CORPORATE GOVERNANCE
Solasia Pharma K.K.

March 22, 2024

Solasia Pharma K.K.
Securities code: 4597 (Tokyo Stock Exchange)
Yoshihiro Arai, President and Chief Executive Officer
Contact：

Toshio Miyashita, Chief Financial Officer

URL:

https://www.solasia.co.jp/en/

The corporate governance of Solasia Pharma K.K. (the “Company”) is described below.
I. Basic Views on Corporate Governance, Capital Structure, Corporate Attributes, and Other
Basic Information
1. Basic Views
At Solasia Pharma, we believe it is our mission to contribute to patients and medical sites
through our business activities as a pharmaceutical development company. We
recognize that enhancing our corporate value and returning profits to shareholders
through our business activities, and fulfilling accountability to stakeholders, are importantundertakings for achieving this mission. For this reason, the Company's basic policy is toensure legal compliance and transparency in management, while enhancing thesupervision and auditing by outside directors and the auditing system of Audit &Supervisory Board members, in order to achieve the effective functioning of corporate
governance.
[Reasons for Non-compliance with the Principles of the Corporate Governance Code]
The Company implements all of the basic principles of the Corporate Governance Code.
2. Capital Structure
Foreign Shareholding Ratio

Less than 10%[Major Shareholders]Name of Shareholders

Number of Shares Held

Shareholding(shares)

Ratio

Nippon Kayaku Co., Ltd

12,000,000

6.88

Maruho Co., Ltd

11,324,000

6.49JAPAN SECURITIES FINANCE Co., Ltd

3,250,100

1.86

SBI SECURITIES Co., Ltd

3,093,148

1.77

MACQUARIE BANK LIMITED DBU AC

3,000,000

1.72

1CORPORATE GOVERNANCE
Solasia Pharma K.K.

Rakuten Securities, Inc

2,243,000

1.28

Shinichi Asai

1,692,700

0.97

MSIP CLIENT SECURITIES

1,362,522

0.78

Hitoshi Imamura

1,157,900

0.66

Yoshihiro Arai

1,154,545

0.66

Controlling Shareholder―

Parent Company―

Listed Exchange of Parent Company―

Supplementary Explanation
[2. Capital Structure] shows as of December 31st, 2023.

3. Corporate Attributes
Listed Stock Market and Market Section

Tokyo Stock Exchange (Growth Market)

Fiscal Year-end

DecemberType of BusinessPharmaceutical

Number of Employees (Consolidated) at

Less than 100 people

the End of the Previous Fiscal YearSales (Consolidated) in the Previous

Less than 10 billion yen

Fiscal Year
Number of Consolidated Subsidiaries at

Less than 10 companies

the End of the Previous Fiscal Year
4. Guidelines for Measures to Protect Minority Shareholders When Conducting Transactions
with Controlling Shareholder―
5. Special Circumstances Which May Have Significant Impact on Corporate Governance―
II. Business Management Organization and Other Corporate Governance Systems
Pertaining to Management Decision-Making, Execution, and Supervision
1. Organizational Composition and Operation
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CORPORATE GOVERNANCE
Solasia Pharma K.K.

Organizational form

Company with Audit & Supervisory Board[Directors]
Maximum Number of Directors under the10

Articles of Incorporation
Term of Office under the Articles of

1 year

Incorporation
Chairman of the Board of Directors

President

Number of Directors

5

Appointment of Outside Directors

Yes

Number of Outside Directors

3

Number of Outside Directors Designated as

3

Independent Directors
Outside Directors’ Relationship with the Company (1)Name

Affiliation

Relationship with the Company (*1)
aStanley Lau

From another company

Norikazu Eiki

From another company

Jiro Mizukawa

From another company

b

c

d

e

f

g

h

i

j

k

*1 Categories for “Relationship with the Company”
a. Executive of the Company or its subsidiaries
b. Executive or non-executive director of a parent company of the Company
c. Executive of a fellow subsidiary company of the Company
d. A party whose major client or supplier is the Company or an executive thereof
e. Major client or supplier of the Company or an executive thereof
f. Consultant, accountant, or legal professional who receives a large sum of money or other property from theCompany in addition to executive compensation
g. Major shareholder of the Company (if the said major shareholder is a corporation, an executive of the said
corporation)h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) (thedirector himself/herself only)
i. Executive of an entity to which outside officers are mutually appointed (the director himself/herself only)
j. Executive of an entity that receives a donation from the Company (the director himself/herself only)
k. Other

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Solasia Pharma K.K.

Outside Directors’ Relationship with the Company (2)NameStanley Lau

Designation

SupplementaryasExplanation of

Independent

theDirector

Relationship

Yes

Not applicable

Reasons for Appointment

We have appointed Mr. Stanley Lau as
an outside director expecting him tocontribute

to

the

Company’s

management, especially in relation to
Chinese companies, by making use ofhisabundant

knowledge

experience

as

a

and

managerofapharmaceutical company. In addition,
we

have

designatedindependent

director,

him

as

an

judging

that

there is no risk that he would harm theinterestsofgeneralshareholders,given that he meets the criteria forassessing independence.
Norikazu

Yes

Not applicable

We have appointed Mr. Norikazu Eiki
as an outside director, expecting him toEikicontribute

to

the

Company’s

management by using his abundant
experienceandknowledge

managerofacompany.

Inaddition,asapharmaceutical
we

have

designated him as an independent
director, judging that there is no riskthat he would harm the interests ofgeneral shareholders, given that he
meets

the

criteria

forassessingindependence.
Jiro

Yes

Not applicable

Mizukawa

We have appointed Mr. Jiro Mizukawa
as an outside director, expecting him tocontribute

to

the

Company’s

management by using his abundant

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CORPORATE GOVERNANCE
Solasia Pharma K.K.

experienceandknowledge

managerofacompany.

Inaddition,asapharmaceutical
we

have

designated him as an independent
director, judging that there is no riskthat he would harm the interests ofgeneral shareholders, given that he
meets

the

criteria

forassessingindependence.
[Voluntary Committees]
Voluntary Establishment of Any

No

Committee Equivalent to Nominating
Committee or Remuneration Committee
Supplementary Explanation―[Audit & Supervisory Board]
Establishment of Audit & Supervisory Board

Yes

Number of Audit & Supervisory Board

Maximum

Members under the Articles of Incorporation

definedNumber of Audit & Supervisory Board

3

numberofmembers

notMembers
Collaboration among Audit & Supervisory Board Members, Accounting Auditors, andInternal Audit Department
The internal audit manager and Audit & Supervisory Board Members regularly exchange
information on the status of internal audits and share information by attending important
meetings. They exchange information and opinions with accounting auditors to improvethe effectiveness and efficiency of audits. Specifically, meetings are held between Audit& Supervisory Board members and accounting auditors at least twice a year, andopinions are exchanged regarding whether there are any problems in the audit andfuture issues. In the audit reviews held at the end of the fiscal year and in each quarter,
information is shared by having Audit & Supervisory Board members and the internal
audit manager in attendance.
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Solasia Pharma K.K.

AppointmentofOutside

Audit

&

Yes

Supervisory Board Members
Number of Outside Audit & Supervisory

3

Board Members
Number of Outside Audit & Supervisory
Board

Members

Designated3

as

Independent Directors
Outside Audit & Supervisory Board Members’ Relationship with the Company (1)Name

Affiliation

Relationship with the Company (*1)
aSusumu Araki

From another company

Yoshiyuki

From another company

b

c

d

e

f

g

h

i

j

k

l

m

Yamakawa
NagisaLawyerKawaida*1 Categories for “Relationship with the Company”
a. Executive of the Company or its subsidiaries
b. Non-executive director or accounting counselor of the Company or its subsidiaries
c. Executive or non-executive director of a parent company of the Company
d. Audit & Supervisory Board member of a fellow subsidiary company of the Company
e. Executive of a fellow subsidiary company of the Company
f. A party whose major client or supplier is the Company or an executive thereof
g. Major client or supplier of the Company or an executive thereofh. Consultant, accountant, or legal professional who receives a large sum of money or other property from theCompany in addition to executive compensation
i. Major shareholder of the Company (if the said major shareholder is a corporation, an executive of the said
corporation)
j. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) (thedirector himself/herself only)
k. Executive of an entity to which outside officers are mutually appointed (the director himself/herself only)
l. Executive of an entity that receives a donation from the Company (the director himself/herself only)
m. OtherOutside Audit & Supervisory Board Members’ Relationship with the Company (2)Name

SusumuDesignation

SupplementaryasExplanation of

Independent

theDirector

Relationship

Yes

Not applicable

Reasons for Appointment

We have appointed Mr. Susumu Araki
as an outside Audit & Supervisory

Araki

Board member, expecting him tostrengthen the Company’s auditing
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Solasia Pharma K.K.

functions, given that he possesses
expertise in corporate management
and financial accounting based on his
many years of international experience
working at financial institutions andhas experience as a director at a listedcompanyinthepharmaceuticalindustry.

Inaddition,

we

have

designated him as an independent
director, judging that there is no riskthat he would harm the interests ofgeneral shareholders, given that he
meets

the

criteria

forassessingindependence.
Yoshiyuki

Yes

Not applicable

We have appointed Mr. Yoshiyuki
Yamakawa as an outside Audit &Yamakawa

Supervisory Board member, expecting
him to contribute to the Company’s
auditing

functions,

given

that

he

possesses extensive experience andknowledge as a manager of a biotech
company and a consulting company. In
addition, we have designated him as
an independent director, judging that
there is no risk that he would harm theinterestsofgeneralshareholders,given that he meets the criteria forassessing independence.
NagisaYes

Not applicable

We

have

appointed

Kawaida as an

KawaidaMs.

outsideNagisaAudit &

Supervisory Board member, expecting
her to contribute to the Company’s
auditing functions, given that she
possesses

expertise

and

broad

experience as a lawyer in corporate
legal affairs.

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CORPORATE GOVERNANCE
Solasia Pharma K.K.

In addition, we have designated her as
an independent director, judging that
there is no risk that she would harm
the interests of general shareholders,given that she meets the criteria forassessing independence.
[Independent Directors]
Number of Independent Directors

6

Matters Related to Independent Directors―[Incentives]
Incentive Policies for Directors

Introduction of stock option system

Supplementary Explanation
The Company grants stock options to raise morale for executives to contribute tobusiness performance and enhance corporate value.
Eligibility of Stock Options

Internal directors, outside directors, internal
Audit

&

outsideSupervisory
Audit

&

Board

members,

Supervisory

members,

employees,

subsidiaries,

auditors

Board

directorsofofsubsidiaries,

employees of subsidiaries, etc.
Supplementary Explanation
The Company grants stock options to officers and employees of the Company (including
subsidiaries) and important advisors who support the Company in developing orcommercializing products in order to boost motivation and morale.
[Director's Remuneration]
Disclosure status

The Company does not disclose individual
remuneration.

Supplementary Explanation
The Company discloses the total amount of remuneration to directors, Audit &Supervisory Board members, outside directors, and outside Audit & Supervisory Board
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CORPORATE GOVERNANCE
Solasia Pharma K.K.

members in the securities report and business report. The total amount of remuneration
to directors, Audit & Supervisory Board members, outside directors, and outside Audit &Supervisory Board members in the fiscal year ended December 31, 2023 was as follows.
Directors: 69 million yen (of which, outside directors: 6 million yen)
Audit & Supervisory Board members: 9 million yen (of which, outside Audit & Supervisory
Board members: 9 million yen)
Total: 79 million yen (of which, outside officers: 15 million yen)
Policy for Determining Remuneration

Established

Amount and Calculation Method
Disclosure on Policy for Determining Remuneration Amount and Calculation Method
・Director remuneration shall be up to 300 million yen per year, and Audit & Supervisory
Board member compensation shall be up to 50 million yen per year. The respective
remuneration amounts are approved at the General Meeting of Shareholders.
・The Company’s executive remuneration comprise of fixed basic remuneration andbonuses according to the degree to which each officer has achieved his/her goal set ineach fiscal year. The amount of remuneration is determined by the resolution of theBoard of Directors’ meetings (remuneration for Audit & Supervisory Board Members isdetermined by discussions among the Audit & Supervisory Board Members) after
discussing the remuneration system according to the duties and responsibilities of each
officer.
[Support System for Outside Directors (Outside Audit & Supervisory Board Members)]
There is no dedicated department to support outside officers, but the Management
Headquarters supports operations as needed. With regard to information transmission,
full-time Audit & Supervisory Board members attend weekly management meetings to
grasp information on management matters. The President explains the matters to be
discussed at the Board of Directors meeting to outside directors in advance. Informationis also transmitted to them by interview, phone, or email as needed.
2. Matters on Functions of Business Execution, Auditing and Supervision, Nomination, andRemuneration Decisions (Overview of Current Corporate Governance System)
The Company’s Board of Directors consists of five (5) directors. We have appointed
three (3) outside directors to ensure transparency and fairness as a decision-making
body and to clarify the supervisory and auditing functions for the execution of theCompany’s business. The three (3) outside Audit & Supervisory Board members are also

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Solasia Pharma K.K.

in attendance at the Board of Directors meetings. We are working to strengthen astructure that enables management decision-making and external managementmonitoring based on a broader perspective. In principle, the regular Board of Directors
meetings are held once a month, and extraordinary Board of Directors meetings are held
as necessary to ensure prompt and accurate decision-making. In principle, management
meetings consisting of executives and led by the President & CEO are held once a week
to ensure management transparency and fairness and to make prompt management
decisions. In these management meetings, discussions are held on important matters ofbusiness execution, and these meetings are positioned as the basis for decision-making
by the President & CEO.
The Company is set up as a Company with an Audit & Supervisory Board. The Audit &Supervisory Board consists of three outside Audit & Supervisory Board members, one ofwhom is a full-time Audit & Supervisory Board member. The Audit & Supervisory Board
meets regularly once a month to exchange views on the legality of decision-making by
the Board of Directors and strives to enhance the effectiveness of corporate governance.
Full-time Audit & Supervisory Board members attend various meetings related to theirbusiness activities to verify the validity of the decision-making process.
The Company has entered into an audit agreement with BDO Sanyu & Co. to receive
accounting audits in accordance with the Companies Act and the Financial Instruments
and Exchange Act, and timely and appropriate audits are being conducted.
3. Reasons for Adoption of Current Corporate Governance System
The Company adopts a “Company with Audit & Supervisory Board” system, and morethan half of the directors are appointed from other companies. Outside directors areappointed to ensure objective and impartial management decisions. The Audit &Supervisory Board consist only of outside members to strengthen the supervisory
function for the execution of duties by directors. The Company has established a systemthat ensures neutrality, objectivity, and transparency while conducting adaptable andflexible management in business execution. We will continue to enhance theeffectiveness of corporate governance by maintaining this system.
III. Implementation of Measures for Shareholders and Other Stakeholders
1. Initiatives to Vitalize General Meetings of Shareholders and Facilitate Exercise of Voting
RightsSupplementary Explanation
Early Notification of

The Company will strive to send the notice as soon as

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CORPORATE GOVERNANCE
Solasia Pharma K.K.

General Meeting of

possible.

Shareholders
Scheduling General

The Company’s fiscal period ends in December. As such, theMeeting ofGeneral Meeting of Shareholders is held in March, instead of

Shareholders in a Way

June when most other listed companies hold their GeneralThat Avoids

Meeting of Shareholders. Holding the meeting in March would

Overlapping with Other

naturally help us avoid holding the meeting on days generally

Shareholder Meetings

considered to be the most intensive. We also avoid days in
March that are expected to be intensive to make it easier for
many shareholders to attend.

Electronic Exercising

The Company allows the exercise of voting rights via theof Voting Rights

Internet.

Participation in

The Company will consider such initiatives in the future in view

Electronic Votingof an increase in institutional investors and the status of the

Platform and Other

exercise of voting rights.

Measures for Greater
Ease of Voting by
Institutional Investors
Provision ofThe

Company

createsanEnglishtranslation

of

the

Convocation Notices

convocation notice (including business reports) and post it on(Summaries) in

our website.

EnglishOther―

2. IR Activities
Supplementary Explanation
Preparation andBased on the Information Management

Publication ofRules, the Company clarifies the basic

Disclosure Policies

concept
departmentof

informationincharge,Presentation byRepresentative

disclosure,communicationroute, and procedures.
Regular briefings for

The Company holds briefings for individual

Individual Investors

investors at least twice a year.

Regular briefings for

The Company holds regular briefings

Analysts andconsisting mainly of a presentation by the
11

Yes
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CORPORATE GOVERNANCE
Solasia Pharma K.K.

President & CEO for institutional investors

Institutional Investors

and analysts after the disclosure of thefinancial results for the full year and the first
half.
Regular Briefings for

The Company does not have plans to do so

Foreign Individual

at this time, but we will consider it

Investors

according to the distribution of overseas

Yes

investors in the future.
Posting of IR Materials

The Company publishes financial resultson Website

information and other disclosure materials
on the website for institutional investors
and analysts as well as individual andoverseas investors.

Establishment of
Department

Corporate Planning, Administration Division(Representative) in
Charge of IR
Other

―

3. Measures to Ensure Due Respect for Stakeholders
Supplementary Explanation
Rules for

The Company believes that trust from all stakeholders is essential

Respecting thefor the continuous development of the business. We establish andPosition ofthoroughly enforce corporate ethics by stipulating an ethical code

Stakeholders inof conduct.

Accordance with
Internal
Regulations
Implementation of

The Company does not particularly implement such activities at thisEnvironmental

stage, but we plan to consider and implement them in the future.

Conservation and
CSR Activities
Formulation ofThe

Company

strives

Policies forappropriately to all stakeholders, including shareholders andProvidinginvestors, in accordance with the Companies Act, the Financial

Information to

Instruments and Exchange Act, the rules established by the Tokyo12

todisclose

information

fairlyandCORPORATE GOVERNANCE
Solasia Pharma K.K.

Stakeholders

Stock Exchange, and the Company’s Information Management
Rules.

Other

The Company will promote the creation of a workplaceenvironment where employees can balance their work and family
lives. We will hire female employees and actively promote them to
executive positions.

IV. Matters Related to Internal Control System
1. Basic Views on Internal Control System and Status of Its Development
1. System for ensuring that the execution of duties by directors and employees
conforms to laws and regulations and the Articles of Incorporation


Thoroughly enforce the Code of Ethics to executives and employees.



Establish and operate an internal control system to ensure the reliability offinancial reporting, and conduct appropriate evaluations.



Based on the Corporate Ethics Declaration Management Rules, promptly grasp
and respond appropriately to violations of laws, regulations, and other importantmatters related to compliance.



Based on the Antisocial Forces Response Rules, take a resolute stance toward
antisocial forces and thoroughly ensure that the Company does not have any
relationship with them.

Conduct internal audits based on the Internal Audit Rules and verify the above
items.

2. System for preserving and managing information pertaining to the execution ofduties by directors
The Company will store and manage minutes of board meetings (including
electronic records) and other information pertaining to the execution of duties bydirectors in accordance with laws and regulations and Document Management
Rules, and will keep them available for viewing by directors and Audit &Supervisory Board members.
3. The Company’s rules and other systems for risk management of losses
We will implement prompt and appropriate measures against risks that affectmanagement based on the Business Risk Management Rules.
4. System for ensuring that directors perform their duties efficiently

Formulate a medium-term business plan, execute duties based on it, andexercise control according to the plan.

Regularly or irregularly use a conference call system or the like to hold Board of13

CORPORATE GOVERNANCE
Solasia Pharma K.K.

Directors meetings and other meetings to make decisions necessary forbusiness execution in a timely manner.
5. System for ensuring the appropriateness of operations in the corporate groupconsisting of the Company and its subsidiaries(1). System for ensuring that the execution of duties by directors and employees ofsubsidiaries conforms to laws and regulations and the Articles of Incorporation
We will establish the Company’s Code of Ethics as the Code of Ethics of theGroup, which also includes subsidiaries, and will thoroughly enforce it for
officers and employees of subsidiaries.



Make subsidiaries subject to audits in the Company’s internal audit system.

(2). System for reporting to the Company matters pertaining to the execution ofduties by directors of subsidiaries


Dispatch the Company’s executives or employees as officers of subsidiaries
and incorporate the execution of duties by directors of subsidiaries into theCompany’s internal control.

With regard to decisions pertaining to the execution of duties by subsidiaries,
clarify and thoroughly enforce the standards for matters reported to theCompany and matters requiring approval.

(3). Regulations and other systems for the management of risk of loss of
subsidiaries


Establish a risk management system for subsidiaries based on the Business
Crisis Management Rules.

(4). System for ensuring efficient execution of duties by directors of subsidiaries


When formulating the Company’s medium-term business plan, incorporate thebusiness activities of subsidiaries, execute duties according to the plan, andexercise control based on the said plan.

6. Matters concerning the employee when the Audit & Supervisory Board member asksthat an employee assist in its duties, and matters concerning the independence ofthe employee from the director and ensuring the effectiveness of instructions fromthe Audit & Supervisory Board member
Audit & Supervisory Board members may order officials who assist in auditing withmatters necessary for audit work, and officials who have received orders from
Audit & Supervisory Board members for matters necessary for auditing work shallnot receive orders from other officers and employees with regard to such matters.
7. System for directors and officials to report to Audit & Supervisory Board members
and other systems for reporting to Audit & Supervisory Board members

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CORPORATE GOVERNANCE
Solasia Pharma K.K.



Audit & Supervisory Board members shall be able to attend all internal
meetings, and a system shall be established allowing them to obtain
information on the effectiveness of internal controls in a timely manner.

Executives and employees shall promptly report to Audit & Supervisory Board
members when requested to report matters related to business execution.



Executives and employees shall promptly report to Audit & Supervisory Board
members when they discover facts that violate laws and regulations or that may
cause significant damage to the Company.



The Company shall ensure that officers and employees of the Company or its
subsidiaries who report such matters to the Audit & Supervisory Board are notadversely treated due to the said reporting.

When an Audit & Supervisory Board member makes a request for advancepayment of expenses resulting from the execution of his/her duties, theCompany shall promptly process the expenses or debts, except when it isdeemed not necessary.

8. System for ensuring that audits by the Audit & Supervisory Board are conductedeffectively
The Company will ensure the effectiveness of audits by the Audit & Supervisory
Board by having Audit & Supervisory Board members collaborate with thedepartment in charge of internal audits and external auditors. In addition, theCompany will create opportunities for Audit & Supervisory Board members toregularly exchange information and opinions with the Representative Director.
2. Basic Approach to the Elimination of Antisocial Forces and Status of Its Development
The Company considers the elimination of antisocial forces as being important for
management from the perspective of corporate social responsibility and corporate
defense. Our basic policy is to respond resolutely to antisocial forces and not to have any
relationship with antisocial forces, including business relationships. We confirm if
shareholders, business partners, or others fall under antisocial forces by requesting
investigations to external specialist organizations or by searching the Internet inaccordance with the Antisocial Forces Response Rules. In addition, we join the National
Center for Removal of Criminal Organizations to gather information on antisocial forces.
In addition, we conduct training each time employees are hired to systematically respondto antisocial forces. We also implement an orientation at the time new employees join the
Company and a once-a-year training for all employees.
V. Other
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CORPORATE GOVERNANCE
Solasia Pharma K.K.

1. Adoption of Anti-takeover Measures
Adoption of Anti-takeover Measures

Not adopted

Supplementary Explanation
While the Company believes that anti-takeover measures are important for continuing tomanage the business stably, the Company does not currently have such measures inplace and has no plans to introduce them, as it considers them to be constraints onshareholder rights.
2. Other Matters Related to Corporate Governance System.
-

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END

17