsidiaries.
In September 2017, Sony transferred its battery businesses to the Murata Manufacturing Co., Ltd. Group.
In April 2019, Sony Visual Products Inc. and SVS merged to become Sony Home Entertainment & Sound Products Inc. (“SHES”).
In April 2020, Sony established Sony Electronics Corporation, an intermediate holding company encompassing the electronics products and solutions businesses.
In April 2021, in connection with the above-mentioned launch of Sony Group Corporation, Sony Electronics Corporation, SHES, SIPS and Sony Mobile Communications Inc. were merged into one company, which was renamed Sony Corporation. Additionally, certain support functions for the electronics products and solutions businesses and the imaging products and solutions business that had been carried out by Sony Group Corporation were transferred to Sony Corporation and SSS.
In April 2022, due to a restructuring of the segments of the TSE, Sony Group Corporation moved from the First Section to the Prime Market of the TSE.
In July 2022, Sony Interactive Entertainment LLC acquired Bungie, an independent videogame developer in the United States.
In September 2022, Sony Honda Mobility, a joint venture in the mobility field between Sony Group Corporation and Honda, was established in Japan. Sony’s stake in Sony Honda Mobility is 50%.
Sony Group Corporation’s registered office is located at 7-1, Konan 1-chome, Minato-ku, Tokyo 108-0075, Japan, telephone +81-3-6748-2111. Its website is https://www.sony.com/en/.
The agent in the U.S. for purposes of this Item 4 is Sony Corporation of America, 25 Madison Avenue, 26th Floor, New York, NY 10010-8601 (Attn: Office of the General Counsel).
Sony files reports and other information with the U.S. Securities and Exchange Commission (the “SEC”) pursuant to the SEC’s rules and regulations that apply to foreign private issuers. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Sony’s electronic filings are available for viewing on this website, at https://www.sec.gov.
Principal Capital Investments
In the fiscal years ended March 31, 2025 and 2026, Sony’s capital expenditures, consisting of additions to long-lived assets and right-of-use assets, were 829.8 billion yen (*) and 804.9 billion yen, respectively. For a breakdown of principal capital expenditures and divestitures (including interests in other companies), refer to “Item 5. Operating and Financial Review and Prospects.” The funding requirements of such various capital expenditures are expected to be financed by cash provided principally by operating and financing activities or the existing balance of cash and cash equivalents.
In the fiscal year ended March 31, 2026, Sony invested approximately 265.3 billion yen in the I&SS segment, representing additions to long-lived assets. This investment included approximately 246.7 billion yen to increase image sensor production capacity.
In connection with the resolution for the plan regarding the execution of the Partial Spin-off of the Financial Services business, the Financial Services business was classified as a discontinued operation and has been excluded from the reporting segments. Consequently, Sony’s capital expenditures for the fiscal year ended March 31, 2025 have been re-presented into continuing operations to conform to this classification.
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Business Overview
The G&NS segment includes the production and sales of digital software and add-on content, the network services businesses and the manufacture and sales of home gaming products. The Music segment includes the Recorded Music, Music Publishing and Visual Media & Platform businesses. The Pictures segment includes the Motion Pictures, Television Productions and Media Networks businesses. The ET&S segment includes the Imaging business, the Sound business, the Network Services business and the Displays business. The I&SS segment includes the image sensors business. All Other consists of various operating activities, including the disc manufacturing and recording media businesses. Sony’s products and services are generally unique to a single operating segment.
Products and Services
Game & Network Services (G&NS)
Sony Interactive Entertainment LLC undertakes product research, development, design, marketing, sales, production, distribution and customer service for PlayStation® hardware, software, content and network services.
The G&NS segment includes the Digital Software and Add-on Content, Network Services and Hardware and Others categories. Digital Software and Add-on Content includes distribution of software titles and add-on content through the network by Sony Interactive Entertainment; Network Services includes network services relating to game, video and music content; and Hardware and Others includes home gaming consoles, packaged software, game software sold bundled with home gaming consoles, peripheral devices and first-party software for third-party platforms.
Music
Recorded Music:
“Recorded Music” includes the distribution of physical and digital recorded music and revenue derived from artists’ live performances and merchandising. SME, a global entertainment company, excluding Japan, is engaged primarily in the development, production, marketing and distribution of recorded music in all commercial formats and genres. SMEJ is an entertainment company mainly focused on the Japanese market, which includes a Japanese domestic recorded music business that produces recorded music and music videos through contracts with many artists in all music genres.
Music Publishing:
“Music Publishing” includes the management and licensing of the words and music of songs. SMP is a U.S.-based music publishing business that owns, administers and acquires rights to musical compositions, exploiting and marketing these compositions and receiving royalties or fees for their use.
Visual Media & Platform:
“Visual Media & Platform” includes the production and distribution of anime content and game applications, and various service offerings for music and visual products. These businesses are operated primarily by SMEJ.
Pictures
Motion Pictures:
“Motion Pictures” includes the worldwide production, acquisition and distribution of live-action and animated motion pictures. SPE’s motion picture production organizations include Columbia Pictures, Screen Gems, TriStar Pictures, 3000 Pictures, Sony Pictures Animation, Stage 6 Films, AFFIRM Films, Sony Pictures International Productions, and Sony Pictures Classics. SPE also operates Sony Pictures Imageworks, a visual effects and animation unit, and manages a studio facility, Sony Pictures Studios, which includes post-production facilities.
Television Productions:
“Television Productions” includes the worldwide production, acquisition and distribution of programming, including scripted series, unscripted “reality” or “light entertainment,” daytime serials, game shows, animated series, made for television movies and miniseries and other programming.
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Media Networks:
“Media Networks” includes the operation of television networks and direct-to-consumer (“DTC”) streaming services worldwide. SPE’s television networks around the world include Sony Pictures Networks India, which operates television networks in India, and Game Show Network, LLC, which operates a U.S.-based network delivered on cable, satellite and other distribution platforms. Digital networks include Crunchyroll, a streaming service based in North America primarily focused on anime content, and SonyLIV, a general entertainment streaming service in India.
Entertainment, Technology & Services (ET&S)
The ET&S segment includes the Imaging, Sound, Network Services, Displays and Other categories. Imaging includes image and video content creation products and solutions, including interchangeable lens cameras and interchangeable lenses; Sound includes headphones and wireless speakers; Network Services includes internet-related services; Displays includes display products such as LCD and OLED televisions, as well as projectors; Other includes smartphones, home audio products and medical equipment, as well as sports officiating support and content production support services.
Imaging & Sensing Solutions (I&SS)
SSS and its subsidiary Sony Semiconductor Manufacturing Corporation undertake product research, development, design, manufacturing, marketing, sales, production, distribution and customer services primarily for complementary metal oxide semiconductor (“CMOS”) image sensors, in addition to display devices, lasers, large-scale integration systems (LSIs) and other semiconductors. These CMOS image sensors are used in a wide variety of applications, primarily smartphones, as well as other products such as digital cameras and security cameras, factory automation systems and automobiles.
All Other
All Other consists of various operating activities, including the disc manufacturing business outside of Japan, and the recording media and storage media businesses.
Sales and Distribution
G&NS, ET&S and I&SS
In the G&NS segment, PlayStation® hardware and peripheral devices, software and content and online services are marketed and distributed by Sony Interactive Entertainment LLC, Sony Interactive Entertainment Inc. and Sony Interactive Entertainment Europe Ltd. Digital software, including add-on content, is primarily sold via the PlayStation™Store, while software for third-party platforms is sold via third-party distributors. Hardware and physical software are sold both indirectly via third-party distributors as well as directly via Sony Interactive Entertainment’s proprietary DTC website.
Sony’s products and services in the ET&S and I&SS segments are primarily marketed throughout the world under the trademark “Sony.”
In most cases, Sony’s products in the ET&S and I&SS segments are sold to sales subsidiaries of Sony Group Corporation located in or responsible for sales in various countries and territories. These subsidiaries then sell those products to unaffiliated local distributors and dealers or through direct sales, such as through the internet. Sony Corporation brings its mobile products to market through direct and indirect channels, such as third-party cellular network carriers and retailers, as well as through its own website. In some regions, certain products and services are sold directly to local distributors by Sony Group Corporation.
Sales of such products and services are particularly seasonal and vary significantly with the timing of new product introductions and the economic conditions of each country. Sales for the third quarter ending December 31 of each fiscal year are generally higher than other quarters of the same fiscal year mainly in the G&NS and ET&S segments due to demand during the year-end holiday season.
Japan:
Sony Marketing Inc. markets consumer electronics products mainly through retailers. It also markets professional electronics products and services. For electronic components, Sony sells products directly to wholesalers and manufacturers.
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United States:
Sony markets its electronics products and services in these segments through Sony Electronics Inc. and other wholly-owned subsidiaries in the U.S.
Europe:
In Europe, Sony’s products and services in these segments are marketed through sales subsidiaries including Sony Europe B.V., which is headquartered in the United Kingdom and has branches in European countries.
China:
Sony markets products and services in these segments through Sony (China) Limited, Sony Corporation of Hong Kong Limited and other wholly-owned subsidiaries in China.
Asia-Pacific:
In Asia-Pacific, Sony’s products and services in these segments are marketed through sales subsidiaries including Sony India Private Limited, Sony Electronics of Korea Corporation, Sony Taiwan Limited and Sony Electronics Vietnam.
Other Areas:
In overseas areas other than the U.S., Europe, China and Asia-Pacific, Sony’s products and services in these segments are marketed through sales subsidiaries including Sony Brasil Ltda., Sony Middle East & Africa FZE in the United Arab Emirates and Sony de Mexico S.A.de C.V.
SME and SMEJ develop, produce, market, and distribute recorded music in various commercial formats. SME and its affiliates conduct business globally under “Columbia Records,” “Epic Records,” “RCA Records” and other labels, in addition to “The Orchard” and “AWAL,” independent label distribution and indie artist services. SMEJ conducts business in Japan under “Sony Music Records,” “Epic Records Japan,” “SME Records,” “Ki/oon Music,” “Sony Music Associated Records” and other labels. In addition, SME produces, markets and distributes products related to its artists mainly through the merchandising company Ceremony of Roses.
Sony owns and acquires rights to musical compositions, exploits and markets these compositions, receives royalties or fees for their use and conducts its music publishing business in countries other than Japan under the Sony Music Publishing name.
SMEJ creates artwork and produces packaged home entertainment products including music and games. It also organizes various events in Japan through Sony Music Solutions Inc. and its affiliates. In addition, SMEJ produces, markets and distributes anime content and game applications based on anime titles through Aniplex Inc. (“Aniplex”).
SPE generally retains all rights relating to the worldwide distribution of its internally produced motion pictures and television programming, including rights for theatrical exhibition, home entertainment distribution, pay and free television and digital exhibition and other markets. SPE also acquires distribution rights to motion pictures and television programming produced by other companies, and jointly produces and distributes motion pictures and television programming with other studios, television networks and production companies. These rights may be limited to particular geographic regions, specific forms of media or periods of time.
Within the U.S., SPE uses its own distribution service businesses, Sony Pictures Releasing and Sony Pictures Classics, for the U.S. theatrical release of its motion pictures and for the theatrical release of motion pictures acquired from and produced by others.
Outside the U.S., SPE generally distributes and markets motion pictures through one of its Sony Pictures Releasing International subsidiaries or affiliates. In certain countries, however, SPE has joint distribution or sub-distribution arrangements with other studios, or arrangements with independent local distributors or other entities.
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The worldwide home entertainment and television distribution of SPE’s motion pictures and television programming (and product acquired or licensed from others) is handled through SPE’s Sony Pictures Home Entertainment/Television Distribution group. For home entertainment, product is distributed in various home media formats including Digital Distribution. Digital Distribution includes electronic sell-through and video-on-demand distributed on digital platforms, cable networks and direct broadcast satellite (“DBS”) providers. For television, SPE’s library of motion pictures and television programming is licensed to distributors such as broadcast television networks, digital platforms, cable networks and DBS providers. Digital platforms include subscription and advertising supported platforms (including Sony’s PlayStation, Netflix and Amazon Prime Video).
SPE’s television networks and streaming services (including Crunchyroll, primarily in North America, Europe and Latin America, and SonyLIV in India) are distributed through digital platforms, cable, DBS providers and telecommunications companies to viewers around the world. These networks and services generate advertising, subscription and other ancillary revenues.
Sony DADC group offers Ultra HD Blu-ray™, Blu-ray Disc™, DVD and CD media replication services as well as digital and physical supply chain solutions to business customers. Sony Storage Media Corporation sells its storage media products through its own sales forces, as well as through Sony’s sales companies mentioned in the above description of Sales and Distribution for the G&NS, ET&S and I&SS segments.
Sales to External Customers by Geographic Area
The following table shows Sony’s consolidated sales to external customers in each of its major markets for the periods indicated.
Japan
United States
Europe
China
Asia-Pacific
Other Areas
Total
Sources of Supply
Sony procures parts, components and raw materials used in the production of its products on a global basis on the most favorable terms that it can achieve. These items are purchased from various suppliers around the world. Sony has a general policy of maintaining multiple suppliers for important parts and components.
When parts, components and raw materials become scarce, it not only causes production costs to rise but also may affect production. For example, semiconductors, LCD panels and other components, which are used in multiple applications, can influence Sony’s performance when the availability of such parts and components is significantly limited. Additionally, rising energy costs and market prices, and trade-related costs may cause prices of parts, components and raw materials to increase, which may adversely affect Sony’s financial results. Regarding raw materials, the market price of resin, sheet steel and copper, which are widely used in mechanical parts, electronic parts and components, may also fluctuate because of market factors such as the balance of supply and demand, and such fluctuations may impact the cost of those parts and components.
After-Sales Service
Sony provides repair and servicing functions in the areas where its G&NS, ET&S and I&SS products are sold. Sony provides these services through its own online support network, call centers, service centers, factories, authorized independent service centers, authorized servicing dealers and subsidiaries.
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In line with industry practices of these businesses, almost all of Sony’s consumer-use products that are sold in Japan carry a warranty, generally for a period of one year from the date of purchase, covering repairs, free of charge, in the case of a malfunction in the course of ordinary use of the product. Warranties outside of Japan generally provide coverage for various periods of time depending on the product and the area in which it is marketed. In the case of broadcast- and professional-use products, Sony maintains support contracts with customers in addition to warranties.
To further help ensure customer satisfaction, Sony maintains customer information centers in its principal markets and web support information for all markets.
Patents and Licenses
Sony has a number of Japanese and foreign patents relating to its products and services. Sony is licensed to use a number of patents owned by others, covering a wide range of products and services. Certain of these licenses are important to Sony’s business. Sony’s products that employ Blu-ray Disc™ player functionality, including PlayStation®4 and PlayStation®5 (“PS5™”) hardware, are substantially dependent upon patents that relate to technologies specified in the Blu-ray Disc™ specifications and are licensed by Via Licensing Alliance LLC. Sony considers its overall license position beneficial to its operations.
Competition
In each of its principal product lines and services, Sony encounters intense competition throughout the world. Sony believes, however, that in the aggregate it competes successfully and has a major position in all of the principal product lines and services in which it is engaged, although the strength of its position varies with products and markets. Refer to “Risk Factors” in “Item 3. Key Information.”
G&NS, ET&S, I&SS and All Other
Sony believes that its product planning and product design expertise, the high quality of its products, its record of innovative product introductions and product improvements, the user experience it provides and the ecosystem that supports such an experience, its price competitiveness derived from reductions in manufacturing and indirect costs, and its extensive marketing and servicing efforts are important factors in maintaining its competitive position. Continuing to provide high-value added products, services and experiences is a key factor by which Sony aims to differentiate itself in these highly competitive markets. Sony believes that the success of the G&NS businesses is determined by the availability of attractive software titles and related content, downloadable content, network services and peripherals. In the I&SS segment, Sony puts significant effort into keeping Sony’s strong competitive position by investing in R&D and production capacity, while also trying to avoid overinvesting and increasing fixed costs by carefully monitoring customer demand, market trends and demand for end-user products.
Success in the music industry is dependent to a large extent upon the artistic and creative abilities of artists, producers and employees and is subject to the vagaries of public taste. The Music segment’s future competitive position depends on its continuing ability to attract and develop artists and products that can achieve a high degree of public acceptance as well as offer value-added services to its artists and customers. In addition, Sony believes that the success of the Music segment’s anime content and game applications business, Aniplex, is largely dependent on the creative talent of producers and developers, and is also subject to the vagaries of public taste.
SPE faces intense competition from all forms of entertainment and other leisure activities to attract the attention of audiences worldwide. SPE competes with other motion picture studios and production companies to obtain story rights and talent, including writers, actors, directors and producers, which are essential to the success of SPE’s products. SPE competes with other companies, in particular technology companies, who are expanding into the production or distribution of film and television programing. In motion picture production and distribution, SPE faces competition to obtain exhibition and distribution outlets and optimal release dates for its products. In addition, SPE faces competition to acquire motion pictures and television programming from third parties. In television production and distribution, competition arises from the increasing fragmentation of
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audiences among broadcast and cable networks, digital platforms, DBS providers and other outlets both within and outside of the U.S. Furthermore, broadcast networks in the U.S., or their affiliated production companies, continue to produce their own shows internally, and major streaming services in and outside the United States are producing more content themselves or acquiring content from affiliated production companies. This competitive environment may result in fewer opportunities to produce shows for such networks and services, and may contribute to shorter lifespans for ordered shows that do not immediately achieve favorable ratings. SPE’s worldwide television networks compete for viewers with broadcast and cable networks, DBS providers, digital platforms and other forms of entertainment. The number of networks around the world continues to drive competition for advertising and subscription revenues, acquisition of programming, and distribution of SPE’s television networks by cable, DBS providers, digital platforms and other distribution systems.
Government Regulations
Sony’s business activities are subject to various governmental regulations in different countries in which it operates, including regulations relating to: various business/investment approvals; trade affairs, including customs, import and export control; competition and antitrust; anti-bribery; advertising and promotion; intellectual property; broadcasting, consumer and business taxation; foreign exchange controls; economic sanctions; personal information protection; product safety; labor; human rights; conflict; occupational health and safety; environmental; and recycling requirements.
In particular, Sony’s telecommunication businesses in Japan are subject to approvals and oversight from the Ministry of Internal Affairs and Communications, under the Telecommunications Business Act and other regulations related to the internet businesses and communication methods in Japan.
Sustainability Related Regulations Such as Environmental and Human Rights Regulations
Sony monitors, evaluates, and complies with laws and regulations that may affect its global operations and purchasing activities with respect to sustainability, such as environmental, human rights, labor, and occupational health and safety issues. For example, Sony has taken steps to address upcoming regulations or governmental policies related to (i) climate change including carbon disclosure, greenhouse gas (“GHG”) emission reduction, carbon taxes and product energy efficiency; (ii) reporting on material sustainability matters relevant to Sony’s business activities; and (iii) mandatory human rights and environmental due diligence throughout Sony’s value chain.
Also refer to “Risk Factors” in “Item 3. Key Information.”
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Disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012
Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 added Section 13(r) to the Securities Exchange Act of 1934 (the “Exchange Act”), as amended. Section 13(r) requires an issuer to disclose in its annual or quarterly reports, as applicable, whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings relating to Iran or with designated natural persons or entities sanctioned under programs relating to terrorism or the proliferation of weapons of mass destruction. Disclosure is required even where the activities, transactions or dealings are conducted outside the U.S. by non-U.S. affiliates in compliance with applicable law, and whether or not the activities are sanctionable under U.S. law.
Sony is aware that certain transactions during the fiscal year ended March 31, 2026, as described below, may be disclosable pursuant to Section 13(r) of the Exchange Act.
Sony’s representative office in Tehran, Iran, which was established in 1992, has been closed and has been under liquidation processes since before the beginning of the fiscal year ended March 31, 2014. In the course of liquidation, Sony engages in certain incidental transactions (for example, permits, taxes, and similar matters incidental to the wind-down of the office in Iran) with Iranian government-owned entities. No material revenues or profits are associated with these transactions with the Iranian government-owned entities.
Sony is not aware of any other activity, transaction or dealing by Sony Group Corporation or any of its affiliates during the fiscal year ended March 31, 2026 that is disclosable in this report under Section 13(r) of the Exchange Act. As of the date of this report, Sony does not anticipate that any activity, transaction or dealing that may be disclosable will be conducted during the fiscal year ending March 31, 2027, except as described above in connection with the wind-down of its representative office in Iran. Nevertheless, Sony continues to monitor developments in this area as sanctions against Iran continue to evolve, and assess whether and to what extent such sanctions may affect Sony’s business activities, which Sony intends to conduct in accordance with applicable laws and regulations.
Sony believes, and maintains policies and procedures designed to ensure that, its transactions with Iran and elsewhere have been conducted in accordance with applicable economic sanctions laws and regulations and do not involve transactions likely to result in the imposition of sanctions or other penalties on Sony. However, there can be no assurance that Sony’s policies and procedures will be effective, and if the relevant authorities were to impose penalties or sanctions against Sony, the impact of such sanctions could be material.
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Sustainability Disclosure
Sony’s Basic Policy for Sustainability Initiatives
Sony Group Corporation has established the following basic policy on sustainability with the approval of the Board of Directors:
Sony manages diverse businesses with people at the core, and aims for sustainable value creation based on such diversity and mid- to long-term growth in the Sony Group’s corporate value under its Purpose to “fill the world with emotion, through the power of creativity and technology,” and its Corporate Direction of “getting closer to people.” In order to have people connected to each other through emotion, it is necessary to create a society in which everyone can live with peace of mind in a healthy global environment. Sony acts with due consideration of the impact of its business activities on stakeholders, including shareholders, customers, employees, suppliers, business partners, local communities and other organizations as well as the global environment, and focuses on building trust with stakeholders through dialogue. Through innovation and sound business practice, Sony endeavors to enhance its corporate value and contribute to the development of a sustainable society.
(1) Organizational Structure for Sustainability Initiatives and Efforts
<Organizational structure>
Sony Group Corporation has established the Sustainability Department under the supervision of the Senior Executive in charge of Sustainability. The Sustainability Department promotes various sustainability-related initiatives throughout the Sony Group in cooperation with each business unit and operating company (“Business Unit(s)”) and other corporate divisions, including Compliance, Human Resources, Corporate Planning & Control, Finance and Legal (“Relevant Divisions”).
The Senior Executive in charge of Sustainability regularly reviews and assesses risks and engages in detection, communication, evaluation and response for the risk of loss related to sustainability. The Sustainability Department reports to the Board of Directors at least once a quarter on sustainability initiatives and their progress. In addition, as part of reporting on each Business Unit’s mid-range plan, the Board of Directors receives reports from each Business Unit on the sustainability challenges and opportunities relevant to their respective business operations and their efforts in those areas.
Also refer to “Risk Factors” in “Item 3. Key Information” for the risks related to sustainability.
<Sony’s sustainability efforts>
The Sustainability Department, operating under the above structure and the aforementioned “Sony’s Basic Policy for Sustainability Initiatives,” embraces “Inspire a world filled with emotion for this generation and beyond” as Sony’s Sustainability Vision and strives to spread this policy across Sony’s business operations. Through dialogue with stakeholders and analysis of material sustainability topics for the Sony Group (“Material Topics”), the Sustainability Department identifies sustainability issues that need to be addressed by the Group as a whole. Additionally, the Sustainability Department promotes the group-wide sustainability initiatives by formulating relevant Group policies on identified sustainability issues, including a long-term environmental plan, “Road to Zero,” and communicating across the Sony Group by collaborating with the Senior Executives in charge of Sony’s headquarters functions and the Relevant Divisions.
The Business Units consider sustainability issues and opportunities for their respective businesses, and implement sustainability-related initiatives that align with their respective business characteristics. In addition, the Business Units, consulting with the Sustainability Department, have introduced key performance indicators (“Sustainability KPIs”), which measure the Business Units’ sustainability efforts. The Sustainability KPIs are incorporated into the Business Units’ performance evaluations, and the Sustainability Department evaluates the status of achievement of such Sustainability KPIs. Additionally, achievement of the Group Sustainability Evaluation is incorporated into one of the indicators for Senior Executives’ remuneration linked to business results. The Group Sustainability Evaluation is an evaluation of efforts by Senior Executives to enhance the mid- to long-term corporate value and sustainable growth of the Sony Group as a whole, not limited to their respective businesses and organizations, including management succession and investment in human capital, sustainability initiatives related to social value creation and ESG (Environment, Social, Governance), value creation through collaborations among the businesses of the Sony Group, and engagement indicators based on employee surveys.
In the fiscal year ended March 31, 2026, Sony hosted the Sustainability Small Meeting for its investors in order to foster a deeper dialogue with stakeholders regarding sustainability. In addition, a global sustainability
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conference was held, where the Senior Executive in charge of Sustainability, the Senior Executive in charge of Human Resources, and personnel in charge of sustainability from the Business Units came together to confirm and share sustainability initiatives for the Business Units and their progress on the Sustainability KPIs.
For the fiscal year ended March 31, 2026, the Sustainability KPIs included enhancing online safety, reducing the power consumption of Sony’s products, promoting resource conservation in products and packaging and implementing environmental awareness-raising activities using the Group’s content IP.
< Material Topics analysis as a prerequisite for the above efforts>
In order to ensure that Sony’s sustainability initiatives can address changes in the social environment and the expectations of stakeholders from a mid- to long-term perspective, the Sustainability Department, under the supervision of the Senior Executive in charge of Sustainability, analyzes and identifies Material Topics and periodically reviews their importance, and conducted a review of the Material Topics in the fiscal year ended March 31, 2026. Sony defines Material Topics as “important topics related to sustainability that reflect both the influence Sony has on society and the environment, and the influence society and the environment have on Sony, determined with mid- to long-term social change and diverse stakeholder needs in mind.” The Sustainability Department evaluated sustainability issues which are highly relevant to Sony from the perspectives of their importance. Based on such evaluation and following the review by the Senior Executives of Sony Group Corporation, Sony identified the Material Topics upon the CEO’s approval. In addition, the identified Material Topics have been reported to the Board of Directors.
(2) Sustainability Strategies
As a result of the Material Topics analysis conducted in the fiscal year ended March 31, 2026, Sony has identified “Diversity,” “Respect for Human Rights” and “Climate Change” as Material Topics.
<Background for identifying Material Topics>
Diversity: Diversity has been a core value for Sony since its founding and serves as a source of innovation. The interaction among employees with diverse backgrounds has led to the creation of new businesses, and the diversification of business operations has expanded opportunities for employees, enabling both the company and its employees to grow together. Sony believes that, in order to achieve sustainable value creation, it is essential to further advance diversity in both attributes and experiences and to foster leadership and a corporate culture that embrace diverse perspectives. In addition, expectations for corporate initiatives addressing social issues related to diversity are increasing and Sony aims to further promote efforts across the Group to address both internal and external challenges.
Respect for Human Rights: Sony is aware of the potential human rights impacts of its global business activities. Sony recognizes that respecting human rights throughout Sony’s value chain and addressing any potential human rights risks, whether the relationship with Sony’s business operation is direct or indirect, are responsibilities that a diverse range of stakeholders expect of Sony. Considering recent changes in the external environment related to respect for human rights, Sony believes that it is important to further strengthen its efforts in this area.
Climate Change: Sony acknowledges that climate change impacts are becoming more apparent and that the transition towards a decarbonized society is a crucial issue for all companies, and that Sony’s stakeholders have elevated expectations of Sony’s environmental initiatives along two axes: the first being Sony’s “responsibility,” for instance, to reduce its environmental impact, and the second being the “contribution” Sony can make by leveraging its diverse businesses and technologies. Sony’s corporate activities are only possible if the earth, which sustains all life, is healthy. Sony believes that it is important to respond to the environment, including by taking measures against climate change.
<Strategy, targets and major initiatives for Material Topics>
Diversity
Refer to “(3) Human Capital Strategies, Metrics and Targets” for diversity strategies.
Respect for Human Rights
Through its “Sony Group Human Rights Policy,” Sony is committed to respecting the internationally recognized human rights of individuals potentially affected by its business activities throughout its value chain.
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Sony also strives to avoid causing or contributing to adverse human rights impacts that may arise from its operations, products, services and/or business relationships, and is dedicated to taking reasonably necessary actions to help remediate any impacts that may occur.
Sony has established and implemented Group policies for specific areas, such as its “Sony Supply Chain Code of Conduct” which sets forth the code of conduct for Sony’s own manufacturing sites and suppliers of electronics products, with the aim to work towards a responsible supply chain, and its “Sony Group AI Ethics Guidelines,” which guide all Sony officers and employees to utilize AI and/or conduct AI-related R&D in a manner that conforms with Sony’s values and emerging social norms.
Sony conducts human rights due diligence in line with the frameworks set out in the United Nations Guiding Principles on Business and Human Rights (UNGP) issued by the United Nations Human Rights Council and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct. As part of these efforts, Sony conducts human rights risk impact assessments, through which it identifies potential human rights risks by considering the characteristics of each business operation and the value chains important to each Business Unit. Based on the results of the assessments, Sony identifies priority areas for enhancing initiatives throughout the Sony Group. For issues where significant adverse human rights impacts are identified or are of concern in these priority areas, Sony promotes initiatives to prevent or mitigate those impacts for each of these areas. In addition, each Business Unit conducts a human rights risk impact assessment to review the specific human rights risks inherent to each Business Unit and the current status of initiatives addressing these risks. This assessment aims to evaluate the need for improvements or new measures and to reassess the human rights issues that should be prioritized.
Furthermore, Sony has established multiple hotlines for employees and relevant stakeholders to report and seek advice concerning any potential violation of laws, regulations, the “Sony Group Code of Conduct,” the “Sony Supply Chain Code of Conduct” or other internal rules. These hotlines equip Sony to respond quickly and appropriately, while giving full consideration to personal privacy. Sony strictly maintains confidentiality and ensures that reporters are not subject to reprisal for reporting or using these services.
In advancing these initiatives, Sony maintains dialogue with stakeholders, including industry associations, investors and NGOs. This dialogue helps Sony to understand stakeholders’ expectations of the companies and enhance its human rights initiatives.
In the fiscal year ended March 31, 2026, in addition to promoting efforts under priority areas identified in 2020 (Responsible supply chains, Respect for diversity and Responsible development and use of technologies), as a subordinate set of rules under the “Sony Group Human Rights Policy,” Sony formulated the “Sony Group Human Rights Due Diligence Implementation Rules,” which define, among other things, the roles and responsibilities of the Sustainability Department, Relevant Divisions and each Business Unit, as well as specific operational procedures for the continued implementation of human rights due diligence. Based on these rules, Sony established organizational structures for human rights due diligence within each Business Unit. In addition, with the cooperation of external experts, Sony refined analyses of key value chains and relevant stakeholders for each Business Unit and reviewed the human rights issues relevant to each business operation. Based on the results of these efforts, Sony updated the Group’s existing priority areas and identified three new priority areas: “Ensuring the Rights and Safety of People Who Use Sony’s Products, Content, and Services,” “Fostering Ways of Working Centered on the Well-being of People Who Contribute to Sony’s Creativity, both Mentally and Physically” and “Upholding Fair Working Conditions for People in Sony’s Supply Chain.” Sony will continue its efforts under these newly identified priority areas.
Climate Change
Under the “Road to Zero,” a long-term environmental plan established in 2010 that aims to achieve a zero environmental footprint for the entire Sony Group by the year 2050, Sony is promoting environmental impact reduction activities in each of the following four perspectives: climate change, resources, chemical substances, and biodiversity. In May 2022, Sony announced that it had determined to accelerate its environmental impact reduction activities in the climate change area and to push its goal of achieving a net-zero footprint throughout the entire value chain, including Scope 1, 2 and 3, moving the target year from 2050 to 2040. Sony’s net-zero (*1) target for 2040 was approved as the net-zero target for the Science Based Targets initiative (“SBTi”) (*2) in August 2022. In April 2025, Sony Group Corporation established “Green Management 2030,” the Group’s new mid-term environmental targets (*3) effective from the fiscal year ending March 31, 2027 through the fiscal year ending March 31, 2031.
Sony’s net-zero target follows the SBTi Corporate Net-zero Standard below:
reducing Scope 1, 2 and 3 GHG emissions to zero or a residual level consistent with reaching GHG net-zero emissions at the global or sector level in eligible 1.5°C scenarios or sector pathways; and
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neutralizing any residual emissions at the net-zero target date – and any GHG emissions released into the atmosphere thereafter.
Science Based Targets initiative (SBTi) is a global initiative that encourages companies to set science-based targets to reduce their GHG emissions toward the goal of limiting the increase in global average temperature due to climate change to 1.5°C above pre-industrial levels.
Sony is working toward achieving its long-term environmental plan, the “Road to Zero,” by setting mid-term (five-year) environmental targets.
Sony’s interim goals for the above 2040 net-zero target under “Green Management 2030” are as follows:
By the fiscal year ending March 31, 2031, Sony aims to reduce direct and indirect GHG emissions (Scopes 1 and 2) from its own business operations by 60% compared to the fiscal year ended March 31, 2026 and to remove an amount of carbon equivalent to the remaining residual emissions. For other emissions originating from stages such as products, supply chains, and logistics (Scope 3), Sony aims to reduce GHG emissions by 25% compared to the fiscal year ended March 31, 2026, by the fiscal year ending March 31, 2031. By 2040, Sony aims to achieve net-zero emissions in all Scopes.
By the fiscal year ending March 31, 2031, Sony aims to achieve 100% renewable electricity used at its own business sites.
To achieve the targets described in 1 and 2 above, Sony intends to implement the following measures.
Continuous reduction of environmental impact at Sony Group’s own business sites: Acceleration of energy saving, installation of solar power generation equipment, and introduction of renewable energy throughout the Sony Group. Virtual PPA (Power Purchase Agreement) using the FIP (Feed-in-Premium) system in Japan.
Promotion of energy-efficient products: Acceleration of initiatives to reduce annual power consumption of Sony’s products.
Strengthening engagement with partners: Encouragement of business partners engaged in parts, materials and finished product manufacturing to manage their GHG emissions, save energy, and convert to renewable energy.
Contribution to carbon removal/fixation (*4): Exploration of investments in start-ups engaged in carbon removal, and development of an index integrating biodiversity enhancement and carbon fixation associated with augmented ecosystem businesses, such as Synecoculture™ (*5) being rolled out by SynecO, Inc.
Process by which carbon from the atmosphere is converted into organic compounds.
Synecoculture is a trademark of Sony Group Corporation.
(3) Human Capital Strategies, Metrics and Targets
Basic Policy on Human Capital Strategy
To realize Sony’s long-term vision, the “Creative Entertainment Vision,” which is positioned as the core of its current Group management policy, the diversity of its businesses and its people is considered to be of utmost importance. From an environment in which employees with different backgrounds contribute diverse perspectives and ideas, synergies and new businesses are created and, as its businesses diversify, opportunities for employees to play active roles further expand, thereby forming a unique source of Sony’s competitiveness.
In addition to the diversity of its businesses and people, another aspect that Sony has valued since its founding is the spirit of challenge of each individual employee, which is represented by the aspiration of “wanting to pursue what one truly wishes to achieve,” as well as cultivating a free and open culture that nurtures and supports such a spirit, as reflected in its founding prospectus.
Sony was established with its origins in the electronics business and began its semiconductor business through the development of Japan’s first transistor. Thereafter, while entering new business areas through various methods, including joint ventures with foreign companies in music and financial services, acquisitions of foreign companies in motion pictures and joint investments within the Group in the game business, both employees and the company have grown together as employees have taken on new challenges within an increasingly diversified business environment.
In recent years, as the focus of Sony’s management shifts toward entertainment, there have been changes in the business environment, including increased demand for experience and expertise related to the entertainment
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businesses, such as gaming, pictures, music and anime, the expansion and fragmentation of organizations, and an increase in employees with experience outside Sony. Under these circumstances, how to maintain and further evolve an environment in which diverse talent, regardless of business, can leverage their respective expertise and strengths and take on challenges with a cross-functional perspective has become an important issue.
Based on the current management policy and recognition of these issues, Sony has positioned the evolution of the diversity of its people and the maintenance and enhancement of an organizational culture that supports the challenges of individuals as the basic policy of its human capital strategy. In order to further evolve the diversity of its people, which is a core source of Sony’s competitiveness, and to achieve the enhancement of corporate value even under a highly uncertain management environment, Sony regards the spirit of challenge of its employees as a driving force for further growth and promotes, as its most important initiative in human capital strategy, the development of talent and organizations that take on the creation of value beyond existing frameworks.
Desired State of “People” and “Organization”
[People] Individuals who drive transformation
Sony aims to continuously develop individuals who possess the following mindset and capabilities:
Aspiration: having an intrinsic motivation of “wanting to achieve this,” and a strong determination to see it through to completion
Action orientation: a stance of stepping into uncertain areas and not being reluctant to engage with others who hold differing views
Resilience: the ability to treat difficulties and failures as learning opportunities and to adapt them into further growth
[Organization] An environment that accelerates the cycle of challenge
Sony aims to work on the development of a workplace environment that places emphasis on the following elements and supports the challenges of diverse individuals:
Cross-boundary experiences: the provision of opportunities for experiences that transcend expertise, organizations and national borders, including stretch assignments
Respect for diverse perspectives: placing importance on processes in which diverse perspectives intersect, while avoiding uniformity
Psychological safety: fostering a culture that welcomes the attitude of taking on challenges without fear of failure and encourages autonomous trial and error
Structure of Human Capital Strategy: Elements Supporting the Cycle of Challenge
In order to realize the desired state of people and organization, Sony has organized the following elements as the core of its human capital strategy.
Diversity of People as the Foundation of Diversity
The presence of individuals with diverse backgrounds creates a state in which a wide range of perspectives and knowledge coexist within the organization. Sony positions the diversity of the attributes of its people as the foundation that supports the expansion of challenge and is working to secure and further evolve such diversity. Sony’s management team is composed of members who possess diverse attributes, experiences, and expertise, and who assume the responsibility of overseeing the Group as a whole with a holistic perspective.
As part of its commitment to further enhance diversity, Sony aims to achieve or maintain, by the fiscal year ending March 31, 2031, a percentage of 30% or more both for women and for persons of non-Japanese origin*1 among its executives*2 at Sony Group Corporation in Japan. As of March 31, 2026, these figures stood at 23.3%*3 and 36.7%*3, respectively (a 4.5 percentage point*3 and 8.6 percentage point*3 increase, respectively, compared to the previous fiscal year).
With respect to the diversity of employees, approximately half of Sony Group employees are engaged in business operations outside Japan and more than 90% of such employees are locally hired. In addition, as one of the elements that constitute employee diversity, Sony is promoting the advancement of women on a global basis,
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and as March 31, 2026, the ratio of women among all Sony Group employees was 34.4%*3 (the same as in the previous fiscal year*3), and the percentage of women in management positions was 33.0%*3 (a 0.7 percentage point*3 increase compared to the previous fiscal year). On the other hand, in Japan, taking into account the current situation in which the percentage of women in management positions remains lower than that of overseas subsidiaries, Sony has established numerical targets at major subsidiaries in Japan and is strengthening initiatives toward achieving such targets. Sony considers the characteristics of each business segment and the composition of its workforce, and implements measures aligned with the actual conditions of each workplace, thereby promoting gender diversity at the management level.
Individuals of non-Japanese nationality or who were born outside Japan.
Directors, Senior Executives including Corporate Executive Officers, and other officers.
In connection with the execution of the Partial Spin-off of the Financial Services business, the figures for continuing operations as of March 31, 2026 are presented. Year-on-year changes are calculated using figures for continuing operations as of March 31, 2025.
Regarding the employment of persons with disabilities, under the philosophy of one of its founders, Masaru Ibuka, Sony has focused on creating “workplaces that do not offer charity, but rather create an environment that makes it possible for individuals with disabilities to manufacture products that exceed those manufactured by individuals without disabilities.” Sony complies with the laws and norms of each country and region, and as a unified Group, is working to create a workplace environment in which employees can build their careers regardless of whether or not they have a disability. In addition, in recent years, employees with disabilities have contributed to the creation of business value through inclusive design, including through collaboration with product development teams as personnel responsible for accessibility initiatives.
Diversity of Experience that Expands Individual Uniqueness
When diverse individuals, based on their respective interests and strengths, step into unknown areas with intention, non-linear experiences are created. Sony regards “diversity of experience” generated in this manner as an important asset that supports the growth of both individuals and the organization. While “diversity of experience” is emphasized across the organization as a whole, particularly at the executive level of Sony Group Corporation, which leads Group management, Sony considers the accumulation of experiences across businesses as well as across countries and regions to be essential, and continuously monitors the content of such experiences. As of March 31, 2026, 75% of the Senior Executives and Corporate Executives of Sony Group Corporation have experience working at overseas Group companies.
At the same time, Sony believes that, among employees as well, the accumulation of diverse experiences both within and outside the company brings a wide range of knowledge and perspectives to the organization, thereby enhancing the strength of the organization as a whole. One example is the percentage of hires with experience at other companies or in other job categories among total hires at Sony Group Corporation and its consolidated subsidiaries in Japan, which was 28.9%*4 and 31.3%*4 for the fiscal years ended March 31, 2025 and 2026, respectively. Additionally, in overseas operations, the majority of employees have such experience at other companies or in other job categories. In personnel evaluations after joining the Group, no distinction is made based on hiring type and systems and mechanisms are in place to ensure that all employees are able to perform to their full potential.
With regard to supporting growth through cross-boundary experiences within the Group, based on development plans tailored to each individual within each business, Sony intentionally creates combinations of experiences through assignments to stretch roles, transfers that transcend organizational boundaries, and collaboration with employees from other businesses. In addition, through internal job posting systems and the “Career Plus” program (a system that allows employees to devote one to two days per week to work on projects in other departments across organizational boundaries), Sony has established an environment in which employees can, based on their own intentions, take on new roles.
Sony has commenced monitoring the overseas experience of employees at the Sony Group Corporation headquarters level. At present, compared to management-level employees, the percentage of leader-level employees (assistant manager level) with overseas assignment experience is relatively low, and therefore Sony will continue to provide overseas assignments as one of the cross-boundary experiences and opportunities for employee growth.
Furthermore, from the perspective of evaluating whether such diverse experience opportunities are leading to employees’ perception of their own growth, Sony Group Corporation also monitors employees’ perceptions
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regarding “growth opportunities” through employee engagement surveys. The score for “Opportunities for Growth” in the survey*5 conducted in the fiscal year ended March 31, 2026 was 69 points.
In connection with the execution of the Partial Spin-off of the Financial Services business, the figures of Sony Group Corporation and its domestic subsidiaries in continuing operations for the fiscal year ended March 31, 2026 are presented. In connection with this change, the figures for the fiscal year ended March 31, 2025 have also been reclassified and restated.
A score calculated by converting responses on a 5-point scale to the question “Do you have ample opportunities for learning and growth?” into a scale where a rating of 5 equals 100 points, 4 equals 75 points, 3 equals 50 points, 2 equals 25 points and 1 equals 0 points.
Leadership and Corporate Culture that Embraces Diverse Perspectives and Brings Out a Spirit of Challenge
Even when diverse individuals interact and experiences are accumulated, whether a spirit of challenge is demonstrated ultimately depends on leadership and organizational culture. Welcoming perspectives that differ from one’s own, promoting an active exchange of opinions, and elevating such differing perspectives into new sources of organizational strength constitute the “leadership that embraces diverse perspectives” that is expected of Sony’s leaders.
At the core of such leadership lies dialogue. By exercising emotional intelligence quotient (“EQ”) leadership, which is based on understanding emotions and attentive listening, and by promoting dialogue that engages with the intrinsic motivation of each individual, Sony seeks to ensure psychological safety and to foster an organizational culture in which individuals are able to take on challenges without fear of failure. For example, Sony Group Corporation has started to incorporate EQ leadership into the curriculum of its training programs for newly appointed managers from the fiscal year ended March 31, 2026.
In addition, Sony believes that it is also important for senior management to communicate their thinking directly to employees and to continue creating opportunities for employees to internalize such thinking as their own, as this contributes to the maintenance and enhancement of its organizational culture. In the fiscal year ended March 31, 2026, Sony Group Corporation held lectures by its executives on “leadership that inspires people,” targeting all employees across the Group, and also conducted roundtable discussions that provide opportunities for Group executives and employees who continue to take on challenges in their respective areas of expertise to directly exchange views.
Management Structure that Connects Individual Challenges and Organizational Growth to the Future
Sony has been working to evolve its management structure in order to carry forward the cycle of challenges into the future and to enhance corporate value over the mid- to long-term. At present, through collaboration with each business, Sony is connecting diverse individuals who are driving transformation to be the forefront of change with senior management, which enhances the effectiveness of succession planning. Specifically, as each business forms and manages a pool of core talent, the management team of the Group headquarters also maintains a cross-organizational understanding of such talent and is proceeding with the examination of a framework to appoint and develop such talent to senior management roles.
Furthermore, in order to develop management talent capable of leading an organization such as Sony, which operates diverse businesses, the commitment of a diverse current management team to the development of the next generation of leaders beyond the boundaries of their respective businesses as well as countries and regions is indispensable. Through the “Sony University,” Sony provides employees who gather from across businesses as well as countries and regions with perspectives and a broader field of vision with respect to Group management, through lectures, group discussions, and a dialogue with senior management. Through the “Sony Cross-Mentoring Program,” by enabling senior management from different businesses and next-generation management talent to establish mentor–mentee relationships, Sony provides opportunities for developing a deeper understanding of new fields beyond one’s own business, gaining insights and learning that contribute to individual development plans, and expanding networks.
Together with a management team that possesses diverse and extensive experience, Sony aims to carry forward the foundation in which new challenges continuously emerge for the next generation.
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Organizational Structure
The following table sets forth the significant subsidiaries owned, directly or indirectly, by Sony Group Corporation.
Name of company
Sony Interactive Entertainment Inc.
Sony Music Entertainment (Japan) Inc.
Sony Corporation
Sony Global Manufacturing & Operations Corporation
Sony Network Communications Inc.
Sony Marketing Inc.
Sony Semiconductor Solutions Corporation
Sony Semiconductor Manufacturing Corporation
Sony Semiconductor Energy Management Corporation
Sony Storage Media Corporation
Sony Global Solutions Inc.
Sony Corporation of America
Sony Interactive Entertainment LLC
Sony Music Entertainment
Sony Music Publishing LLC
Sony Pictures Entertainment Inc.
Columbia Pictures Industries, Inc.
CPT Holdings, Inc.
Sony Electronics Inc.
Sony Capital Corporation
Sony Interactive Entertainment Europe Ltd.
Sony Europe B.V.
Sony Global Treasury Services Plc
Sony Overseas Holding B.V.
Sony (China) Limited
Sony EMCS (Malaysia) Sdn. Bhd.
Sony Electronics (Singapore) Pte. Ltd.
Sony Device Technology (Thailand) Co., Ltd.
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Property, Plant and Equipment
Sony has a number of offices, plants and warehouses throughout the world. Most of the buildings and land in/on which such offices, plants and warehouses are located are owned by Sony.
The status of major property, plant and equipment as of March 31, 2026 is as follows:
Facility or
Subsidiary Name
(Primary Location)
Number of
employees*2
Land
(Area(thousandsquaremeters))
Machinery,equipmentand other
assets* 1
In Japan (Sony Group Corporation*3):
Headquarters
(Minato-ku, Tokyo)
(0
)
(279
In Japan (Subsidiaries):
Sony Interactive Entertainment Inc.*5
(—
Sony Network Communications Inc.*5
(Shinagawa-ku, Tokyo)
(Kohda Site, etc.)
(386
(Atsugi-shi, Kanagawa)
(Nagasaki TEC, etc.)
(Kikuchi-gun, Kumamoto)
(1,003
Sony Music Entertainment (Japan) Inc.*5
(Chiyoda-ku, Tokyo)
(320
Sony Corporation of America*5
(New York, United States)
ET&S,
I&SS
Production facilities for electronic products, etc.
(4
(272
Sony Interactive Entertainment LLC*5
(California, United States)
Sony Interactive Entertainment Europe Ltd.*5
(London, United Kingdom)
Sony Europe B.V.*5
(Surrey, United Kingdom)
(45
(Bangkadi, Thailand)
(132
Sony Pictures Entertainment Inc.*5
(Delaware, United States)
(318
*1 “Machinery, equipment and other assets” represents machinery, equipment and other tangible fixed assets, as well as content assets and other intangible assets.
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*2 Numbers of employees of subsidiaries are rounded to the nearest hundred.
*3 Includes facilities leased from subsidiaries in Japan. In addition to the listed facilities, Sony Group Corporation leases a portion of its land, buildings and structures to subsidiaries and affiliates in Japan. Furthermore, Sony Group Corporation subleases its right-of-use assets mainly to subsidiaries and affiliates in Japan.
*4 “Others” primarily includes Sony City Osaki and Atsugi TEC.
*5 Figures for Sony Interactive Entertainment Inc., Sony Network Communications Inc., Sony Music Entertainment (Japan) Inc., Sony Corporation of America, Sony Interactive Entertainment LLC, Sony Interactive Entertainment Europe Ltd., Sony Europe B.V. and Sony Pictures Entertainment Inc. are consolidated financial figures, which include their subsidiaries’ figures.
Unresolved Staff Comments
None
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Operating and Financial Review and Prospects
The following discussion covers the fiscal years ended March 31, 2025 and 2026. For the discussion covering the fiscal year ended March 31, 2024, refer to “Item 5. Operating and Financial Review and Prospects” of Sony’s Form 20-F for the fiscal year ended March 31, 2025 filed with the SEC on June 20, 2025.
Operating Results
Consolidated Financial Results
Sales
Operating income
Income before income taxes
Net income attributable to Sony Group Corporation’s stockholders
* The above financial results represent the results only for continuing operations. On a consolidated basis including the discontinued operation, net loss attributable to Sony Group Corporation’s stockholders for the fiscal year ended March 31, 2026 was 326.9 billion yen. (Income of 1 trillion 141.6 billion yen in the fiscal year ended March 31, 2025.)
Results for the fiscal year ended March 31, 2026 are as follows (“(+)” represents positive contributing factors while “(–)” represents negative contributing factors):
Sales: 12 trillion 479.6 billion yen (444.7 billion yen increase compared to the previous fiscal year (“year-on-year”))
Increases in sales in the I&SS and Music segments
A further breakdown of sales figures is presented under “Operating Performance by Business Segment” below.
The calculations of all ratios below that pertain to reportable segments include intersegment transactions.
Cost of Sales: 8 trillion 635.2 billion yen (130.4 billion yen increase year-on-year)
The ratio of cost of sales to sales improved year-on-year from 70.7% to 69.2%.
R&D costs (all R&D costs are included within cost of sales): 762.0 billion yen (27.4 billion yen increase year-on-year)
The ratio of R&D costs to sales remained unchanged from the fiscal year ended March 31, 2025 at 6.1%. For further details, refer to “Research and Development” in Item 5.C.
Selling, General and Administrative Expenses: 2 trillion 298.6 billion yen (41.8 billion yen increase year-on-year)
The ratio of SGA expenses to sales improved year-on-year from 18.8% to 18.4%.
Other Operating (Income) Expense, net: Expense of 34.1 billion yen (Income of 11.2 billion yen in the fiscal year ended March 31, 2025)
Recording of impairment losses against Bungie’s intangible and other assets: 120.1 billion yen (G&NS segment)
Realization of unrealized gains on land transferred by Sony Group Corporation to Sony Life in past fiscal years, in connection with the execution of the Partial Spin-off of the Financial Services business: 43.9 billion yen (Corporate and elimination)
Recording of remeasurement gain from the acquisition of additional equity interest in Peanuts Holdings: 34.7 billion yen (Music segment)
Refer to Note 23 of the consolidated financial statements.
Share of profit (loss) of investments accounted for using the equity method: Loss of 64.2 billion yen (Loss of 7.9 billion yen in the fiscal year ended March 31, 2025)
Recording of an additional share of loss of investments accounted for using the equity method in All Other, resulting from the discontinuation of the launch of Sony Honda Mobility’s electric vehicle models: 44.9 billion yen
Operating Income: 1 trillion 447.5 billion yen (170.9 billion yen increase year-on-year)
Increases in operating income in the I&SS and Music segments
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Financial Income: 76.0 billion yen (63.0 billion yen decrease year-on-year)
Financial Expenses: 101.2 billion yen (28.7 billion yen increase year-on-year)
Financial Income and Expenses, net: Expenses of 25.1 billion yen (Income of 66.6 billion yen in the fiscal year ended March 31, 2025)
Decrease in unrealized gains mainly on Sony’s shares of Spotify Technology S.A.
Income before Income Taxes: 1 trillion 422.4 billion yen (79.2 billion yen increase year-on-year)
Income Taxes: 367.1 billion yen (109.6 billion yen increase year-on-year)
Effective Tax Rate: 25.8% (19.2% in the fiscal year ended March 31, 2025)
The year-on-year change in the tax rate was mainly due to the impact of the following factors:
Absence of decrease in tax expense from the repayment of capital from a subsidiary in the fiscal year ended March 31, 2025 (48.4 billion yen)
Absence of decrease in tax expense from the dissolution of a subsidiary in the fiscal year ended March 31, 2025 (35.3 billion yen)
Refer to Note 25 of the consolidated financial statements.
Net Income Attributable to Noncontrolling Interests: 24.4 billion yen (6.1 billion yen increase year-on-year)
Net Income Attributable to Sony Group Corporation’s Stockholders for continuing operations: 1 trillion 30.9 billion yen (36.5 billion yen decrease year-on-year)
Basic net income per share attributable to Sony Group Corporation’s stockholders for continuing operations: 172.51 yen (176.45 yen for the fiscal year ended March 31, 2025)
Diluted net income per share attributable to Sony Group Corporation’s stockholders for continuing operations: 171.44 yen (175.71 yen for the fiscal year ended March 31, 2025)
Sony Group Corporation conducted a five-for-one stock split of its common stock effective October 1, 2024, with a record date of September 30, 2024. The above figures for basic net income per share and diluted net income per share are calculated based on the assumption that the stock split was conducted at the beginning of the fiscal year ended March 31, 2024. Refer to Note 26 of the consolidated financial statements.
Operating Performance by Business Segment
The following discussion is based on segment information. Sales in each business segment represents sales recorded before intersegment transactions are eliminated. Operating income (loss) in each business segment represents operating income (loss) reported before intersegment transactions are eliminated and excludes unallocated corporate expenses. Refer to Note 4 of the consolidated financial statements.
Key Financial Figures
Sales to external customers by product category
Digital Software and Add-on Content
Network Services
Hardware & Others
Sales to external customers
Intersegment sales
G&NS segment total sales
G&NS segment operating income
The operating performance for the G&NS segment for the fiscal year ended March 31, 2026 is as follows:
Sales: 4 trillion 685.7 billion yen, essentially flat year-on-year (Impact of foreign exchange rates: +87.3 billion yen)
Impact of foreign exchange rates
Increase in sales from network services
Increase in sales of non-first-party game software titles
Decrease in sales of hardware due to a decrease in unit sales
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Operating income: 463.3 billion yen, a 48.4 billion yen increase year-on-year (Impact of foreign exchange rates: +54.3 billion yen)
Impact of increase in sales from network services
Positive impact of foreign exchange rates
Recording of impairment losses against Bungie’s intangible and other assets (120.1 billion yen)
Business Environment and Strategy
The operating performance of the G&NS segment for the fiscal year ended March 31, 2026 reflected steady growth in revenues from network services and game software sales, benefitting from the expanded installed base of PS5, with operating income reaching a record high for the segment. In this environment, Sony aims to achieve sustainable business growth by seeking higher revenue and profits from PlayStation®Plus (“PS Plus”), maximizing average revenue per user on the PlayStation Store, expanding sales of first-party game software, and strengthening control over business costs and supply chain management. In hardware, although Sony expects to be affected by the impact of increased prices and supply shortages of memory semiconductors, it plans to manage the impact on profitability by flexibly adjusting plans for, among other things, unit sales and promotions. In Network Services, Sony is focused on driving profitable growth of PS Plus by increasing user engagement and continuously improving its service proposition and content, as well as inviting users to shift to higher tiers. In non-first-party game software, in addition to maintaining and strengthening relationships with third-party studios in order to continue to benefit from the stable revenue contribution of major franchise titles, Sony plans to continue its efforts to support creators in order to promote the development of new hit titles. Regarding Sony’s first-party game software, Sony aims to create a stable base of revenue through consistent, annual releases of single-player games, which have traditionally been its core strength, while also building a portfolio of live service games. In addition, Sony is utilizing AI to unleash the creativity of studios and further enhance the PlayStation experience. Within the studio business, Sony aims to improve productivity through the use of AI powered tools, allowing development teams to reinvest their time into building richer worlds and gameplay experiences. In the platform business, Sony is working to leverage AI to route transactions more efficiently, and to personalize and recommend content for individual users in the PlayStation Store. Sony also aims to push visual fidelity forward and deliver higher quality gameplay experiences through continued investments in AI and machine learning. Additionally, Sony plans to continue its efforts to create films and television shows based on PlayStation game IP in order to further expand the reach and monetization of its IP.
The Music segment results include the yen-based results of SMEJ and the yen-translated results of SME and SMP, which aggregate the results of their worldwide subsidiaries on a U.S. dollar basis.
Recorded Music — Streaming
Recorded Music — Others
Music Publishing
Visual Media & Platform
Music segment total sales
Music segment operating income
The operating performance for the Music segment for the fiscal year ended March 31, 2026 is as follows:
Sales: 2 trillion 120.1 billion yen, a 277.5 billion yen increase year-on-year (Impact of foreign exchange rates: –16.9 billion yen)
Higher revenues from streaming services in Recorded Music and Music Publishing
Higher revenues from live events and merchandising in Recorded Music
Higher revenues in Visual Media & Platform
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Contributions from Demon Slayer: Kimetsu no Yaiba Infinity Castle and Kokuho released in the fiscal year ended March 31, 2026
Higher revenues from game applications, mainly for mobile
Operating income: 447.0 billion yen, an 89.7 billion yen increase year-on-year
Impact of increase in sales
Recording of remeasurement gain from the acquisition of additional equity interest in Peanuts Holdings (34.7 billion yen)
As the music streaming market continued to expand, the operating performance of the Music segment for the fiscal year ended March 31, 2026 reflected steady growth in revenues from streaming services, resulting from Sony’s past proactive efforts to enhance discovery and development of outstanding artists and songwriters, as well as from Sony’s investments in music catalogs. Additionally, the global hit film Demon Slayer: Kimetsu no Yaiba Infinity Castle in Visual Media & Platform also contributed to the sales growth of the Music segment. In this environment, in the global music business, Sony aims to achieve business growth both in its music business as a whole and in emerging markets with high growth such as Latin America, India and other Asian countries, while maintaining strong relationships with digital streaming platforms. In order to achieve this growth, Sony is striving to continuously explore strategic investment opportunities in high-quality music catalogs to expand revenue opportunities, discover and develop artists and songwriters, build and strengthen relationships with local independent labels and artists, and grow revenues from independent label distribution and indie artist services such as The Orchard and AWAL. Sony is also focusing on expanding businesses aimed at fans of artists and content, such as live events and merchandising. In addition, Sony aims to continuously expand utilization of its IP through biopics, documentaries and live events involving Sony Music artists. Sony intends to continue working with various partners to explore the use of cutting-edge technologies such as AI in ways that create innovative new music content and realize new ideas, opening and expanding new revenue channels through licensing agreements, while also protecting the rights of artists and pursuing transparency with consumers regarding AI-generated music. In the music business in Japan, Sony aims to further expand efforts to bring Japanese artists, such as YOASOBI and Kenshi Yonezu, to the global market. In Visual Media & Platform, Sony aims to further grow its anime business by strengthening its planning and production capabilities to develop and acquire IP with high potential and by enhancing its ability to expand core IP, including expansion to the global market. In March 2026, Sony acquired an additional equity interest in Peanuts Holdings, which owns the rights and manages the business of “PEANUTS” IP. Sony aims to further grow this business and further increase the value of the brand over the long term by leveraging the strengths of the Sony Group. Additionally, in its game business, Sony is focusing on creating new hit titles while maximizing the lifetime value of existing titles.
The Pictures segment results are the yen-translated results of SPE, which aggregates the results of its worldwide subsidiaries on a U.S. dollar basis. Management analyzes the results of SPE in U.S. dollars, so discussion of certain portions of its results is specified as being on “a U.S. dollar basis.”
Motion Pictures
Television Productions
Media Networks
Pictures segment total sales
Pictures segment operating income
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The operating performance for the Pictures segment for the fiscal year ended March 31, 2026 is as follows (the following analysis is on a U.S. dollar basis):
Sales: 1 trillion 499.3 billion yen, essentially flat year-on-year (U.S. dollar basis: an 18 million increase year-on-year)
Higher revenues from Crunchyroll mainly due to paid subscriber growth and the worldwide theatrical distribution of Demon Slayer: Kimetsu no Yaiba Infinity Castle*
Increase in series deliveries in Television Productions
Lower revenues from theatrical releases in the current fiscal year in Motion Pictures
* Crunchyroll and Sony Pictures distributed the film theatrically worldwide, excluding Japan and select Asian territories.
Operating income: 104.9 billion yen, a 12.4 billion-yen decrease year-on-year (U.S. dollar basis: an 87 million decrease year-on-year)
Impairment losses against assets associated with Pixomondo Holdings, Inc. and its subsidiaries, which operate VFX and virtual production businesses, and related shutdown costs (27.1 billion yen)
Impact of decrease in sales for Motion Pictures
Higher contribution from catalog product in Motion Pictures
Impact of higher revenues from Crunchyroll
The operating performance of the Pictures segment for the fiscal year ended March 31, 2026 reflected an expansion of the contribution to the operating performance of the DTC anime platform Crunchyroll, mainly due to paid subscriber growth and the worldwide theatrical distribution of Demon Slayer: Kimetsu no Yaiba Infinity Castle, despite lower revenues from theatrical releases in the current fiscal year in Motion Pictures. In this environment, Sony aims to continue to maximize the long-term value of its IP by leveraging its strengths as an independent content supplier with the ability to provide content to any distribution platform. In Motion Pictures, in addition to continuously emphasizing the theatrical release of films, Sony aims to strengthen its relationships with talent and creators through its global marketing and theatrical distribution capabilities. In the fiscal year ending March 31, 2027, Sony anticipates the theatrical releases of strong IP lineups, including Spider-Man: Brand New Day and Jumanji: Open World. In Television Productions, Sony will strive to continue to strengthen its production capabilities in a variety of genres and to expand its franchises through the development of spin-offs. In Media Networks, Sony aims to further strengthen its DTC services, including Crunchyroll and SonyLIV. In particular, Crunchyroll is an important growth pillar for the Pictures segment and is striving to reach a broader audience through expanding touchpoints with fans, such as e-commerce for anime merchandise, anime events, mobile games, and a manga application, in addition to its streaming service. Additionally, as a hub for synergistic, cross-business collaborations, the Pictures segment aims to contribute to realizing Sony’s “Creative Entertainment Vision.” For example, Sony plans to further expand its films and television shows based on PlayStation game IP as well as cross-business collaborations in anime, such as an anime series adaptation of Ghost of Tsushima to be produced in collaboration with Aniplex, SMEJ and PlayStation Productions, and film adaptations of Bloodborne and Helldivers to be produced in collaboration with SPE and PlayStation Productions.
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Imaging
Sound
Displays
Other
ET&S segment total sales
ET&S segment operating income
The operating performance for the ET&S segment for the fiscal year ended March 31, 2026 is as follows:
Sales: 2 trillion 260.5 billion yen, a 148.7 billion yen decrease year-on-year (Impact of foreign exchange rates: +7.1 billion yen)
Decrease in unit sales in Displays
Operating income: 158.6 billion yen, a 32.3 billion yen decrease year-on-year (Impact of foreign exchange rates: +5.3 billion yen)
Impact of decrease in sales in Displays
Reductions in operating expenses
In the fiscal year ended March 31, 2026, amid a challenging business environment impacted by intensified competition in Displays and additional U.S. tariffs, the operating performance of the ET&S segment reflected the results of efforts to prioritize profitability by responding flexibly to such changes in the environment through measures such as disciplined inventory management and fixed cost reduction initiatives. In this environment, Sony is steadily expanding its businesses centered around creation, such as the highly profitable imaging business, and promoting mid-term business transformation with the goals of “enhancing corporate value” and “generating cash flow” under its business direction of “establishing a business structure for maintaining profitability and growth strategy.” Sony has divided the businesses of this segment into three business areas – “Area Expansion,” “Business Growth/Generation” and “Structural Reform/Transformation.” In the Imaging and Sound businesses, positioned as the “Area Expansion” area, Sony aims to strengthen the stable earnings base, expand business domains, and achieve further growth. Specifically, in the Imaging business, Sony aims to leverage its competitive advantages based on its technological and product capabilities to expand its business domain and build an ecosystem. Similarly, in the Sound business, Sony aims to build an end-to-end ecosystem that encompasses sound production and consumer products. In business areas such as solutions in the Imaging business and creation in the Sound business, Sony will strive to enhance creator expression by adding the value of software based on technologies cultivated in its existing businesses, aiming to expand its operations through the diversification of creation and to broaden the creator base. In areas such as the sports and new content creation businesses, positioned as the “Business Growth/Generation” area, Sony intends to accelerate the evolution of its business models and create new businesses. Specifically, in the sports business, Sony aims to evolve its business from officiating support to the creation of new entertainment utilizing data enhancement technology. In the new content creation business, Sony aims to leverage technologies such as spatial capturing and creative tools to foster the emergence of a new creation industry. In the Display business, positioned as the “Structural Reform/Transformation” area, Sony aims to accelerate structural reform to reduce volatility and control risk. Sony Corporation signed definitive agreements for a strategic partnership in the home entertainment field with TCL in March 2026. Going forward, Sony aims to further strengthen the competitiveness of this business and achieve sustainable business growth by bringing together its high-quality picture and audio technology, brand value and operational management expertise, while utilizing TCL’s advanced display technology, end-to-end cost efficiency, and vertical supply chain strength. Sony plans to mitigate the impact of the recent increases in price and shortages of memory semiconductors in this segment through procurement, design and sales actions in various regions. If memory semiconductor prices deviate further going forward, Sony aims to maintain profitability by flexibly adjusting its sales strategy with an eye on foreign exchange rates and the competitive environment.
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I&SS segment total sales
I&SS segment operating income
The operating performance for the I&SS segment for the fiscal year ended March 31, 2026 is as follows:
Sales: 2 trillion 151.5 billion yen, a 352.5 billion yen increase year-on-year (Impact of foreign exchange rates: -15.0 billion yen)
Increase in sales of image sensors for mobile products
Improvement in product mix
Increase in unit sales
Operating income: 357.3 billion yen, a 96.2 billion yen increase year-on-year (Impact of foreign exchange rates: -12.5 billion yen)
Recording of restructuring costs
Loss associated with the sale of equity interest in Sony Semiconductor Israel Ltd. (19.9 billion yen)
Impairment losses against a portion of the display device business’s long-lived assets (16.5 billion yen)
The operating performance of the I&SS segment in the fiscal year ended March 31, 2026 reflected the continued trend toward larger size, higher image quality and higher performance image sensors for mobile products, primarily in high-end smartphones, as well as higher unit sales of mobile sensors, which led to record highs in both sales and operating income, despite the recording of one-time restructuring costs. In this environment, Sony is working to restructure its management foundation for growth with profitability to further strengthen its number one position in image sensors worldwide, despite increasing uncertainties in the business environment. Sony has divided the business of the I&SS segment into three business areas – the growth-driving business area, the profitable business area and the strategic business area – and operates each in accordance with the strategic direction of each business area. In the image sensor business for mobile products, which has been positioned as the growth-driving business area, Sony plans to continue to enhance its technological capabilities and invest in growth to win out over the competition. In the fiscal year ending March 31, 2027, although Sony is taking a cautious view of the growth of the sensor market due to the company’s view that the trend toward larger-sized sensors for smartphones will moderate and that the uncertainty regarding the impact of market conditions for memory semiconductors will remain, Sony expects that the trend toward larger-sized sensors for smartphones will remain unchanged in the mid- to long-term. Looking ahead, in addition to the trend toward larger size, Sony aims to achieve future business growth by realizing further high-value add in image sensors and contributing to various creations through utilizing video by pursuing technological innovations through higher density. Specifically, Sony aims to increase density in the horizontal plane through process node adaptation, which refers to the development of advanced process technologies, and increase density in the vertical plane through multi-layered stacking technology. In the image sensor businesses for cameras and industrial and social infrastructure, which have been positioned as the profitable business area, Sony aims to maintain high competitiveness and stable revenue contributions. Regarding the strategic business area, which includes the image sensor business for automotive and the semiconductor laser business, among others, Sony plans to operate these businesses with discipline while balancing business expansion and profitability to establish these businesses as pillars for future growth. The image sensor business for automotive has been growing steadily and Sony’s market share by revenue has been expanding as expected. As the market expands, Sony will strive to further enhance its comprehensive strength in sensors and continue to build and strengthen engagement with global OEMs and partners with the aim of increasing revenue. Sony is also making efforts to raise the profitability of this segment by addressing low-profitability businesses. Under these circumstances, Sony has not changed its strategy of carefully selecting investments and reducing capital expenditures for the I&SS segment in the mid-range plan for the three fiscal years started on April 1, 2024 and ending on March 31, 2027 (the “fifth
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mid-range plan”) compared to the fourth mid-range plan. Additionally, in May 2026, SSS and Taiwan Semiconductor Manufacturing Company Limited (“TSMC”) entered into a non-binding memorandum of understanding to pursue a strategic partnership for the development and manufacturing of next-generation image sensors. This partnership aims to significantly enhance the future technological competitiveness of image sensors, including through increased density, by combining the advanced design expertise of Sony and the process and manufacturing technologies of TSMC, and also seeks to explore and address emerging opportunities in physical AI applications, such as automotive and robotics, paving the way for future innovations and expanded technological advancements. From a financial perspective, Sony believes that this partnership will improve the cash flow, reduce invested capital, and improve profitability of the I&SS segment by lowering investment in production facilities and mitigating equipment procurement costs.
The operating performance for All Other for the fiscal year ended March 31, 2026 is as follows:
Sales: 89.1 billion yen, a 7.3 billion yen decrease year-on-year
Operating income (loss): Loss of 74.6 billion yen, 56.7 billion yen deterioration year-on-year
Recording of an additional share of loss of investments accounted for using the equity method, resulting from the discontinuation of the launch of Sony Honda Mobility’s electric vehicle models (44.9 billion yen)
Foreign Exchange Fluctuations and Risk Hedging
During the fiscal year ended March 31, 2026, the average rates of the yen were 150.7 yen against the U.S. dollar and 174.7 yen against the euro, which were 1.8 yen stronger and 11.0 yen weaker, respectively, than the fiscal year ended March 31, 2025.
For the fiscal year ended March 31, 2026, sales from continuing operations increased 444.7 billion yen (4%) year-on-year to 12 trillion 479.6 billion yen. On a constant currency basis, sales increased approximately 3% year-on-year. For further details about the impact of foreign exchange rate fluctuations on sales and operating income, refer to “Note: Sales on a Constant Currency Basis and the Impact of Foreign Exchange Rate Fluctuations” below.
During the fiscal year ended March 31, 2026, Sony estimated that a one-yen appreciation against the U.S. dollar would have decreased sales in the G&NS, ET&S and I&SS segments by approximately 33.0 billion yen, with a corresponding decrease in operating income of approximately 2.5 billion yen. A one-yen appreciation against the euro was estimated to decrease sales in these segments by approximately 11.4 billion yen, with a corresponding decrease in operating income of approximately 6.3 billion yen. For more details, refer to “Risk Factors” in “Item 3. Key Information.”
Sony’s consolidated operating results are subject to foreign currency rate fluctuations primarily due to different currency composition of revenue and costs. In the G&NS segment, a significant proportion of costs is incurred in U.S. dollars, but sales are recorded in Japanese yen, U.S. dollars or euros. As a result, the yen appreciation against the U.S. dollar has a positive impact on operating income while the yen appreciation against the euro has a negative impact. In the ET&S segment, yen appreciation against the U.S. dollar has a positive impact on operating income, mainly due to a high proportion of manufacturing and other costs for certain key products being incurred in U.S. dollars. Meanwhile, a large portion of sales for certain key products is in emerging markets, resulting in yen appreciation against the currencies of emerging markets having a negative impact on operating profit in the ET&S segment. In the I&SS segment, a significant proportion of sales contracts are denominated in U.S. dollars, but manufacturing operations are located in Japan, and, therefore, yen appreciation against the U.S. dollar has a significantly negative impact on operating income.
In order to reduce the risk caused by foreign exchange rate fluctuations, Sony employs derivatives, including foreign exchange forward contracts and foreign currency option contracts, in accordance with a consistent risk management strategy. Such derivatives are used primarily to mitigate the effect of foreign currency exchange rate fluctuations on cash flows generated or anticipated by Sony’s transactions and accounts receivable and payable denominated in foreign currencies.
Sony Global Treasury Services Plc (“SGTS”) in the U.K. provides integrated treasury services for Sony Group Corporation, its subsidiaries, and affiliated companies. Sony’s policy is that Sony Group Corporation and all subsidiaries with foreign exchange exposures should enter into commitments with SGTS to hedge their
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exposures. Sony Group Corporation and most of its subsidiaries utilize SGTS for this purpose. Sony’s policy of concentrating its foreign exchange exposures means that SGTS and Sony Group Corporation hedge most of the net foreign exchange exposure within the Sony group. Sony has a policy on the use of derivatives whereby, in principle, SGTS should centrally deal with and manage derivatives with financial institutions for risk management purposes. SGTS enters into foreign exchange transactions with creditworthy third-party financial institutions. Most of these transactions are entered into to address projected exposures before the actual export and import transactions take place. In general, SGTS hedges the projected exposures for a period of the current month or one month before the actual transactions take place. Sony enters into foreign exchange transactions with financial institutions primarily for hedging purposes and does not use these derivative financial instruments for trading or speculative purposes.
Changes in the fair value of derivatives designated as cash flow hedges are initially recorded in accumulated other comprehensive income and reclassified into earnings when the hedged transaction affects earnings. Foreign exchange forward contracts, foreign currency option contracts and other derivatives that do not qualify as hedges are marked-to-market with changes in value recognized in financial income and expenses. The net fair value of all the foreign exchange derivative contracts as of March 31, 2025 and 2026 was a liability of 0.5 billion yen and 7.6 billion yen, respectively. Refer to Note 15 of the consolidated financial statements.
Note:
Sales on a Constant Currency Basis and the Impact of Foreign Exchange Rate Fluctuations
The descriptions of sales on a constant currency basis reflect sales calculated by applying the yen’s monthly average exchange rates from the previous fiscal year to local currency-denominated monthly sales in the current fiscal year. For SME and SMP in the Music segment, and in the Pictures segment, the constant currency amounts are calculated by applying the monthly average U.S. dollar / yen exchange rates after aggregation on a U.S. dollar basis.
Results for the Pictures segment are described on a U.S. dollar basis as the Pictures segment reflects the operations of SPE, a U.S.-based operation that aggregates the results of its worldwide subsidiaries in U.S. dollars.
The impact of foreign exchange rate fluctuations on sales is calculated by applying the change in the yen’s periodic weighted average exchange rate for the previous fiscal year from the current fiscal year to the major transactional currencies in which the sales are denominated. The impact of foreign exchange rate fluctuations on operating income (loss) is calculated by subtracting from the impact on sales the impact on cost of sales and SGA expenses calculated by applying the same major transactional currencies calculation process to cost of sales and SGA expenses as for the impact on sales. The impact of foreign exchange hedging transactions entered into by the I&SS segment is included in the impact of foreign exchange rate fluctuations on sales and operating income (loss) for that segment.
This information is not a substitute for Sony’s consolidated financial statements measured in accordance with IFRS Accounting Standards. However, Sony believes that these disclosures provide additional useful analytical information to investors regarding the operating performance of Sony.
Assets, Liabilities and Equity
Sony’s consolidated assets, liabilities and equity as of the end of the fiscal year ended March 31, 2026 are as follows.
Total assets amounted to 15 trillion 683.5 billion yen, a decrease of 19 trillion 609.7 billion yen compared with the end of the previous fiscal year. Total liabilities amounted to 7 trillion 169.9 billion yen, a decrease of 19 trillion 613.1 billion yen compared with the end of the previous fiscal year. Total equity amounted to 8 trillion 513.6 billion yen, an increase of 3.4 billion yen compared with the end of the previous fiscal year. The decreases in assets and liabilities were primarily attributable to the deconsolidation of SFGI, which operates the Financial Services business, in connection with the execution of the Partial Spin-off of the Financial Services business during the fiscal year ended March 31, 2026.
Cash Flows
Operating Activities: A net cash inflow of 1 trillion 945.6 billion yen (376.1 billion yen decrease year-on-year)
Continuing operations: A net cash inflow of 1 trillion 966.3 billion yen (5.1 billion yen decrease year-on-year)
Smaller decrease in trade receivables and contract assets
Smaller decrease in inventories
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Smaller increase in trade payables
Increase in income before income taxes after taking into account non-cash adjustments (including depreciation and amortization, including amortization of contract costs, other operating (income) expense, gain on securities, net, and share of loss of investments accounted for using the equity method, net of dividends)
Investing Activities: A net cash outflow of 1 trillion 970.5 billion yen (1 trillion 40.4 billion yen increase year-on-year)
Continuing operations: A net cash outflow of 784.2 billion yen (119.0 billion yen decrease year-on-year)
Decrease in payments for purchases of property, plant and equipment
Decrease in payments for purchases of businesses and other
Increase in payments for investments and advances
Discontinued operations: A net cash outflow of 1 trillion 186.3 billion yen (1 trillion 159.4 billion yen increase year-on-year)
Due to the exclusion from consolidation of SFGI, which operates the Financial Services business, in connection with the execution of the Partial Spin-off of the Financial Services business during the fiscal year ended March 31, 2026
Financing Activities: A net cash outflow of 842.8 billion yen (544.5 billion yen increase year-on-year)
Continuing operations: A net cash outflow of 833.5 billion yen (556.2 billion yen increase year-on-year)
Increase in payments for the purchase of treasury stock
Decrease in capital contributions from non-controlling interests
Decrease in proceeds from the issuance of long-term debt
Total outstanding balance of cash and cash equivalents accounting for the effect of fluctuations in foreign exchange rates in the Consolidated Statements of Financial Position as of March 31, 2026: 2 trillion 208.9 billion yen, a decrease of 772.1 billion yen as compared to the balance as of March 31, 2025
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Liquidity and Capital Resources
The description below covers basic financial policy and figures for Sony’s consolidated operations except for certain subsidiaries, which secure liquidity on their own.
Liquidity Management and Market Access
An important financial objective of Sony is to maintain the strength of its financial condition, while securing adequate liquidity for business activities. Sony defines its liquidity sources as the amount of cash and cash equivalents (“cash balance”) (excluding restrictions on capital transfers mainly due to national regulations) and the unused amount of committed lines of credit.
Funding requirements that arise from maintaining liquidity are principally covered by cash flow from operating and investing activities (including asset sales) and by the available cash balance; however, Sony also raises funds as needed from financial and capital markets through means such as corporate bonds, CP and bank loans.
Sony Group Corporation, SGTS and Sony Capital Corporation (“SCC”), a finance subsidiary in the U.S., maintain CP programs with access to the Japanese, U.S. and European CP markets. The borrowing limits under these CP programs, translated into yen, were 1 trillion 299.3 billion yen in total for Sony Group Corporation, SGTS and SCC as of March 31, 2026. There were no amounts outstanding under the CP programs as of March 31, 2026.
If disruption and volatility occur in financial and capital markets and Sony becomes unable to raise sufficient funds from these sources, Sony may also draw down funds from contractually committed lines of credit from various financial institutions. Sony has a total, translated into yen, of 789.6 billion yen in unused committed lines of credit, as of March 31, 2026. Details of those committed lines of credit are: a 350.0 billion yen committed line of credit contracted with a syndicate of Japanese banks, a 1.7 billion U.S. dollar multi-currency committed line of credit also contracted with a syndicate of Japanese banks and a 1.05 billion U.S. dollar multi-currency committed line of credit contracted with a syndicate of foreign banks. Sony currently believes that it can sustain sufficient liquidity through access to committed lines of credit with financial institutions, together with its available cash balance, even in the event that financial and capital markets become illiquid.
Sony considers one of management’s top priorities to be the maintenance of stable and appropriate credit ratings in order to ensure financial flexibility for liquidity and capital management and continued adequate access to sufficient funding resources in the financial and capital markets. However, in the event of a downgrade in Sony’s credit ratings, there are no financial covenants in any of Sony’s material financial agreements with financial institutions that would cause an acceleration of the obligation. Even though the cost of borrowing for some committed lines of credit could change according to Sony’s credit ratings, there are no financial covenants that would cause any impairment on the ability to draw down on unused facilities.
Cash Management
Sony manages its global cash management activities primarily through Sony Group Corporation in Japan, SCC in the U.S. and SGTS in other regions. The excess or shortage of cash at most of Sony’s subsidiaries is invested or funded by Sony Group Corporation, SGTS and SCC on a net basis, although Sony recognizes that fund transfers are limited in certain countries and geographic areas due to restrictions on capital transactions. In order to pursue more efficient cash management, cash surpluses among Sony’s subsidiaries are deposited with Sony Group Corporation, SGTS and SCC, and cash shortfalls among subsidiaries are covered by loans through Sony Group Corporation, SGTS and SCC, so that Sony can make use of excess cash balances and reduce third-party borrowings. Where local restrictions prevent an efficient intercompany transfer of funds, Sony’s intent is that cash balances remain outside of Sony Group Corporation, SGTS and SCC and that Sony meets its liquidity needs through ongoing cash flows, external borrowings, or both. Sony does not expect restrictions of capital transactions on amounts held outside of Japan to have a material effect on Sony’s overall liquidity, financial condition or results of operations.
For further information about Sony’s views regarding utilization of cash flow from operating activities generated within the Sony Group for strategic investments, shareholder returns and as cash on hand, refer to “Issues Facing Sony and Management’s Response to those Issues: Fifth Mid-Range Plan — Financial Targets, Capital Allocation and their Progress” in Item 5.D.
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Off-balance Sheet Transactions
Sony has certain off-balance sheet transactions that provide liquidity, capital resources and/or credit risk support. These transactions in which Sony has relinquished control of trade receivables are accounted for as sales.
Contractual Obligations, Commitments, and Contingent Liabilities
Sony’s contractual obligations, commitments and contingent liabilities are summarized as follows:
Short-term borrowings and long-term debt
Refer to Note 6 and Note 14 of the consolidated financial statements.
Loan commitments, purchase commitments and litigation
Refer to Note 32 of the consolidated financial statements.
Research and Development
Under its Purpose to “fill the world with emotion (Kando) through the power of creativity and technology,” Sony has established the “Creative Entertainment Vision” as its long-term vision for where it wants to be in 10 years. Under this vision, Sony develops and provides technologies and solutions for creators.
To realize the “Creative Entertainment Vision,” R&D in the Sony Group is aimed at strengthening the technologies and platforms that support IP creation, IP cultivation and IP expansion. As part of these efforts, Sony is promoting the application of R&D results in its businesses by building and utilizing a technological portfolio based on business demands. In addition, Sony is promoting a system that allows technology professionals with diverse backgrounds and values to collaborate across business units, enabling them to understand and share the latest technological trends and work together across the Group.
Sony aims to promote the use of AI, which has continued to evolve in recent years, based on the view that it can enhance human capabilities and increase the value of Sony’s businesses. In addition to supporting the creative activities of creators, Sony also places importance on protecting creators’ rights and ensuring the proper use of intellectual property. To this end, Sony is advancing R&D of technologies that contribute to preventing copyright infringement and misuse, such as the detection of unauthorized music.
Sony works to support diverse, outstanding research talent, which is necessary for technological innovation. As part of this effort, together with the world’s leading science journal Nature, Sony launched the “Sony Women in Technology Award with Nature” in March 2024 to annually recognize next-generation women researchers whose work is driving positive impact on the planet and society. The second winners of the award were announced in February 2026, and were honored at an award ceremony held in Tokyo.
Sony’s R&D organizations carry out various R&D activities in collaboration with multiple R&D organizations located both inside and outside of Japan, utilizing the different characteristics and strengths of each area. In addition to aiming to acquire excellent local R&D personnel, Sony will strive to strengthen collaboration with external creators and academia, without limiting itself within its own organization.
R&D costs for the fiscal year ended March 31, 2026 increased 27.4 billion yen (3.7%) year-on-year to 762.0 billion yen. The ratio of R&D costs to sales from continuing operations was 6.1%, unchanged from the previous fiscal year.
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The following table shows a breakdown of R&D costs for each business segment in the fiscal years ended March 31, 2025 and 2026.
R&D costs
G&NS
ET&S
Note: Due to the reorganization of Sony’s technology-related organizations in the fiscal year ended March 31, 2025, the amount of R&D costs for Sony Group Corporation’s R&D organization (“Corporate R&D”) has become immaterial. Therefore, from the fiscal year ended March 31, 2025, R&D costs for Corporate R&D are not presented separately.
Trend Information
This section contains forward-looking statements about the possible future performance of Sony and should be read in light of the cautionary statement on that subject, which appears on the inside front cover page and applies to this entire document.
Issues Facing Sony and Management’s Response to those Issues
Sony has a wide range of businesses globally. Changes in the global landscape, including increasing uncertainty regarding the situations in Ukraine and Russia and in the Middle East, increased geopolitical risk including relations between the U.S. and China, the rise of new technologies such as AI, and responses to global environmental challenges and social division, are causing major changes in the environment surrounding Sony’s businesses.
Sony has responded swiftly to changes in the business environment and worked to strengthen the profit structure of each of its businesses, while continuing to prioritize management with a long-term view, with the goal of enhancing the corporate value of the entire Sony Group.
On May 8, 2026, Sony Group Corporation held its Corporate Strategy and Earnings Announcement Presentation. President and CEO, Hiroki Totoki, presented an update on Sony’s businesses, corporate priorities and direction as the company enters the final fiscal year of the fifth mid-range plan.
Sony has set forth its long-term “Creative Entertainment Vision,” which articulates the direction for the evolution of its businesses centered on entertainment, IP, content creation, and real-time creation technologies, and aims to leverage the power of technology to empower creators, deliver new experiences to fans across both physical and digital spaces and maximize the value of IP. At the beginning of the presentation, Hiroki Totoki reviewed the progress toward realizing this long-term vision, along with key topics across each business. He also noted that anime is an important growth sector for Sony, introducing various initiatives centered on anime, and announcing that the DTC anime platform Crunchyroll has surpassed 21 million subscribers as of the end of March 2026.
He then introduced AI as one of the most important themes across the Sony Group businesses to unlock new value creation and to capture new opportunities for growth for its entertainment businesses. He emphasized that “human creativity must remain at the center,” and stated that “AI is not a replacement for artists or creators.” He then presented examples of how AI is being utilized across Sony’s businesses and welcomed Hideaki Nishino, President and CEO of Sony Interactive Entertainment LLC, to share examples of AI utilization in the G&NS segment.
Hiroki Totoki then announced that SSS signed a non-binding MOU with TSMC regarding a strategic partnership for the development and manufacturing of next-generation image sensors, with the aim of balancing growth and improving profitability for image sensor business.
He emphasized the importance of adaptability in driving each business forward amid technological and geopolitical disruptions and noted that the diversity of its businesses and employees will drive continued success for Sony.
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The details of the corporate strategy announced in the Corporate Strategy and Earnings Announcement Presentation held on May 8, 2026 are as follows:
1. Advancing the Creative Entertainment Vision
Under the Creative Entertainment Vision, Sony seeks to leverage the power of technology to empower creators, deliver new experiences to fans across both physical and digital spaces, and maximize the value of IP in its entertainment businesses.
In the anime field, Sony collaborates with Group companies and strategic partners spanning production, fan engagement, marketing and global distribution to generate synergies to deliver anime at scale to worldwide audiences.
The explosive worldwide growth of anime is exemplified by the massive global hit film Demon Slayer: Kimetsu no Yaiba Infinity Castle, which was produced by Aniplex and its partners.
Crunchyroll serves more than 21 million paid subscribers globally as of the end of March 2026. To further accelerate growth, Crunchyroll newly adopted MyAnimeList as the platform for global fan participation in voting for the 2026 Crunchyroll Anime Awards, in partnership with Gaudiy Inc. In addition, in fall 2026, Crunchyroll will host its first-ever “Crunchyroll Anime Future Forum,” bringing together leading companies from various fields to strengthen relationships with anime fans, Japanese publishers and creators.
2. Optimizing the Business Portfolio
During the fifth mid-range plan period, Sony continues to optimize its business portfolio mainly through the following initiatives.
Executed the Partial Spin-off of the Financial Services business as of October 1, 2025.
Signed definitive agreements for a strategic partnership in the home entertainment field of ET&S segment with TCL on March 31, 2026.
In parallel with these initiatives, Sony continues to invest and lean into areas where it sees ongoing growth and competitive advantages.
Building on the strategic partnerships announced with Bandai Namco, Sony is further strengthening its position in anime and other areas.
Sony acquired an additional equity interest in Peanuts Holdings, which was owned by WildBrain Ltd., increasing Sony’s ownership stake to 80%.
Following major deals to acquire the Pink Floyd and Queen catalogues, Sony Music Group announced a partnership with GIC Private Limited, to further build its music IP investments.
3. Driving Growth with AI
AI brings new opportunities for value creation and growth, and remains a tool to unlock human potential, not a replacement for artists or creators. Under this principle, Sony introduced examples of how it is leveraging AI across its businesses.
(1) The role of AI
AI is not only for efficiency, but also a tool to empower creators to expand their creativity, making it easier to take on more innovative projects that were previously difficult to pursue due to constraints of cost and time.
Sony is continuing a collaborative pilot initiative with Bandai Namco to explore the use of generative AI and other advanced technologies, and has confirmed gains such as a significant increase in speed and an improvement in productivity per person in video production. Sony aims to continue to integrate its own technologies with generative AI to establish a creator-first production environment that maximizes creative potential while ensuring safety and security.
(2) How AI evolves the PlayStation experience
As AI lowers barriers to creation and increases the volume and diversity of content, the PlayStation platform and studios are expected to remain critical in delivering high quality experiences and helping players discover the right content in an increasingly crowded landscape.
Within the studio business, AI powered tools are automating repetitive workflows and improving productivity across areas such as software development, quality assurance, 3D modeling, and animation, allowing production teams to focus on building richer worlds and gameplay experiences.
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Across the platform business, AI is driving efficiency, personalization, and customer value at scale, while continued investments in AI and machine learning are expected to push visual fidelity forward and deliver higher quality player experiences.
Overall, AI is expected to unleash the creativity of Sony Interactive Entertainment’s studios, power a more curated and consumer-centric platform, and enhance the PlayStation experience, supported by its global player base, deep IP library, and integrated ecosystem.
4. Strengthening Competitiveness in Sensor Technology that Underpins Creativity
Building on the deep expertise cultivated over many years in the analog domain, Sony is strengthening the competitiveness of its sensor technology with a view to mid- to long-term business growth and value creation, while delivering the best possible imaging experience for its customers.
Sony’s image sensors have advanced to a phase beyond competition solely based on specifications. By leveraging deep analog-domain expertise cultivated over many years across areas such as pixel structure, stacking technologies, circuitry, and process technologies, Sony has established difficult-to-replicate strength that underpins its sustainable competitive advantage.
In the mobile image sensor business, which is the core of the I&SS segment, Sony is pursuing enhanced performance through the development of higher density enabled by finer process technologies and stacking technologies.
SSS signed a non-binding MOU with TSMC to form a strategic partnership for the development and manufacturing of next- generation image sensors. Under this partnership, the two companies intend to establish a joint venture, with Sony as the majority and controlling shareholder, and plan to conduct studies toward setting up development and production lines utilizing Sony’s newly constructed fab in Koshi City, Kumamoto Prefecture.
5. Navigating a Changing World
Sony is carefully managing technological and geopolitical disruptions that are impacting international supply chains, including the current memory semiconductor shortage driven by surging AI infrastructure demand. Looking ahead, even amid geopolitical complexity and rapid change, the strengths and diversity of Sony’s businesses and employees will continue to support Sony’s growth.
Fifth Mid-Range Plan -Financial Targets, Capital Allocation and their Progress
<Financial Targets and Capital Allocation>
On May 14, 2024, Sony announced the financial targets for the fifth mid-range plan.
In the fifth mid-range plan, Sony is placing greater emphasis on profit-based growth, and has set as the key performance indicators for the entire Group the growth rate of consolidated operating income and the operating income margin for Sony without the Financial Services segment*1. Specifically, Sony is targeting an average annual growth rate of consolidated operating income for the three fiscal years started on April 1, 2024 and ending on March 31, 2027 of 10% or more, and a three-year cumulative consolidated operating income margin of 10% or more.
Regarding the capital allocation plan in the fifth mid-range plan, Sony established a capital expenditure target of 1.7 trillion yen and a strategic investment target of 1.8 trillion yen including growth investments for each business and flexible share repurchases. Three-year cumulative consolidated operating cash flow excluding the Financial Services segment, the main source of capital allocation, is expected to be 4.5 trillion yen, exceeding the results of the fourth mid-range plan for the three fiscal years started on April 1, 2021 and ended on March 31, 2024, due to expected profit growth during the fifth mid-range plan as well as the recovery of working capital that increased during the fourth mid-range plan.
Regarding shareholder returns, Sony plans to place emphasis on its total payout ratio, which it expects to gradually increase throughout the period of the fifth mid-range plan, aiming for approximately 40% in the fiscal year ending March 31, 2027, which is the final fiscal year of the plan.
As a result of the resolution of the Board of Directors of Sony Group Corporation on May 14, 2025 on the plan for the execution of the Partial Spin-off of the Financial Services business, Sony has classified the Financial Services business as a discontinued operation from the first quarter of the fiscal year ended March 31, 2026, and presented it separately from continuing operations excluding the Financial Services business. Therefore, the key performance indicators for the entire Group after May 14, 2025 are the growth rate of consolidated operating income and the operating income margin for continuing operations.
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<Progress>
In the fiscal year ended March 31, 2026, the G&NS, Music and I&SS segments, the profit growth drivers of the entire Group, achieved record-high profits. The average annual growth rate of operating income for continuing operations from the fiscal year ended March 31, 2024 was 18%, and the cumulative operating income margin over the two fiscal years ended March 31, 2025 and March 31, 2026 was 11.1%.
Regarding capital allocation, Sony has revised its forecast for cumulative three-year operating cash flow on a continuing operations basis, which is the main source of capital, from the previous forecast of 4.8 trillion yen to 5.7 trillion yen, taking into account the results of the fiscal year ended March 31, 2026. Because Sony has made strengthening shareholder returns a priority for the fifth mid-range plan, Sony intends to use such increase as a source of capital mainly for greater shareholder returns. Although the strategic investment budget of 1.8 trillion yen remains unchanged from the original plan, Sony has revised the capital expenditure budget from the previous forecast of 1.7 trillion yen to 1.8 trillion yen.
A total of approximately 1.0 trillion yen of strategic investments have been executed or determined already as of May 8, 2026. Regarding shareholder returns, Sony completed a total of 500.0 billion yen in repurchases of its own shares during the period from May 15, 2025 to March 24, 2026, and the annual dividend for the fiscal year ended March 31, 2026, taking into account the stock split*2, increased 5 yen year-on-year to 25 yen per share (a total of 148.6 billion yen)*3. For the fiscal year ending March 31, 2027, Sony has established a maximum 500 billion yen share buyback facility for the year from May 11, 2026 to May 10, 2027, and aims to increase the pace of its increase in dividends, raising the annual dividend by 10 yen per share year-on-year*3 to 35 yen per share.
Sony Group Corporation conducted a five-for-one stock split of its common stock effective October 1, 2024, with a record date of September 30, 2024.
The above figures for the dividend for the fiscal year ended March 31, 2026 and the planned dividend increase for the fiscal year ending March 31, 2027 do not include dividends in kind of the shares of SFGI from the Partial Spin-off of the Financial Services business.
Critical Accounting Estimates
The preparation of the consolidated financial statements in conformity with IFRS Accounting Standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, Sony evaluates its estimates, which are based on historical experience, future projections and various other assumptions that are believed to be reasonable under the circumstances. The results of these evaluations form the basis for making judgments about the carrying values of assets and liabilities and the reported amounts of expenses that are not readily apparent from other sources. Actual results may significantly differ from these estimates. Sony considers an accounting estimate to be critical if it is important to its financial condition and results, and requires significant judgment and estimates on the part of management in its application. Sony believes that the following represents its critical accounting estimates. The critical accounting estimates should be read in conjunction with Notes 2 and 3 of the consolidated financial statements regarding Sony’s material accounting policies.
Impairment of non-financial assets
Sony reviews the recoverability of its non-financial assets, except for inventories, contract costs and deferred tax assets, whenever there is any indication that an asset or a cash-generating unit (“CGU”) may be impaired. In addition, an annual impairment test for goodwill, intangible assets with indefinite useful lives or intangible assets not yet available for use is performed during the fourth quarter of the fiscal year for each CGU or group of CGUs to which the carrying amount of these assets is allocated.
For all other CGUs or groups of CGUs with goodwill, the recoverable amount exceeded the carrying amount, and therefore no impairment existed in the fiscal year ended March 31, 2026, except for certain CGUs, primarily in the Pictures segment, for which impairment losses were recognized. Also, the recoverable amount of these CGUs or groups of CGUs with significant goodwill exceeded their respective carrying values by at least 10.0%. For intangible assets with indefinite useful lives or intangible assets not yet available for use, the recoverable amount exceeded the carrying amount, and therefore no impairment existed.
A discussion of the significant assumptions, other than the mid-range plan, including a sensitivity analysis with respect to their impact, of the recoverable amount of each CGU or group of CGUs for the impairment
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analysis for goodwill performed for the fiscal year ended March 31, 2026 is included below. Refer to Note 11 of the consolidated financial statements for details.
The post-tax discount rates ranged from 6.0% to 15.5%. A hypothetical one percentage point increase in the discount rate, holding all other assumptions constant, would not have resulted in a significant impairment.
The growth rates applied to the terminal values for the CGUs within the G&NS, ET&S and I&SS were 2.0%. The growth rates beyond the mid-range plan period for the CGUs in the Music segment ranged from 1.0% to 3.4%, and in the Pictures segment ranged from (5.0%) to 10.0%. A hypothetical one percentage point decrease in the growth rate, holding all other assumptions constant, would not have resulted in a significant impairment.
The earnings multiple used to calculate the terminal value in the Pictures CGUs was 8.9x to 11.0x and the revenue multiple was 1.5x. A hypothetical reduction in earnings multiple by 1.0x and revenue multiple by 0.25x, respectively, holding all other assumptions constant, would not have resulted in a significant impairment.
Management believes that the assumptions used in the impairment tests are reasonable. However, in the future, changes in estimates resulting in lower recoverable amounts due to unforeseen changes in assumptions could negatively affect the valuations, which may result in Sony recognizing impairment losses for non-financial assets.
Business combinations
Sony recognizes identifiable assets acquired and the liabilities assumed of an acquiree at their fair values at the acquisition date with limited exceptions. Sony recognizes goodwill when the aggregate of the consideration transferred in a business combination, the amount of any non-controlling interests in the acquiree and the fair value of Sony’s previously held equity interest in the acquiree exceeds the net amount of the identifiable assets and liabilities of the acquiree at the acquisition date. If the aggregate above is less than the net amount of identifiable assets and liabilities, the difference is recognized as a gain.
Due to the inherent uncertainties involved in making the estimates and assumptions, the consideration transferred could be valued and allocated to the identifiable assets acquired and liabilities assumed differently. Actual results may differ, or unanticipated events and circumstances may affect such estimates, which could require Sony to record an impairment of an identifiable asset acquired and goodwill, or an increase in the amounts recorded for identifiable liabilities assumed.
Estimation of ultimate revenue in the Pictures segment
An aspect of film accounting that requires the exercise of management’s judgment relates to the process of estimating the total revenues to be received throughout a film’s life cycle. Such estimate of a film’s ultimate revenue is important for the measurement of film costs and participation and residual liabilities in the Pictures segment.
While a film is being produced and the related costs are being capitalized, it is necessary for management to estimate the ultimate revenue, less additional costs to be incurred, including exploitation costs which are expensed as incurred, in order to determine whether the value of a film has been impaired and thus requires an immediate write-off of unrecoverable film costs. In addition, the amount of film costs recognized as cost of sales for a given film as it is exhibited in various markets throughout its life cycle is based on the ratio of current period actual revenues to the estimated remaining total revenues.
Management bases its estimates of ultimate revenue for each film on several factors including the historical performance of similar genre films, the star power of the lead actors, the expected number of theaters at which the film will be released, anticipated performance in the home entertainment, television and other ancillary markets, and agreements for future sales. Management updates such estimates on a regular basis based on the actual results to date and estimated future results for each film. For example, a film with lower-than-expected theatrical revenues in its initial weeks of release would generally have its theatrical, home entertainment and television distribution ultimate revenues adjusted downward; a failure to do so would result in the understatement of amortized film costs for the period. Also, participation and residual liabilities are accrued based on the ratio of current period actual revenues to the estimated remaining total revenues.
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Valuation of deferred tax assets
Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which the assets can be utilized. Accordingly, the valuation of deferred tax assets is assessed periodically with available evidence related to the realizability of the deferred tax assets.
The valuation of deferred tax assets, which is based on currently enacted tax laws and rates as of the end of the reporting period, reflects management’s judgment and best estimate of the likely future tax consequences of events that have been recognized in Sony’s financial statements and tax returns, the ability to implement various tax planning strategies and, in certain cases, future forecasts, business plans and other expectations about business outcomes. Changes in existing tax laws or rates in tax jurisdictions in which Sony operates could affect actual tax results, and market or economic deterioration or failure of management to achieve its restructuring objectives could affect future business results, either of which could affect the valuation of deferred tax assets over time. If future results are less than projected, if the results of tax examinations or the negotiations of advance pricing agreements covering transfer pricing of intercompany transactions result in a different allocation of profits and losses than currently anticipated, if tax planning alternatives are no longer viable, or if there is no excess appreciated asset value over the tax basis of the assets contemplated for sale, outstanding deferred tax assets may be required to be written down in the future. On the other hand, a forecasted improvement and consistency in future earnings or other factors, such as business reorganizations, could lead in the future, as a result of a review of all relevant factors, to the reversal of the previous write down of the deferred tax assets which would be recorded as a reduction to tax expense. These possible factors and other changes, that are not anticipated in current estimates, could have a material impact on Sony’s earnings or financial condition in the period or periods in which the impact is recorded or reversed.
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Directors, Senior Management and Employees
Directors and Senior Management
Set forth below are the current members of the Board of Directors and Corporate Executive Officers of Sony Group Corporation (the “Corporation”), their responsibility as a director or officer, date of birth, the number of years they have served as a director or officer, and other principal business activities outside the Corporation as of the date of this report.
Board of Directors
Kenichiro Yoshida
Responsibility as a Director: —
Date of Birth: October 20, 1959
Number of Years Served as a Director: 12 years
Principal Business Activities Outside the Corporation: None
Brief Personal History:
April 1983
July 2000
September 2000
May 2001
April 2005
December 2013
April 2014
June 2014
April 2015
April 2018
June 2020
April 2023
April 2025
April 2026
June 2026
Hiroki Totoki
Date of Birth: July 17, 1964
Number of Years Served as a Director: 7 years
April 1987
February 2002
June 2005
April 2012
April 2013
Representative Director, Corporate Executive Officer, Deputy President and Chief Financial Officer,
So-net Entertainment Corporation
November 2014
June 2015
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April 2016
Executive Vice President, Corporate Executive Officer, the Corporation
In charge of New Business Platform (Strategy)
June 2017
Executive Vice President, Chief Strategy Officer, Corporate Executive Officer, the Corporation
In charge of Mid- to Long-Term Business Strategy, New Business
June 2018
Senior Executive Vice President, Chief Financial Officer, Representative Corporate Executive Officer, the Corporation
Outside Director, Recruit Holdings Co., Ltd.
June 2019
April 2024
June 2024
Wendy Becker
Responsibility as a Director: Chair of the BoardChair of the Nominating Committee
Date of Birth: November 2, 1965
Brief Personal History and Principal Business Activities Outside the Corporation:
September 1987
September 1993
December 1998
February 2008
September 2009
September 2012
October 2013
February 2017
September 2017
September 2019
June 2021
October 2023
May 2024
Keiko Kishigami
Responsibility as a Director: Member of the Audit Committee
Date of Birth: January 28, 1957
Number of Years Served as a Director: 6 years
October 1985
August 1989
December 1997
May 2004
September 2018
March 2023
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Joseph A. Kraft Jr.
Responsibility as a Director: Chair of the Audit CommitteeMember of the Nominating CommitteeDirector in charge of Information Security
Date of Birth: May 12, 1964
July 1986
January 2000
April 2007
March 2010
July 2015
November 2024
Neil Hunt
Responsibility as a Director: Director in charge of Information Security
Date of Birth: January 12, 1962
Number of Years Served as a Director: 3 years
June 1989
October 1991
December 1999
September 2010
January 2020
June 2023
William Morrow
Responsibility as a Director: Chair of the Compensation Committee
Date of Birth: July 2, 1959
September 1980
November 2001
February 2004
May 2006
August 2006
June 2008
March 2009
March 2012
December 2018
February 2021
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Shingo Konomoto
Date of Birth: February 11, 1960
Number of Years Served as a Director: 2 years
April 1985
April 2004
April 2010
Director, the Corporation (present)
Chairman, Member of the Board, Nomura Research Institute, Ltd. (present)
March 2025
Yoriko Goto
Date of Birth: November 11, 1958
Number of Years Served as a Director: 1 year
November 1983
March 1987
June 1996
November 2010
Managing Partner, Financial Services Industry, Deloitte Touche Tohmatsu LLC
Member of the Board of Directors, Deloitte Touche Tohmatsu Limited
Board Chair, Deloitte Tohmatsu Group and Deloitte Touche Tohmatsu LLC
November 2018
October 2022
Representative, Yoriko Goto CPA Office (present)
Outside Director, Member of the Audit & Supervisory Committee, Sumitomo Mitsui Banking Corporation
June 2025
Outside Director, Member of the Audit & Supervisory Committee, Shionogi & Co., Ltd. (present)
Outside Director, Sumitomo Mitsui Financial Group, Inc. (present)
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Nora Denzel
Responsibility as a Director: Member of the Compensation CommitteeDirector in charge of Information Security
Date of Birth: August 31, 1962
June 1984
May 1996
February 1997
March 2000
November 2007
February 2011
September 2011
February 2013
March 2013
March 2014
January 2015
July 2017
December 2019
May 2021
November 2022
Masayuki Hyodo
Responsibility as a Director: Member of the Nominating CommitteeMember of the Compensation Committee
Date of Birth: June 26, 1959
April 1984
March 1996
April 2009
Corporate Officer, Assistant General Manager for Asia, Sumitomo Corporation
President and CEO, PT. Sumitomo Indonesia (Jakarta)
June 2016
Outside Director, Mitsui O.S.K. Lines, Ltd. (present)
The Corporation has proposed “To elect 10 Directors” as an agenda item for the Ordinary General Meeting of Shareholders to be held on June 23, 2026. If the proposal is approved, the members of the Board of Directors will be Hiroki Totoki, Lin Tao, Wendy Becker, Joseph A. Kraft Jr., Neil Hunt, William Morrow, Shingo Konomoto, Yoriko Goto, Nora Denzel and Masayuki Hyodo. With respect to newly appointed Director (Lin Tao), her expected responsibility as a director, date of birth, principal business activities outside the Corporation and brief personal history and principal business activities outside the Corporation are set forth below. Refer to “Item 6.C., Board Practices” for the planned composition of the Board and the Committees after the resolution of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 23, 2026. The Corporation plans to disclose the results of the Ordinary General Meeting of Shareholders in a Form 6-K to be furnished on or around June 26, 2026.
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Lin Tao
Date of Birth: September 2, 1973
Brief Personal History and Principal Business Activities Outside the Corporation
April 2000
April 2021
July 2021
Corporate Executive Officers
In addition to Hiroki Totoki and Lin Tao, the three individuals set forth below are the current Corporate Executive Officers of Sony Group Corporation as of the date of this report. Refer to “Board Practices” in Item 6.C.
Toshimoto Mitomo
Responsibility as an Officer: Chief Strategy Officer, Representative Corporate Executive Officer in charge of Legal, Compliance, Privacy, Intellectual Property, Business Strategy, Sustainability, External Relations, Business Incubation Platform, Creative Platform and Mobility Business
Date of Birth: January 6, 1963
Number of Years Served as a Corporate Executive Officer: 4 years
Principal Business Activities Outside Sony: None
June 2013
April 2022
Tsuyoshi Kodera
Responsibility as an Officer: Chief Digital Officer, Corporate Executive Officer in charge of Digital & Technology Platform (Digital Transformation Strategy, Information Systems, Information Security and Advanced Technology, R&D, Technology Strategy and Quality Management)
Date of Birth: October 8, 1969
Number of Years Served as a Corporate Executive Officer: 1 year
April 1992
October 2017
President and Chief Executive Officer, Sony Interactive Entertainment LLC
Representative Director, President, Sony Interactive Entertainment Inc.
April 2019
Deputy President, Sony Interactive Entertainment LLC
Representative Director, Deputy President, Sony Interactive Entertainment Inc.
July 2023
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Yasuhiro Ito
Responsibility as an Officer: Chief People Officer, Corporate Executive Officer in charge of Human Resources, General Affairs, the Corporate Executive Office and Diversity
Date of Birth: September 10, 1971
April 1994
Executive Vice President, Sony Pictures Entertainment
Senior Vice President, Sony Corporation of America
Hiroki Totoki, Toshimoto Mitomo, Tsuyoshi Kodera, Yasuhiro Ito and Lin Tao are engaged on a full-time basis by Sony Group Corporation. There is no family relationship between any of the persons named above. There is no arrangement or understanding with major shareholders, customers, suppliers, or others pursuant to which any person named above was selected as a Director or a Corporate Executive Officer.
Compensation
Under the Financial Instruments and Exchange Act of Japan and related regulations, the Corporation is required to disclose the total remuneration paid by the Corporation to Directors and Corporate Executive Officers, as well as remuneration of any Director or Corporate Executive Officer who receives total aggregate annual remuneration exceeding 100 million yen from the Sony Group in a fiscal year, on an individual basis. The following table and accompanying footnotes show the information on such matters that the Corporation has disclosed in its annual Securities Report for the fiscal year ended March 31, 2026 filed on June 18, 2026 with the Director General of the Kanto Local Finance Bureau of the Ministry of Finance in Japan.
(1) Total amounts of remuneration for Directors and Corporate Executive Officers and the number thereof*1
(*7)
(*10)
Units (“RSUs”)
(*12)
(*15)
ofpersons
persons
Directors
(*2)
Corporate Executive
Officers
*1 Due to rounding, individual sums may not add up to the total shown.
*2 The number of persons does not include two Directors who concurrently serve as Corporate Executive Officers, because the Corporation does not pay any additional remuneration for services as a Director to Directors who concurrently serve as Corporate Executive Officers. All Directors above are outside Directors.
*3 The number of persons includes two Directors (outside Directors) who resigned on the day of the Ordinary General Meeting of Shareholders held on June 24, 2025.
*4 The Corporation does not pay remuneration linked to business results to Directors who do not concurrently serve as Corporate Executive Officers.
*5 The number of persons includes one Corporate Executive Officer who resigned on March 31, 2026.
*6 The final amount of remuneration linked to business results for the fiscal year ended March 31, 2026, which is scheduled to be paid in June 2026.
*7 As to stock acquisition rights, the amount above is that of expenses the Corporation recorded during the fiscal year ended March 31, 2026 applicable to stock acquisition rights granted. The amount includes 18 million yen, which was recorded as expense for stock acquisition rights for the fiscal year ended March 31, 2026, as a result of a value adjustment to previously granted stock-based compensation carried out in connection with the Partial Spin-off of the Financial Services business.
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*8 The Corporation does not grant stock acquisition rights to Directors who do not concurrently serve as Corporate Executive Officers.
*9 The number of persons includes four Corporate Executive Officers who resigned by the end of the fiscal year ended March 31, 2025.
*10 As to restricted stock, the amount above is that of expenses the Corporation recorded during the fiscal year ended March 31, 2026 applicable to restricted stock.
*11 The number of persons includes three Corporate Executive Officers who resigned by the end of the fiscal year ended March 31, 2025.
*12 As to RSUs, the amount above is that of expenses the Corporation recorded during the fiscal year ended March 31, 2026. The amount includes 1,109 million yen, which was recorded as expense for RSUs for the fiscal year ended March 31, 2026, as a result of a value adjustment to previously granted stock-based compensation carried out in connection with the Partial Spin-off of the Financial Services business.
*13 The number of persons includes two Directors (outside Directors) who resigned on the day of the Ordinary General Meeting of Shareholders held on June 24, 2025.
*14 The number of persons includes three Corporate Executive Officers who resigned by the end of the fiscal year ended March 31, 2025.
*15 As to the phantom restricted stock plan, the amount of expenses recorded during the fiscal year ended March 31, 2026 applicable to Corporate Executive Officers decreased by 386 million yen.
*16 The Corporation does not pay remuneration under the phantom restricted stock plan to Directors who do not concurrently serve as Corporate Executive Officers.
(2) Amounts of remuneration for Directors and Corporate Executive Officers on an individual basis
(Yen in millions)
(Yen inmillions)
Timing of vesting
vested after
three years
Director (*6), Chairman (*7)
Director (*6), President and CEO, and Representative Corporate Executive Officer (*7)
CSO, and Representative Corporate Executive Officer (*7)
CDO, and Corporate Executive Officer (*7)
(*8)
CPO, and Corporate Executive Officer (*7)
CFO, and Corporate Executive Officer
*1 This chart shows remuneration for Directors and Corporate Executive Officers who received, or who became likely to receive, total remuneration exceeding 100 million yen from the Corporation and its subsidiaries during the fiscal year ended March 31, 2026. Titles are as of the date of submission of this document.
*2 Due to rounding, individual sums may not add up to the total shown.
*3 For the metrics and actual financial results used to determine the amount of remuneration linked to business results, refer to “(5) Corporate Executive Officer remuneration linked to business results for the fiscal year ended March 31, 2026” below.
*4 Indicates the grant criteria amount determined for each Corporate Executive Officer, and the number of stock acquisition rights actually granted was determined by dividing such grant criteria amount by the fair value per stock acquisition right, as estimated based on the Black-Scholes model, immediately prior to the date of the grant resolution on October 30, 2025. The number of shares of common stock of the Corporation (“Common Stock”) to be acquired based on the assumption that all such stock acquisition rights are exercised is 142,600 for Kenichiro Yoshida, 525,700 for Hiroki Totoki, 83,600 for Toshimoto Mitomo, 71,900 for Tsuyoshi Kodera,
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55,000 for Yasuhiro Ito and 108,400 for Lin Tao, respectively. The compensation expense relating to these stock options is calculated based on the fair value of the stock acquisition rights as of the date of grant (November 25, 2025). The grant criteria amount does not indicate the actual value that would be realized by a Corporate Executive Officer upon the exercise of the above-mentioned stock acquisition rights. The actual value, if any, that is realized by a Corporate Executive Officer upon the exercise of any stock acquisition rights will depend on the extent to which the market value of Common Stock exceeds the exercise price of the stock acquisition rights on the date of exercise, and several other restrictions imposed on the exercise of the stock acquisition rights, including the period when a Corporate Executive Officer could exercise the stock acquisition rights. Accordingly, there is no assurance that the value realized or to be realized by a Corporate Executive Officer upon the exercise of the stock acquisition rights is or will be at or near the grant criteria amount.
*5 Indicates the grant criteria amount determined for each Corporate Executive Officer, and the number of RSUs actually granted was determined by dividing such grant criteria amount by the simple average of the closing prices of Common Stock on the TSE during a certain period immediately prior to the date of the grant resolution on June 25, 2025. The number of RSUs actually granted was 76,950 units to Kenichiro Yoshida, 309,380 units to Hiroki Totoki, 50,520 units to Toshimoto Mitomo, 44,580 units to Tsuyoshi Kodera, 34,470 units to Yasuhiro Ito and 65,730 units to Lin Tao, respectively. The compensation expense relating to these RSUs is calculated based on the fair value per unit as of the date of grant (July 25, 2025). Of the units granted to Toshimoto Mitomo, only 5,440 units had a grant resolution date of October 30, 2025 and a grant date of November 25, 2025.
*6 The Corporation does not pay any remuneration for services as a Director to Directors who concurrently serve as Corporate Executive Officers.
*7 Apart from the remuneration contained in the table above, the Corporation also provided certain personal benefits and perquisites, including fringe benefits and in some instances amounts to pay income taxes related to perquisites, totaling 2 million yen to Kenichiro Yoshida, 2 million yen to Hiroki Totoki, 19 million yen to Toshimoto Mitomo, 1 million yen to Tsuyoshi Kodera, and 19 million yen to Yasuhiro Ito during the fiscal year ended March 31, 2026.
*8 Remuneration paid to Tsuyoshi Kodera includes 6 million yen in fixed remuneration and 7 million yen in remuneration linked to business results from Sony Research Inc.
9 Apart from the remuneration contained in the table above, the Corporation recorded 593 million yen for Kenichiro Yoshida, 278 million yen for Hiroki Totoki, 96 million yen for Toshimoto Mitomo, 69 million yen for Tsuyoshi Kodera, 18 million yen for Yasuhiro Ito, and 28 million yen for Lin Tao, as a result of a value adjustment to previously granted stock-based compensation carried out in connection with the Partial Spin-off of the Financial Services business.
(3) Basic policy regarding Director and Senior Executive remuneration
The basic policy regarding remuneration for respective Directors and Senior Executives including Corporate Executive Officers determined by the Compensation Committee is as follows:
(a) Basic policy regarding Director remuneration
The primary duty of Directors is to supervise the performance of business operations of the Sony Group as a whole. In order to improve this supervisory function over the business operations of the Sony Group, which is a global company, the following two elements have been established as the basic policy for the determination of remuneration of Directors. No Director remuneration is paid to those Directors who concurrently serve as Corporate Executive Officers.
Attracting and retaining an adequate talent pool of Directors possessing the requisite abilities to excel in the global marketplace; and
Ensuring the effectiveness of the supervisory function of Directors.
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Based on the above, Director remuneration shall consist of the following components. The amount of each component and its percentage of total remuneration shall be at an appropriate level determined in accordance with the basic policy above and based on research conducted by a third party regarding remuneration of directors of both Japanese and non-Japanese companies.
•
The amount of fixed remuneration shall be at an appropriate level determined in accordance with the basic policy above and based on research conducted by a third party regarding remuneration of directors of both Japanese and non-Japanese companies.
Restricted stock or RSUs are granted to further promote shared values between the shareholders and Directors and incentivize Directors to develop and maintain a sound and transparent management system.
Any Director to whom restricted stock is granted may not sell or transfer the granted shares during his/her tenure, and in principle, such restriction is to be released when such Director resigns.
In principle, all RSUs granted to the Directors will be vested at the time of resignation, and the Common Stock will be delivered to the Directors upon vesting.
(b) Basic policy regarding Senior Executive remuneration
Senior Executives are key members of management responsible for executing the operations of the Sony Group as a whole, or respective businesses of the Sony Group. In order to further improve the business results of the Sony Group, the following two elements have been established as the basic policy for the determination of remuneration of Senior Executives.
Attracting and retaining an adequate talent pool possessing the requisite abilities to excel in the global marketplace; and
Providing effective incentives to improve business results on a short-, mid- and long-term basis.
Based on the above, Senior Executive remuneration shall basically consist of the following components. The amount of each component and its percentage of total remuneration shall be at an appropriate level determined in accordance with the above basic policy and the individual’s level of responsibility and based on research conducted by a third party regarding remuneration of management of both Japanese and non-Japanese companies, with an emphasis on linking Senior Executive remuneration to business results and shareholder value.
Description
Fixed remuneration
The amount of fixed remuneration shall be at an appropriate level determined based on research conducted by a third party regarding remuneration of management of both Japanese and non-Japanese companies, according to his/her responsibility, and in order to maintain competitiveness in recruiting talent.
Structured appropriately and based on appropriate indicators to ensure that such remuneration effectively incentivizes Senior Executives to achieve financial targets for the mid- to long-term and financial targets for the corresponding fiscal year.
Specifically, the amount to be paid to Senior Executives shall be determined based on the level of achievements of the two metrics below, and can fluctuate, in principle, from 0% to 200% of the standard payment amount (“Business Results Linked Standard Payment Amount”) depending on the level of achievement.
(1) Certain key performance indicators linked to the continuing operations or individual business results of the Sony Group during the corresponding fiscal year, such as operating
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income and operating income margin (collectively, the “Financial Performance KPIs”), which are based on the areas for which each Senior Executive is responsible.
(2) Achievement of the Group Sustainability Evaluation.
The Group Sustainability Evaluation is an evaluation of efforts by Senior Executives to enhance the mid- to long-term corporate value and sustainable growth of the Sony Group as a whole, not just their respective businesses and organizations, and includes management succession planning and investment in human capital, sustainability initiatives related to social value creation and ESG (environment, social and governance), value creation through collaborations among the businesses of the Sony Group, and engagement indicators based on employee surveys.
The Business Results Linked Standard Payment Amount shall be determined so that such amount is within a certain percentage of the cash compensation (total of the fixed remuneration and the remuneration linked to business results), which percentage shall be determined in accordance with each individual’s level of responsibility.
The Corporation adopted a clawback policy for the recoupment of compensation. (Please see below Reference: Clawback Policy.)
Stock-based compensation
Stock acquisition rights, and restricted stock or RSUs are granted to incentivize Senior Executives to increase mid- to long-term shareholder value.
As a general policy, remuneration for a Senior Executive who has greater management responsibility and influence over the Sony Group as a whole has a higher proportion of stock-based compensation, which is directly linked to the corporate value. (Please see below Reference: Executive Compensation Package Designed to Focus on Long-Term Management.)
The amount of stock-based compensation shall be determined so that the amount is within a certain percentage of the total cash compensation (total of the fixed remuneration and the remuneration linked to business results) and stock-based compensation.
Stock acquisition rights
The exercise of the stock acquisition rights is, in principle, restricted during a one-year period from the allotment date, and one-third of the total number of exercisable stock acquisition rights will be vested and be exercisable each year thereafter. (All of the allocated stock acquisition rights will be exercisable on and after three years from the allotment date.)
Restricted stock
The Senior Executives to whom restricted stock is granted, in principle, may not sell or transfer the granted stock before the third anniversary date of the Ordinary General Meeting of Shareholders of the fiscal year when the subject restricted stock was granted.
Restricted stock units
(vested after three years)
In principle, RSUs are granted to the Senior Executives every year during his/her tenure, and all RSUs granted to the Senior Executives will be vested after three years have passed since the date of grant of the RSUs, and the Common Stock will be delivered to the Senior Executives.
(vested upon resignation)
In principle, RSUs are granted to the Senior Executives every year during his/her tenure, and all RSUs granted to the Senior Executives will be vested at the time of resignation and the Common Stock will be delivered to the Senior Executives.
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Phantom restricted stock plan
Points determined every year by the Compensation Committee shall be granted to Senior
Executives every year during his/her tenure, and at the time of resignation, the remuneration amount shall be calculated by multiplying the Common Stock price (closing price) by the individual’s accumulated points.
* Phantom restricted stock plan is being gradually replaced with RSUs vesting upon resignation.
(Reference: Executive Compensation Package Designed to Focus on Long-Term Management)
The bar chart below shows the components of remuneration for Corporate Executive Officers for the fiscal year ended March 31, 2026. For this chart, the remuneration linked to business results is based on the Business Results Linked Standard Payment Amount for each Corporate Executive Officer, and the stock-based compensation is based on the grant criteria amount for each Corporate Executive Officer. Accordingly, the components of remuneration based on the amounts actually paid will be different from the chart below.
*1 Due to rounding, individual sums may not total 100%.
*2 For “Other Corporate Executive Officers,” the components of remuneration are presented as the simple average of the remuneration mix ratios of the Chief Strategy Officer, Chief Digital Officer, Chief People Officer and Chief Financial Officer.
(Reference: Stock-based Compensation)
The Corporation introduced stock acquisition rights, restricted stock and RSUs as forms of stock-based compensation, granted to the Directors and the Senior Executives including Corporate Executive Officers.
The purpose of the stock-based compensation for the outside Directors is to incentivize the outside Directors to develop and maintain a sound and transparent management system by further promoting shared values between the shareholders and the outside Directors. Furthermore, the purpose of the stock-based compensation for the Senior Executives including Corporate Executive Officers is to further reinforce management’s alignment with shareholder value, and to incentivize management to improve mid- to long-term performance and increase shareholder value.
The details of such stock-based compensation, including vesting conditions, recipients and number of grants, are determined or supervised by the Compensation Committee based on research conducted by a third party regarding stock-based compensation of both Japanese and non-Japanese companies. In addition, in determining the number of shares or units to be granted, the impact on dilution of the value of the shares of the Corporation is monitored.
(Reference: Clawback Policy)
In 2022, the SEC adopted rules relating to the mandatory recovery of erroneously awarded incentive-based compensation received by certain current or former executive officers, and the NYSE has, in turn, adopted listing standards in connection with such rules. Accordingly, Sony Group Corporation’s Compensation Committee adopted a clawback policy, with an effective date of October 2, 2023 (the “Clawback Policy”). The Clawback Policy provides for the mandatory recovery of erroneously awarded incentive-based compensation received by each Executive Officer (as defined in the Clawback Policy) during the three-fiscal-year period prior to the date Sony Group Corporation is required to prepare an Accounting Restatement (as defined in the Clawback Policy), in accordance with the above rules and standards. The amount of erroneously awarded incentive compensation that the Executive Officers would be required to repay is the amount of incentive-based compensation paid to the
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Executive Officer that exceeds the amount the Executive Officer would have received had it been determined based on the restated amounts, computed without regard to any taxes paid. The recovery of such compensation applies regardless of whether an Executive Officer engaged in misconduct or otherwise caused or contributed to the requirement of an accounting restatement. For further details and full text of the Clawback Policy, please refer to Exhibit 97.1 attached to this report.
(4) Procedures to determine remuneration of Directors and Senior Executives
Based on the policy outlined above, the amount and content of the compensation for each Director and Senior Executive, including Corporate Executive Officers, are determined by the Compensation Committee or otherwise under the supervision of the Compensation Committee.
Specifically, in principle, as for Directors, each year at the meeting of the Compensation Committee held after the Ordinary General Meeting of the Shareholders, the amount of basic remuneration and the content of compensation for the corresponding fiscal year are determined. Thereafter, at the meeting of the Compensation Committee held after the corresponding fiscal year end, the final amount of compensation of each Director is determined. As for the Senior Executives, each year at the meeting of the Compensation Committee held at the end of the previous fiscal year, in principle, the amount of basic remuneration and the content of compensation for the corresponding fiscal year are determined or reviewed. Thereafter, at the meeting of the Compensation Committee held after the corresponding fiscal year end, the final amount of compensation for each Senior Executive is determined or supervised.
For determining the amount of the remuneration linked to business results for each Senior Executive, the Business Results Linked Standard Payment Amount, the targets for the Financial Performance KPIs and the targets for the Group Sustainability Evaluation are determined and thereafter, the amount of such remuneration is determined based on the level of achievement of such indicators and targets for the Financial Performance KPIs and the individual performance at the meeting of the Compensation Committee held after the corresponding fiscal year end for Corporate Executive Officers or otherwise under the supervision by the Compensation Committee for Senior Executives other than Corporate Executive Officers.
The amount of compensation of each Director and Senior Executive including Corporate Executive Officers for the fiscal year ended March 31, 2026 was also determined by the Compensation Committee or otherwise under the supervision by the Compensation Committee according to the procedure above. The Compensation Committee concluded that the amount and content of the compensation is in accordance with the policy set forth in section (3) above.
(5) Corporate Executive Officer remuneration linked to business results for the fiscal year ended March 31, 2026
The Business Results Linked Standard Payment Amount for each Corporate Executive Officer for the fiscal year ended March 31, 2026 was determined to be in the range between 80% and 100% of the amount of the fixed remuneration of such Corporate Executive Officer according to his/her responsibility.
The formula to calculate the amount of the remuneration linked to business results to be paid to Corporate Executive Officers is as follows.
* Business Results Linked Standard Payment Amount: Determined to be in the range between 80% and 100% of the amount of the fixed remuneration of each Corporate Executive Officer.
** Payment rate of the remuneration linked to business results: Determined in principle, within the range from 0% to 200% based on (i) the achievement of Financial Performance KPIs based on the areas for which each Corporate Executive Officer is responsible and (ii) the achievement of the Group Sustainability Evaluation.
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The Financial Performance KPIs and the weighting of such Financial Performance KPIs used for Corporate Executive Officers in the fiscal year ended March 31, 2026 were as follows:
Compound Annual Growth Rate (“CAGR”) of Operating Income
(Continuing Operations)
10.0% ~ 11.2%
(CAGR from the fiscal year ended March 31, 2024 to the fiscal year ended March 31, 2026)
Operating Income Margin
10.0% ~ 10.9%
(the fiscal year ended March 31, 2026)
CAGR of operating income (continuing operations) and operating income margin (continuing operations) were determined as the Financial Performance KPIs under the fifth mid-range plan of the Sony Group to place greater emphasis on profit-based growth.
The target range to be achieved for CAGR of operating income (continuing operations) for the fiscal year ended March 31, 2026, was set between 10%, which is the target under the fifth mid-range plan, and 11.2%, which is the CAGR calculated based on the operating income of continuing operations of 1 trillion 35.3 billion yen for the fiscal year ended March 31, 2024, and the forecast for the operating income of continuing operations of 1 trillion 280 billion yen for the fiscal year ended March 31, 2026, which was disclosed in May 2025. (This range was set as the performance level at which the achievement rate of the KPI is deemed to be 100%.)
The target range to be achieved for operating income margin (continuing operations) for the fiscal year ended March 31, 2026, was set between 10%, which is the target under the fifth mid-range plan, and 10.9%, which is the forecast for the operating income margin of continuing operations for the fiscal year ended March 31, 2026, which was disclosed in May 2025. (This range was set as the performance level at which the achievement rate of the KPI is deemed to be 100%.)
The results for the Financial Performance KPIs for the fiscal year ended March 31, 2026 were as follows: CAGR of operating income (continuing operations): 18.2%, operating income margin (continuing operations): 11.6%, each exceeding the targeted range.
As outlined above under “(3) Basic policy regarding Director and Senior Executive remuneration,” remuneration linked to business results for Senior Executives for the fiscal year ended March 31, 2026 was determined based on the level of achievement of the indicators which were selected based on the areas of responsibility of the relevant Senior Executive and the achievement of the Group Sustainability Evaluation. The amounts to be paid to the Senior Executives were, in principle, determined within the range from 0% to 200% of the Business Results Linked Standard Payment Amount. As a result, the ratio of remuneration linked to business results of Corporate Executive Officers for the fiscal year ended March 31, 2026 varied from 146.6% to 154.7% of the Business Results Linked Standard Payment Amount.
Board Practices
General
Sony Group Corporation continuously strives to strengthen its corporate governance system based on the understanding that corporate governance is an essential basis to promote our management in order to fulfill the company’s corporate social responsibility and increase corporate value over the mid- to long-term. To operate Sony effectively, Sony Group Corporation continues to approach its corporate governance through two basic precepts: (a) the Board of Directors (the “Board”), a majority of which is comprised of independent outside Directors, focuses on effective oversight of management’s operation of the business and maintains a sound and transparent governance framework by utilizing the Nominating Committee, the Audit Committee and the Compensation Committee; and (b) the Board determines Sony’s fundamental management policies and other material matters and delegates to the Senior Executives (including Corporate Executive Officers), who assume important roles in the management of Sony, decision-making authority to conduct Sony’s business operations broadly in line with their respective responsibilities, as defined by the Board, with a view to promoting timely
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and efficient decision-making within Sony. In furtherance of these efforts, Sony Group Corporation has adopted a “Company with Three Committees” corporate governance system under the Companies Act of Japan (Kaishaho) and related regulations (collectively the “Companies Act”). Under this system, Sony Group Corporation has introduced its own requirements to help improve and maintain the soundness and transparency of its governance by strengthening the separation of the Directors’ function from that of management; maintaining what the company believes is an appropriate Board size, which enables the members of the Board to actively contribute to discussion; and advancing the proper functioning of the statutory committees.
Sony Group Corporation is governed by the Board, the members of which are elected at the Ordinary General Meeting of Shareholders. Under the Companies Act, a “Company with Three Committees” is required to have three committees: a Nominating Committee, an Audit Committee and a Compensation Committee, each consisting of Directors appointed by the Board. The Companies Act also requires the Board to appoint Corporate Executive Officers (Shikko-yaku), who make decisions regarding the execution of Sony’s business activities within the scope of the authority delegated to them by the Board. Sony Group Corporation has appointed its Chief Executive Officer (“CEO”), who is responsible for Sony’s overall management, and other officers who are responsible for important and extensive headquarters functions as Corporate Executive Officers. Sony Group Corporation has also appointed Corporate Executive Officers, including the CEO and other executives, that assume important roles in the management of Sony as Senior Executives. In addition, Sony has designated management team members as Business CEOs, Chief Officers, or Corporate Executives in accordance with their respective roles and responsibilities.
A summary of the governance system adopted by Sony Group Corporation is set forth below. For an explanation of the significant differences between the NYSE’s corporate governance standards and Sony’s corporate governance practices, refer to “Item 16G. Corporate Governance.”
(1) Members: 11 Directors including 9 outside Directors (as of the date of this report)
Chair of the Board
Outside Director
* Sony Group Corporation has proposed “To elect 10 Directors” as an agenda item for the Ordinary General Meeting of Shareholders to be held on June 23, 2026. If the proposal is approved, the Board will consist of the following 10 members.
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Expected members after the resolution of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 23, 2026: 10 Directors including 8 outside Directors
(2) Purpose/Authority
The primary roles of the Board are to: (a) determine Sony’s fundamental management policies; (b) oversee the management of Sony’s business operations as an entity independent from Sony’s management; (c) appoint and dismiss the statutory committee members; (d) appoint and dismiss Corporate Executive Officers and oversee the status of appointment/dismissal of Senior Executives other than Corporate Executive Officers; and (e) appoint and dismiss Representative Corporate Executive Officers.
For the matters to be decided by the Board and the matters to be reported to the Board, refer to Appendices 1 and 2 of the Charter of the Board of Directors (the “Board Charter”) attached as Exhibit 1.3 hereto.
(3) Policy Regarding Composition of the Board
With a view toward securing effective input and oversight by the Board, the Nominating Committee reviews and selects candidates for the Board with the aim of assuring that a substantial part of the Board is comprised of qualified outside Directors that satisfy the independence requirements established by Sony and by law. The Nominating Committee selects candidates that it views as well-suited to be Directors in light of the Board’s purpose of enhancing Sony’s corporate value. The Nominating Committee broadly considers various relevant factors, including a candidate’s capabilities (such as the candidate’s work and other experience, achievements and expertise), availability, and independence, as well as diversity, including gender and internationality, in the boardroom, the appropriate size of the Board, and the knowledge, experience and talent needed for the role. Under the Board Charter, Sony Group Corporation also requires that the Board consist of not fewer than 8 Directors and not more than 14 Directors. In addition, since 2005 the majority of the members of the Board have been outside Directors.
(4) Qualifications for Directors and Limitation of Re-election
The qualifications for Directors of Sony Group Corporation under the Board Charter are generally as summarized below. As of the date of this report, all Directors satisfy the qualifications for Directors as set forth below, and all outside Directors satisfy the additional qualifications for outside Directors and are also qualified and designated as Independent Directors under the Securities Listing Regulations of the TSE. It is expected that all Director candidates who will be appointed at the Ordinary General Meeting of Shareholders to be held on June 23, 2026 satisfy the qualifications for Directors as set forth below, and that all outside Director candidates satisfy the additional qualifications for outside Directors and are also qualified and designated as Independent Directors under the Securities Listing Regulations of the TSE.
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All Directors must meet the qualifications below:
He/she shall not be a director, a statutory auditor, a corporate executive officer, a general manager or other employee of any company in competition with Sony in any of Sony’s principal businesses (a “Competing Company”) or own 3% or more of the shares of any Competing Company.
He/she shall not be or have been a representative partner or partner of Sony’s independent auditor the past three years before being nominated as a Director.
He/she shall not have any connection with any matter that may cause a material conflict of interest in performing the duties of a Director.
Directors must meet the additional qualifications below:
He/she shall not have received directly from Sony, during any consecutive twelve-month period within the last three years, more than an amount equivalent to U.S. $120,000, other than Director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service).
He/she shall not be an executive director, corporate executive officer, general manager or other employee of any company whose aggregate amount of transactions with Sony, in any of the last three fiscal years, exceeds the greater of an amount equivalent to U.S. $1,000,000, or 2% of the annual consolidated sales of such company.
For additional requirements for outside Directors under the Companies Act, refer to “Item 16G. Corporate Governance”.
Also, each outside Director may be nominated as a Director candidate for re-election up to five times (six years, in total), and thereafter by resolution of the Nominating Committee and by consent of all of the Directors. Even with the consent of all of the Directors, in no event may any outside Director be re-elected more than eight times (nine years, in total).
(5) Matters related to Outside Directors
Sony Group Corporation expects that each outside Director plays an important role in ensuring proper business decisions by Sony and effective input and oversight by the Board through actively exchanging opinions and having discussions about Sony’s business based on his or her various and broad experience, knowledge and expertise. Considering these expectations, the policy and procedures on the election of Director candidates, including independent outside Director candidates, are set forth as described above. As of the date of this report, the Board has 11 Directors, nine of whom are outside Directors. The Chair of the Board, as well as all members of the Nominating Committee, the Compensation Committee and the Audit Committee are outside Directors. After the closing of the Ordinary General Meeting of Shareholders to be held on June 23, 2026, it is expected that the Board will have 10 Directors, eight of whom will be outside Directors, that the Chair of the Board will be an outside Director; and that all members of the Nominating Committee, the Compensation Committee and the Audit Committee will be outside Directors.
Pursuant to the Articles of Incorporation, Sony Group Corporation has entered into a liability limitation agreement with all outside Directors. A summary of such liability limitation agreement is as follows:
In a case where an outside Director is liable to the company after the execution of the liability limitation agreement for damages pursuant to Article 423, Paragraph 1 of the Companies Act, such liabilities shall be limited to the greater of either 30 million yen or an amount equal to the aggregate sum of the amounts prescribed in each item of Article 425, Paragraph 1 of the Companies Act, only where the outside Director acted in good faith without any gross negligence in performing his/her duties as a Director of the company.
In a case where an outside Director is re-elected as an outside Director of the company and re-assumes his/her office as such on the expiration of the term of his/her office as an outside Director of the company, the liability limitation agreement shall continue to be effective after the re-election and re-assumption without any action or formality.
In addition, Sony Group Corporation has a directors and officers liability insurance policy covering all Directors as insured parties. For an outline of the directors and officers liability insurance policy, refer to “Outline of the Terms of Executives Liability Insurance Policy”.
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(6) Policy and Procedure for Selection and Dismissal of Senior Executives
Sony Group Corporation appoints Corporate Executive Officers including the CEO and other officers that assume important roles in the management of Sony as “Senior Executives.”
The Board has the authority to appoint and dismiss and assign the roles and responsibilities of, or to request a report regarding such matters for Senior Executives, including the CEO, and exercises such authority as necessary. In making decisions on the appointment of Corporate Executive Officers, including the CEO, the Board considers whether candidates for CEO meet certain qualifications for the CEO position which are set by the Nominating Committee and whether candidates for other Corporate Executive Officer positions have the necessary skills, capabilities, experiences and achievements that correspond to such Corporate Executive Officers’ expected roles and responsibilities. The Board also receives a report on the status of appointment and dismissal of Senior Executives other than Corporate Executive Officers.
The term of office of Senior Executives, including the CEO, is one year. The Board discusses, determines and/or oversees their re-appointment upon the expiration of each term considering the factors described above as well as their latest performance. The Board dismisses a Corporate Executive Officer, as necessary, in the event that the Board recognizes such Corporate Executive Officer is disqualified after discussions amongst the members of the Board or the Nominating Committee, even in the middle of the term for such Corporate Executive Officer.
Nominating Committee
Members: 3 outside Directors (as of the date of this report)
Chair of the Nominating Committee
(Outside Director)
Nominating Committee Member
* It is expected that members of the Nominating Committee will be appointed as follows at a meeting of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 23, 2026.
Members after the resolution of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 23, 2026: 4 outside Directors
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The primary roles of the Nominating Committee are to: (a) determine the content of proposals regarding the appointment/dismissal of Directors to be submitted for approval at a General Meeting of Shareholders and (b) evaluate management succession plans, which the CEO develops, for the CEO and other executives designated by the Nominating Committee.
The Nominating Committee determines the content of proposals regarding the appointment and dismissal of Directors, considering the policy on composition of the Board, the qualifications for Directors and the limitation of re-election of Directors described above.
(3) Policy Regarding Composition of the Nominating Committee
Under the Companies Act, the Nominating Committee shall consist of at least three Directors, the majority of whom shall be outside Directors. Also, under the Board Charter, the chair is to be selected from among the outside Directors. In determining whether to appoint or remove a member of the Nominating Committee, continuity of the Nominating Committee shall be duly taken into account. After the resolution of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 23, 2026, the Nominating Committee is expected to consist of four outside Directors.
(4) Management Succession Plans
The Nominating Committee evaluates the succession plans, and the implementation of such plans, for the CEO and other executives designated by the Nominating Committee, and reports the results of its evaluation to the Board, as appropriate.
Evaluations are conducted by having the CEO periodically submit draft succession plans to the Nominating Committee, which it reviews. As a part of such review, the Nominating Committee considers the development or promotion of the next generation of management and evaluates whether the succession plans have been prepared in a reasonable manner in light of Sony’s purpose to create sustainable social value and to enhance corporate value over the mid- to long-term.
Audit Committee
(1) Members: 4 outside Directors (as of the date of this report)
Chair of the Audit Committee
Audit Committee Member
* It is expected that members of the Audit Committee will be appointed as follows at a meeting of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 23, 2026.
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Members after the resolution of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 23, 2026: 3 outside Directors
The primary roles of the Audit Committee are to: (a) monitor the performance of duties by Directors and Corporate Executive Officers and (b) oversee and evaluate the independent auditor.
(3) Policy Regarding Composition of the Audit Committee
Under the Companies Act, the Audit Committee shall consist of at least three Directors, the majority of whom shall be outside Directors. In addition, under the Board Charter, each member of the Audit Committee (“Audit Committee Member”) shall satisfy all of the following qualifications: (a) he/she shall not be a Director engaged in the business operations of Sony Group Corporation or any of its subsidiaries, a Corporate Executive Officer, an accounting counselor, a general manager or other employee of Sony and (b) he/she shall meet the independence requirements or such other equivalent requirements of the U.S. securities laws and regulations as may from time to time be applicable to Sony Group Corporation, and the chair is to be selected from among the outside Directors. The Audit Committee Members shall be selected from among the persons who possess appropriate experience and talent as well as the necessary finance, accounting and legal knowledge to serve on the Audit Committee. In determining whether to appoint or remove an Audit Committee Member, continuity of the Audit Committee shall be duly taken into account.
Moreover, at least one Audit Committee Member shall meet the audit committee financial expert requirements or such other equivalent requirements of the U.S. securities laws and regulations as may from time to time be applicable to Sony Group Corporation. The Board makes a determination on whether or not such Audit Committee Members meet these requirements. As of the date of this report, Keiko Kishigami and Yoriko Goto are “audit committee financial experts” within the meaning of Item 16A of Form 20-F under the Exchange Act, as amended. After the resolution of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 23, 2026, the Audit Committee is expected to consist of three outside Directors, one of whom (Yoriko Goto) is expected to be an “audit committee financial expert.” Yoriko Goto has auditing experience across various companies in Japan and overseas, as well as expertise on internal control and considerable knowledge of finance and accounting.
(4) Policy on Selection of Independent Auditor Candidates and Independence of the Independent Auditor
With respect to the candidates for independent auditor nominated by the CEO and other Corporate Executive Officers, the Audit Committee evaluates the nomination, prior to making a decision on the candidates. The Audit Committee continues to evaluate the independence, the qualification and the reasonableness as well as the performance of the independent auditor so appointed.
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Compensation Committee
(1) Members: 3 outside Directors (as of the date of this report)
Chair of the Compensation Committee
Compensation Committee Member
* It is expected that members of the Compensation Committee described above will be reappointed at a meeting of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 23, 2026.
The primary roles of the Compensation Committee are to: (a) set policy on the content of individual compensation for Directors, Corporate Executive Officers and other officers and (b) determine the amount and content of individual compensation of Directors and Corporate Executive Officers in accordance with the policy, and oversee the determination regarding the amount and content of individual compensation of Senior Executives other than Corporate Executive Officers.
For the basic policy regarding remuneration for Directors and Corporate Executive Officers, refer to “Compensation” in Item 6.B.
(3) Policy Regarding Composition of the Compensation Committee
Under the Companies Act, the Compensation Committee shall consist of at least three Directors, the majority of whom shall be outside Directors. In addition, under the Board Charter, a Director who is a CEO, a Chief Operating Officer (“COO”) or a Chief Financial Officer (“CFO”) of Sony Group Corporation or who holds any equivalent position shall not be a member of the Compensation Committee, and the chair is to be selected from among the outside Directors. In determining whether to appoint or remove a member of the Compensation Committee, continuity of the Compensation Committee shall be duly taken into account. After the resolution of the Board immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 23, 2026, the Compensation Committee is expected to be comprised of three outside Directors.
Senior Executives (Corporate Executive Officer, Business CEO and other officers that assume important roles in the management of Sony)
(1) Total number of Senior Executives: 14 (including 5 Corporate Executive Officers) (as of the date of this report)
The primary roles of Senior Executives are to determine and execute Sony’s business activities in accordance with their roles and responsibilities determined by the Board.
(3) Delegation of Authority from the Board
The Board determines the fundamental management policies and other material matters related to the operation of Sony’s business. The Board assigns the duties of Corporate Executive Officers, including the CEO, by determining the areas over which each Corporate Executive Officer is in charge and by determining the scope of Senior Executives. Then, it delegates its decision-making authority to the CEO with a view to promoting timely and efficient decision-making within Sony. The CEO further subdelegates a part of such authority to other Senior Executives.
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Other Officers (Corporate Executives)
(1) Total number of other officers: 6 (as of the date of this report)
The primary roles of other officers are to carry out their assignments within designated areas, such as headquarters functions and/or R&D, in accordance with the fundamental policies determined by the Board and Senior Executives.
Outline of the Terms of Executives Liability Insurance Policy
Sony Group Corporation has, at its expense in respect of insurance premiums, entered into a directors and officers liability insurance policy for all Directors, Corporate Executive Officers, corporate auditors, and persons in equivalent positions (the “Executives”) of itself and its subsidiaries over which Sony Group Corporation has a direct or indirect ownership more than 50%. The outline of the terms of such liability insurance policy is as follows:
The insurance policy covers compensation for damages, litigation costs (including attorney’s fees) and other costs that may be incurred by the Executives as a result of assuming responsibility for the execution of their duties or receiving claims related to such responsibility.
As a measure to ensure the appropriateness of the execution of duties by the Executives, there are certain exemptions, such as in the case of an act committed by the Executives with the knowledge that it constitutes a violation of laws or regulations.
Support for Activities of Directors, the Board and the Committees
Sony Group Corporation engages in various activities to enhance the oversight function of the Board over management’s operation of Sony’s business as follows:
(1) Outside Director Initiatives
The Chair of the Board, who is an outside Director, leads the Board’s activities and secures the appropriate cooperation, communication and arrangement among outside Directors and Senior Executives. As an example of such initiatives, outside Directors’ meetings have been held, generally on the same day as each Board Meeting, for the purpose of exchanging information and sharing information with respect to recognized issues among outside Directors. The Board also conducted Directors’ strategic workshops with management, business site visits by Directors, and meetings with the Chair of the Board and the CEO. All of these activities were aimed at securing better understanding by outside Directors of Sony’s business and management’s challenges and encouraging strategic discussions among Directors. At a workshop held over two days in December 2025, through direct dialogue with the management team of Sony Group Corporation including the CEOs of each business segment, the Directors exchanged opinions about the business environment and challenges surrounding each business, as well as strategies to address them. At the workshop, Directors also intensively discussed Sony Group’s mid- to long-term strategies and challenges, including the business portfolio. In October 2025, the outside Directors first visited Sony’s External Relations office in Washington D.C., where they discussed geopolitical risks with local employees and engaged in dialogue with outside experts, and then they visited the offices of Sony Corporation of America and Sony Music Entertainment in New York, where they exchanged opinions with local management on the current status and strategies of the global music business.
(2) Secretariat Offices for the Board and each Committee
The company has established secretariat offices of the Board and each Committee to support the activities of the members and encourage constructive and proactive discussion at the meetings of the Board and each Committee. Each secretariat office endeavors to distribute necessary materials for the meetings in advance and to provide other information such as accounting information, organizational charts, press releases, external analyst reports and credit rating reports, as appropriate. Each secretariat office explains the meeting agenda to the members and provides them with presentation materials in advance of each meeting date and facilitates deliberation in separate meetings or briefing sessions depending on the nature of matters to be discussed. Each secretariat office also provides the absent members with a follow up briefing, as appropriate. In addition, under supervision by the Chairs of the Board and each Committee, each secretariat office shares the annual schedule of the meetings and anticipated agenda items in advance with the members in order to appropriately set the frequency of meetings and the number of agenda items to be deliberated at each meeting.
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(3) Provision of Necessary Information
When the company is requested to provide additional information, each secretariat office endeavors to provide the members such information promptly. Also, each secretariat office verifies appropriately whether requested information is provided smoothly. In the event that the members consult with external specialists, participate in various seminars and so on to perform their duties, the costs and expenses in connection with such activities are borne by the company in accordance with applicable internal rules.
(4) Audit Committee Aide
With the approval of the Board and with the Audit Committee’s consent, the company has established the Audit Committee Aide to support the activities of the Audit Committee. The Audit Committee Aide does not concurrently hold positions related to the business operations of Sony and, upon instruction by each Audit Committee member, conducts investigations into and analyzes auditing matters and engages in physical inspections or visiting audits either by him/herself or by cooperating with relevant departments in order to support the Audit Committee.
(5) Policy on Director Training
Newly appointed Directors receive briefings by Senior Executives and outside experts regarding their expected roles and responsibilities, including their legal duties as a Director or as a member of the Committees, as well as briefings about the business, financial status, organization and governance structure of Sony. Also, throughout their tenure, each Director receives compliance-related training in accordance with internal protocols and briefings on matters relevant to each Director’s fulfillment of his/her roles and responsibilities including the current status of Sony’s business.
Evaluation of the Board and the Committees’ Effectiveness
(1) Policy for Evaluation
Sony Group Corporation believes that it is important to endeavor to improve the effectiveness of the Board and each Committee in order to support Sony’s business operations and enhance the corporate value of Sony. To achieve this goal, Sony Group Corporation conducts evaluations of the effectiveness of the Board and of each Committee (the “Evaluation”) annually, as a general rule.
(2) Recent Evaluation
From February through May 2026, the Board conducted the Evaluation mainly in respect of the Board and Committee activities in the fiscal year ended March 31, 2026 after confirming that actions proposed in response to the results of the previous Evaluation were appropriately taken. The recent Evaluation was conducted under the leadership of the Chair of the Board, with the support of a third-party evaluation by an outside counsel having expertise in Japanese and global corporate governance practices (the “Outside Counsel”) in order to ensure transparency and objectivity and to obtain professional advice.
(3) Procedure of the Recent Evaluation
First, the Board confirmed that the actions proposed to be taken in response to the results of the previous Evaluation were taken, and it discussed and confirmed the proposed procedures for the Evaluation for the fiscal year ended March 31, 2026. Thereafter, the third-party evaluation was conducted by the Outside Counsel in accordance with the following steps:
Reviewed relevant material, such as the minutes of Board meetings, and attended a Board meeting;
Confirmed with the Board secretariat office and each Committee’s secretariat office how meetings of the Board and Committees were conducted;
Gathered responses to a questionnaire from each Director (including the Peer Review*) about the current status and practices of the Board and each Committee, such as the composition of the Board, operation of the Board, commitments of each Director, activities of each Committee and procedures of the previous Evaluation;
Interviewed the Chair of the Board and the Chair of each Committee, newly appointed Directors (including the Peer Review*), and some of the Corporate Executive Officers; and
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Researched other global companies’ practices in Japan and the U.S., and compared them with the company’s practices.
Peer Review: A mutual evaluation among Directors. In the fiscal year ended March 31, 2026, it was conducted through a questionnaire responded to by all Directors.
The Board then received, reviewed and discussed the Outside Counsel’s report on the results of its evaluation. The Board confirmed the effectiveness of the Board and the Committees.
(4) Summary of the Results of the Recent Evaluation
Based on the following findings, the Outside Counsel reported that, as assessed in the previous Evaluation, the Board is established and operated in a manner sufficient to be highly evaluated:
The results of the questionnaire and interviews show that all Directors rate the effectiveness of the Board, including each Committee, highly.
The roles played by the newly appointed Chair of the Board and CEO on the Board were also highly evaluated by the Directors.
The Board played an appropriate role in the preparation and execution of the Partial Spin-off of the Financial Services business.
With the addition of three new Directors, the composition of the Board has shifted toward a structure that the capital markets highly value.
Initiatives to improve effectiveness of the Board continue to be implemented.
The process for sharing Board meeting materials with the Directors has been streamlined through the introduction of a dedicated application.
The newly appointed Directors commented that the orientation program was well conducted and evaluated it highly.
In terms of the Board’s composition and other various aspects, the Board has characteristics that are highly evaluated in many respects in comparison with the boards of listed companies in the U.S. as well as in Japan.
Following discussion and analysis based on the Outside Counsel’s report, the Board re-affirmed that the Board and each Committee were functioning effectively as of May 2026.
The Outside Counsel also suggested several ideas on possible options for the Board and Committees to further improve their own effectiveness.
(5) Actions in Response to the Results of the Evaluation
In order to increase the corporate value of Sony, Sony Group Corporation will take appropriate actions to further enhance functions of the Board and the Committees in response to the results of the Evaluation, as well as various comments and opinions given by Directors and the Outside Counsel during the Evaluation process.
In addition, since the previous Evaluation conducted in 2025, the following major efforts have been implemented to improve the effectiveness of the Board.
Monitoring the progress of the business portfolio review and capital allocation;
Deepening discussions on and supervision over initiatives toward realizing the “Creative Entertainment Vision”; and
Overseeing policies and the status of responses to risks that could affect Sony’s management, including cybersecurity, economic security and geopolitical risks.
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Internal Control and Governance Framework
At a Board meeting held on April 26, 2006, the Board reaffirmed the internal control and governance framework in effect as of the date of determination and determined to continue to evaluate and improve such framework going forward, as appropriate. At Board meetings held on May 13, 2009 and April 30, 2015, the Board amended and updated the internal control and governance framework, and as of May 8, 2026, the Board reaffirmed that such framework was in effect and determined to continue to evaluate and improve such framework going forward, as appropriate. These determinations were required by and met the requirements of the Companies Act.
A summary of the principal framework of the internal control and governance framework based on the Board determination above is as follows:
(1) Disclosure Control Framework
The securities of Sony Group Corporation are listed for trading on exchanges in Japan and the U.S. As a result, Sony is obligated to make various disclosures to the public in accordance with applicable securities laws, regulations and rules in those countries and listing standards of the stock exchanges on which Sony Group Corporation’s shares are listed. Sony is committed to full compliance with all requirements applicable to its public disclosures. Sony Group Corporation’s policy on investor relations activities is to aim to disclose accurate information in a timely and fair manner, as well as to endeavor to promote constructive dialogue with shareholders and investors, with a view to maximizing the corporate value by building a relationship of trust with shareholders and investors. Sony Group Corporation has established disclosure controls and procedures as an approach to implement this policy. All personnel responsible for the preparation of submissions to and filings with the TSE, the SEC and other regulatory entities, or for other public communications made on behalf of Sony, or who provide information as part of that process, have a responsibility to ensure that such disclosures and information are full, fair, accurate, timely and understandable, and in compliance with the established disclosure controls and procedures.
Sony Group Corporation has established “Disclosure Controls and Procedures” outlining the process through which potentially material information is reported from important business units, subsidiaries, affiliated companies and corporate divisions and is reviewed and considered for disclosure in light of its materiality to Sony. As a body to assist the CEO and the CFO of Sony Group Corporation in designing, implementing and evaluating the Disclosure Controls and Procedures, Sony Group Corporation has established the “Disclosure Committee,” which is comprised of members of senior management who are in charge of a part of Sony’s headquarters functions. In order to assure appropriate and timely disclosure, the Disclosure Committee shall evaluate events that are reported from the important business units, subsidiaries, affiliated companies and corporate divisions in accordance with Sony’s internal rules in light of their materiality to Sony. Based on such evaluation, the Disclosure Committee shall review the necessity of disclosure in accordance with applicable securities laws, regulations and rules, as well as the listing standards of the relevant stock exchanges, and report to the CEO and CFO for their determination.
(2) Risk Management Framework
Each business unit, subsidiary/affiliated company and corporate division of Sony periodically reviews and assesses risks and establishes and maintains necessary risk management systems (such as detection, communication, evaluation and response) for the area for which they are responsible. In addition, Senior Executives, including the Corporate Executive Officers, of Sony Group Corporation have established and currently maintain a system to identify and control risks that may cause losses to Sony regarding the areas for which they are responsible. The Corporate Executive Officer in charge of group risk control shall comprehensively promote and manage the establishment and maintenance of the systems as stated above.
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Details of Actions Taken by the Board and the Committees
(1) Details of Actions Taken by the Board
During the fiscal year ended March 31, 2026, the Board convened 8 times. The attendance records of respective Directors are as follows.
Yoriko Goto*2
Nora Denzel*2
Masayuki Hyodo*2
*1 The numbers of the Meeting Records and the Attendance Records are those applicable to the fiscal year ended March 31, 2026.
*2 Because Yoriko Goto, Nora Denzel and Masayuki Hyodo were newly appointed as Directors at the Ordinary General Meeting of Shareholders on June 24, 2025, the numbers of their Meeting Records and Attendance Records differ from those of other outside Directors.
Note: Mr. Yoshihiko Hatanaka and Ms. Sakie Akiyama, who retired as Directors in June 2025, attended the one Board meeting held prior to their retirements.
During the fiscal year ended March 31, 2026, the Board discussed a variety of matters, such as a review of Sony’s business performance on a quarterly basis, Sony’s business portfolio including the Partial Spin-off of the Financial Services business, progress and reviews of the results of the fifth mid-range plan, formation of a business plan for the fiscal year ending March 31, 2027, strategically important M&A, initiatives toward realizing the “Creative Entertainment Vision” as Sony’s long-term vision, Group-wide AI initiatives, effectiveness of internal control and governance framework (including the ethics and compliance program) and risk management (including cybersecurity risks and geopolitical risks), as well as Sony’s initiatives and strategies related to sustainability.
(2) Details of Actions Taken by the Nominating Committee
During the fiscal year ended March 31, 2026, the Nominating Committee convened 5 times. The attendance records of respective Directors are as follows.
*2 Because Masayuki Hyodo was newly appointed as a member of the Nominating Committee pursuant to the resolution at the meeting of the Board held on June 24, 2025, the numbers of his Meeting Records and Attendance Records differ from those of other members of the Nominating Committee.
Note: Mr. Yoshihiko Hatanaka, who retired as a member of the Nominating Committee in June 2025, attended the one Nominating Committee meeting held prior to his retirement.
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The matters given consideration by the Nominating Committee include policies on selecting Director candidates, exploring Director prospects, and CEO succession. In addition, the Nominating Committee assesses succession plans for the Senior Executives with key management responsibilities for individual business units and headquarters functions, based on management, including CEO, reports. During the fiscal year ended March 31, 2026, with respect to the selection of Director candidates, as a priority item for the fiscal year, the Nominating Committee confirmed the policy that the candidates for Directors should be selected by considering the size of the Board, and the expertise and diversity of each Director, and held discussions based on such policy. As a result, Lin Tao, CFO, was appointed as a candidate for new Director while concurrently serving as a Corporate Executive Officer. The Nominating Committee also reviewed and decided to continue discussions on candidates for new outside Directors for the next fiscal year and beyond. Regarding the change in the Senior Executives, the Nominating Committee reviewed and assessed the proposed retirement of Kenichiro Yoshida from the position of Representative Corporate Executive Officer and for him to continue to serve as Chairman, as well as succession plans for the Senior Executives.
(3) Details of Actions Taken by the Audit Committee
During the fiscal year ended March 31, 2026, the Audit Committee convened 7 times. The attendance records of respective Directors are as follows.
*2 Because Yoriko Goto was newly appointed as a member of the Audit Committee pursuant to the resolution at the meeting of the Board held on June 24, 2025, the numbers of her Meeting Records and Attendance Records differ from those of other members of the Audit Committee.
The Audit Committee conducts audits of the performance of duties by Directors and Corporate Executive Officers pursuant to applicable laws and regulations and the Charter of the Audit Committee established by the Board, through deliberation at seven Audit Committee meetings, activities of Audit Committee Members (for example, reviewing reports relating to the execution of duties by the Corporate Executive Officers and employees of Sony Group Corporation, or directors, statutory auditors and employees of major subsidiaries of Sony Group Corporation, and visiting audits at business sites), and activities of the Audit Committee Aide (including attendance at meetings relating to important management execution matters, review of meeting materials, and review of approval documents and other materials concerning the Senior Executives). In addition, the Audit Committee conducts the “organizational audit” in cooperation with divisions in charge of internal audit and divisions in charge of internal control of Sony. Through the process, the Audit Committee receives periodical reports from these divisions at the Audit Committee meetings or other meetings to be held from time to time, requests that they conduct necessary investigations, and receives reports on the process and result of such investigations. Furthermore, the meetings with divisions in charge of internal control of Sony were held seven times and the meetings with and written reports from the independent auditor were held and received, in total, eight times during the fiscal year ended March 31, 2026.
Specific considerations by the Audit Committee include review of audit plans in three-way audits, identification and audit of priority audit items for each fiscal year, review of financial results and disclosure documents related to financial results, review of development and operation of internal control systems, audit of financial reports and SOX 404-related activities, audit of internal audit activities, review of the content and process for determining the compensation of the independent auditors, audit of the appropriateness of audit by the independent auditors and evaluation of the independent auditors. In addition to these, the Audit Committee held interviews with the Senior Executives and other officers to receive reports on matters such as the recognition of issues and the status of risk management in the respective areas of responsibility of each business and headquarter function, and engaged in dialogue.
The priority audit items for the fiscal year ended March 31, 2026 were the focus areas and governance framework under the new management structure, responses to changes in the business portfolio, and responses to
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new accounting standards and disclosure standards not yet adopted. Through the organizational audit described above, the following audit activities were conducted.
Focus areas and governance under the new management structure
The Audit Committee engaged in dialogue with the newly appointed Chief Officers, whose roles were effective April 1, 2025, regarding their focus areas under the new management structure and the status of progress. In meetings with the Business CEOs, in light of the rapidly increasing uncertainty in the business environment, the Audit Committee discussed opportunities and risks identified as particularly significant within their respective areas of responsibility and confirmed that prompt responses to risks and initiatives to strengthen the profitability of each business were being advanced.
Responses to changes in the business portfolio
With respect to the Partial Spin-off of the Financial Services business, the Audit Committee held in-depth discussions with the internal control department and the independent auditor regarding the appropriateness and sufficiency of the phased accounting treatments and related disclosures. In addition, the Audit Committee reviewed the policies and details regarding accounting treatments and disclosures in connection with the establishment of a joint venture through a strategic partnership in the home entertainment field between Sony Corporation and TCL.
Responses to new accounting standards and disclosure standards not yet adopted
The Audit Committee received reports on preparations for sustainability disclosures in accordance with the sustainability disclosure standards published by the Sustainability Standards Board of Japan, which will be effective from the fiscal year ending March 31, 2027, and reviewed the disclosure policy options available to Sony, Sony’s status of collecting such information for disclosure, and related challenges.
(4) Details of Actions Taken by the Compensation Committee
During the fiscal year ended March 31, 2026, the Compensation Committee convened 6 times. The attendance records of respective Directors are as follows.
*2 Because Nora Denzel and Masayuki Hyodo were newly appointed as members of the Compensation Committee pursuant to the resolution at the meeting of the Board held on June 24, 2025, the numbers of their Meeting Records and Attendance Records differ from those of the other member of the Compensation Committee.
Note: Wendy Becker and Ms. Sakie Akiyama, who retired as members of the Compensation Committee in June 2025, attended the two Compensation Committee meetings held prior to their retirement.
The specific matters given consideration by the Compensation Committee include the Corporation’s policy regarding the determination of individual remuneration for Directors and Senior Executives, including Corporate Executive Officers, for each fiscal year, and the amount and content of such remuneration. The Committee also considers the total number of stock acquisition rights to be issued for the purpose of granting stock options to Corporate Executive Officers and employees of the Corporation and directors, other officers and employees of the Corporation’s subsidiaries, other stock-based compensation utilizing shares of the Corporation’s stock such as restricted stock units, and the determination of officers subject to the clawback policy. During the fiscal year ended March 31, 2026, the Compensation Committee discussed and determined a review of the percentage of the Business Results Linked Standard Payment Amount relative to fixed remuneration for the Senior Executives, the introduction of restricted stock units (“RSUs”) vesting upon resignation to gradually replace the phantom restricted stock plan, and the value adjustment to previously granted stock-based compensation carried out in connection with the Partial Spin-off of the Financial Services business. The Committee also conducted a
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comprehensive review of and discussion on the types and composition of stock-based compensation for the fiscal year ending March 31, 2027 and beyond, with consideration of other companies’ trends in Japan and other countries.
Employees
As of March 31, 2026, Sony had approximately 94,900 employees, a decrease of approximately 17,400 employees from March 31, 2025. This decrease was mainly attributable to the deconsolidation of SFGI following the Partial Spin-off of the Financial Services business, as well as headcount reductions resulting from structural reforms in the ET&S segment (in Japan) and business divestitures in the I&SS segment (outside of Japan). Approximately 8% of the total number of employees were members of labor unions.
As of March 31, 2025, Sony had approximately 112,300 employees, a decrease of approximately 700 employees from March 31, 2024. During the fiscal year ended March 31, 2025, although there was an increase of employees in the Pictures segment (outside of Japan) due to the expansion of the business, including through mergers and acquisitions, as well as in the Financial Services segment, there was a decrease of employees in the ET&S and G&NS (outside of Japan) segments and All Other (in Japan) mainly due to restructuring, and in the I&SS segment (outside of Japan) mainly due to the closure of a manufacturing site in China. Approximately 7% of the total number of employees were members of labor unions.
As of March 31, 2024, Sony had approximately 113,000 employees, essentially unchanged from March 31, 2023. During the fiscal year ended March 31, 2024, although there was a decrease of employees mainly at manufacturing sites in China in the I&SS segment, there was an increase of employees primarily in the Pictures segment (outside of Japan). Approximately 8% of the total number of employees were members of labor unions.
The following table shows the number of employees of Sony by segment and region as of March 31, 2024, 2025 and 2026.
Number of Employees by Segment and Region
By segment:
Financial Services
Unallocated — Corporate employees
By region:
Outside of Japan
In addition, the average number of employees for the fiscal years ended March 31, 2024, 2025 and 2026, calculated by averaging the total number of employees at the end of each quarter, was approximately 113,900, 113,300 and 103,600, respectively.
Sony generally considers its labor relations to be good.
In Japan, Sony Group Corporation and several subsidiaries have labor unions.
In the G&NS, ET&S and I&SS segments, Sony owns many manufacturing sites, particularly in Asia, where a few sites have labor unions that have union contracts. In China, most employees are members of labor unions. Sony has generally maintained good relationships with these labor unions. In Europe, Sony also maintains good labor relations with the European Works Council and the local Unions and Works Councils.
In the Music segment, Sony has a labor union and generally considers its labor relations to be good.
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In the Pictures segment, Sony also generally considers its labor relations to be good. A number of Pictures’ subsidiaries are signatories to union contracts. During the fiscal year ended March 31, 2026, negotiations were conducted and agreements were reached with a number of unions. Negotiations were completed with Screen Actors Guild-American Federation of Television and Radio Artists (“SAG-AFTRA”) for the Network Code agreement and for the first Intimacy Coordinators agreement. Negotiations were also completed with the International Alliance of Theatrical and Stage Employees for an agreement with The Animation Guild. Negotiations were also completed on April 5, 2026 with the Writers Guild of America for a new agreement for a four-year term. Negotiations were also completed on May 2, 2026 with SAG-AFTRA for the Codified Basic Agreement and the Television Basic Agreement, each with a new four-year term. A tentative agreement was reached with the Directors Guild of America (“DGA”) on June 9, 2026 for the Basic Agreement and the Film Live Tape Television Agreement. These agreements, which also have four-year terms, are still subject to ratification in June 2026 by the DGA membership. Alamo Drafthouse Cinema is in negotiations for collective bargaining agreements with the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, Local 2179 covering employees at two theaters and with the Communications Workers of America, AFL-CIO covering employees at four theaters.
Sony continuously strives to provide competitive wages and benefits and good working conditions for all of its employees.
Share Ownership
The following table sets forth information with respect to the number of shares of Common Stock beneficially owned by Directors and Corporate Executive Officers listed in “Compensation” in “Item 6. Directors, Senior Management and Employees.” as of March 31, 2026.
Percentage of Total
Shares Outstanding
*1 The number of the Shares of Common Stock Beneficially Owned represents the total number of the shares of Common Stock, ADSs evidenced by ADRs, each ADS representing one share of Common Stock, Restricted Stock and stock acquisition rights.
*2 Includes (a) 682,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 1,288 yen per share, which will expire on October 30, 2028; (b) 600,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 2,278 yen per share, which will expire on November 15, 2032; and (c) 566,500 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 2,589 yen per share, which will expire on November 26, 2033.
*3 Includes (a) 132,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 1,288 yen per share, which will expire on October 30, 2028; (b) 150,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 1,848 yen per share, which will expire on October 28, 2030; (c) 250,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 2,870 yen per share, which will expire on October 28, 2031; (d) 250,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 2,278 yen per share, which will expire on November 1, 2032; and (e) 300,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 2,589 yen per share, which will expire on November 9, 2033.
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*4 Includes (a) 35,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 2,870 yen per share, which will expire on November 17, 2031; (b) 65,500 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 2,278 yen per share, which will expire on November 1, 2032; and (c) 20,500 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 2,589 yen per share, which will expire on November 9, 2033.
*5 Includes (a) 44,500 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 1,288 yen per share, which will expire on October 30, 2028; (b) 100,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 1,341 yen per share, which will expire on October 30, 2029; (c) 100,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 1,848 yen per share, which will expire on October 28, 2030; (d) 100,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 2,870 yen per share, which will expire on October 28, 2031; (e) 100,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 2,278 yen per share, which will expire on November 1, 2032; and (f) 66,500 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 2,589 yen per share, which will expire on November 9, 2033.
*6 Includes (a) 68,500 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 673 yen per share, which will expire on November 1, 2026; (b) 100,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 1,047 yen per share, which will expire on October 31, 2027; (c) 33,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 10.42 U.S. dollars per share, which will expire on November 19, 2028; (d) 66,500 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 11.37 U.S. dollars per share, which will expire on November 19, 2029; (e) 100,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 16.67 U.S. dollars per share, which will expire on November 17, 2030; (f) 100,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 2,870 yen per share, which will expire on October 28, 2031; (g) 100,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 2,278 yen per share, which will expire on November 1, 2032; and (h) 46,500 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 2,589 yen per share, which will expire on November 9, 2033.
*7 Includes (a) 13,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 1,288 yen per share, which will expire on October 30, 2028; (b) 15,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 1,341 yen per share, which will expire on October 30, 2029; (c) 20,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 1,848 yen per share, which will expire on October 28, 2030; (d) 20,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 2,870 yen per share, which will expire on October 28, 2031; (e) 20,000 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 2,278 yen per share, which will expire on November 1, 2032; and (f) 5,500 shares that may be acquired upon the exercise of stock acquisition rights at an exercise price of 2,589 yen per share, which will expire on November 9, 2033.
*8 Less than 1%.
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During the fiscal year ended March 31, 2026, Sony Group Corporation granted stock acquisition rights, which represent rights to subscribe for shares of Common Stock, to Corporate Executive Officers and employees of Sony Group Corporation as well as directors, officers and employees of its subsidiaries. The stock acquisition rights cannot be exercised for one year from the date of grant and generally vest ratably up to three years from the date of grant and are generally exercisable up to ten years from the date of grant. The following table shows the portion of those stock acquisition rights which were granted by Sony Group Corporation to Directors and Corporate Executive Officers as of March 31, 2026 and which were outstanding as of the same date.
Year granted
(Fiscal year ended March 31)
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
*1 Total numbers of shares subject to stock acquisition rights and the exercise prices per share of stock acquisition rights granted from the fiscal year ended March 31, 2017 to the fiscal year March 31, 2024 are figures taking into account the five-for-one stock split effective October 1, 2024.
*2 In connection with the Partial Spin-off of the Financial Services business, the execution of which was completed on October 1, 2025, the exercise prices per share of stock acquisition rights have been adjusted in accordance with the provisions of the terms and conditions governing the issuance of such stock acquisition rights.
Regarding the above compensation plans, refer to Note 21 of the consolidated financial statements.
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation
Not applicable
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Major Shareholders and Related Party Transactions
Major Shareholders
As of March 31, 2026, there were 6,149,810,645 shares of Common Stock outstanding, including 242,144,891 shares of treasury stock. Out of the total outstanding shares, 523,381,332 shares were in the form of ADRs and 1,115,823,494 shares were held of record in the form of Common Stock by residents in the U.S. As of March 31, 2026, the number of registered ADR holders was 4,302 and the number of registered holders of Common Stock in the U.S. was 473.
The Financial Instruments and Exchange Act of Japan requires any person who solely or jointly owns more than 5% of total issued voting shares of a company listed on any Japanese stock exchange to file with the Kanto Local Finance Bureau (the “Bureau”) a Bulk Shareholding Report. The following table summarizes the Bulk Shareholding Reports related to Sony (each a “Report”) submitted to the Bureau, where it is reported that ownership percentage by the reported entity exceeds 5% in the most recent updated Report. The Reports do not specify whether reported ownership is direct or beneficial.
Date of Report*
Reported entities
October 6, 2020
December 5, 2024
September 19, 2025
* The table above contains information from the most recent updated Reports.
** Shares issuable or transferable upon exchange of exchangeable securities, conversion of convertible securities or exercise of warrants or stock acquisition rights (including those incorporated in bonds with stock acquisition rights) are taken into account in determining both the size of the reported entity’s holding and Sony’s total issued share capital.
To the knowledge of Sony Group Corporation, it is not directly or indirectly owned or controlled by any other corporation, by any foreign government or by any other natural or legal person either severally or jointly. As far as is known to Sony Group Corporation, there are no arrangements the operation of which may, at a subsequent date, result in a change in control of Sony Group Corporation.
To the knowledge of Sony Group Corporation, there were no significant changes in the percentage ownership held by any other major beneficial shareholders during the past three fiscal years. Major shareholders of Sony Group Corporation do not have different voting rights from other shareholders.
Related Party Transactions
In the ordinary course of business, Sony purchases materials, supplies, and services from numerous suppliers throughout the world, including firms with which certain members of the Board of Directors are affiliated.
Refer to Note 31 of the consolidated financial statements for account balances and transactions with associates and joint ventures accounted for under the equity method.
Interests of Experts and Counsel
Financial Information
Consolidated Statements and Other Financial Information
Refer to the consolidated financial statements and the notes of the consolidated financial statements.
Sony Group Corporation and certain of its subsidiaries are defendants or otherwise involved in pending legal and regulatory proceedings. However, based upon the information currently available, Sony believes that
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the outcome from such legal and regulatory proceedings would not have a material impact on Sony’s results of operations and financial position.
Sony believes that continuously increasing corporate value and providing dividends are essential to rewarding shareholders. It is Sony’s policy to utilize retained earnings, after ensuring the perpetuation of stable dividends, to carry out various investments that contribute to an increase in corporate value, such as those that ensure future growth and strengthen competitiveness. Going forward, Sony will determine the amount of dividends based on an overall consideration of Sony’s consolidated operating results, financial condition and future business expectations.
A fiscal year-end dividend of 12.5 yen per share of Common Stock was approved at the Board of Directors meeting held on May 8, 2026 and the payment of such dividend started on June 1, 2026. Sony Group Corporation has already paid an interim dividend for Common Stock of 12.5 yen per share to each shareholder; accordingly, the total annual dividend per share of Common Stock for the fiscal year ended March 31, 2026 is 25 yen.
Significant Changes
The Offer and Listing
Offer and Listing Details
Trading Markets
The principal trading markets for Sony Group Corporation’s ordinary shares are the TSE in the form of Common Stock and the NYSE in the form of ADSs evidenced by ADRs. Each ADS represents one share of Common Stock.
Sony Group Corporation’s Common Stock, with no par value per share, has been listed on the TSE since 1958 under the stock code “6758.”
Sony Group Corporation’s ADRs have been traded in the U.S. since 1961 and have been listed on the NYSE since 1970. As of April 1, 2021, the ticker symbol changed from “SNE” to “SONY.” Sony Group Corporation’s ADRs are issued and exchanged by JPMorgan Chase Bank, N.A., as the Depositary.
Plan of Distribution
Markets
Refer to “Offer and Listing Details” in Item 9.A.
Selling Shareholders
Dilution
Expenses of the Issue
Additional Information
Share Capital
Sony Group Corporation conducted a five-for-one stock split of Common Stock effective October 1, 2024, with a record date of September 30, 2024. Sony Group Corporation conducted the stock split and lowered the amount per an investment unit for the purpose of making it easier for investors to invest and expanding the investor base.
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Sony Group Corporation amended its Articles of Incorporation to increase the total number of shares authorized to be issued by Sony Group Corporation from 3.6 billion to 18.0 billion, in accordance with Article 184, Paragraph 2 of the Companies Act of Japan, effective on October 1, 2024, which was the effective date of the stock split.
Memorandum and Articles of Association
Organization
Sony Group Corporation is a joint stock corporation (Kabushiki Kaisha) incorporated in Japan under the Companies Act (Kaishaho) of Japan. It is registered in the Commercial Register (Shogyo Tokibo) maintained by the Minato Branch Office of the Tokyo Legal Affairs Bureau.
Objects and purposes
The Articles of Incorporation of Sony Group Corporation provide that its purpose is to engage in the following business activities:
manufacture and sale of electronic and electrical machines and equipment, medical instruments, optical instruments and other equipment, machines and instruments;
planning, production and sale of audio-visual software and computer software programs;
manufacture and sale of metal industrial products, chemical industrial products and ceramic industrial products, textile products, paper products and wood-crafted articles, daily necessities, foodstuffs and toys, transportation machines and equipment, and petroleum and coal products;
real estate activities, construction business, transportation business and warehousing business;
publishing business and printing business;
advertising agency business, insurance agency business, broadcasting enterprise, recreation business such as travel, management of sporting facilities, etc. and other service enterprises;
financial business;
Type I and Type II telecommunications business under the Telecommunications Business Law;
investing in stocks and bonds, etc.;
manufacture, sale, export and import of products which are incidental to or related to those mentioned above;
rendering of services related to those mentioned above;
investment in businesses mentioned above operated by other companies or persons; and
all businesses which are incidental to or related to those mentioned above.
Under the Companies Act, because Sony Group Corporation has adopted the “Company with Three Committees” system, Directors have no power to execute the business of Sony Group Corporation except in limited circumstances as permitted by law. If a Director also serves concurrently as a Corporate Executive Officer, then he or she can execute the business of Sony Group Corporation in the capacity of Corporate Executive Officer. Under the Companies Act, Directors must refrain from engaging in any business competing with Sony Group Corporation unless approved by the Board of Directors, and any Director who has a material interest in the subject matter of a resolution to be taken by the Board of Directors cannot vote on such resolution. The amount of remuneration to each Director is determined by the Compensation Committee, which consists of Directors, the majority of whom are outside Directors (Refer to “Board Practices” in “Item 6. Directors, Senior Management and Employees”). No member of the Compensation Committee may vote on a resolution with respect to his or her own compensation as a Director or a Corporate Executive Officer.
Neither the Companies Act nor Sony Group Corporation’s Articles of Incorporation make a special provision as to the borrowing powers exercisable by Directors (subject to requisite internal authorizations as required by the Companies Act), their retirement age, or a requirement to hold any shares of capital stock of Sony Group Corporation.
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For more information on Directors, refer to “Board Practices” in “Item 6. Directors, Senior Management and Employees.”
Capital stock
(General)
Unless indicated otherwise, set forth below is information relating to Sony Group Corporation’s capital stock, including brief summaries of the relevant provisions of Sony Group Corporation’s Articles of Incorporation and Share Handling Regulations, currently in effect, and of the Companies Act and related regulations.
The central book-entry transfer system for shares of Japanese listed companies under the Act Concerning Book-entry Transfer of Corporate Bonds, Shares, etc. (including regulations promulgated thereunder, “Book-entry Transfer Act”) is applied to the shares of Common Stock of Sony Group Corporation. Under this system, shares of all Japanese companies listed on any Japanese stock exchange are dematerialized, and shareholders must have accounts at account management institutions to hold their shares unless such shareholder has an account at Japan Securities Depository Center, Inc. (“JASDEC”). “Account management institutions” are financial instruments traders (i.e., securities companies), banks, trust companies and certain other financial institutions that meet the requirements prescribed by the Book-entry Transfer Act. Transfer of the shares of Common Stock of Sony Group Corporation is effected exclusively through entry in the records maintained by JASDEC and the account management institutions, and title to the shares passes to the transferee at the time when the transfer of the shares is recorded at the transferee’s account at an account management institution. The holder of an account at an account management institution is presumed to be the legal holder of the shares recorded in such account.
Under the Companies Act and the Book-entry Transfer Act, in order to assert shareholders’ rights against Sony Group Corporation, a shareholder of shares must have its name and address registered in Sony Group Corporation’s register of shareholders. Under the central book-entry transfer system operated by JASDEC, shareholders shall notify the relevant account management institutions of certain information prescribed under the Book-entry Transfer Act or Sony Group Corporation’s Share Handling Regulations, including their names and addresses, and the registration on Sony Group Corporation’s register of shareholders is updated upon receipt by Sony Group Corporation of necessary information from JASDEC (as described in “(Record date)”). On the other hand, in order to assert, against Sony Group Corporation, shareholders’ rights to which shareholders are entitled, regardless of whether such shareholder held shares on the requisite record date, such as minority shareholders’ rights, including the right to propose a matter to be considered at a General Meeting of Shareholders, except for shareholders’ rights to request that Sony Group Corporation purchase or sell shares constituting less than a full unit (as described in “(Unit share system)”), JASDEC shall, upon the shareholder’s request, issue a notice of certain information, including the name and address of such shareholder, to Sony Group Corporation.
Thereafter, such shareholder shall provide Sony Group Corporation with written notice that he or she exercises such shareholder’s right in accordance with the Sony Group Corporation’s Share Handling Regulations. Under the Book-entry Transfer Act, the shareholder shall exercise such shareholders’ right within four weeks after the notice above has been given to Sony Group Corporation.
Mitsubishi UFJ Trust and Banking Corporation is the transfer agent for Sony Group Corporation’s capital stock. As such, it keeps Sony Group Corporation’s register of shareholders in its office at 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo.
Non-resident shareholders are required to appoint a standing proxy in Japan or file notice of a mailing address in Japan. Notices from Sony Group Corporation to non-resident shareholders are delivered to such standing proxies or mailing address. Japanese securities companies and commercial banks customarily act as standing proxies and provide related services for standard fees. The recorded holder of deposited shares underlying the ADSs is the depositary for the ADSs. Accordingly, holders of ADSs will not be able to directly assert shareholders’ rights against Sony Group Corporation.
(Authorized capital)
Under the Articles of Incorporation of Sony Group Corporation, Sony Group Corporation may only issue shares of Common Stock. Sony Group Corporation’s Articles of Incorporation provide that the total number of shares authorized to be issued by Sony Group Corporation is 18 billion shares.
All shares of capital stock of Sony Group Corporation have no par value. All issued shares are fully-paid and non-assessable.
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(Distribution of Surplus)
Distribution of Surplus — General
Under the Companies Act, distributions of cash or other assets by joint stock corporations to their shareholders, so called “dividends,” are referred to as “distributions of Surplus” (“Surplus” is defined in “— Restriction on distribution of Surplus”). Sony Group Corporation may make distributions of Surplus to shareholders any number of times per business year, subject to certain limitations described in “— Restriction on distribution of Surplus.” Distributions of Surplus are required in principle to be authorized by a resolution of a General Meeting of Shareholders, but Sony Group Corporation may authorize distributions of Surplus by a resolution of the Board of Directors as long as its non-consolidated annual financial statements and certain documents for the last business year present fairly its assets and profit or loss, as required by ordinances of the Ministry of Justice.
Distributions of Surplus may be made in cash or in kind in proportion to the number of shares of Common Stock held by each shareholder. A resolution of the Board of Directors or a General Meeting of Shareholders authorizing a distribution of Surplus must specify the kind and aggregate book value of the assets to be distributed, the manner of allocation of such assets to shareholders, and the effective date of the distribution. If a distribution of Surplus is to be made in kind, Sony Group Corporation may, pursuant to a resolution of the Board of Directors or (as the case may be) a General Meeting of Shareholders, grant a right to the shareholders to require Sony Group Corporation to make such distribution in cash instead of in kind. If no such right is granted to shareholders, the relevant distribution of Surplus must be approved by a special resolution of a General Meeting of Shareholders, subject to certain exceptions under special laws and regulations (refer to “(Voting rights)” with respect to a “special resolution”).
Under the Articles of Incorporation of Sony Group Corporation, year-end dividends and interim dividends may be distributed in cash to shareholders appearing in Sony Group Corporation’s register of shareholders as of March 31 and September 30 each year, respectively, in proportion to the number of shares of Common Stock held by each shareholder following approval by the Board of Directors or (as the case may be) the General Meeting of Shareholders. Sony Group Corporation is not obliged to pay any dividends in cash unclaimed for a period of five years after the date on which they first became payable.
In Japan, the ex-dividend date and the record date for dividends precede the date of determination of the amount of the dividends to be paid. The price of the shares of Common Stock generally goes ex-dividend on the business day immediately prior to the record date (or if the record date is not a business day, the second business day prior thereto).
Distribution of Surplus — Restriction on distribution of Surplus
In making a distribution of Surplus, Sony Group Corporation must, until the sum of its additional paid-in capital and legal reserve reaches one quarter of its stated capital, set aside in its additional paid-in capital and/or legal reserve an amount equal to one-tenth of the amount of Surplus so distributed.
The amount of Surplus at any given time must be calculated in accordance with the following formula:
A + B + C + D – (E + F + G)
In the above formula:
the total amount of other capital surplus and other retained earnings, each such amount being that appearing on the non-consolidated balance sheet as of the end of the last business year
(if Sony Group Corporation has disposed of its treasury stock after the end of the last business year) the amount of the consideration for such treasury stock received by Sony Group Corporation less the book value thereof
(if Sony Group Corporation has reduced its stated capital after the end of the last business year) the amount of such reduction less the portion thereof that has been transferred to additional paid-in capital or legal reserve (if any)
(if Sony Group Corporation has reduced its additional paid-in capital or legal reserve after the end of the last business year) the amount of such reduction less the portion thereof that has been transferred to stated capital (if any)
(if Sony Group Corporation has cancelled its treasury stock after the end of the last business year) the book value of such treasury stock
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“F” =
(if Sony Group Corporation has distributed Surplus to its shareholders after the end of the last business year) the total book value of the Surplus so distributed
“G” =
certain other amounts set forth in ordinances of the Ministry of Justice, including (if Sony Group Corporation has reduced Surplus and increased its stated capital, additional paid-in capital or legal reserve after the end of the last business year) the amount of such reduction and (if Sony Group Corporation has distributed Surplus to the shareholders after the end of the last business year) the amount set aside in additional paid-in capital or legal reserve (if any) as required by ordinances of the Ministry of Justice
The aggregate book value of Surplus distributed by Sony Group Corporation may not exceed a prescribed distributable amount (the “Distributable Amount”), as calculated on the effective date of such distribution. The Distributable Amount at any given time shall be equal to the amount of Surplus less the aggregate of the following:
the book value of its treasury stock;
the amount of consideration for any of treasury stock disposed of by Sony Group Corporation after the end of the last business year; and
certain other amounts set forth in ordinances of the Ministry of Justice, including (if the sum of one-half of goodwill and the deferred assets exceeds the total of stated capital, additional paid-in capital and legal reserve, each such amount being that appearing on the non-consolidated balance sheet as of the end of the last business year) all or certain part of such exceeding amount as calculated in accordance with ordinances of the Ministry of Justice.
As Sony Group Corporation has become a company with respect to which consolidated balance sheets should also be considered in the calculation of the Distributable Amount (renketsu haito kisei tekiyo kaisha), Sony Group Corporation must further deduct from the amount of Surplus the excess amount, if any, of (x) the total amount of stockholders’ equity appearing on the non-consolidated balance sheet as of the end of the last business year and certain other amounts set forth by an ordinance of the Ministry of Justice over (y) the total amount of stockholders’ equity and certain other amounts set forth by an ordinance of the Ministry of Justice appearing on the consolidated balance sheet as of the end of the last business year.
If Sony Group Corporation has prepared interim financial statements as described below, and if such interim financial statements have been approved by the Board of Directors or (if so required by the Companies Act) by a General Meeting of Shareholders, then the Distributable Amount must be adjusted to take into account the amount of profit or loss, and the amount of consideration for any of the treasury stock disposed of by Sony Group Corporation, during the period in respect of which such interim financial statements have been prepared. Sony Group Corporation may prepare non-consolidated interim financial statements consisting of a balance sheet as of any date subsequent to the end of the last business year and an income statement for the period from the first day of the current business year to the date of such balance sheet. Interim financial statements so prepared by Sony Group Corporation must be audited by the Audit Committee and the independent auditor, as required by the Companies Act and in accordance with the details prescribed by ordinances of the Ministry of Justice.
(Capital and reserves)
Sony Group Corporation may generally reduce its additional paid-in capital or legal reserve by resolution of a General Meeting of Shareholders and, if so decided by the same resolution, may account for the whole or any part of the amount of such reduction as stated capital. On the other hand, Sony Group Corporation may generally reduce its stated capital by a special shareholders’ resolution (as defined in “(Voting rights)”) and, if so decided by the same resolution, may account for the whole or any part of the amount of such reduction as additional paid-in capital. In addition, Sony Group Corporation may reduce its Surplus and increase either (i) stated capital or (ii) additional paid-in capital and/or legal reserve by the same amount, in either case by resolution of a General Meeting of Shareholders.
(Stock splits)
Sony Group Corporation may at any time split shares in issue into a greater number of shares at the determination of the CEO, and may amend its Articles of Incorporation to increase the number of the authorized shares to be issued to allow such stock split pursuant to a resolution of the Board of Directors or a determination by a Corporate Executive Officer to whom the authority to make such determination has been delegated by a resolution of the Board of Directors, rather than relying on a special shareholders’ resolution, which is otherwise required for amending the Articles of Incorporation.
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When a stock split is to be made, Sony Group Corporation must give public notice of the stock split, specifying the record date thereof, at least two weeks prior to such record date. Under the central book-entry transfer system operated by JASDEC, Sony Group Corporation must also give notice to JASDEC regarding a stock split at least two weeks prior to the relevant effective date of the stock split. On the effective date of the stock split, the numbers of shares recorded in all accounts held by Sony Group Corporation’s shareholders at account managing institutions or JASDEC will be increased in accordance with the applicable ratio.
(Consolidation of shares)
Sony Group Corporation may at any time consolidate issued shares into a smaller number of shares by a special shareholders’ resolution. When a consolidation of shares is to be made, Sony Group Corporation must give public notice or notice to each shareholder at least two weeks prior to the effective date of the consolidation of shares. Under the central book-entry transfer system operated by JASDEC, Sony Group Corporation must also give notice to JASDEC regarding a consolidation of shares at least two weeks prior to the effective date of the consolidation of shares. On the effective date of the consolidation of shares, the numbers of shares recorded in all accounts held by Sony Group Corporation’s shareholders at account managing institutions or JASDEC will be decreased in accordance with the applicable ratio. Sony Group Corporation must disclose the reason for the consolidation of shares at a General Meeting of Shareholders.
(General Meeting of Shareholders)
The Ordinary General Meeting of Shareholders of Sony Group Corporation for each business year is normally held in June of each year in Tokyo, Japan. In addition, Sony Group Corporation may hold an Extraordinary General Meeting of Shareholders whenever necessary by giving notice thereof at least two weeks prior to the date set for the meeting.
Notice of a shareholders’ meeting setting forth the place, time and purpose thereof must be mailed to each shareholder having voting rights (or, in the case of a non-resident shareholder, to such shareholder’s resident proxy or mailing address in Japan) at least two weeks prior to the date set for the meeting. Under the Companies Act, such notice may be given to shareholders by electronic means, subject to obtaining the consent of the relevant shareholders. The record date for voting rights at an Ordinary General Meeting of Shareholders is March 31 of each year.
Under the Companies Act and the Articles of Incorporation, Sony Group Corporation shall take measures to electronically provide to its shareholders (“Electronic Provision”) the contents of reference materials for a General Meeting of Shareholders, etc.
Notice of a shareholders meeting must set forth the contents of reference materials for a General Meeting of Shareholders, etc. to be provided by way of Electronic Provision and the URL of the website used for Electronic Provision, in addition to the place, time and purpose of the meeting. The contents of reference materials for a General Meeting of Shareholders, etc. must be posted on the website from the earlier of the date three weeks prior to the date set for the meeting or the date on which the notice of the shareholders meeting is dispatched until the date on which three months have elapsed from the meeting. Any shareholder (other than those shareholders consenting to receipt of notice of shareholders’ meeting by electronic means) is entitled to request printed paper copies of the contents of reference materials for a General Meeting of Shareholders, etc. by the record date for voting rights at the relevant General Meeting of Shareholders.
Any shareholder or group of shareholders holding at least 3% of the total number of voting rights for a period of six months or more may require the convocation of a General Meeting of Shareholders for a particular purpose. Unless such a shareholders’ meeting is convened promptly or a convocation notice of a meeting that is to be held no later than eight weeks from the day of such request is dispatched, the shareholder requesting the holding of the meeting may, upon obtaining a court’s approval, convene such a shareholders’ meeting.
Any shareholder or group of shareholders holding at least 300 voting rights or 1% of the total number of voting rights for a period of six months or more may propose a matter to be considered at a General Meeting of Shareholders by submitting a written request to Sony Group Corporation at least eight weeks prior to the date set for such meeting, provided that Sony Group Corporation may limit the number of such matters requested by each shareholder to 10.
If the Articles of Incorporation so provide, any of the minimum voting rights or percentages, time periods and number of voting rights necessary for exercising the minority shareholder rights described above may be decreased or shortened. Sony Group Corporation’s Articles of Incorporation currently do not include any such provisions.
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(Voting rights)
So long as Sony Group Corporation maintains the unit share system, a holder of shares constituting one or more units is entitled to one vote for each such unit of stock (refer to “(Unit share system)” below; currently 100 shares constitute one unit), except that no voting rights with respect to shares of capital stock of Sony Group Corporation are afforded to Sony Group Corporation or any corporate or certain other entities more than one-quarter of the total voting rights of which are directly or indirectly held by Sony Group Corporation. If Sony Group Corporation eliminates from its Articles of Incorporation the provisions relating to units of stock, holders of capital stock will have one vote for each share they hold. Except as otherwise provided by law or by the Articles of Incorporation of Sony Group Corporation, a resolution can be adopted at a General Meeting of Shareholders by a majority of the number of voting rights of all the shareholders represented at the meeting. The Companies Act and Sony Group Corporation’s Articles of Incorporation provide, however, that the quorum for the election of Directors shall be one-third of the total number of voting rights of all the shareholders. Sony Group Corporation’s shareholders are not entitled to cumulative voting in the election of Directors. Shareholders may cast their votes in writing and may also exercise their voting rights through proxies, provided that the proxies are also shareholders holding voting rights. Shareholders may also exercise their voting rights by electronic means pursuant to the method designated by Sony Group Corporation.
The Companies Act and the Articles of Incorporation of Sony Group Corporation provide that in order to amend the Articles of Incorporation and in certain other instances, including:
acquisition of its own shares from a specific party other than its subsidiaries;
consolidation of shares;
any offering of new shares or existing shares held by Sony Group Corporation as treasury stock at a “specially favorable” price (or any offering of stock acquisition rights to acquire shares of capital stock, or bonds with stock acquisition rights on “specially favorable” conditions) to any persons other than shareholders;
the exemption of liability of a Director, Corporate Executive Officer or independent auditor with certain exceptions;
a reduction of stated capital with certain exceptions;
a distribution of in-kind dividends which meets certain requirements;
dissolution, merger, consolidation, or corporate split with certain exceptions;
the transfer of the whole or a material part of the business;
the transfer of the whole or a part of the shares or equity interests in a subsidiary which meets certain requirements;
the taking over of the whole of the business of any other corporation with certain exceptions;
share exchange or share transfer for the purpose of establishing 100% parent-subsidiary relationships with certain exceptions; or
partial share exchange for the purpose of establishing parent-subsidiary relationships with certain exceptions,
the quorum shall be one-third of the total number of voting rights of all the shareholders, and the approval by at least two-thirds of the number of voting rights of all the shareholders represented at the meeting is required (the “special shareholders’ resolutions”).
(Issue of additional shares and pre-emptive rights)
Holders of Sony Group Corporation’s shares of capital stock have no pre-emptive rights under its Articles of Incorporation. Authorized but unissued shares may be issued, or existing shares held by Sony Group Corporation as treasury stock may be transferred, at such times and upon such terms as the Board of Directors or the CEO determines, subject to the limitations as to the offering of new shares or transfer of existing shares held by Sony Group Corporation as treasury stock at a “specially favorable” price mentioned under “(Voting rights)” above.
In the case of an issuance of shares (including a transfer of existing shares held by Sony Group Corporation as treasury stock) or stock acquisition rights whereby any subscriber will hold more than 50% of the voting rights of all shareholders, generally Sony Group Corporation shall give public notice at least two weeks prior to the
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payment date for such issuance, and if shareholders who hold one-tenth or more of the voting rights of all shareholders dissent from the issuance of shares or stock acquisition rights, the approval by a resolution of a General Meeting of Shareholders is generally required before the payment date pursuant to the Companies Act. In addition, in the case of an issuance of shares (including a transfer of existing shares held by Sony Group Corporation as treasury stock) or stock acquisition rights by way of an allotment to a third party which would dilute the outstanding voting shares by 25% or more or change the controlling shareholder, in addition to a resolution of the Board of Directors or a determination by the CEO, the approval of the shareholders or an affirmative vote from a person independent of the management is generally required pursuant to the rules of the TSE. The Board of Directors or the CEO may, however, determine that shareholders shall be given subscription rights regarding a particular issue of new shares, in which case such rights must be given on uniform terms to all shareholders as of a record date of which not less than two weeks’ prior public notice is given. Each of the shareholders to whom such rights are given must also be given notice of the expiry thereof at least two weeks prior to the date on which such rights expire.
Subject to certain conditions, Sony Group Corporation may issue stock acquisition rights by a resolution of the Board of Directors or a determination by the CEO. Holders of stock acquisition rights may exercise their rights to acquire a certain number of shares within the exercise period as prescribed in the terms of their stock acquisition rights. Upon exercise of stock acquisition rights, Sony Group Corporation will be obliged to issue the relevant number of new shares or alternatively to transfer the necessary number of treasury stock held by it.
In cases where a particular issue of new shares or stock acquisition rights (i) violates laws and regulations or Sony Group Corporation’s Articles of Incorporation, or (ii) will be performed in a materially unfair manner, and shareholders may suffer disadvantages therefrom, such shareholders may file an injunction to enjoin such issue with a court.
(Liquidation rights)
In the event of a liquidation of Sony Group Corporation, the assets remaining after payment of all debts, liquidation expenses and taxes will be distributed among the holders of shares of Common Stock in proportion to the respective numbers of shares of Common Stock held.
(Record date)
March 31 is the record date for Sony Group Corporation’s year-end dividends, if declared. So long as Sony Group Corporation maintains the unit share system, shareholders who are registered as the holders of one or more unit of stock in Sony Group Corporation’s register of shareholders at the end of each March 31 are also entitled to exercise shareholders’ rights at the Ordinary General Meeting of Shareholders with respect to the business year ending on such March 31. September 30 is the record date for interim dividends, if declared. In addition, Sony Group Corporation may set a record date for determining the shareholders entitled to other rights and for other purposes by giving at least two weeks’ prior public notice.
JASDEC is required to promptly give Sony Group Corporation notice of the names and addresses of Sony Group Corporation’s shareholders, the numbers of shares of Common Stock held by them and other relevant information as of such respective record dates.
The price of shares generally goes ex-dividends or ex-rights on Japanese stock exchanges on the business day immediately prior to a record date (or if the record date is not a business day, the second business day prior thereto), for the purpose of dividends or rights offerings.
(Acquisition by Sony Group Corporation of its capital stock)
Under the Companies Act and the Articles of Incorporation of Sony Group Corporation, Sony Group Corporation may acquire shares of Common Stock (i) from a specific shareholder other than any of its subsidiaries (pursuant to the special shareholders’ resolution), (ii) from any of its subsidiaries (pursuant to a resolution of the Board of Directors), or (iii) by way of purchase on any Japanese stock exchange on which Sony Group Corporation’s shares of Common Stock are listed or by way of tender offer (pursuant to a resolution of the Board of Directors, as long as its non-consolidated annual financial statements and certain documents for the last business year present fairly its assets and profit or loss, as required by ordinances of the Ministry of Justice).
In the case of (i) above, any other shareholder may make a request to Sony Group Corporation that such other shareholder be included as a seller in the proposed purchase, provided that no such right will be available if the purchase price or any other consideration to be received by the relevant specific shareholder will not exceed the last trading price of the shares on the relevant stock exchange on the day immediately preceding the date on
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which the resolution mentioned in (i) above was adopted (or, if there is no trading in the shares on the stock exchange or if the stock exchange is not open on such day, the price at which the shares are first traded on such stock exchange thereafter).
The total amount of the purchase price of shares of Common Stock may not exceed the Distributable Amount, as described in “(Distribution of Surplus) — Distributions of Surplus — Restriction on distribution of Surplus.”
Shares acquired by Sony Group Corporation may be held for any period or may be retired at the determination of the CEO. Sony Group Corporation may also transfer (by public or private sale or otherwise) to any person the treasury stock held by it, at such times and upon such terms as the Board of Directors or the CEO determines, and subject also to other requirements similar to those applicable to the issuance of new shares, as described in “(Issue of additional shares and pre-emptive rights)” above. Sony Group Corporation may also utilize its treasury stock for the purpose of transfer to any person upon exercise of stock acquisition rights or for the purpose of acquiring another company by way of merger, share exchange, partial share exchange or corporate split through exchange of treasury stock for shares or assets of the acquired company.
(Unit share system)
The Articles of Incorporation of Sony Group Corporation provide that 100 shares constitute one “unit” of shares of stock. The Board of Directors or the Corporate Executive Officer to whom the authority to make such a determination has been delegated by a resolution of the Board of Directors is permitted to amend the Articles of Incorporation to reduce the number of shares that constitute a unit or to abolish the unit share system entirely. Under the Companies Act, the number of shares constituting one unit cannot exceed 1,000 shares nor 0.5% of the total number of issued shares.
Under the unit share system, shareholders have one voting right for each unit of stock that they hold. Any number of shares less than one full unit have neither voting rights nor rights related to voting rights. Holders of shares constituting less than one unit will have no other shareholder rights if Sony Group Corporation’s Articles of Incorporation so provide, except that such holders may not be deprived of certain rights specified in the Companies Act or an ordinance of the Ministry of Justice, including the right to receive distribution of Surplus.
A holder of shares constituting less than one full unit may require Sony Group Corporation to purchase such shares at their market value in accordance with the provisions of the Share Handling Regulations of Sony Group Corporation. In addition, the Articles of Incorporation of Sony Group Corporation provide that a holder of shares constituting less than one full unit may request Sony Group Corporation to sell to such holder such amount of shares which will, when added together with the shares constituting less than one full unit, constitute one full unit of stock. Such request by a holder and the sale by Sony Group Corporation must be made in accordance with the provisions of the Share Handling Regulations of Sony Group Corporation. As prescribed in the Share Handling Regulations, such requests shall be made through an account management institution and JASDEC pursuant to the rules set by JASDEC, without going through the notification procedure required for the exercise of the shareholders’ rights to which shareholders are entitled, regardless of whether such shareholder held shares on the requisite record date, as described in “(General).” Shares constituting less than a full unit are transferable, under the central book-entry transfer system described in “(General).” Under the rules of the Japanese stock exchanges, however, shares constituting less than a full unit do not comprise a trading unit, except in limited circumstances, and accordingly may not be sold on the Japanese stock exchanges.
(Sale by Sony Group Corporation of shares held by shareholders whose location is unknown)
Sony Group Corporation is not required to send a notice to a shareholder if a notice to such shareholder fails to arrive at the registered address of the shareholder in Sony Group Corporation’s register of shareholders or at the address otherwise notified to Sony Group Corporation continuously for five years or more.
In addition, Sony Group Corporation may sell or otherwise dispose of shares of capital stock for which the location of the shareholder is unknown. Generally, if (i) notices to a shareholder fail to arrive continuously for five years or more at the shareholder’s registered address in Sony Group Corporation’s register of shareholders or at the address otherwise notified to Sony Group Corporation, and (ii) the shareholder fails to receive distributions of Surplus on the shares continuously for five years or more at the address registered in Sony Group Corporation’s register of shareholders or at the address otherwise notified to Sony Group Corporation, Sony Group Corporation may sell or otherwise dispose of such shareholder’s shares at the then market price of the shares by a determination of a Corporate Executive Officer and after giving at least three months’ prior public and individual notice, and hold or deposit the proceeds of such sale or disposal of shares for such shareholder.
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Reporting of substantial shareholdings
The Financial Instruments and Exchange Act of Japan and its related regulations require any person, regardless of residence, who has become, beneficially and solely or jointly, a holder of more than 5% of the total issued shares of capital stock of a company listed on any Japanese stock exchange or whose shares are traded on the over-the-counter market in Japan to file with the Director General of the competent Local Finance Bureau of the Ministry of Finance within five business days a report concerning such shareholdings. A similar report must also be filed in respect of any subsequent change of 1% or more in any such holding, or any change in material matters set out in reports previously filed, with certain exceptions. For this purpose, shares issuable to such persons upon conversion of convertible securities or exercise of share subscription warrants or stock acquisition rights are taken into account in determining both the number of shares held by such holders and the issuer’s total issued share capital. Any such report shall be filed with the Director General of the relevant Local Finance Bureau of the Ministry of Finance through the Electronic Disclosure for Investors’ Network (EDINET) system.
Ownership restrictions
Except for the general limitation under Japanese anti-trust and anti-monopoly regulations against holding of shares of capital stock of a Japanese corporation which leads or may lead to a restraint of trade or monopoly, except for the limitations under the Foreign Exchange Regulations as described in “Exchange Controls” below, and except for general limitations under the Companies Act or Sony Group Corporation’s Articles of Incorporation on the rights of shareholders applicable regardless of residence or nationality, there is no limitation under Japanese laws and regulations applicable to Sony Group Corporation or under its Articles of Incorporation on the rights of non-residents or foreign shareholders to hold or exercise voting rights on the shares of capital stock of Sony Group Corporation.
There is no provision in Sony Group Corporation’s Articles of Incorporation or internal regulations that would have an effect of delaying, deferring or preventing a change in control of Sony Group Corporation and that would operate only with respect to a merger, acquisition or corporate restructuring involving Sony Group Corporation.
Material Contracts
Exchange Controls
Japanese Foreign Exchange Controls Regulations
The following is a general summary of major Japanese foreign exchange controls regulations applicable to holders of shares of capital stock or voting rights of Sony Group Corporation or holders of ADSs who are “exchange non-residents” or “foreign investors,” as described below. The statements regarding Japanese foreign exchange control regulations set forth below are based on the laws and regulations in force and as interpreted by the Japanese authorities as of the date of this annual report and are subject to subsequent changes in the applicable Japanese laws or interpretations thereof. This summary is not exhaustive of all possible foreign exchange controls considerations that may apply to a particular investor, and potential investors are advised to satisfy themselves as to the overall foreign exchange controls consequences of the acquisition, ownership and disposition of shares of capital stock or voting rights of Sony Group Corporation or ADSs by consulting their own advisors.
The FEFTA and its related cabinet orders and ministerial ordinances (collectively, the “Foreign Exchange Regulations”) govern certain aspects relating to the acquisition and holding of shares of capital stock and voting rights of Sony Group Corporation by “exchange non-residents” and by “foreign investors” (as these terms are defined below). The Foreign Exchange Regulations also apply to the acquisition and holding of ADSs and the exercise of voting rights by holders of ADSs who are “foreign investors” that constitute an “inward direct investment” (as defined below).
Capital Transaction
Except as described below with respect to an “inward direct investment” by a “foreign investor,” the Foreign Exchange Regulations currently in effect do not affect transactions between exchange non-residents to purchase or sell shares of a Japanese listed corporation outside Japan using currencies other than Japanese yen.
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In general, the acquisition of shares of a Japanese corporation (such as the shares of capital stock of Sony Group Corporation) by an exchange non-resident from an exchange resident requires post facto reporting by the exchange resident to the Minister of Finance. No such reporting requirement is imposed, however, if:
the aggregate purchase price of the relevant shares is 100 million yen or less;
the acquisition is effected through any bank, financial instruments business operator or other entity prescribed by the Foreign Exchange Regulations acting as an agent or intermediary; or
the acquisition constitutes an “inward direct investment” described below (in which case a prior notification requirement may apply).
Exchange residents are defined in the Foreign Exchange Regulations as:
individuals who reside within Japan; or
corporations whose principal offices are located within Japan.
Exchange non-residents are defined in the Foreign Exchange Regulations as:
individuals who do not reside in Japan; or
corporations whose principal offices are located outside Japan.
Generally, branches and other offices of non-resident corporations that are located within Japan are regarded as exchange residents. Conversely, branches and other offices of Japanese corporations located outside Japan are regarded as exchange non-residents.
Inward Direct Investment in Shares of Listed Corporations
Definition of Foreign Investor
Foreign investors are defined in the Foreign Exchange Regulations as:
individuals who are exchange non-residents;
corporations or other entities that are organized under the laws of foreign countries or whose principal offices are located outside Japan;
corporations of which 50% or more of the total voting rights are held, directly or indirectly, by individuals and/or corporations falling within (i) and/or (ii) above;
partnerships under the Civil Code of Japan established to invest in corporations, limited partnerships for investment under the Limited Partnership Act for Investment of Japan or any other similar partnerships under foreign law of which (a) 50% or more of the total contributions are made by individuals and/or corporations falling within (i), (ii), (iii) above and/or (v) below or any other persons prescribed under the Foreign Exchange Regulations or (b) a majority of the general partners are individuals and/or corporations falling within (i), (ii), (iii) above and/or (v) below or any other persons prescribed under the Foreign Exchange Regulations; or
corporations or other entities, a majority of whose directors or other officers (or directors or other officers having the power of representation) are individuals who are exchange non-residents.
Definition of Inward Direct Investment
If a foreign investor acquires shares or voting rights of a Japanese corporation that is listed on a Japanese stock exchange (such as the shares of capital stock of Sony Group Corporation) or that is traded on an over-the-counter market in Japan and, as a result of the acquisition, the foreign investor, in combination with any existing holdings, directly or indirectly holds 1% or more of the total number of issued shares or the total number of voting rights of the relevant corporation, such acquisition constitutes an “inward direct investment.” In addition, the acquisition of the authority to exercise, either directly or through instructions, voting rights held by other shareholders that results in the foreign investor, in combination with any existing shareholding, directly or indirectly holding 1% or more of the total number of voting rights of the relevant corporation constitutes an “inward direct investment.”
In addition to the acquisitions of shares or voting rights described above, if a foreign investor (i) is granted the authority to exercise voting rights on behalf of other shareholders of a Japanese listed corporation regarding
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certain matters which may give such foreign investor the power to control, or may have a material influence on the management of such corporation, such as the election or removal of directors, or (ii) obtains consent from another foreign investor holding the voting rights of the relevant corporation to exercise the voting rights of such corporation held by such other foreign investor jointly, and, in each case, as a result of these arrangements, the number of the voting rights directly or indirectly held by the foreign investor, including the total number of the voting rights subject to such authorization to exercise, or the sum of the number of the voting rights directly or indirectly held by the foreign investor and such other foreign investor subject to such joint voting agreement, as the case may be, is 10% or more of the total number of voting rights of the relevant corporation, each such arrangement regarding voting rights (hereinafter referred to as a “voting arrangement”) also constitutes an “inward direct investment”.
Additionally, if a foreign investor directly or indirectly holds 1% or more of the total voting rights of a Japanese listed corporation and, at a general meeting of shareholders, consents to certain proposals having a material influence on the management of such corporation such as the (i) election of such foreign investor or any of its related persons (as defined in the Foreign Exchange Regulations) as a director or corporate auditor of the relevant corporation or (ii) transfer or discontinuation of its business, such consent also constitutes an “inward direct investment.”
Prior Notification Requirements regarding Inward Direct Investment
If a foreign investor intends to consummate an acquisition of shares or voting rights of a Japanese listed corporation or the authority to exercise, either directly or through instructions, voting rights held by other shareholders that constitutes an “inward direct investment” as described above, unless certain exemptions apply (such as where the foreign investor is in a country that is listed on an exemption schedule in the Foreign Exchange Regulations and where that Japanese corporation is not engaged in certain businesses (the “Designated Businesses”) designated by the Foreign Exchange Regulations), a prior notification of the relevant inward direct investment is required to be filed with the Minister of Finance and any other competent Ministers.
However, if a foreign investor is seeking to acquire shares or voting rights of a Japanese listed corporation or the authority to exercise, either directly or through instructions, voting rights held by other shareholders and such acquisition would constitute an “inward direct investment,” such foreign investor may be eligible for the exemptions if certain conditions are met. In the case of an acquisition of shares or voting rights or the authority to exercise, either directly or through instructions, voting rights of a Japanese listed corporation that is engaged in a Designated Business other than certain Designated Business designated by the Foreign Exchange Regulations as a core sector business (the “Core Sector Designated Businesses”), the foreign investor may be exempted from the prior notification requirement if such foreign investor complies with the following conditions (the “Exemption Conditions”):
the foreign investor or its related persons will not become directors or corporate auditors of the relevant corporation;
the foreign investor will not make certain proposals (as prescribed in the Foreign Exchange Regulations) at the general meeting of shareholders, including transfer or discontinuation of the Designated Businesses of the relevant corporation; and
the foreign investor will not access non-public technical information in relation to the Designated Businesses of the relevant corporation, or take certain other actions that may lead to the leak of such non-public technical information (as prescribed in the Foreign Exchange Regulations).
In addition, in the case of an acquisition of shares or voting rights or the authority to exercise, directly or through instructions, voting rights of a Japanese listed corporation that is engaged in the Core Sector Designated Businesses, the foreign investor may be exempted from the prior notification requirement, if, as a result of such acquisition, the foreign investor, in combination with any existing holdings, directly or indirectly holds less than 10% of the total number of issued shares or voting rights of the relevant corporation and such foreign investor complies with the Exemption Conditions and the following additional conditions:
the foreign investor will not attend, or not cause any persons designated by it to attend, meetings of the relevant corporation’s board of directors, or meetings of committees having authority to make important decisions, in respect of the Core Sector Designated Businesses of the relevant corporation; and
the foreign investor will not make, or not cause any persons designated by it to make, proposals to such board or committees or their members in writing or electronic form requesting any response or actions by certain deadlines in respect of the Core Sector Designated Businesses of the relevant corporation.
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Notwithstanding the above, if a foreign investor falls under a category of disqualified investors designated by the Foreign Exchange Regulations (including (a) investors who have been sanctioned during the previous five years due to violations of the FEFTA, (b) foreign governments, etc. (as prescribed in the Foreign Exchange Regulations) and (c) certain investors that are owned by, or have a certain other relationship with, foreign governments, etc. that are not otherwise accredited by the Minister of Finance), in no event may such foreign investor be eligible for the exemptions described above. On the other hand, if a foreign investor, excluding the disqualified investors described in the foregoing sentence, falls under a category of certain foreign financial institutions (as prescribed in the Foreign Exchange Regulations) and complies with the Exemption Conditions, such foreign investor may be eligible for the exemptions described above, even if the acquisition results in such foreign investor directly or indirectly holding 10% or more of the total number of issued shares or voting rights of the corporation engaged in the Core Sector Designated Businesses.
Pursuant to the amendments to the Foreign Exchange Regulations with taking into effect in May 2025, the scope of the above-mentioned disqualified investors, who are not eligible for the exemptions described above, was expanded to include (a) certain foreign investors who have obligations to cooperate with foreign governments, etc. in collecting information pursuant to agreements with foreign governments, etc. or foreign laws and regulations and (b) certain investors who are owned by, or who have a certain other relationship with, the foreign investors set forth in (a) (collectively, the “Specified Foreign Investors”) that are not otherwise accredited by the Minister of Finance. In addition, the exemption from the prior notification requirement was amended not to be applicable to the case where a foreign investor equivalent to the Specified Foreign Investor (the “Quasi-Specified Foreign Investors”) (as prescribed in the Foreign Exchange Regulations), which includes a foreign investor (i) whose managerial decisions are made substantially by the foreign investors set forth in (a), (ii) whose managerial decisions are made in a country other than the country of incorporation and affected by laws and regulations, etc. imposing obligations to cooperate with foreign governments, etc. in collecting information or (iii) who has obligations to disclose information to cooperate with foreign governments, etc. pursuant to agreements with the Specified Foreign Investors or the foreign investor set forth in this (iii), and that seeks to acquire shares or voting rights, including authority to exercise, either directly or through instructions, voting rights owned by others, of a listed corporation (the “Designated Core Business Entity”) which is engaged in the Core Sector Designated Businesses and also falls under the “Specified Essential Infrastructure Service Providers” as defined in the Economic Security Promotion Act, even if the foreign investor, (x) as a result of an acquisition of such shares or voting rights, including the authority to exercise, either directly or through instructions, voting rights owned by others, of such listed corporation, together with parties that have a special relationship with that foreign investor, holds or has authority to exercise less than 10% of the total issued shares or voting rights of such listed corporation, or (y) falls under a category of certain foreign financial institutions (as prescribed in the Foreign Exchange Regulations) set forth in the preceding paragraph. Further, the Exemption Conditions, which must be complied with for a foreign investor to be exempted from the prior notification requirement, were amended to include the following two additional conditions set forth in items (i) and (ii) below, when they apply to the case of an acquisition by a Quasi-Specified Foreign Investor of shares or voting rights, including authority to exercise, either directly or through instructions, voting rights owned by others, of a listed corporation which is engaged in the Core Sector Designated Businesses but is not the Designated Core Business Entity, as a result of which acquisition, together with parties that have a special relationship with that Quasi-Specified Foreign Investor, such Quasi-Specified Foreign Investor holds or has authority to exercise less than 10% of the total issued shares or voting rights of the above mentioned corporation:
the foreign investor will not access non-public information in relation to the Core Sector Designated Businesses of such corporation, or take certain other actions that may lead to the leak of such non-public information (as prescribed in the Foreign Exchange Regulations); and
the foreign investor will not work, or cause its closely-related persons (prescribed in the Foreign Exchange Regulations) to work in relation to the Core Sector Designated Businesses of such corporation, as an employee for such corporation and will not solicit any officers or employees of such corporation to work for the foreign investor or any third party.
For reference purposes only, the Minister of Finance publishes, and may update from time to time, a list that classifies Japanese listed corporations into the following categories: (i) corporations engaged only in businesses other than the Designated Businesses, (ii) corporations engaged in Designated Businesses other than Core Sector Designated Businesses, (iii) corporations engaged in the Core Sector Designated Businesses and (iv) corporations falling into the Designated Core Business Entity. According to the list most recently published by the Minister of Finance, as of June 18, 2026, Sony Group Corporation is classified as category (iii) above.
In addition, if a foreign investor intends to make a voting arrangement with respect to a Japanese listed corporation engaged in the Designated Businesses or consents to a proposal at the general meeting of
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shareholders of such corporation, in each case, that constitutes an “inward direct investment” as described in “Definition of Inward Direct Investment” above, in certain circumstances, prior notification of the relevant inward direct investment must be filed with the Minister of Finance and any other competent Ministers. In such cases, the exemptions from the prior notification requirements may not be available, except for cases where the relevant voting arrangement is a joint voting agreement with other foreign investors to exercise voting rights regarding matters other than certain matters which may give such foreign investor the power to control, or may have a material influence on the management of the relevant corporation, such as the election or removal of directors.
Acquisitions of shares by foreign investors by way of stock split are not subject to the foregoing notification requirements.
Procedures for Prior Notification regarding Inward Direct Investment
If such prior notification is filed, the proposed inward direct investment may not be consummated until 30 days after the date of filing during which time the Ministers will review the proposed inward direct investment, although this screening period may be shortened by such Ministers if they no longer deem it necessary to review the proposed inward direct investment, or may be shortened to five business days, if the proposed inward direct investment is determined not to raise concerns from the perspective of national security or certain other factors. The Ministers may extend the screening period up to five months if they deem it necessary to continue to review the proposed inward direct investment, and may recommend any modification or abandonment of the proposed inward direct investment and, if the foreign investor does not accept such recommendation, the Ministers may order the modification or abandonment of such inward direct investment. In addition, if the Ministers consider the proposed inward direct investment to be an inward direct investment that is likely to cause damage to the national security of Japan, to interfere with the maintenance of public order or to pose an obstacle to the preservation of public safety, and, if a foreign investor (i) consummates such inward direct investment without filing the prior notification described above; (ii) consummates such inward direct investment before the expiration of the screening period described above; (iii) in connection with such inward direct investment, makes false statements in the prior notification described above; or (iv) does not follow the recommendation or order issued by the Ministers to modify or abandon such inward direct investment, the Ministers may order such foreign investor to divest all or part of the shares acquired or take other measures.
Post Facto Reporting Requirements regarding Inward Direct Investment
A foreign investor who consummates an inward direct investment as described above through an acquisition of shares or voting rights or the authority to exercise, directly or through instructions, voting rights of a Japanese listed corporation that is engaged in the Designated Businesses, but is not subject to the prior notification requirements described above due to the exemptions from such prior notification requirements, in general, must file a post facto report of the relevant inward direct investment with the Minister of Finance and any other competent Ministers having jurisdiction over such Japanese corporation within 45 days of the date when, as a result of such acquisition, the foreign investor, in combination with any existing holdings, directly or indirectly holds (i) 1% or more but less than 3% of the total number of issued shares or voting rights, for the first time, (ii) 3% or more but less than 10% of the total number of issued shares or voting rights, for the first time, or (iii) 10% or more of the total number of issued shares or voting rights (excluding, in the cases of (i) and (ii) above, a foreign investor who falls under a category of certain foreign financial institutions (as prescribed in the Foreign Exchange Regulations)). In addition, if a foreign investor consummates the inward direct investment described above through the acquisition of shares or voting rights or the authority to exercise, directly or through instructions, voting rights of a Japanese listed corporation that is not engaged in the Designated Businesses (which is, in general, not subject to the prior notification requirements described above) and, as a result of such inward direct investment, such foreign investor, in combination with any existing holdings, directly or indirectly holds 10% or more of shares or voting rights of the total number of issued shares or voting rights of the relevant corporation, such foreign investor, in general, must file a post facto report of the relevant inward direct investment with the Minister of Finance and any other competent Ministers having jurisdiction over such Japanese corporation within 45 days of such inward direct investment.
In addition, if a foreign investor consummates the inward direct investment described above through a voting arrangement with respect to a Japanese listed corporation that is not engaged in the Designated Businesses (which is, in general, not subject to the prior notification requirements described above), such foreign investor, in general, must file a post facto report of the relevant inward direct investment with the Minister of Finance and any other competent Ministers having jurisdiction over such Japanese corporation within 45 days of such inward direct investment.
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Acquisitions of shares by foreign investors by way of stock split are not subject to the foregoing reporting requirements.
Dividends and Proceeds of Sale
Under the Foreign Exchange Regulations, dividends paid on and the proceeds from sales in Japan of shares of capital stock of Sony Group Corporation held by exchange non-residents may generally be converted into any foreign currency and repatriated abroad.
Taxation
The following is a summary of the major Japanese national tax and U.S. federal income tax consequences of the ownership, acquisition and disposition of shares of Common Stock of Sony Group Corporation and of ADRs evidencing ADSs representing shares of Common Stock of Sony Group Corporation by a non-resident of Japan or a non-Japanese corporation without a permanent establishment in Japan. The summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to any particular investor, and does not take into account any specific individual circumstances of any particular investor. Accordingly, holders of shares of Common Stock or ADSs of Sony Group Corporation are encouraged to consult their tax advisors regarding the application of the considerations discussed below to their particular circumstances.
This summary is based upon the representations of the depositary and the assumption that each obligation in the deposit agreement in relation to the ADSs dated as of April 1, 2025, and in any related agreement, will be performed in accordance with its terms.
For purposes of the income tax convention between Japan and the United States (the “Treaty”) and the U.S. Internal Revenue Code of 1986, as amended (the “Code”), U.S. holders of ADSs generally will be treated as owning shares of Common Stock of Sony Group Corporation underlying the ADSs evidenced by the ADRs. For the purposes of the following discussion, a “U.S. holder” is a beneficial owner of shares of Common Stock of Sony Group Corporation or ADRs evidencing ADSs representing shares of Common Stock of Sony Group Corporation that:
is a resident of the U.S. for purposes of the Treaty;
does not maintain a permanent establishment in Japan (a) with which shares of Common Stock or ADSs of Sony Group Corporation are effectively connected and through which the U.S. holder carries on or has carried on business or (b) of which shares of Common Stock or ADSs of Sony Group Corporation form part of the business property; and
is eligible for benefits under the Treaty with respect to income and gain derived in connection with shares of Common Stock or ADSs of Sony Group Corporation.
Japanese Tax Considerations with respect to shares of Common Stock and ADSs
The following is a summary of the principal Japanese tax consequences (limited to national taxes) to non-residents of Japan or non-Japanese corporations without a permanent establishment in Japan (“non-resident Holders”) who are holders of shares of Common Stock of Sony Group Corporation or of ADRs evidencing ADSs representing shares of Common Stock of Sony Group Corporation. The information given below regarding Japanese taxation is based on the tax laws and tax treaties in force and their interpretations by the Japanese tax authorities as of June 18, 2026. Tax laws and tax treaties as well as their interpretations may change at any time, possibly with retroactive effect. Sony Group Corporation will not update this summary for any changes in the tax laws or tax treaties or their interpretation that occurs after such date.
Generally, non-resident Holders are subject to Japanese withholding tax on dividends paid by Japanese corporations. Such taxes are withheld prior to payment of dividends as required by Japanese law. Stock splits are, in general, not a taxable event.
In the absence of an applicable tax treaty, convention or agreement reducing the maximum rate of Japanese withholding tax or allowing exemption from Japanese withholding tax, the rate of Japanese withholding tax applicable to dividends paid by Japanese corporations to non-resident Holders is generally 20.42%, provided, with respect to dividends paid on listed shares issued by a Japanese corporation (such as the shares of Common Stock or ADSs of Sony Group Corporation) to non-resident Holders other than any non-resident Holder who is an individual holding 3% or more of the total shares issued by the relevant Japanese corporation, the
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aforementioned 20.42% withholding tax rate is reduced to 15.315% for dividends due and payable on or before December 31, 2047. Due to the imposition of a special additional withholding tax (2.1% of the original withholding tax amount) to secure funds for reconstruction from the Great East Japan Earthquake (the “reconstruction surtax”), the original withholding tax rates of 15% and 20% as applicable, have been effectively increased to 15.315% and 20.42%. These overall 15.315% and 20.42% withholding tax rates continue to apply until December 31, 2047, while the breakdown of the 0.315% and 0.42% surtax portion is (i) the reconstruction surtax of 0.315% (or 2.1% of 15%) and 0.42% (or 2.1% of 20%) until December 31, 2026, and (ii) during the period beginning on January 1, 2027 and ending on December 31, 2047, the reconstruction surtax of 0.165% (or 1.1% of 15%) and 0.22% (or 1.1% of 20%) and another special additional withholding tax of 0.15% (or 1.0% of 15%) and 0.2% (or 1.0% of 20%) to fund strengthening Japan’s national defense capabilities (the “defense surtax”). The 2026 tax reform, which was promulgated on March 31, 2026, has introduced the defense surtax while accordingly reducing the reconstruction surtax, to maintain the overall 15.315% and 20.42% withholding tax rates.
As of the date of this document, Japan has income tax treaties, conventions or agreements in force, whereby the above-mentioned withholding tax rate is reduced, in most cases to 15%, 10% or 5% for portfolio investors (15% under the income tax treaties with, among other countries, Canada, Denmark, Finland, Germany, Iceland, Ireland, Italy, Luxembourg, New Zealand, Norway and Singapore, 10% under the income tax treaties with, among other countries, Australia, Austria, Belgium, France, Hong Kong, the Netherlands, Portugal, Sweden, Switzerland, the U.K. and the United States, and 5% under the income tax treaties with, among other countries, Spain). Under the Treaty, the maximum rate of Japanese withholding tax that may be imposed on dividends paid by a Japanese corporation to a U.S. holder that does not own directly or indirectly at least 10% of the voting stock of the Japanese corporation is generally reduced to 10% of the gross amount actually distributed, and dividends paid by a Japanese corporation to a U.S. holder that is a pension fund are exempt from Japanese income taxation by way of withholding or otherwise unless such dividends are derived from the carrying on of a business, directly or indirectly, by such pension fund.
If the maximum tax rate provided for in the income tax treaty applicable to dividends paid by Sony Group Corporation to any particular non-resident Holder is lower than the withholding tax rate otherwise applicable under Japanese tax law, or if any particular non-resident Holder is exempt from Japanese income tax with respect to such dividends under the income tax treaty applicable to such particular non-resident Holder, such non-resident Holder who is entitled to a reduced rate of or exemption from Japanese withholding tax on payment of dividends on shares of Common Stock by Sony Group Corporation is, in principle, required to submit an Application Form for Income Tax Convention Regarding Relief from Japanese Income Tax and Special Income Tax for Reconstruction on Dividends (together with any other required forms and documents) in advance through the withholding agent to the relevant tax authority before the payment of dividends. A standing proxy for non-resident Holders of a Japanese corporation may provide this application service. In this regard, a certain simplified special filing procedure is available for non-resident Holders to claim treaty benefits of exemption from or reduction of Japanese withholding tax, by submitting a Special Application Form for Income Tax Convention Regarding Relief from Japanese Tax and Special Income Tax for Reconstruction on Dividends of Listed Stock (together with any other required forms and documents). With respect to ADSs, this reduced rate or exemption is applicable if the depositary or its agent submits two Application Forms (one before payment of dividends and the other within eight months after the record date concerning such payment of dividends). To claim this reduced rate or exemption, a non-resident Holder of ADSs will be required to file a proof of taxpayer status, residence and beneficial ownership (as applicable) and to provide other information or documents as may be required by the depositary. A non-resident Holder who is entitled, under an applicable income tax treaty, to a reduced rate which is lower than the withholding tax rate otherwise applicable under Japanese tax law or an exemption from the withholding tax, but failed to submit the required application in advance will be entitled to claim the refund of taxes withheld in excess of the rate under an applicable tax treaty (if such non-resident Holder is entitled to a reduced treaty rate under the applicable income tax treaty) or the full amount of tax withheld (if such non-resident Holder is entitled to an exemption under the applicable income tax treaty) from the relevant Japanese tax authority, by complying with a certain subsequent filing procedure. Sony Group Corporation does not assume any responsibility to ensure withholding at the reduced treaty rate or to ensure the absence of withholding for shareholders who would be so eligible under any applicable income tax treaty but where the required procedures as stated above are not followed.
Gains derived from the sale of shares of Common Stock or ADSs of Sony Group Corporation outside Japan by a non-resident Holder holding such shares or ADSs as portfolio investors are, in general, not subject to Japanese income tax or corporation tax under Japanese tax law. U.S. holders are not subject to Japanese income or corporation tax with respect to such gains under the Treaty.
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Japanese inheritance tax and gift tax at progressive rates may be payable by an individual who has acquired from another individual shares of Common Stock or ADSs of Sony Group Corporation as a legatee, heir or donee even though neither the acquiring individual nor the deceased nor donor is a Japanese resident.
Holders of shares of Common Stock or ADSs of Sony Group Corporation should consult their tax advisors regarding the effect of these taxes and, in the case of U.S. holders, the possible application of the Estate and Gift Tax Treaty between the U.S. and Japan.
United States Taxation with respect to shares of Common Stock and ADSs
The U.S. dollar amount of dividends received (prior to deduction of Japanese taxes) by a U.S. holder of ADSs or Common Stock of Sony Group Corporation will be included in income as ordinary income for U.S. federal income tax purposes to the extent paid out of current or accumulated earnings and profits of Sony Group Corporation as determined for U.S. federal income tax purposes. The U.S. dollar amount of dividends received by a non-corporate U.S. holder with respect to the ADSs or Common Stock will be subject to taxation at a reduced rate if the dividends are “qualified dividends.” Subject to certain exceptions for short-term and hedged positions, dividends paid on the ADSs or Common Stock will be treated as qualified dividends if Sony Group Corporation was not, in the year prior to the year in which the dividend was paid, and is not, in the year in which the dividend is paid a passive foreign investment company (“PFIC”). Based on Sony Group Corporation’s audited financial statements and relevant market and shareholder data, Sony Group Corporation believes that it was not treated as a PFIC for U.S. federal income tax purposes with respect to its taxable year ended March 31, 2026. In addition, based on Sony Group Corporation’s audited financial statements and Sony Group Corporation’s current expectations regarding the value and nature of its assets, the sources and nature of its income, and relevant market and shareholder data, Sony Group Corporation does not anticipate becoming a PFIC for the taxable year ending March 31, 2027. Holders of ADSs and Common Stock of Sony Group Corporation should consult their own tax advisors regarding the availability of the reduced dividend tax rate in light of the considerations discussed above and their own particular circumstances. Dividends paid by Sony Group Corporation to U.S. corporate holders of ADSs or Common Stock of Sony Group Corporation will not be eligible for the dividends-received deduction.
Subject to generally applicable limitations and special considerations discussed below, a U.S. holder of ADSs or Common Stock of Sony Group Corporation may be entitled to a credit for Japanese tax withheld in accordance with the Treaty from dividends paid by Sony Group Corporation. The applicable limitations include requirements adopted by the U.S. Internal Revenue Service (“IRS”) in regulations promulgated in December 2021 and any Japanese tax will need to satisfy these requirements in order to be eligible to be a creditable tax for a U.S. holder. In the case of a U.S. holder that either (i) properly elects the benefits of the Treaty, or (ii) consistently elects to apply a modified version of these rules under temporary guidance and complies with specific requirements set forth in such guidance, the Japanese tax on dividends will be treated as meeting the requirements and therefore as a creditable tax. In the case of all other U.S. holders, the application of these requirements to the Japanese tax on dividends is uncertain and Sony Group Corporation has not determined whether these requirements have been met. Foreign tax credits will not be allowed for withholding taxes imposed in respect of certain short-term or hedged positions and may not be allowed in respect of arrangements in which economic profit, after non-U.S. taxes, is insubstantial. If the Japanese dividend tax is not a creditable tax for a U.S. holder or the U.S. holder does not elect to claim a foreign tax credit for any foreign income taxes paid or accrued in the same taxable year, the U.S. holder may be able to deduct the Japanese tax in computing such U.S. holder’s taxable income for U.S. federal income tax purposes. For purposes of the foreign tax credit limitation, dividends will be foreign source income, and will generally constitute “passive” income. The availability and calculation of foreign tax credits and deductions for foreign taxes depend on a U.S. holder’s particular circumstances and involve the application of complex rules to those circumstances. The temporary guidance discussed above also indicates that the U.S. Department of the Treasury and the IRS are considering proposing amendments to the December 2021 regulations and that the temporary guidance can be relied upon until additional guidance is issued that withdraws the temporary guidance. U.S. holders should consult their own tax advisors regarding the application of these rules to their particular situations.
In general, a U.S. holder will recognize capital gain or loss upon the sale or other disposition of ADSs or Common Stock of Sony Group Corporation equal to the difference between the amount realized on the sale or disposition and the U.S. holder’s tax basis in the ADSs or Common Stock. Such capital gain or loss will be long-term capital gain or loss if the ADSs or Common Stock have been held for more than one year on the date of the sale or disposition. The net amount of long-term capital gain recognized by an individual holder is subject to lower rates of federal income taxation than ordinary income or short-term capital gain rates.
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Under the Code, a U.S. holder of ADSs or Common Stock of Sony Group Corporation may be subject, under certain circumstances, to information reporting and possibly backup withholding with respect to dividends and proceeds from the sale or other disposition of ADSs or Common Stock, unless the U.S. holder provides proof of an applicable exemption or correct taxpayer identification number and otherwise complies with applicable requirements of the backup withholding rules. Any amount withheld under the backup withholding rules is not an additional tax and may be refunded or credited against the U.S. holder’s federal income tax liability, so long as the required information is furnished to the IRS.
Dividends and Paying Agents
Statement by Experts
Documents on Display
The SEC maintains an internet site that contains the documents referred to in this annual report on Form 20-F that have been filed with the SEC at https://www.sec.gov.
Subsidiary Information
Annual Report to Security Holders
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Quantitative and Qualitative Disclosures about Market Risk
Sony’s business is continuously exposed to market fluctuation, such as fluctuations in currency exchange rates, interest rates or stock prices. For risk management policies and exposures for each risk, refer to Note 6 of the consolidated financial statements. For derivative instruments and hedging activities utilized by Sony to reduce such risk, refer to Note 15 of the consolidated financial statements.
Description of Securities Other Than Equity Securities
Debt Securities
Warrants and Rights
Other Securities
American Depositary Shares
JPMorgan Chase Bank, N.A. (the “Depositary”) serves as the depositary for Sony Group Corporation’s ADSs pursuant to a deposit agreement between Sony Group Corporation, the Depositary, and the holders and beneficial owners of ADSs issued thereunder from time to time (the “Deposit Agreement”) (attached as Exhibit 2.1 to this report). ADS holders (“Holders”) may be required to pay various fees to the Depositary and the Depositary may refuse to provide any service for which a fee is assessed until the applicable fee has been paid. The following fees may at any time and from time to time be changed by agreement between Sony Group Corporation and the Depositary.
The Depositary may charge, and collect from (i) each person to whom ADSs are issued, including, without limitation, issuances against deposits of Sony Group Corporation’s Common Stock, issuances in respect of share distributions, rights and other distributions, issuances pursuant to a stock dividend or stock split declared by Sony Group Corporation, or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or the deposited property, and (ii) each person surrendering ADSs for withdrawal of Sony Group Corporation’s Common Stock or other deposited property or whose ADSs are cancelled or reduced for any other reason, a fee of up to U.S. $5.00 for each 100 ADSs (or portion thereof) issued, delivered, reduced, cancelled or surrendered, or upon which a share distribution or elective distribution is made or offered (as the case may be). The Depositary may sell (by public or private sale) sufficient securities and property received in respect of share distributions, rights and other distributions prior to such deposit to pay such charge.
(a) Additional Fees, Charges and Expenses by the Depositary. The following additional fees, charges and expenses shall also be incurred by the Holders, by beneficial owners of ADSs, by any party depositing or withdrawing Sony Group Corporation’s Common Stock or by any party surrendering ADSs and/or to whom ADSs are issued (including, without limitation, issuances pursuant to a stock dividend or stock split declared by Sony Group Corporation or an exchange of stock regarding the ADSs or the Sony Group Corporation Common Stock or other deposited property or a distribution of ADSs, whichever is applicable):
a fee of up to U.S. $0.05 per ADS held for any cash distribution made, or for any elective cash/stock dividend offered, pursuant to the Deposit Agreement,
a fee of up to U.S. $0.05 per ADS held for the direct or indirect distribution of securities (other than ADSs or rights to purchase additional ADSs) or the net cash proceeds from the public or private sale of any such securities, regardless of whether any such distribution and/or sale is made by, for, or received from, or (in each case) on behalf of, the Depositary, Sony Group Corporation and/or any third party (which fee may be assessed against Holders as of a record date set by the Depositary),
an aggregate fee of up to U.S. $0.05 per ADS per calendar year (or portion thereof) for services performed by the Depositary in administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against Holders as of the record date or record dates set by the Depositary during each calendar year and shall be payable at the sole discretion of the Depositary by billing such Holders or by deducting such charge from one or more cash dividends or other cash distributions), and
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an amount for the reimbursement of such charges and expenses as are incurred by the Depositary and/or any of its agents (including, without limitation, the Custodian (as defined in the Deposit Agreement), as well as charges and expenses incurred on behalf of Holders in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in connection with the servicing of the Sony Group Corporation Common Stock or other deposited property, the sale of securities (including, without limitation, deposited property), the delivery of Sony Group Corporation Common Stock or other deposited property or otherwise in connection with the Depositary’s or its Custodian’s compliance with applicable law, rule or regulation (which charges and expenses may be assessed on a proportionate basis against Holders as of the record date or dates set by the Depositary and shall be payable at the sole discretion of the Depositary by billing such Holders or by deducting such charge or expense from one or more cash dividends or other cash distributions).
(b) Other Obligations, Fees, Charges and Expenses. Sony Group Corporation will pay all other fees, charges and expenses of the Depositary and any agent of the Depositary (except the Custodian) pursuant to agreements from time to time between Sony Group Corporation and the Depositary, except:
stock transfer or other taxes and other governmental charges (which are payable by Holders or persons depositing Shares);
a transaction fee per cancellation request (including any cancellation request made through SWIFT (Society for Worldwide Interbank Financial Telecommunications), facsimile transmission or any other method of communication) as disclosed on the “Disclosures” page (or successor page) of www.adr.com (as updated by the Depositary from time to time, “ADR.com”) and any applicable delivery expenses (which are payable by such persons or Holders); and
transfer or registration expenses for the registration or transfer of Sony Group Corporation Common Stock and other deposited property on any applicable register in connection with the deposit or withdrawal of Sony Group Corporation Common Stock and other deposited property (which are payable by persons depositing Sony Group Corporation Common Stock or Holders withdrawing Sony Group Corporation Common Stock or other deposited property).
(c) The right of the Depositary to charge and receive payment of fees, charges and expenses as provided above shall survive the termination of the Deposit Agreement. Upon the resignation or removal of the Depositary, such right shall extend for those fees, charges and expenses incurred prior to the effectiveness of such resignation or removal.
In the case of ADSs issued by the Depositary into the Depository Trust Company or presented to the Depositary via the Depository Trust Company, the ADS issuance and cancellation fees and charges will be payable by the Depository Trust Company participant(s) receiving the ADSs from the Depositary or the Depository Trust Company participant(s) surrendering the ADSs to the Depositary for cancellation, as the case may be, on behalf of the beneficial owner(s) and will be charged by the Depository Trust Company participant(s) to the account(s) of the applicable beneficial owner(s) in accordance with the procedures and practices of the Depository Trust Company participant(s) as in effect at the time. ADS fees and charges in respect of distributions and the ADS service fee are payable by Holders as of the applicable ADS record date established by the Depositary. In the case of distributions of cash, the amount of the applicable ADS fees and charges is deducted from the funds being distributed. In the case of (i) distributions other than cash and (ii) the ADS service fee, the applicable Holders as of the ADS record date established by the Depositary will be invoiced for the amount of the ADS fees and charges. For ADSs held through the Depository Trust Company, the ADS fees and charges for distributions other than cash and the ADS service fee are charged to the Depository Trust Company participants in accordance with the procedures and practices prescribed by the Depository Trust Company from time to time and the Depository Trust Company participants in turn charge the amount of such ADS fees and charges to the beneficial owners for whom they hold ADSs.
In the event of refusal by a Holder to pay the Depositary fees, the Depositary may, under the terms of the Deposit Agreement, refuse the requested service until payment is received or may set off the amount of the Depositary fees from any distribution to be made to the Holder. Note that the fees and charges Holders may be required to pay may vary over time and may be changed by Sony Group Corporation and by the Depositary. Holders will receive prior notice of such changes. The Depositary may reimburse Sony Group Corporation for certain expenses incurred by it that are related to the establishment and maintenance of the ADR program upon such terms and conditions as Sony Group Corporation and the Depositary may agree from time to time.
The Depositary may agree to reduce or waive certain fees, charges and expenses to Holders that would normally be charged on ADSs issued to or at the direction of, or otherwise held by, Sony Group Corporation and/
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or certain Holders and beneficial owners of ADSs and holders and beneficial owners of Sony Group Corporation’s Common Stock.
The Depositary reserves the right to utilize a division, branch or affiliate of the Depositary to direct, manage and/or execute any public and/or private sale of securities hereunder. Such division, branch and/or affiliate may charge the Depositary a fee in connection with such sales, which fee is considered an expense of the Depositary contemplated under the Deposit Agreement.
Direct and Indirect Payments by the Depositary to Sony
The Depositary may make available to Sony Group Corporation a set amount or a portion of the Depositary fees charged in respect of the ADR program or otherwise upon such terms and conditions as Sony Group Corporation and the Depositary may agree from time to time.
The Depositary reimbursed Sony for certain expenses Sony incurred in connection with its ADR program, subject to certain ceilings. These reimbursable expenses included, but were not limited to, legal and accounting fees, investor relations expenses and fees payable to service providers for the distribution of material to ADR holders. For the fiscal year ended March 31, 2026, such amounts paid by the Depositary to Sony Group Corporation totaled 216,228.30 U.S. dollars.
Defaults, Dividend Arrearages and Delinquencies
Material Modifications to the Rights of Security Holders and Use of Proceeds
Controls and Procedures
Item 15(a). Disclosure Controls and Procedures
Sony has carried out an evaluation under the supervision and with the participation of Sony’s management, including the CEO and CFO, of the effectiveness of the design and operation of Sony’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of March 31, 2026. Disclosure controls and procedures require that information to be disclosed in the reports Sony Group Corporation files or submits under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported as and when required, within the time periods specified in the applicable rules and forms, and that such information is accumulated and communicated to Sony’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon Sony’s evaluation, the CEO and CFO have concluded that, as of March 31, 2026, the disclosure controls and procedures were effective at the reasonable assurance level.
Item 15(b). Management’s Annual Report on Internal Control over Financial Reporting
Sony’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Sony’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS Accounting Standards. Sony’s internal control over financial reporting includes those policies and procedures that:
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Sony;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of Sony are being made only in accordance with authorizations of management and directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Sony’s assets that could have a material effect on the financial statements.
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Sony’s management evaluated the effectiveness of Sony’s internal control over financial reporting as of March 31, 2026 based on the criteria established in “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the evaluation, management has concluded that Sony maintained effective internal control over financial reporting as of March 31, 2026.
Sony’s independent registered public accounting firm, PricewaterhouseCoopers Japan LLC, has issued an audit report on the effectiveness of Sony’s internal control over financial reporting as of March 31, 2026, presented on page (F-2).
Item 15(c). Attestation Report of the Registered Public Accounting Firm
Refer to the Report of Independent Registered Public Accounting Firm on page (F-2).
Item 15(d). Changes in Internal Control over Financial Reporting
There has been no change in Sony’s internal control over financial reporting during the fiscal year ended March 31, 2026 that has materially affected, or is reasonably likely to materially affect, Sony’s internal control over financial reporting.
Audit Committee Financial Expert
Sony Group Corporation’s Board of Directors has determined on June 24, 2025 that Keiko Kishigami and Yoriko Goto each qualifies as an “audit committee financial expert” as defined in Item 16A of Form 20-F under the Exchange Act, as amended. In addition, both are determined to be independent as defined under the NYSE Corporate Governance Standards. As of the date of this report, it is planned that Yoriko Goto will be determined to qualify as an “audit committee financial expert” as defined in Item 16A of Form 20-F under the Exchange Act, as amended, and to be independent, under the NYSE Corporate Governance Standards, at the meeting of the Board of Directors immediately following the closing of the Ordinary General Meeting of Shareholders to be held on June 23, 2026.
Code of Ethics
Sony has adopted a code of ethics, as defined in Item 16B of Form 20-F under the Exchange Act, as amended. The code of ethics applies to all directors, officers and employees of Sony. The code of ethics is available at:
https://www.sony.com/en/SonyInfo/csr_report/compliance/code_of_conduct_En.pdf
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Principal Accountant Fees and Services
The following table presents fees for audit and other services rendered by PricewaterhouseCoopers for the fiscal years ended March 31, 2025 and 2026.
Audit Fees (1)
Audit-Related Fees (2)
Tax Fees
All Other Fees (3)
Audit Fees consist of fees for the annual audit services engagement and other audit services, which are those services that only the external auditor can provide.
Audit-Related Fees consist of fees billed for assurance and related services, and audit services relating to benefit plans, business acquisitions and dispositions.
All Other Fees consist of fees primarily for services rendered with respect to advisory services.
Consistent with the SEC rules regarding auditor independence, Sony Group Corporation’s Audit Committee is responsible for appointing, reviewing and setting compensation, retaining, and overseeing the work of Sony’s independent auditor, so that the auditor’s independence will not be impaired. The Audit Committee established a formal policy requiring pre-approval of all audit and permissible non-audit services provided by the independent auditor to Sony Group Corporation or any of its subsidiaries. The Audit Committee periodically reviews this policy with due regard for compliance with laws and regulations of host countries where Sony Group Corporation is listed.
Prior to the engagement of the independent auditor for the following fiscal year’s audit, management in charge of accounting or other relevant areas (“Accounting Management”) submits an application form to the Audit Committee for comprehensive pre-approval of all recurring services expected to be rendered during that year, other than services that are classified as “Tax” related services (“Tax Services”). In order to obtain comprehensive pre-approval, Accounting Management must designate in which of two categories (Audit and Non-Audit) the services will be classified as well as fees expected, both for each category in the aggregate and for each individual service, and detailed back-up information regarding each service to the extent possible to ensure that the Audit Committee knows precisely what particular service and the expected fees it is being asked to pre-approve and that the scope of any service or the expected fees approved is unambiguous. Any additional services not within the scope of comprehensive pre-approval and Tax Services require the Audit Committee’s separate pre-approval on an individual basis. The Audit Committee approves, if necessary, any changes in terms, conditions and fees resulting from changes in the scope of services to be provided or from other circumstances, with respect to both services that are subject to comprehensive and individual pre-approval. The Audit Committee or its designee establishes procedures to assure that the independent auditor is aware in a timely manner of the services that have been pre-approved.
Exemptions from the Listing Standards for Audit Committees
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Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table sets out information concerning purchases made by Sony Group Corporation during the fiscal year ended March 31, 2026.
Period
April 1 — 30, 2025
May 1 — 31, 2025
June 1 — 30, 2025
July 1 — 31, 2025
August 1 — 31, 2025
September 1 — 30, 2025
October 1 — 31, 2025
November 1 — 30, 2025
December 1 — 31, 2025
January 1 — 31, 2026
February 1 — 28, 2026
March 1 — 31, 2026
Column (a) represents the combined total number of shares purchased during the fiscal year ended March 31, 2026, including both fractional shares purchased from fractional shareholders in accordance with the Companies Act, and shares purchased in accordance with publicly announced plans, as shown in column (c).
Under the Companies Act, a holder of shares constituting less than one full unit may require Sony Group Corporation to purchase such shares at their market value (Refer to “Memorandum and Articles of Association — Capital stock — (Unit share system)” in “Item 10. Additional Information”). During the fiscal year ended March 31, 2026, Sony Group Corporation purchased 5,362 shares of Common Stock for a total purchase price of 20,648,946 yen upon such requests from holders of shares constituting less than one full unit.
*1 Sony Group Corporation approved on May 14, 2025 by resolution of the Board of Directors the establishment of the following facility for the repurchase of Common Stock pursuant to the Companies Act and Sony Group Corporation’s Articles of Incorporation.
Total number of shares for repurchase: 100 million shares (maximum) (1.66% of total number of shares issued and outstanding (excluding treasury stock))
Total purchase price for repurchase of shares: 250 billion yen (maximum)
Period of repurchase: From May 15, 2025 to May 14, 2026
*2 The repurchase of shares of Common Stock based on the approval at the Board of Directors set forth in Note 1 above was completed. The details are as follows.
Total number of shares repurchased: 63,156,800 shares
Total purchase price for repurchased shares: 249,999,876,533 yen
Period of repurchase: May 15, 2025 to October 27, 2025
*3 Sony Group Corporation approved on November 11, 2025 by resolution of the Board of Directors the establishment of the following facility for the repurchase of Common Stock pursuant to the Companies Act and Sony Group Corporation’s Articles of Incorporation.
Total number of shares for repurchase: 35 million shares (maximum) (0.59% of total number of shares issued and outstanding (excluding treasury stock))
Total purchase price for repurchase of shares: 100 billion yen (maximum)
Period of repurchase: From November 12, 2025 to May 14, 2026
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Sony Group Corporation approved on February 5, 2026 by resolution of the Board of Directors the partial amendment to the facility for the repurchase of Common Stock approved on November 11, 2025, pursuant to the Companies Act and Sony Group Corporation’s Articles of Incorporation.
Total number of shares for repurchase (after partial amendments): 55 million shares (maximum) (0.92% of total number of shares issued and outstanding (excluding treasury stock))
Total purchase price for repurchase of shares (after partial amendments): 150 billion yen (maximum)
Sony Group Corporation approved on February 26, 2026 by resolution of the Board of Directors the further partial amendment to the facility for the repurchase of Common Stock approved on November 11, 2025 and partially amended on February 5, 2026, pursuant to the Companies Act and Sony Group Corporation’s Articles of Incorporation.
Total number of shares for repurchase (after partial amendments): 90 million shares (maximum) (1.51% of total number of shares issued and outstanding (excluding treasury stock))
Total purchase price for repurchase of shares (after partial amendments): 250 billion yen (maximum)
*4 The repurchase of shares of Common Stock based on the approval at the Board of Directors set forth in Note 3 above was completed. The details are as follows.
Total number of shares repurchased: 70,793,900 shares
Total purchase price for repurchased shares: 249,999,854,281 yen
Period of repurchase: November 12, 2025 to March 24, 2026
*5 Sony Group Corporation approved on May 8, 2026 by resolution of the Board of Directors the establishment of the following facility for the repurchase of Common Stock pursuant to the Companies Act and Sony Group Corporation’s Articles of Incorporation.
Total number of shares for repurchase: 230 million shares (maximum) (3.89% of total number of shares issued and outstanding (excluding treasury stock))
Total purchase price for repurchase of shares: 500 billion yen (maximum)
Period of repurchase: From May 11, 2026 to May 10, 2027
Change in Registrant’s Certifying Accountant
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Corporate Governance
The table below discloses the significant ways in which Sony’s corporate governance practices differ from those required for U.S. companies under the listing standards of the NYSE. As a foreign private issuer listed on the NYSE, Sony Group Corporation is exempt from most of the exchange’s corporate governance standards requirements. For further information on Sony’s corporate governance practices and history, refer to “Board Practices” in “Item 6. Directors, Senior Management and Employees.”
NYSE Standards
Sony’s Corporate Governance Practices
Board Independence. A majority of board directors must be independent.
Sony Group Corporation has adopted the “Company with Three Committees” corporate governance system under the Companies Act. Sony Group Corporation’s Board Charter requires its board to consist of between 8 to 14 directors.
The Companies Act does not require Sony Group Corporation to have a majority of “independent” (in the meaning given by the NYSE Corporate Governance Standards) directors on its board; rather, it requires Sony Group Corporation to have a majority of “outside” directors (the definition of the term “outside” director is summarized below) on each of three statutory committees (the Nominating Committee, the Audit Committee and the Compensation Committee).
Director Independence. A director is not independent if such director is
(i) a person who the board determines has a material direct or indirect relationship with the company, its parent or a consolidated subsidiary;
(ii) a person who, within the last three years, has been an employee of the company or has an immediate family member of an executive officer of the company, its parent or a consolidated subsidiary;
(iii) a person who had received, or whose immediate family member had received, during any 12-month period within the last three years, more than 120,000 U.S. dollars per year in direct compensation from the company, its parent or a consolidated subsidiary, other than director and committee fees or deferred compensation for prior services (provided such compensation is not contingent in any way on continued service);
(iv) (A) a person who is, or whose immediate family member is, a current partner or employee of a firm that is the company’s internal or external auditor; (B) a person whose immediate family member is a partner of such a firm; (C) a person who has an immediate family member who is a current employee of such a firm and who personally participates in the firm’s audit, assurance or tax compliance (but not tax planning) practice; or (D) a person who was, or has an immediate family member who was, within the last three years, a partner or employee of such a firm and personally worked on the listed company’s audit within that time;
“Outside” director is defined in the Companies Act as a person who satisfies all of the requirements (i) through (v) below:
(i) a person who is not a Director of Sony Group Corporation or any of its subsidiaries engaged in the business operations of Sony Group Corporation or such subsidiaries, as the case may be, or a Corporate Executive Officer or general manager or other employee (“Group Executive Director, etc.”) of Sony Group Corporation or any of its subsidiaries and who has not been a Group Executive Director, etc. of Sony Group Corporation or any of its subsidiaries for ten years prior to assuming his/her office; (ii) if a person who has been a director, accounting counselor (if the accounting counselor is a juridical person, a member who is in charge of the affairs), or corporate auditor of Sony Group Corporation or any of its subsidiaries (excluding a person who has been a Group Executive Director, etc.) at the time within ten years prior to assuming his/her office, a person who has not been a Group Executive Director, etc. of Sony Group Corporation or any of its subsidiaries for ten years prior to assuming his/her office as a director, an accounting counselor, or a corporate auditor; (iii) a person who is not a director or a Corporate Executive Officer or general manager or other employee of a parent company or any entity which controls the management of Sony Group Corporation; (iv) a person who is not a Group Executive Director, etc. of a direct/indirect subsidiary of Sony Group Corporation or any entity the management of which is directly or indirectly controlled by Sony Group Corporation; and (v) a person who is not a spouse or relative within the
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(v) a person who is, or whose immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of the listed company’s present executive officers at the same time serves or served on that company’s compensation committee; or
(vi) an executive officer or employee of a company, or has an immediate family member of an executive officer of a company, that makes payments to, or receives payments from, the listed company, its parent or a consolidated subsidiary for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of 1 million U.S. dollars or 2% of such other company’s consolidated gross revenues
second degree of kinship of a Director or a Corporate Executive Officer or general manager or other employee of Sony Group Corporation. Under the Companies Act, a director’s status as an “outside” director is unaffected by the director’s compensation, his or her affiliation with business partners, or the board’s affirmative determination of independence. On the other hand, under the Companies Act, a director who has had a career as a management director, corporate executive officer, or other employee of the company, its subsidiaries or other group companies is by definition not an “outside” director.
Sony Group Corporation’s Board Charter includes a provision requiring that each “outside” director:
(i) Shall not have received directly from Sony Group, during any consecutive 12-month period within the last three years, more than an amount equivalent to 120,000 U.S. dollars, other than Director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); and
(ii) Shall not be an executive director, a corporate executive officer, a general manager or other employee of any company whose aggregate amount of transactions with Sony Group, in any of the last three fiscal years, exceeds the greater of an amount equivalent to 1,000,000 U.S. dollars, or 2% of the annual consolidated sales of such company.
In addition, the Securities Listing Regulations of the TSE require Sony Group Corporation to make efforts to have at least one “Independent Director” on the Board of Directors. “Independent Director” is defined in the Securities Listing Regulations of the TSE as an “outside” director who is unlikely to have conflicts of interest with shareholders. According to the guidelines of the TSE, if a person falls in any of the categories listed below, such person, in principle, will be considered to have a conflict of interest with shareholders of the listed company.
(1) A person for which the listed company is a major client or a person who executes business of a person for which the listed company is a major client;
(2) A major client of the listed company or a person who executes business of a major client of the listed company;
(3) A consultant, accounting professional, or legal professional (or, if such consultant, accounting professional, or legal professional is a juridical person, a member of such juridical person) of the listed company who receives a large amount of money or other consideration other than remuneration for directorship/auditorship from such listed company;
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(4) A person who has fallen in any of categories (1) through (3) listed above until recently;
(5) A person who has fallen in any of categories (a) or (b) listed below for ten years prior to assuming his/her office:
(a) A person who executes business of a parent company of the listed company or a director who does not execute business of a parent company of the listed company; or
(b) A person who executes business of a fellow subsidiary of the listed company.
(6) A close relative of a person who falls in any of categories (a) through (f) listed below (only if such person is significant):
(a) A person who falls in any of (1) through (5) listed above;
(b) A person who executes business of a subsidiary of the listed company;
(c) A director who does not execute business of a subsidiary of the listed company;
(d) A person who executes business of a parent company of the listed company or a director who does not execute business of a parent company of the listed company;
(e) A person who executes business of a fellow subsidiary of the listed company; or
(f) A person who has fallen in any of categories (b) or (c) listed above or a person who has executed business of the listed company until recently.
As of the date of this report, 9 of the 11 members of Sony Group Corporation’s Board of Directors are qualified as “outside” directors. In addition, all 9 “outside” directors are qualified and designated as “Independent Directors” under the Securities Listing Regulations of the TSE. It is expected that 8 of the 10 members of new director candidates who will be appointed at the Ordinary General Meeting of Shareholders to be held on June 23, 2026 will each be qualified as “outside” directors, and will also be qualified and designated as “Independent Directors” under the Securities Listing Regulations of the TSE.
Executive Sessions. Non-management directors must meet in regularly scheduled executive sessions without management. Independent directors should meet alone in an executive session at least once a year.
An “outside” director, as defined under the Companies Act, is equivalent to a “non-management director” under the NYSE rules because an “outside” director does not engage in the execution of business operations of the company.
The outside/non-management Directors generally meet several times a year without management, though neither the Companies Act nor Sony Group Corporation’s Board Charter requires
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non-management Directors to meet regularly without management and there is no requirement for the outside Directors to meet alone in an executive session at least once a year.
Nominating/Corporate Governance Committee. A nominating/corporate governance committee of independent directors is required. The committee must have a charter that addresses the purpose, responsibilities (including development of corporate governance guidelines) and annual performance evaluation of the committee.
Sony Group Corporation’s Nominating Committee shall consist of at least three Directors. Under the Companies Act, the Committee is responsible for determining the contents of proposals regarding the appointment and dismissal of Directors to be submitted for approval to the shareholders’ meeting. Unlike listed U.S. companies under NYSE rules, it is not responsible for developing governance guidelines or overseeing the evaluation of the board and management. Under the Companies Act, a majority of its members shall be “outside” directors, as defined under the Companies Act.
Compensation Committee. A compensation committee of independent directors is required. The committee must have a charter that addresses the purpose, responsibilities and annual performance evaluation of the committee. In addition, in accordance with the SEC rules adopted pursuant to Section 952 of the Dodd-Frank Act, NYSE listing standards expanded the factors relevant in determining whether a committee member has a relationship to the company that will materially affect that member’s duties to the compensation committee and provided compensation committees the authority to engage compensation advisers. Additionally, the committee may obtain or retain the advice of a compensation adviser only after taking into consideration all factors relevant to determining that adviser’s independence from management, unless the adviser’s role is (i) limited to consulting on a generally applicable broad-based plan or (ii) is providing information that is not customized for the issuer or is not customized by the adviser and about which the adviser does not provide advice.
Sony Group Corporation’s Compensation Committee shall consist of at least three Directors. Under the Companies Act, a majority of its members shall be “outside” directors, as defined under the Companies Act. Sony Group Corporation’s Board Charter prohibits the CEO, the COO and/or the CFO (or a person at any equivalent position) from serving on the Compensation Committee. Under the Companies Act, the Committee is responsible for, among others, determining the compensation of each director and Corporate Executive Officer.
Audit Committee. An audit committee satisfying the independence and other requirements of Rule 10A-3 under the Exchange Act is required. The committee must have at least three members. All members must be independent. The committee must have a charter addressing the committee’s purpose, an annual performance evaluation of the committee and the duties and responsibilities of the committee.
Sony Group Corporation’s Audit Committee shall consist of at least three Directors. Under the Companies Act, a majority of its members shall be “outside” Directors, as defined under the Companies Act. In addition, pursuant to the Companies Act, no member of the Committee shall be a Director of the company or any of its subsidiaries who is engaged in the business operations of the company or such subsidiary, as the case may be, or a corporate executive officer of the company or any of its subsidiaries, or an accounting counselor, general manager or other employee of any of such subsidiaries. Sony Group Corporation’s Board Charter also requires each member of the Audit Committee to meet the independence requirements of the applicable U.S. securities laws and regulations, and requires at least one member to meet the audit
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committee financial expert requirements. As of the date of this report, all the members of Sony Group Corporation’s Audit Committee are “independent” as defined in the NYSE Corporate Governance Standards, and two members of the Committee are qualified as audit committee financial experts. It is expected that all the members of the Audit Committee will be determined to be also “independent” as defined in the NYSE Corporate Governance Standards, and one member of the Committee will be determined to qualify as an audit committee financial expert, at the meeting of the Board of Directors immediately following the closing of the Ordinary General Meeting of Shareholders on June 23, 2026.
Equity Compensation Plans. Equity compensation plans require shareholder approval, subject to limited exemptions.
Under the Companies Act, if Sony Group Corporation wishes to adopt an equity compensation plan under which stock acquisition rights or shares of common stock are granted on specially favorable conditions, except where all of its shareholders are granted rights to subscribe for such stock acquisition rights/shares of common stock or such stock acquisition rights/shares of common stock are gratuitously allocated to all of its shareholders, each on a pro rata basis, then Sony Group Corporation must obtain shareholder approval by a “special resolution” at a General Meeting of Shareholders, where the quorum is one-third of the total number of voting rights of all of its shareholders and the approval by at least two-thirds of the number of voting rights of all the shareholders represented at the meeting is required under Sony Group Corporation’s Articles of Incorporation.
On the other hand, under the Companies Act, if Sony Group Corporation wishes to adopt an equity compensation plan under which stock acquisition rights or shares of common stock are granted against fair value thereof, such plan can be adopted by the resolution of Sony Group Corporation’s Compensation Committee, and grants of stock acquisition rights or shares pursuant to such plan may be decided by a resolution of the Board of Directors or a determination by a Corporate Executive Officer to whom the authority to make such determination has been delegated, and no shareholder approval is required.
Corporate Governance Guidelines. Corporate governance guidelines must be adopted and disclosed.
Sony Group Corporation is required to disclose the status of its corporate governance under the Companies Act, the Financial Instruments and Exchange Act and its related regulations, and the Securities Listing Regulations of the TSE; however, Sony Group Corporation does not have corporate governance guidelines that cover all the requirements described in the NYSE Corporate Governance Standards, as many of the provisions do not apply to
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Sony Group Corporation. Refer to “Board Practices” in “Item 6. Directors, Senior Management and Employees.”
Code of Ethics. A code of business conduct and ethics for directors, officers and employees must be adopted and disclosed, along with any waivers of the code for directors or executive officers.
Although this provision of the NYSE Corporate Governance Standards does not apply to Sony Group Corporation, Sony Group Corporation has adopted a code of conduct to be observed by all its directors, officers and other employees. The code of conduct is available at:
The code’s content covers principal items described in the NYSE Corporate Governance Standards.
Mine Safety Disclosure
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
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Exhibits
Documents filed as exhibits to this annual report:
1.1
Amended Articles of Incorporation of Sony Group Corporation (English Translation), incorporated by reference to Exhibit 1.1 to Sony’s annual report on Form 20-F for the fiscal year ended March 31, 2025 (Commission file number 001-06439) filed on June 20, 2025
1.2
Share Handling Regulations (English Translation), incorporated by reference to Exhibit 1.2 to Sony’s annual report on Form 20-F for the fiscal year ended March 31, 2024 (Commission file number 001-06439) filed on June 25, 2024
1.3
Charter of the Board of Directors, as amended (English Translation), incorporated by reference to Exhibit 1.3 of Sony’s annual report on Form 20-F for the fiscal year ended March 31, 2024 (Commission file number 001-06439) filed on June 25, 2024
2.1
Second Further Amended and Restated Deposit Agreement, dated as of April 1, 2025, by and among Sony Group Corporation, JPMorgan Chase Bank, N.A. and holders and beneficial owners of American Depositary Shares issued thereunder, including the form of American Depositary Receipt, incorporated by reference to Exhibit 99. A to Sony’s registration statement on Form F-6 (Commission file number 333-285828) filed on March 14, 2025
2.2
Description of Rights of each Class of Securities Registered under Section 12 of the Securities Exchange Act of 1934
8.1
Significant subsidiaries (as defined in §210.1-02(w) of Regulation S-X) of Sony Group Corporation, including additional subsidiaries that management has deemed to be significant, as of March 31, 2026: Incorporated by reference to “Business Overview” and “Organizational Structure” in “Item 4. Information on the Company”
11.1
Global Policy on Insider Trading Prevention
12.1
302 Certification
12.2
13.1
906 Certification
15.1
Consent of PricewaterhouseCoopers Japan LLC
97.1
Sony Group Corporation Clawback Policy, incorporated by reference to Exhibit 97.1 to Sony’s annual report on Form 20-F for the fiscal year ended March 31, 2024 (Commission file number 001-06439) filed on June 25, 2024
101.INS
Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104
Cover page formatted as Inline XBRL and contained in Exhibit 101
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
SONY GROUP CORPORATION
(Registrant)
By:
/s/ LIN TAO
(Signature)
Chief Financial Officer
Date: June 18, 2026
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