Corporate Governance / Compliance

GOVERNANCE

N.E. CHEMCAT is working to build a transparent and sound governance system and strengthening
internal controls in order to increase stakeholder trust and enhance corporate value. We have also
positioned compliance as our top priority in corporate activities.

Governance SystemInternal Controls

To conduct transparent and sound corporate management, we need to establish corporate governance that isin line with the true state of the company. The company
has put in place a general shareholders' meeting, a boardof directors, corporate auditors, and accounting auditor toensure appropriate corporate governance.

Activities of the Board of Directors andCorporate Auditors
In accordance with the Companies Act and internal regulations, we held eight board of directors’ meetings (three ofwhich were held in writing) in FY2022 to discuss importantmatters and report on the state of business execution.
Corporate auditors also attended the general shareholders meeting, the board of directors’ meetings, andother important meetings to monitor and verify whether
resolutions and reports have been made in accordancewith laws, the Articles of Incorporation, and internal regulations, and whether appropriate business judgment wasexercised in making decisions.

Compliance

The company has formulated the Policy on Internal Controls as an effort to establish a system necessary to ensure
the appropriateness of business operations as stipulated
in the Companies Act. Based on this policy, the company
has established a system for appropriate operational controls in terms of business processes, risk management,and compliance.
The company also conducts internal audits on businessprocesses and compliance. Regarding internal audits, theInternal Audit Committee reviews and evaluates the status of the system’s development and operation in terms of
the appropriateness of the company’s important businessprocesses and compliance status.
When conducting internal audits, the company cooperates with external organizations as appropriate, andreports the existence of deficiencies and their causes tothe Internal Audit Committee. If deficiencies are found,
an issue log is released, and the General Manager of theCorporate Administration Dept. investigates and confirms the implementation of improvements in a timely
manner and releases the summarized report to the Internal Audit Committee.

Overview of Directors and Corporate Auditors
Number of directors

6

Number of corporate auditors

3

Number of board of directors’ meetings held

8

Number of corporate auditors liaison meetings held

7

We believe that compliance must be addressed to fulfill our required social responsibilities and achieve sustainable growth.
Based on this belief, the company has established theCorporate Guiding Principle and the Code of Conduct toshow its commitment to rigorous compliance as a company,
and to clarify the items that must be observed by employees, which they must put into practice in their daily work.
In FY2022, there were two incidents involving compliance violations. Each incident was handled appropriately,according to internal rules.
To prevent recurrence, we are also making everyone in
the company aware of these incidents and are posting educational activities on the intranet.

Internal Reporting System
The company has established an internal reporting system
to promptly collect information on any violation of laws orregulations and to respond to that information as quickly as possible. The division in charge investigates reports
and determines whether the report content qualifies as alegal violation or violation of other rules. It then reports
the results to the Representative Directors and full-time
auditor for determination of the appropriate steps to take.
One report was made through the internal reporting
system in FY2022. We continue to inform everyone about
the role of the internal reporting system and how to use
it, along with the importance of compliance, and promoteuse of the system.
Internal Reporting Contact

Corporate Governance System Chart

General Manager of the Corporate Administration Dept.

Shareholders
Appointment/Dismissal

Appointment/Dismissal

External Reporting Contacts
An affiliated law firm

Cooperation

Board of Directors

Accounting auditor

Appointment, dismissal, andoversight of business execution

Referral/Reporting

Business Strategy
Meeting

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Reporting

Reporting

Reporting

Each organizational
category

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Audit

President andRepresentative
Director

Instruction

Oversight

Corporate auditors

Internalaudit

Business Execution Functions

Internal Audit
functions

ReportingInstruction

Internal Audit
Committee

Corporate Guiding Principle
Basic attitude towards business activities
We conduct active R&D based on a long-term perspective,
establish systems to supply safe and quality products consistently, develop existing businesses and create new businesses in order to resolve social issues.

Environmental initiatives
We position the preservation of global environment as animportant mission, and provide products that help resolve
environmental issues, as well as take actions to reduce environmental impact throughout our corporate activities.

Enforce safety
We make sure that safety is given first priority throughout
the company. We allocate management resources necessary to ensure safety, and strive to create an accident-free,disaster-free environment by enforcing training upon all
persons engaged in our corporate business activities.

Quality improvement
We provide the quality that is satisfactory to our customers,
engage the entire company in the quality control systems
and conduct continuous quality improvement activities togain customer trust.

Relationship with stakeholders
We value the dialogues with all stakeholders around us, andaim to be trusted as member of society through achieving
accountability and appropriate information disclosure.

Compliance, internal controls
We enforce legal compliance, provide appropriate internal
training, and take rigorous attitude against illegal and violating acts, as well as establish an internal controls systemwith emphasis on the management risks associated withour business activities.

Vibrant working environment
We respect the human rights of our employees and encourage open exchange of opinions and proactive challenges,
and create a cheerful working environment that will enable
employees to express their characters and diverse humanresources to reach their potential.

In-House Training
We conduct compliance training company-wide, focusing
on the importance of compliance, the company's compliance system, and the prevention of harassment.
In FY2022, the company regularly published the Compliance Newsletter to raise awareness about harassment,safety and environmental laws and regulations, and theinternal reporting system.

Audit

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Compliance & Risk Management

GOVERNANCE

N.E. CHEMCAT promotes risk management under the supervision of top management so that it can
respond appropriately and promptly to increasingly diverse and complex risks.

Human Rights Policy
The company has established a human rights policy that
respects the Universal Declaration of Human Rights andother international norms and prohibits all forms of workplace discrimination. The policy also clearly states that wewill cooperate with relevant parties and not be complicit inany human rights violations, even indirectly.

Human Rights Policy
1) We will respect the Universal Declaration of HumanRights and other international norms, comply with laws
and regulations, and promote initiatives towards respecting human rights.
2) We will not allow discrimination, harassment, or otheracts of human rights abuse in the workplace. We will
respect the diversity of our employees and will foster alively workplace environment.
3) We will encourage supply chain partners and other stakeholders to take the initiative on respecting human rights,
and will not take part in any human rights violations.
4) We will identify the adverse human rights impacts in ourbusiness activities and strive to prevent and mitigate suchimpacts, and to address such impacts when they occur.
5) We will carry out awareness-raising activities for officers
and employees to embed the Policy throughout theCompany.

Harassment Prevention
The company will in no way tolerate any violation of humanrights, including discrimination, harassment, or any otherforms of harassment in the workplace for any reason. InFY2022, there were four incidents of harassment that led todisciplinary action. When someone reports harassment, wefirst take sufficient steps to protect the privacy of the reporter, the perpetrator, and others involved, and then swiftly andaccurately verify the facts. The necessary measures are thenpromptly implemented after the facts have been verified.
To prevent harassment in the workplace, we have established internal and external contacts for consultation
and reporting and a system for handling the process fromreceiving a report to the response. We make everyone inthe company aware of this system, in addition to conducting training on harassment.

Internal audit
N.E. CHEMCAT conducts internal audits based on the internal audit rules to help ensure appropriate, efficient auditsof its business.

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In FY2022, we audited compliance with the Act against
Delay in Payment of Subcontract Proceeds, etc. to Subcontractors (Subcontractor Payment Delay Prevention Act).

Risk Management
We believe that identifying and strengthening our responseto management risks not only fulfills our corporate responsibility but also leads to our sustainable growth, and we areworking to strengthen our risk management system.
The risk management policy stipulates that the company shall establish a high-precision crisis management
system. The policy also stipulates that in the event of an
emergency, we should prioritize respect for human lifeand seek rapid recovery.

Risk Management Policy
1) Ensure the safety of company employees and preservecompany resources.
2) Conduct risk management to continuously improve risk
response capabilities.
3) Develop risk sensitivity and share risk-related information.
4) In the event of an emergency, prioritize respect for humanlife, responding promptly and quickly restoring operations.
5) Maintain a high-precision crisis management systemwith the aims of not only quickly restoring operationsin the case of an emergency, but also contributing tosociety and enhancing our corporate image.

Risk Management System
The company has established the Risk Management Committee, chaired by the president, as a body that oversees
risk management.
The Risk Management Committee is responsible for identifying and assessing various management risks and implementing risk mitigation measures, as well as planning andconducting disaster prevention-related education and training.
We have established and maintain a disaster response
system that makes it possible to ensure the physical safety of people and protect lives, prevent and/or mitigate theexpansion of corporate and stakeholder losses, and rapidly
restore important business and business operations.
In the event of a serious disaster that could disrupt business continuity, the officer in charge of crisis management
has the discretion to activate a crisis response headquarters
and mount a company-wide response when a crisis occurs.

Business Continuity Management (BCM)
N.E. CHEMCAT has formulated a business continuity plan(BCP) for earthquakes, wind and water damage, infectious
diseases, and other envisioned events.
We also take action to improve the crisis management
system and response measures by operating the PDCA cycle to enhance our ability to respond when a crisis occurs.

Disaster Prevention Training and Drills
We conduct various kinds of training and drills for all employees as part of our business continuity management.
Once a year, we conduct training and drills for all employees on disaster prevention measures during normal times
and response procedures during emergencies.
Safetyverification
drillsResponse drills for all employees
using the safety verification andresponse system

Twice ayear

Comprehensive disaster
drills(NumazuandTsukuba)

Training for evacuation, roll call,reporting, firefighting, and inspection based on the assumption of alarge-scale earthquake, fire, chemicalleak, and injuries (we also assumed atsunami for the Numazu Plant)

Onceperyear for
eachtype ofwork

Self-defense
firefightingdrills(Head office)

Drills for evacuation, fire extinguishing, and reporting in caseof a fire

Twice ayear

BCP
training anddrills

Training and drills on internal information sharing, determining theresponse, and response procedures to maintain and quickly
restore continuity of important
operations in the event of a disasterOnce ayear

Information Security
To protect information assets including various confidential and personal information held by the company, we
have established Regulations for Handling Confidential
Information, Regulations for Handling Personal Information, and Regulations for Information Security to protect
information assets including distinct types of confidential
and personal information held by the company.
Based on these regulations, the company appoints
an Information Security Management Officer (Director incharge of Corporate Planning Dept.) and an Execution
Supervisor (General Manager of the Corporate Planning
Dept.).
The Information Security Management Officer and theExecution Supervisor identify information security risks suchas large-scale disasters, computer viruses, cyberat­tacks, andinformation leaks, and promote measures to properly protect and manage the company's information assets fromvarious threats, while constantly working to strengthen information security.
If information security risks materialize that make it difficult to maintain our information security and seriously
affect our business, the Execution Supervisor shall reportto the Information Security Management Officer and convene the Information Security Emergency Response Committee to respond appropriately to minimize the damage
and promptly return the situation to normal.
In addition, to maintain and improve security, the company informs, educates, and instructs its officers and employees on information security standards and rules.

 Risk Management System

During normal times

During a crisis

Risk Management Committee(Chairperson: President)Secretariat
Importantpoints andinstructions forimprovementof deficiencies

PDCA

Reportingon riskmanagement
activities

Related departments at plants,
R&D center, and head office

Officer in charge of crisis management
Decides whether toactivate the Crisis
Response Headquarters

Secretariat

Crisis Response Headquarters
Provides instructions oncrisis response

Secretariat

Related departments at plants,
R&D center, and head office

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