Corporate Governance Report

Last Update: June 24, 2021
NAGASE & CO., LTD

Kenji Asakura, Representative Director and President
Contact：Corporate Management Dept.
Corporate Administration Div.
Securities Code：8012
https://www.nagase.co.jp/english/
The corporate governance of NAGASE & CO., LTD (the “Company”) is described below.

I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic
Information
1. Basic Views
We recognize our responsibility to society and offer beneficial products and services while maintaining the highest standards ofintegrity. Through our growth, we will contribute to society and enrich the lives of our employees.
Under this philosophy, we pursue the NAGASE Vision as a promise to our stakeholders that we will realize a sustainable world
where people live with peace of mind, each of us embodies our value proposition, Identify, Develop and Expand through daily
activities, and strives to improve our medium- and long-term corporate value.
We continue to strengthen corporate governance, as the Company believes that speed in decision-making and action and ensuringtransparency are essential for executing the initiatives described above.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code]UpdatedSupplementary Principle 4.2(1)With the exception of outside directors and members of the Audit & Supervisory Board, the Company’s compensation system fordirectors consists of basic compensation (according to title) and performance incentives (bonus).
Striving to maintain and evolve effective incentive plans, the Company has established a Compensation Committee consisting of amajority of independent outside directors. This committee ensures the propriety of our compensation system and compensationlevels in light of quantitative and qualitative business results. This committee also ensures transparency and objectivity in thecompensation decision-making process.
To establish a medium- and long-term incentive for improving corporate value, the Company determines an annual number ofshares to contribute to the Officers Shareholding Association. Officers obtain a number of shares corresponding to their various
responsibilities to be held on an ongoing basis.
The Compensation Committee and board of directors deliberated the ratio of renumeration linked to medium- and long-termbusiness results, revising the Company’s compensation system, including the ratio of remuneration linked to medium- and longterm business results, effective fiscal 2021.
The Compensation Committee and the board of directors will continue discussing remuneration linked to business results,
including the adoption of stock-based compensation.

[Disclosure Based on the Principles of the Corporate Governance Code]UpdatedPrinciple 1.4<Cross-Shareholding Policy and Objectives>
To improve the group's corporate value in a sustainable manner, the Company may hold shares for strategic purposes when deemednecessary, taking into account the maintenance and strengthening of business relationships and business strategies.
The rationality of our cross-shareholdings is reviewed by the department in charge. This department examines whether the earnings
from related transactions and dividends received are commensurate with the internal hurdle rate based on the cost of capital, as wellas the prospects for business expansion and synergies. The department also considers whether the stable supply of services
essential to the group's corporate activities can be expected in the future. The board of directors reviews the results of thisexamination on an annual basis. In cases where shareholdings are deemed other than rational, the Company will proceed with thesale of such shares in stages, taking into consideration various circumstances, to reduce the size of the holding.
<Exercising of Voting rights>
We exercise voting rights appropriately, carefully reviewing the resolution in question and determining approval or disapproval in acomprehensive manner according to whether the measure contributes to the increased share price of the issuing company andwhether the measure contributes to our own improved corporate value as a shareholder.
Principle 1.7
Before engaging in transactions with directors or major shareholders, the Company determines whether said transaction requires a
resolution of the board of directors according to the Company’s Board of Director Regulations or Regulations Governing
Approvals.
Principle 2.6
The Company has adopted a contract-type defined benefit pension plan, establishing and managing an Asset Management
Committee which serves as a body to provide basic policies for plan management, establish policies for plan asset composition, andreview said policies. The Asset Management Committee is also responsible for evaluating and reviewing the contracted investment
institution.
This contracted investment institution includes the Company’s labor union and uses outside consultants in plan management,
ensuring transparency and objectivity. The committee manages the plan appropriately to ensure no conflicts of interest occur
between plan beneficiaries and the Company.
Further, the Company has established Operating Regulations for Corporate Pension Asset Management Committee to prevent any
conflicts of interest. The Company appoints a plan manager who is well-experienced in finance and investing. This individual
develops greater expertise through the guidance of outside consultants and performs regular monitoring of the investment
institution.
Principle 3.1（i）,（ii）
We recognize our responsibility to society and offer beneficial products and services while maintaining the highest standards ofintegrity. Through our growth, we will contribute to society and enrich the lives of our employees.
Under this philosophy, we pursue the NAGASE Vision as a promise to our stakeholders that we will realize a sustainable world
where people live with peace of mind, each of us embodies our value proposition, Identify, Develop and Expand through daily
activities, and strives to improve our medium- and long-term corporate value.
We continue to strengthen corporate governance, as the Company believes that speed in decision-making and action and ensuringtransparency are essential for executing the initiatives described above.
（iii）
See II Business Management Organization and Other Corporate Governance Systems Regarding Decision-making, Execution ofBusiness, and Oversight in Management 1. Organizational Composition and Operation [Director Remuneration] in this report and 4[Corporate Governance] (1) Corporate Governance 4. Director Remuneration in our annual securities report for more information
related to policies and decision-making procedures regarding director compensation.
（iv）,（v）<Policies and Procedures for Selecting Executive Officers>
Candidates for executive officer are those individuals who demonstrate an honest character and who possess great insight andskills. Candidates must also possess operational experience, knowledge, and expertise. Candidates are selected by the
representative director. After deliberations by the independent Nominating Committee, the board of directors then conducts
deliberations and comes to a decision.
<Policies and Procedures for Selecting Directors and Members of the Audit & Supervisory Board>
As a rule, internal directors interim directors are selected from candidates who have experience as an executive officer. Candidates
for outside director are individuals who demonstrate honest character and possess great insight and skill, providing insight fromstakeholders in society from which they can raise issues to be addressed by the Company. Candidates are selected by the represent
rector. After deliberations by the independent Nominating Committee, the board of directors then conducts deliberations and comesto a decision. Finally, candidates are proposed before the general shareholders’ meeting.
Candidates for member of the Audit & Supervisory Board are selected by the represent director from among individuals who meet
conditions as provided in the Audit & Supervisory Board Audit Standards. After deliberations by the independent Nominating
Committee, the board of directors conducts deliberations and comes to a decision Finally, candidates are proposed before thegeneral shareholders’ meeting. The Company discloses the reasons for nominating each candidate for director in each candidate formember of the Audit & Supervisory Board within the reference materials included in the shareholders’ meeting convocation notice.
The Company has established standards for the dismissal of directors and executive officers*. After deliberations by the
independent Nominating Committee as to the dismissal of individuals subject to any of the aforementioned standards, the board of
directors conducts celebrations and comes to a decision. The Company performs dismissal procedures as necessary, disclosing thereasons for dismissal as applicable.

*Dismissal Standards:(1) Individual has committed an act of suspected illegality, unfairness, or bad faith, individual becomes subject to discipline under
the provisions of Employment Regulations, individual has engaged in acts or speech damaging to the Company’s reputation for
profits, or individual has become otherwise ineligible, deemed unsuitable to serve in the capacity of corporate officer.
(2) Individual demonstrates insufficient performance of duties or results, and the board of directors determines that leaving said
individual in the capacity of corporate officer is inappropriate.
Supplementary Principle 4.1(1)The board of directors functions to oversee business operations and make decisions regarding important business matters. The
board also make decisions about important management issues, as well as important operational issues as provided by laws,
relations, and the Company’s articles of incorporation. The Company has established standards for those matters to be decided by
the president, the director in charge, division general managers, or supervisory departments. We have established systems thatclarify the division of responsibilities, allowing for speed in business management. We clearly define these standards in Board of
Director Regulations and Regulations Governing Approvals.
Principle 4.9
The Company selects candidates according to independent standards provided by the financial instruments exchange, as well as theability to raise issues to be addressed by the Company from the standpoint of our stakeholders and society.
Supplementary Principle 4.11(1)Our basic policy is to have a board of directors consisting of inside directors and a multiple number of outside directors. Insidedirectors have operational experience, knowledge, and expertise to properly understand the Company’s business operations,provide agile and timely decision-making, and oversee the execution of our business. Outside directors provide insight fromstakeholders and society, raising issues to be addressed by the Company.
As a part of this basic policy, currently the Company's board of directors comprises nine directors of whom three are independent
outside directors, meaning these independent outside directors comprise more than one-third of the board of directors. Furthermore,
we feel that the NAGASE Group pursues diversity in management, regardless of gender, nationality, or race, and we haveappointed one female director. We have also ensured a certain degree of diversity from the perspective of gender andinternationality, and by ensuring that many of our directors have experience of being posted overseas for a number of years(average length of overseas posting for internal directors: six years). Presently, we believe that we are able to maintain both acertain level of diversity and an appropriate size for the board of directors. However in order to ensure the effectiveness of theboard of directors, we are aiming to achieve higher levels of both diversity and a more appropriate size for its composition.
Supplementary Principle 4.11(2)The Company discloses the significant concurrent duties (including service as directors of other publicly traded corporations)performed by directors, members of the Audit & Supervisory Board, and candidates thereof on an annual basis in disclosure
documents including shareholders’ meeting convocation notice reference materials, business reports, and annual securities reports.
The Company believes that the number of companies in which directors perform concurrent services is within a reasonable scope.
Supplementary Principle 4.11(3)The Company analyzes and evaluates the effectiveness of the board of directors, believing in the importance of improving board
effectiveness on ongoing basis. Accordingly, the Company has conducted a survey of all directors and members of the Audit &Supervisory Board to analyze and evaluate the effectiveness of the board of directors.
As a result, the Company confirmed that our board of directors conducts appropriate and timely deliberations and decision-making,functioning effectively.
Additionally, in response to the issue of the requirement to further expand deliberations of medium- and long-term policies,
companywide strategies, and other important matters identified in the evaluation from the previous year’s board of directors
meetings, we reviewed items deliberated in board of director meetings to ensure improvements allowing for sufficient time to be
allotted.
At the same time, and from the perspective of improving the effectiveness of the board of directors, we identified the need toensure more robust meetings by providing information for consideration prior to meetings, to provide better feedback and followup, and to secure greater diversity in the composition of the board of directors over the medium to long term.
The Company intends to continue with initiatives for improving board of director effectiveness.
Supplementary Principle 4.14(2)The Company provides information related to the NAGASE Group Management Philosophy, corporate management, businessactivities, and organization to outside directors and outside members of the Audit & Supervisor Board. In this way, we help these
individuals gain a deeper understanding of these topics.
The Company also provides opportunities at the Company’s expense to help directors and members of the Audit & Supervisory
Board (including outside directors and outside members) obtain the necessary knowledge to accomplish their roles andresponsibilities.
Principle 5.1
Our basic policy is to conduct constructive dialogue with shareholders that contributes to sustainable growth and corporate value
improvement over the medium and long term. As much as reasonable, we respond to meeting requests from shareholders the
purpose of holding constructive dialogues.
The Company’s director in charge of the Corporate Management Department in charge of Company investor relations. Ourinvestor relations department works in cooperation with other internal departments to provide appropriate responses in creating
opportunities for constructive dialogue with our shareholders.
The Company strives to provide information through various briefings, in-person meetings with domestic and foreign investors,
facilities tours, and publication on our corporate website.
Information and requests received from shareholders through these and other dialogues are forwarded to the board of directors as
deemed necessary. We manage information carefully in accordance with our Regulations for Preventing Insider Trading to prevent
inside information from being disclosed during these dialogues.

2. Capital Structure
Foreign Shareholding Ratio

More than 20% less than 30%[Status of Major Shareholders]Name / Company Name

Number of Shares
Owned

No. of Shares Held(%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

9,726,100

7.88

Sumitomo Mitsui Trust Bank, Limited

5,776,000

4.68

NORTHERN TRUST CO. (AVFC) RE SILCHESTERINTERNATIONAL INVESTORS INTERNATIONALVALUE EQUITY TRUST

5,477,100

4.44

Custody Bank of Japan, Ltd. (Trust Account)

5,435,800

4.40

Sumitomo Mitsui Banking Corporation

4,377,000

3.54

Nippon Life Insurance Company

3,589,133

2.91

Reiko Nagase

3,519,249

2.85

NORTHERN TRUST CO. (AVFC) RE U.S. TAXEXEMPTED PENSION FUNDS

3,122,600

2.53

NAGASE & CO., LTD. Own Share Investment Association

2,927,093

2.37

Nagase Shunzo Co., Ltd.

2,688,000

2.18

Controlling Shareholder (except for
Parent Company)
Parent Company

―――

None

Supplementary Explanation
1. On August 20, 2010, BlackRock Japan Co., Ltd. submitted the following information to the Director-General of the Kanto
Finance Bureau in connection with a substantial shareholding report (change report) concerning holdings of Company stock. As ofthe end of the second quarter, we have not been able to confirm beneficial ownership status. Accordingly, BlackRock Japan Co.,
Ltd. is not included in the Status of Major Shareholders above.
Name/Company Name

Number of Shares Held (Thousands)

(%)

3,672

2.65

BlackRock Advisors (UK) Limited

654

0.47

BlackRock Fund Advisors

309

0.22

1,057

0.76

BlackRock Japan Co., Ltd.

BlackRock Institutional Trust N.A.

2． On November 8, 2017, Silchester International Investors LLP submitted the following information to the Director-General of
the Kanto Finance Bureau in connection with a substantial shareholding report (change report) concerning holdings of Company
stock. As of the end of the second quarter, we have not been able to confirm beneficial ownership status. Accordingly, Silchester
International Investors LLP is not included in the Status of Major Shareholders above.
Name or Trade Name
Silchester International Investors LLP

Number of Shares Owned (Thousands)(%)

13,900

10.91

3. On April 16, 2018, Mitsubishi UFJ Financial Group, Inc. submitted the following information to the Director-General of the
Kanto Finance Bureau in connection with a substantial shareholding report (change report) concerning holdings of Company stock.
As of the end of the second quarter, we have not been able to confirm beneficial ownership status. Accordingly, Mitsubishi UFJ
Financial Group, Inc. is not included in the Status of Major Shareholders above.
Name/Company Name

Number of Shares Held (Thousands)(%)

MUFG Bank, Ltd.

1,836

1.44

Mitsubishi UFJ Trust and Banking Corporation

5,602

4.40

360

0.28

Mitsubishi UFJ Kokusai Asset Management Co., Ltd.

4. On December 4, 2020, Sumitomo Mitsui Trust Bank, Limited submitted the following information to the Director-General of the
Kanto Finance Bureau in connection with a substantial shareholding report (change report) concerning holdings of Company stock.
As of the end of the second quarter, we have not been able to confirm beneficial ownership status. Accordingly, Sumitomo Mitsui
Trust Bank, Limited is not included in the Status of Major Shareholders above.
Name/Company Name

Number of Shares Held (Thousands)(%)

Sumitomo Mitsui Trust Bank, Limited

5,776

4.53

Sumitomo Mitsui Trust Asset Management Co., Ltd.

3,884

3.05

Nikko Asset Management Co., Ltd.

1,670

1.31

3. Corporate Attributes
Listed Stock Market andMarket Section

First Section of the Tokyo Stock Exchange

Fiscal Year-End

MarchType of Business

Wholesale trade

Number of Employees (consolidated) asof the End of the Previous Fiscal Year

More than 1000

Sales (consolidated) as of the End of thePrevious Fiscal Year

From ¥100 billion to less than ¥1 trillion

Number of Consolidated Subsidiaries asof the End of the Previous Fiscal Year

From 50 to less than 100

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder―――

5. Other Special Circumstances which may have Material Impact on Corporate Governance―――II. Business Management Organization and Other Corporate Governance Systems Regarding
Decision-making, Execution of Business, and Oversight in Management
1. Organizational Composition and Operation
Organization Forma company with an Audit and Supervisory Board[Directors]
Maximum Number of Directors
Stipulated in Articles of Incorporation

12

Term of Office Stipulated in Articles ofIncorporation

1 years

Chairperson of the Board

Chairman (excluding cases when serving concurrently as president)

Number of Directors

Updated

9

Appointment Status of Outside
Members of the Managing Board

Appointed

Number of Outside Directors

3

Number of Independent Directors

3Outside Directors’ Relationship with the Company (1)NameAttribute

Relationship to the Company*
a

b

c

d

e

f

g

h

Nobumasa Kemori

From another company△

Takahiko Ijichi

From another company△

Ritsuko Nonomiya

From another company

i

j

k

* Categories for “Relationship with the Company”* ”○” when the director presently falls or has recently fallen under the category;“△” when the director fell under the category in the past
* “●” when a close relative of the director presently falls or has recently fallen under the category;“▲”when a close relative of the director fell under the category in the pasta. Executive of the Company or its subsidiaries
b. Non-executive director or executive 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 listed company or an executive thereof
f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from theCompany besides compensation as a director/kansayaku
g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)
h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f)(the director himself/herself only)
i. Executive of a company, between which and the Company outside directors/kansayaku are mutually appointed (the director
himself/herself only)
j. Executive of a company or organization that receives a donation from the Company (the director himself/herself only)
k. Others

Outside Directors’ Relationship with the Company (2)Name

Nobumasa
KemoriTakahiko
IjichiRitsukoNonomiya

Designation as
Independent
Director〇〇〇

Supplementary Explanation of
the Relationship

Reasons of Appointment

Mr. Kemori serves as an
Executive Adviser to
Sumitomo Metal Mining Co,
Ltd. Although the Company
conducts business transactions
with Sumitomo Metal Mining,
sales from Sumitomo Metal
Mining to the NAGASEGroup amounted to less than
0.1% of Company net sales,
and our purchases from
Sumitomo Metal Mining
amounted to less than 0.1% of
the total of our cost of sales
and our selling, general andadministrative expenses
during the fiscal year ending
March 2021.

Mr. Kemori has been involved in management of
Sumitomo Metal Mining Co, Ltd. for many years andpossesses advanced knowledge and extensive
experience regarding corporate management. We
expect Mr. Kemori to enhance the NAGASE Group
corporate governance through his knowledge andexperience, offering proposals concerning theCompany’s overall management from a perspectiveof familiarity with industry. Accordingly, we haveappointed Mr. Kemori as an outside director. Mr.
Kemori serves as an Executive Adviser to Sumitomo
Metal Mining Co, Ltd., with whom the Company
conducts business transactions, however we do notbelieve any significant special interest between
Sumitomo Metal Mining Co, Ltd. and the Company
exists when considering the scope of these business
transactions. In addition to the preceding, with the
exception of his stock ownership in the Company, Mr.
Kemori has no personal relationships, equity
relationships, business relationships, or other interestsin the Company. Therefore, we consider Mr. Kemori
to be an outside director having no potential conflictsof interest with our general shareholders.

Mr. Ijichi formerly served as
an Executive Vice president at
Toyota Motor Corporation,
one of our business partners.
Although the Company
conducts business transactions
with Toyota Motor
Corporation, sales fromToyota Motor Corporation to
the NAGASE Groupamounted to less than 0.6% of
Company net sales, and ourpurchases from Toyota Motor
Corporation amounted to lessthan 0.3% of the total of ourcost of sales and our selling,
general and administrative
expenses during the fiscal
year ending March 2021.

Mr. Ijichi has been involved in management of
Toyota Motor Corporation for many years andpossesses advanced knowledge and extensive
experience regarding corporate management. Mr.
Ijichi has been appointed as an outside director, sothat he can use this knowledge and experience tomake proposals concerning the Company's overallmanagement including about production activities
underway both within Japan and overseas, and he isexpected to strengthen the NAGASE Group corporate
governance. Mr. Ijichi is a former executive vicepresident at Toyota Motor Corporation, with whom
the Company conducts business transactions.
However, we do not believe any significant special
interests exist when considering the scope of thesebusiness transactions. In addition to the preceding,with the exception of his stock ownership in the
Company, Mr. Ijichi has no personal relationships,
equity relationships, business relationships, or otherinterests in the Company. Therefore, we consider Mr.
Ichiji to be an outside director having no potential
conflicts of interest with our general shareholders.

―

Having experience in auditing and similar areas at
KPMG Group, and in M&A and businessdevelopment at UBS Group and GE Group, Ms.
Nonomiya has high levels of financial and accounting
knowledge, together with ample insight into andexperience in corporate management. She has been
appointed as an outside director so that she can use
this knowledge and experience to make proposals
concerning the Company's overall management, andshe is expected to strengthen Group corporate

governance as we conduct an increasing amount ofbusiness overseas. With the exception of her stock
ownership in the Company, Ms. Nonomiya has no
personal relationships, equity relationships, business
relationships, or other interests in the Company.
Therefore, we consider Ms. Nonomiya to be an
outside director having no potential conflicts ofinterest with our general shareholders.

Voluntary Establishment ofCommittee(s) Corresponding toNomination Committee orRemuneration Committee

Established

Committee’s Name, Composition, and Attributes of Chairperson

Committee’s
Name

All Committee
Members

Full-timeMembers

InsideDirectors

OutsideDirectors

Committee
Corresponding
to Nomination
Committee

Nominating
Committee

5

0

2

2

Committee
Corresponding
to Remuneration
Committee

Compensation
Committee

401

OutsideExperts

3

0

0

Other

Chairperson

1Internal
member of
the Managing
Board

0

Internal
member of
the Managing
Board

Supplementary Explanation
The Nominating Committee consists of the majority of outside officers. The committee deliberates director appointments andsuccession plans, reporting to and offering advice to the board of directors. In this way, the committee accomplishes its role toenhance objectivity and transparency in the naming of Company senior management.
The Officer Remuneration Committee consists of a majority of outside directors. The committee deliberates the propriety ofcompensation levels and structures, reporting to and offering advice to the board of directors. In this way, the committee
accomplishes its role to enhance objectivity and transparency in the process for determining direct compensation for Company
directors and executive officers.

[Audit & Supervisory Board Members]
Establishment of Audit & Supervisory
Board

Established

Maximum number of Audit &Supervisory Board Members stipulated

5

Number of Audit & Supervisory Board
Members

4

Cooperation among Audit & Supervisory Board Members, Accounting Auditor and the Internal Audit
Members of the Audit & Supervisory Board hold regular meetings with the independent financial statement auditor, receiving
explanations of audit plans and audit results. In addition to exchanging opinions related to the identification of risks, members also
ask the independent financial statement auditor to provide explanations of their structure for audit quality assurance. In addition,members coordinate with the independent financial statement alter as appropriate, including participation in visits to subsidiaries,
asset observations, etc. Members of the Audit & Supervisor Board exchange information with the Audit Office, internal auditors,
and audit divisions of domestic and international affiliated companies. Further, members receive reports about the status of internal
controls related to financial reporting.

Appointment of outside Audit &Supervisory Board Members

Appointed

Number of Outside Audit &Supervisory Board Members

2

Number of independent officers
designated from among outside Audit &Supervisory Board Members

2

Outside Audit & Supervisory Board Members’ Relationship with the Company (1)NameAttributeNobuyuki Shirafuji

From anothercompany

Gan Matsui

LawyerRelationship to the Company*
a

b

c

d

e

f

g

h

i

j

k

l

m

△

* Categories for “Relationship with the Company”* ”○” when the director presently falls or has recently fallen under the category;“△” when the director fell under the category in the past

* “●” when a close relative of the director presently falls or has recently fallen under the category;“▲”when a close relative of the director fell under the category in the pasta. Executive of the Company or its subsidiaries
b. Non-executive director or executive 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 listed company or an executive thereof
f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from theCompany besides compensation as a director/kansayaku
g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)
h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f)(the director himself/herself only)
i. Executive of a company, between which and the Company outside directors/kansayaku are mutually appointed (the director
himself/herself only)
j. Executive of a company or organization that receives a donation from the Company (the director himself/herself only)
k. Others

Outside Auditors’ Relationship with the Company (2)Name

Designation as
Independent
Director

Nobuyuki
Shirafuji

Gan Matsui〇

Supplementary Explanationof the Relationship

Reasons of Appointment

In the past, Mr. Shirafuji
worked for the Sumitomo
Mitsui Banking
Corporation, one of theCompany’s banks. Although
the Company maintains an
outstanding loan from thebank in question, the loanbalance was less than 2.4%of Company’s total assets asof the end of the fiscal year
ended March 2021.

Mr. Shirafuji possesses a wide range of knowledge
based on his many years of experience at overseas
financial institutions. He also has many years ofexperience related to audits and working in audit
departments, earning considerable knowledge
regarding finance and accounting. Accordingly, it is
our judgment that Nobuyuki Shirafuji has the ability
to appropriately execute the duties of an outside
member of the Audit & Supervisory Board and wehave therefore appointed him to this role. In the past,
Mr. Shirafuji worked for the Sumitomo Mitsui
Banking Corporation, one of the Company’s banks;
however, Mr. Shirafuji did not manage Company
accounts during his service at the bank in question.
Furthermore, the Company maintains a highshareholder’s equity ratio and a sound financial
structure. We do not rely heavily on borrowings fromfinancial institutions, resulting in minimal impact offinancial institutions on Company management. In
addition to the preceding, with the exception of his
stock ownership in the Company, Mr. Shirafuji has no
personal relationships, equity relationships, business
relationships, or other interests in the Company.
Therefore, we consider Mr. Shirafuji to be an outside
director having no potential conflicts of interest with
our general shareholders.

―Mr. Matsui has a wealth of experience and knowledge
in legal matters. Accordingly, it is our judgment that
Mr. Matsui has the ability to execute the duties of an
outside member of the Audit & Supervisory Board
and we have consequently appointed him to this role.
With the exception of his stock ownership in the
Company, Mr. Matsui has no personal relationships,
equity relationships, business relationships, or otherinterests in the Company. Therefore, we consider Mr.
Matsui to be an outside director having no potential
conflicts of interest with our general shareholders.

〇[Independent Officers]
Number of Independents

5

Matters relating to Independents
The Company designates all outside officer who satisfy the requirements of independent officers as such.

[Incentives]
Incentive Policies for Directors

Supplementary Explanation

Performance-linked Remuneration

We selected profit attributable to owners of the parent, a measure of bottom-line profit, as an indicator for performance-linked
remuneration and as an incentive to improve business results. We calculate performance-linked remuneration by determining thebasic amount of performance-linked remuneration based on consolidated earnings forecasts at the beginning of the period,
multiplied by the ratio of net income to net income results of the previous fiscal year, and multiplied by performance comparedwith the consolidated earnings forecast at the beginning of the fiscal year, adjusted by individual assessments. Net income for the
fiscal year ended March 2021 amounted to 18.8 billion yen. Beginning with the fiscal year ending March 2022, we will add ROE
as an indicator in addition to net income to provide an incentive to improve capital efficiency.

Recipients of Stock Options

Supplementary Explanation―――[Director Remuneration]
Disclosure of Individual Directors’
Remuneration

The Company does not disclose individual compensation.

Supplementary Explanation
・ Compensation paid to directors and members of the Audit & Supervisory Board in service as of the fiscal year ended March
2021
The Company paid ¥314 million in compensation to nine directors and ¥79 million in compensation to four members of the Audit& Supervisor Board. Of this amount, a total of ¥61 million in compensation was paid to six outside officers. Payments to directors
include accrued bonuses for directors in the amount of ¥76 million for the year ended March 2021, recognized as an expense forthe period. In addition, the Company paid the equivalent of ¥12 million as employee bonuses for individuals serving concurrently
as directors and employees.
The aforementioned compensation includes payments to one director who retired upon the conclusion of the 105th regularshareholders’ meeting held June 22, 2020.
Policy on Determining Remuneration
Amounts and Calculation Methods

Established

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods
The Company has determined a policy related to decisions on amounts and calculation methods for director remuneration after
recommendations from the Compensation Committee, which consists of at least half outside directors, and deliberations by theboard of directors. This basic policy ensures compensation is commensurate with the role and scope of responsibilities for eachdirector, taking into consideration objective external data and business conditions, and that compensation serves as a standard for
motivation to improve ongoing corporate value. Fixed (basic) remuneration according to this standard shall represent between 50%
and 70% according to position, and performance-linked remuneration representing between 30% and 50% of total remuneration.
Compensation for outside directors and members of the Audit & Supervisory Board reflects the individual’s responsibilities andconsists only of fixed (basic) compensation.
The Company's basic policy is to pay the annual amount of fixed (basic) remuneration in equal monthly installments, and to pay
performance-linked remuneration in a lump sum at the end of June.

[Supporting System for Outside Directors]
The Company has assigned a department responsible for coordinating board of director meeting schedules, contacting meeting
attendees, and providing materials and explanations prior to board meetings.

[Supporting of Former Director and President of the Company]
Name, etc. of advisor or counselor who is a former director and president of the Company

Name
―――

Position―――

Responsibilities

Work status/conditions(full-time, part-time,
Remuneration status, etc.)

Date of retirement
as president, etc.

―――

―――

―――

Number of advisor or counselor who is a former
director and president of the Company

Term

―――

0

Other notes―――

2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration

UpdatedThe Company has adopted the form of a company with an Audit & Supervisory Board. In addition, the Company has adopted an
executive officer system to separate management and business execution to speed up decision-making and strengthen businessexecution. The Company’s present management structure consists of nine directors (including three outside directors), 20 executive
officers (including four who serve concurrently as directors), and four members of the Audit & Supervisory Board (two of whom
are outside members).
The Company has defined the board of directors as the body that determines management policies and strategic decision-making,as well as the body that oversees business execution. The board meets regularly on a monthly basis, resolving important matters,
discussing progress of the Company’s business, and formulating policies.
Members of the Audit & Supervisory Board follow audit policies and roles as determined by the Audit & Supervisory Board,
attending meetings of the board of directors and other important meetings. As necessary, members request reports from subsidiaries
and otherwise conducts audits related to performance of duties on the part of directors.
The Company has established the following voluntary committees to strengthen corporate governance functions.The Compensation
Committee, which consists of four individuals (a majority of outside directors), deliberates the validity of compensation standards
and systems, reporting to and advising the board of directors. The role of this committee is to improve objectivity and transparency
in the director compensation decision-making process. The Nomination Committee, which consists of five individuals (a majorityof outside directors), deliberates candidates for director and executive officer, as well as succession plans, reporting to and advising
the board of directors. The role of this committee is to improve objectivity and transparency in the Company’s nominations ofsenior managers.
The Company has also established the following voluntary committees and committee structures:The Group Management
Committee comprises executive officers appointed by the board of directors, and in principle, this meets regularly twice a month todiscuss management strategies, investment projects, and other important matters, and to support management decision-making.
This serves as an advisory body that discusses matters resolved by the board of directors. The Sustainability Committee is chairedby the President and comprises executive officers and senior management of Group companies. This formulates policies forpromoting sustainability throughout the Group, establishes and maintains the promotion system, monitors measures and policies,and conducts educational activities within the Group.The Risk Management & Compliance Committee serves as an advisory bodyto the board of directors to strengthen mechanisms not only for legal compliance, but also for risk management and compliance,
including risks associated with corporate ethics. The Internal Control Committee deliberates basic policy for internal controls andmonitors the structure and operation of mechanisms determined under the internal controls system to ensure the appropriateness ofbusiness operations. The Security Trade Control Committee ensures compliance with laws and regulations related to transactions
and goods and technologies addressed by export-related regulations, including the Foreign Exchange and Foreign Trade Act.
Audits conducted by members of the Audit & Supervisory Board are conducted by four members who have a considerable amountof knowledge about finance and accounting, three of whom are full-time members (one outside member) and one of whom is apart-time member (outside members). In principle, the Audit & Supervisory Board meets on a monthly basis and otherwise asneeded. At meetings, each member reports on audit activities and results, and members exchange opinions related to audit
perspectives and other matters. To ensure the effectiveness of audits by members of the Audit & Supervisory Board, one individualwith considerable knowledge of finance, accounting, and internal audits is assigned from the Audit Office (internal audit division)to act as audit staff.
Internal audits are conducted by a staff of 11 individuals having expert knowledge in internal audits, including certified auditors(CIA) and qualified internal auditors (QIA). These individuals conduct audits of the appropriateness and efficiency of business
operations within the Company and subsidiaries based on Internal Audit Regulations.
The Company’s financial statement audits are performed by the following designated limited liability partners to ensure a fair andunbiased audit.
None of the individuals mentioned below have been engaged in audits of the Company for more than seven consecutive years.
● Specified limited liability partners and managing executive partners
Name
Audit Corporation
Yoshifumi Mitsugi
Ernst & Young ShinNihon LLC
Rikio Watanabe
Ernst & Young ShinNihon LLC
The Company has executed limited liability agreements with outside directors Nobumasa Kemori, Takahiko Ijichi, and Ritsuko
Nonomiya, as well as with outside members of the Audit & Supervisory Board Nobuyuki Shirafuji and Gan Matsui. These
agreements, an overview of which follows, are based on the Company’s articles of incorporation and Article 423.1 of theCompanies Act.
・ Outside directors shall be liable for compensation of damages to the Company at the minimum limit of liability as provided in
Article 425.1 of the Companies Act when negligence of duties results in damage to the Company, but said outside director has
acted in good faith and without gross negligence in the execution of their duties.
The Company provides directors and officers liability insurance naming directors, executive officers, and members of the Audit &Supervisory Board as the insureds. The insureds pay 10% of total premiums and the Company pays the remaining 90% of total
premiums, which correspond to a special clause regarding indemnification for shareholder lawsuits. The insurance covers third
party lawsuits, shareholder lawsuits, etc. The total amount to be paid by the insurance is limited, and in the event of an incident, acertain amount is to be borne by the individual directors and members of the Audit & Supervisory Board to ensure that theappropriate conduct of their respect duties is not impaired.

3. Reasons for Adoption of Current Corporate Governance System
The Company believes that the current corporate governance system is the most reasonable system at present, as the systemfacilitates objective suggestions and advice from multiple independent outside directors, as well as objective and effective audits
conducted impartially by highly expert and independent members of the Audit & Supervisory Board. In addition, the governancesystem ensures transparency, effectiveness, practicability, and soundness in management supervision and decision-making throughcoordination with various committees and councils that have been established on a voluntary basis.

III. Implementation of Measures for Shareholders and Other Stakeholders

1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting Rights
Supplementary Explanations
Early notices of convocations of generalshareholders’ meetings

Notices are sent three weeks prior to the scheduled date of the meeting.

Scheduling AGMs Avoiding
the Peak Day

In principle, we avoid holding general shareholders' meetings on days whennumerous other companies hold their meetings.

Allowing Electronic Exerciseof Voting Rights

The Company allows shareholders to exercise voting rights electronically throughan electronic voting website (https://www.web54.net). Voting is allowed until 5:15
PM on the day before the general shareholders’ meeting.

Participation in Electronic
Voting Platform

The platform for electronic exercise of voting rights for institutional investors
managed by Investors Communications Japan, Inc.is available.

Providing Convocation
Notice in English

The Company provides endless translations of convocation notices, business reports,financial statements, etc. on the Company’s website, the website of the Tokyo Stock
Exchange, and the electronic voting platform operated by Investor Communications
Japan, Inc.

Other

The Company publishes convocation notices for general shareholders meetings
approximately four weeks prior to the scheduled date of said meeting. This
information is published on the Company’s website, the website of the Tokyo Stock
Exchange, and the electronic voting platform operated by Investor Communications
Japan, Inc.

2. IR Activities

Supplementary Explanations

Preparation and Publication ofDisclosure Policy

Regular Investor Briefings for Analysts
and Institutional Investors

Posting of IR Materials on Website

Explanations
by theRepresentative
Himself /Herself

The Company’s Basic Compliance Policy and NAGASE Group
Compliance Conduct Standards call for the Company to engage inthe proactive and fair disclosure of corporate information to
stakeholders to ensure transparency.
See the Company’s website for disclosures related to our Basic
Compliance Policy and NAGASE Group Compliance Conduct
Standards.

The Company conducts investor briefings in May and November.
The president of NAGASE & CO., LTD. provides an explanation offinancial results and mid-term management plans, etc. These
briefings are tended by approximately 50 persons, including analysts
and institutional investors.

Yes

The Company publishes investor relations communications on our
corporate website. These communications include disclosures related
to financial information, timely disclosure materials other thanfinancial information, the Company’s annual securities report andquarterly reports, shareholder meeting convocation notices (including
English translations), presentation materials used in briefings foranalysts and institutional investors, shareholder newsletters,
integrated reports, corporate videos, etc.
Our main investor relations webpage may be found at the following
URL: https://www.nagase.co.jp/english/ir/

Establishment of Department and/orManager in Charge of IR

Department in Charge of Investor Relations: Corporate Management
Department
Director in Charge of Investor Relations: Director in Charge of the
Corporate Management Department

Other

The Company offers individual meetings and facility tours toanalysts and institutional investors on an appropriate basis.

3. Measures to Ensure Due Respect for Stakeholders
Supplementary Explanation

Stipulation of Internal Rules for
Respecting the Position of
Stakeholders

The Company’s Management Philosophy states that we recognize our
responsibility to society and offer beneficial products and services while
maintaining the highest standards of integrity. Through our growth, we willcontribute to society and enrich the lives of our employees.
Guided by this statement, the Company created our Basic Compliance Policy and
NAGASE Group Compliance Conduct Standards to define rules for respecting theposition of our stakeholders.

Implementation of Environmental
Activities, CSR Activities etc.

In April 2000, the Company obtained ISO 14001 certification (international
standard for environmental management systems). We conduct ongoing activities
to improve our environmental management systems, including measures toachieve goals for reducing energy usage and general waste in our businessprocesses.
As part of our social contribution activities, the Company provides a grant to theNAGASE Science Technology Foundation to encourage science and technology
development throughout Japan.
For more information, see the Company’s integrated report(https://www.nagase.co.jp/english/ir/library/annual-report/).
The Company’s main Sustainability webpage can be found athttps://www.nagase.co.jp/english/sustainability/ .
Development of Policies on
Information Provision to
Stakeholders

The Company’s Basic Compliance Policy and NAGASE Group Compliance
Conduct Standards call for the Company to engage in the proactive and fairdisclosure of corporate information to stakeholders to ensure transparency.
The NAGASE Group believes that diversity is an important part of corporate
strategy. We respect the ideas and views of a diverse workforce, encouraging
active internal discussions and the creation of new ideas, which represent a sourceof competitive advantage. We believe this policy results in the growth of the
NAGASE Group, as well as in the growth of every individual employee.
< Policies and Initiatives on Women in the Workforce>
As of March 2019, 2020 and 2021, the Company had 20, 22, and 25 women in
managerial roles*. This number has risen gradually over time, and the Company
plans to continue to hire and promote women in these roles.
The Company has created a guidebook defining systems supporting maternal careand child rearing to allow women to continue to work in the Company. Prior to
taking leave for maternity or childcare, and prior to returning to work, employees
meet with their workplace superior a representative of the human resources
department. Upon returning to work from childcare leave, official assistants andother employees take advantage of Company programs (during fiscal year ended
March 2016, the Company raised the eligible age for children of employees
working under the shorter-time work system, telework system, shift-work system,
hourly paid leave system, etc.) to balance work duties and childcare obligations.

Other

During the fiscal year ended March 2017, the Company formulated a five-year
action plan to promote the role of women in the workplace based on the Act on
Promotion of Women's Participation and Advancement in the Workplace. This
plan includes raising the ratio of women in managerial roles from 2.9% to 6.0% by
the fiscal year ending March 2021. As of the fifth year of this plan, the Company
has raised this ratio to 4.4%. We will formulate an action plan to increase the ratioof women in career-track positions to 10% or more over the next five years,
implementing various measures to achieve this goal.
* Managerial role is defined as an individual who oversees subordinates as part oftheir duties or equivalent without subordinates.
<Work-Life Balance>
The Company believes that work-life balance is a necessary part of promoting
diversity. Providing a supportive work environment for a diverse employee baseand facilitating work styles that balance work and life these two benefits for bothcompany and employee. Accordingly, the Company is striving to reform attitudes
and implement systems that support this balance.
The Company sponsors a monthly Safety Committee meeting held jointly between
labor and management. The major topics of this meeting include flexible work
styles, encouraging taking paid vacation, and reducing overtime. The Company
uses the results of workplace and work environment surveys in ongoing dialogue
with employees to create more comfortable work environments. To reduce
overtime, the Company has designated one day per week as a no overtime day. In
addition, the company discloses overtime data by job description to promote
operational efficiency and encourage a closer look at the status of overtime work.
We will continue to create practical systems that provide more flexible work
options for our employees.

IV. Matters Related to the Internal Control System
1. Basic Views on Internal Control System and the Progress of System Development
The Company’s board of directors adopted a resolution on basic policy for creating internal control systems entitled “Creation of
Systems to Ensure that Directors Execute their Duties in Accordance with Laws and Regulations and the Articles of Incorporation andOther Systems Specified by Ministry of Justice Ordinance Necessary for Ensuring the Proper Implementation of Business by a Stock
Corporation and the Corporate Group Comprising that Corporation and its Subsidiaries.” Details of the policy are set forth below.
Based on this basic policy, the Company will ensure the appropriateness of its business operations and conduct ongoing reviews andcontinuous improvement in order to appropriately reinforce governance systems even further in light of changes in the Company’sbusiness environment.
Furthermore, the company has established an Internal Control Committee in order to establish, maintain, and improve the internal
control system. The Internal Control Committee deliberates basic policy for internal controls, and monitors the structure and operationof mechanisms determined by the internal controls system.
a) Systems to ensure that Directors and employees execute their duties in accordance with laws and regulations and the Articles ofIncorporation
The Company adopted Basic Compliance Policy setting forth a code of conduct with which all officers and employees must comply,
conducts all business activities in accordance with the Nagase Group Compliance Code of Conduct, and complies with laws andregulations and the Articles of Incorporation. Furthermore, regarding the internal reporting system, the Company operates it in an
appropriate and proper way that ensures the information management of the contents of the report and ensures people reporting
incidents or concerns regarding non-compliance will not suffer any disadvantage. Courses and other programs contributing to legal
compliance are conducted as necessary for officers and employees including those of Group companies.
b) Systems for retaining and managing information relating to the execution of duties by Directors
Information relating to the execution of duties by Directors is recorded on paper or electromagnetically in accordance with internal
rules and is retained and managed. Directors and Audit & Supervisory Board members can access and view these documents at anytime.
c) Rules relating to management of loss-related risks and other systems
The Company has established the Risk Management & Compliance Committee as the organization that performs comprehensive
management relating to loss-related risks for the Company and Group companies, determined the committee’s functions and authority,and created a system that clarifies its roles and responsibilities. Under this system, each responsible division establishes rules andguidelines, conducts training, prepares and distributes manuals, and takes other measures concerning individual risks relating to thebusiness activities of the Company and Group companies. When new risks arise, the Committee promptly designates the responsible
division to address the risks, and also develops a system for prompt and appropriate communication and emergency procedures incase that an incident occurs within the Group.
d) Systems for ensuring the efficient execution of duties by Directors
The board of directors is clearly positioned as the body in charge of making decisions on management policies and strategies, and it
supervises the execution of operations as the foundation for ensuring that Directors efficiently execute their duties. The board of
directors holds regular monthly meetings as well as extraordinary meetings when necessary. With regard to the performance ofbusiness in accordance with the decisions of the board of directors, organizational operations rules and divisions of work
responsibilities established under an executive officer system specify responsible parties, their responsibilities, and procedures forcarrying out those responsibilities. Additionally, the Group Management Committee comprises executive officers appointed by theboard of directors, and in principle, this meets regularly twice a month to discuss management strategies, investment projects andother important matters, and to support management decision-making.
Furthermore, directors and corporate auditors may attend Group Management Committee meetings.
e) Systems for ensuring the proper implementation of business by the corporate group comprising a stock corporation and its
subsidiaries
I In principle, the Company dispatches officers to Group companies and ensures the proper conduct of business by those companies
by establishing operational standards and establishing a system that requires approval from or reporting to the Company before Group
companies make decisions on certain matters. The Audit Office of the Company conducts audits of the Company and its Group
companies in accordance with the Internal Audit Rules. Under the mid-term management plan and a system of annual budgets, clear
targets are set and budget and results management is performed for the Company and each Group company. In order to enhance thereliability of financial reports, the status of company-wide internal controls as well as the process for preparing financial statements
have been codified in light of the Financial Instruments and Exchange Act and evaluation and improvement efforts are made on aconsolidated basis.
The Company and Group companies perform Group-wide risk management with the Risk Management & Compliance Committee
mentioned above playing a central role. Important matters relating to Group-wide compliance are discussed and decisions are made

based on deliberations and determinations regarding issues relating to implementation and countermeasures addressing those issues.
f) Matters pertaining to employees when Audit & Supervisory Board members request the appointment of employees to assist them inthe execution of their duties
Upon request from Audit & Supervisory Board members, in order to ensure their auditing effectiveness, the Company appoints
employees to support the Audit & Supervisory Board members’ work. Such employees are assigned to the Audit Office.
g) Matters pertaining to ensuring the independence of employees specified in the preceding paragraph from Directors and ensuring theeffectiveness of instructions from Audit & Supervisory Board members
In order to ensure the independence of the employees specified in the preceding paragraph from the Directors, when such employees
are transferred, evaluations are conducted, and so on, prior consultations are conducted with Audit & Supervisory Board members andtheir opinions are sought. In addition, efforts are made to ensure the effectiveness of instructions to such employees, adequately taking
into consideration the selection of such employees and the period for which they will work supporting the execution of duties by
Audit & Supervisory Board members.
h) Systems for Directors and employees to report to Audit & Supervisory Board members and other systems for reporting to Audit &Supervisory Board members
Audit & Supervisory Board members attend the board of directors meetings and other important meetings, exchange opinions withmanagers, review requests for decisions, reports, and so on so that they can understand the status of operations of the Company andGroup companies at all times. Furthermore, the directors, employees, and so on of the Company and Group companies can report to
Audit & Supervisory Board and its members regarding the following matters individually or through the Risk Management &Compliance Committee or the board of directors as necessary.
i. Improper implementation, violations of laws and regulations or the Articles of Incorporation, or other compliance-related issues
regarding the performance of duties by Directors;
ii. Facts that pose a risk of substantial harm to the Company;iii. Disclosure of material information; andiv. Facts reported to internal reporting system and other matters.
Detrimental treatment of persons who make reports is prohibited in cases where a report is made by a Company Director or employee
directly to an Audit & Supervisory Board member of the Company. This information is distributed throughout the Group and is clearlystated within internal reporting system.
i) Other systems to ensure that audits are conducted effectively by Audit & Supervisory Board members
In order to raise awareness and understanding of the importance and usefulness of audits by Audit & Supervisory Board members,
Audit & Supervisory Board members hold periodic meetings for the exchange of opinions with the Representative Director and theoutside Director. There are also systems that allow for close collaboration and mutual support among the independent auditor, Audit
Office, and Audit & Supervisory Board members of affiliated companies so that Audit & Supervisory Board members can efficiently
and effectively perform audit operations. When advice is sought from attorneys, certified public accountants, and other outside
professionals or expenses are requested for outsourcing investigations, appraisals, or other administrative tasks so that the Audit &Supervisory Board or its members can perform audits, the Company may not refuse such requests except when the expenses relating
to a request are not necessary for the performance of duties by the Audit & Supervisory Board or its members.

2. Basic Views on Eliminating Anti-Social Forces
・ Basic Approach to Eliminating Anti-Social Forces
The Company responds resolutely in the face of anti-social forces threatening the public order and safety, defining
our firm commitment within our Basic Compliance Policy in opposition to such forces.
The NAGASE Group Compliance Conduct Standards states that (1) the Company will have no relationships withindividuals or groups having a negative impact on the social order or sound corporate activities; (2) individuals
involved in Company management will take the initiative and correct actions without fear of such forces; (3) the
Company will act as a unified organization, without abandoning individual directors or employees, to seek the aidof police and legal authorities to reject fear, funding, or usage in response to unreasonable demands.
・ Status of Efforts to Eliminate Anti-Social Forces
The Company has established responsible departments and individuals in Tokyo, Osaka, and the Nagoya branch
office. The individual responsible in the Tokyo head office participates in seminars on the prevention of
unreasonable demands sponsored by the Tokyo Metropolitan Public Safety Commission.
In every region, the Company participates in groups discussing measures to deal with anti-social forces. Assigned
individuals readily attend conferences and seminars, maintaining contact with local police. At the same time, these
individuals gather and manage information about anti-social forces. The Company’s basic trade agreements
include terms regarding the elimination of anti-social forces. The Company endeavors to cancel agreements withany trading partner determined to be an anti-social force.
General affairs personnel in Tokyo, Osaka, and the Nagoya branch have access to the Manual Regarding thePrevention of Unreasonable Demands, taking the initial response in case of emergencies.

V. Other

1. Adoption of Anti-Takeover Measures
Adoption of Anti-Takeover Measures

None

Supplementary Explanation―――

2. Other Matters Concerning to Corporate Governance System(1) See Attachment (1) for a diagram of the Company’s corporate governance structure, including our internal controls system.
(2) Overview of Timely Disclosure Structure
The Company has established Basic Compliance Policy. In pursuit of compliance with laws, regulations, and internal
regulations/rules and public disclosure to stakeholders (interested parties), the company actively and fairly discloses corporate
information striving to ensure transparency.
Under this basic approach, the company has created the following structure for identifying and managing information subject totimely disclosure which functions as an internal system for providing me timely and appropriate disclosure of company information
to investors.
The following describes how the Company handles each type of information.
■ Information Related to Material Facts
The relevant headquarters general managers and division managers report information collected from departments and subsidiaries
to the individual designated to handle such information. The individual designated to handle information coordinates with therelevant internal departments, summarizes information, and submits a report to the representative director and president.
As necessary, a report is submitted to the board of directors, after which the Corporate Management Department (body responsible
for timely disclosures) promptly issues a timely disclosure.
■ Information Related to Decision-Supporting Facts
Each department or subsidiary circulates a proposal draft, based on which related departments hold consultations. After final
approval of the representative director or the board of directors, the Corporate Management Department promptly issues a timely
disclosure.
■ Financial Information
Corporate Management Departments receive financial information from each consolidated subsidiary, accepting advice andguidance from members of the Audit & Supervisory Board and outside experts as necessary to ensure the reliability of financial
information received. These divisions then prepare financial reports and drafts of public announcements. After decision by thepresident, the board of directors makes a final approval, after which the Corporate Management Department promptly issues atimely disclosure.
Refer to Attachment (2) for a diagram of this structure.

Attachment (1)Corporate Governance system

Shareholders' Meeting
Election/Dismissal

Independent
AuditorElection/Dismissal

LiaisonAudit & Supervisory Board
Members
Audit & Supervisory Board
4(including 2 outside Auditor &Supervisory Board Members)
ReportLiaisonElection/Dismissal
Report/Suggestion
Audit

Board of Directors

9(including 3 outside Directors)

Compensation Committee
Report/Suggestion

Audit

Audit

Nominating Committee

5(including 3 outside Officers)

Report4(including 3 outside Drectors)

Opinion/Report【Business Execution】

Group Management
Committee

Risk Management & Compliance
Committee

Consideration/
Suggestion

President

Sustainability Committee
Internal Control Committee
Security Trade Control Committee

Consideration/
Suggestion

Audit Office

Audit

Executive Officers

Attachment (2)Fact/Information

Decision

Financial Data

Department/Subsidiary

Department/Subsidiary/Related Companies

Corporate Management Dept.
Related Department
Communication/
Coordination

Related Department

Department/Subsidiary

Corporate Management
Dept.

Responsible Party (Corporate Management Dept.)

Representative Director and President

Board of Directors

Corporate Management Dept.

TimelyDisclosure

Audit &
Supervisory Board

OutsideTimely Disclosure System