Corporate Governance Report

Last Update: January 22, 2024
NAGASE CO., LTD.
Hiroyuki Ueshima, 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]We comply with all principles set forth in the Corporate Governance Code.

[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
well as 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
a comprehensive manner according to whether the measure contributes to the increased share price of the issuing company andwhether 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.
Supplementary Principle 2.4(1)Under the ACE 2.0 medium-term management plan, the Company aims for growth through quality driven by Profit Structure
Reform and Corporate Culture Reform. We pursue three strategies to this end: (1) Cultivate innovative global talent capable ofadvancing change; (2) Promote safe, comfortable, and inspirational work styles and workplaces that encourage employees to takeon challenges; and (3) Build a corporate culture that embraces diverse personalities and raise employee engagement. As a resultof these efforts, we strive for the sustainable growth and development of our employees and the Company. Diversity is anindispensable part of the success of this strategy. Our policy is to hire and promote more women, non-Japanese, and mid-careerhires to the executive officer system, which forms the core of human resources within the NAGASE Group. During fiscal 2023,
we promoted five individuals from within these categories. We will continue to take global measures at each stage of therecruitment, retention, and promotion process, with particular emphasis on the advancement of women in our organization, which
we regard as a high-priority issue.

We established two targets as indicators to achieve by fiscal 2025 related to the strategies above: (1) raise the ratio of women in
career-track positions to 30% or more and (2) raise the ratio of women in managerial roles to 6% or more. In addition to these
two targets, our general employer action plan, based on the Act on Promotion of Women's Participation and Advancement in the
Workplace, provides a target of 70% or more for the percentage of employees taking paid leave. We are introducing several
measures to achieve this target. See the following website for more on diversity-related initiatives at NAGASE.
(https://www.nagase.co.jp/english/sustainability/social/labor-practices/)
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,and review 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 and4 [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
for member 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 boardof directors conducts celebrations and comes to a decision. The Company performs dismissal procedures as necessary, disclosing
the reasons 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 3.1 (3)We recognize that sustainability initiatives are an important management issue. When we formulated our ACE 2.0 medium-term
management plan, announced in May 2021, we analyzed the external environment and identified the most important issues for
NAGASE and our shareholders: technological innovation, climate change and resource shortages, demographic changes, andindustrial reorganization. We identified materialities based on the value we offer to stakeholders. With respect to climate change
and resource shortages in particular, we established the Carbon Neutral Project under the Sustainability Committee. With respect
to climate change and resource shortages in particular, we established the Carbon Neutral Project under the Sustainability
Committee. We plan to conduct scenario analyses incorporating climate-related risks and opportunities, identifying and disclosing
these in line with the TCFD (Task Force on Climate-related Financial Disclosures), which we have endorsed. With respect tohuman capital, we established the Employee Engagement Project under the Sustainability Promotion Committee, and we strive tostrengthen human capital by improving employee engagement.
Our sustainability initiatives, including initiatives related to climate change, are disclosed on our corporate sustainability website.
https://www.nagase.co.jp/english/sustainability/
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
the ability to raise issues to be addressed by the Company from the standpoint of our stakeholders and society.
Supplementary Principle 4.10(1)As advisory bodies to the board of directors, the Company has established the Compensation Committee and the Nomination
Committee, the majority of which consists of outside directors. Outside directors and outside members of the Audit & Supervisory
Board meet the criteria for independence. We believe these individuals are fully capable of fulfilling the role to ensure theindependence, objectivity, and, and transparency with respect to the nomination and compensation of the Company’s management
team at present. The Compensation Committee deliberates the design of compensation packages for directors and executive
officers. The Nomination Committee deliberates the knowledge, experience, and abilities required of directors, as well as thediversity of the composition of the board of directors, specific proposals regarding appointments, and succession plans. Eachcommittee provides reports and advice to the board of directors as necessary. In this way, these committees enhance the objectivity
and transparency of the management nomination process within the Company.
Supplementary Principle 4.11(1)The board of directors is composed of internal directors with business experience, knowledge, and expertise, and outside directors
who have management experience, mainly at other companies, and who can raise issues based on the perspectives of stakeholders
and society. This composition ensures that the board understands the status of business execution, can make decisions in a flexible
and prompt manner, and can supervise business execution.
Under this basic policy, the board of directors consists of eight members, including three outside directors who are independent
directors. More than one-third of the board of directors is composed of independent outside directors. Further, the Company
pursues diversity in management, regardless of gender, nationality, or race. We believe we have secured a certain level of diversity
in terms of gender and internationality, including the appointment of one female director. As well, many of our directors haveworked overseas for several years (an average of six years of overseas service among our internal directors). The skills matrix forthe board of directors, which indicates the roles and expertise required by NAGASE of its directors, is disclosed in notices ofannual shareholders’ meetings and is also posted on the Company's website.
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 an annual basis. In order to more proactively elicit frank opinions, we conduct anonymous surveys with all
directors and Audit & Supervisory Board members.
In addition, survey results are collected, aggregated, and analyzed by a third-party organization to eliminate arbitrary elements,
ensuring transparency in the evaluation methodology.
As a result, the Company confirmed that our Board of Directors conducts appropriate and timely deliberations and decisionmaking, functioning effectively.
The status of issues recognized in the previous fiscal year is as follows.
We improved the composition of Board meeting information materials by creating an executive summary to clarify the details of
the agenda and points of discussion.
We also began soliciting director options regarding specific management issues identified to ensure opportunities for discussion
on overall direction and management issues.
We identified other issues to address from the viewpoint of making the Board a forum for higher-level deliberations anddiscussions, including further discussions on the role and format of the Board of Directors, continued operational efficiencies, andbetter monitoring of management issues.
In terms of operational improvements, we will consider pre-meeting explanations and review the criteria for agenda items to ensuresufficient time for discussion and deliberation on the day of each meeting. To improve monitoring over management issues, wewill select discussion topics and opportunities, review the quantitative and qualitative aspects related to the current medium-term
management plan, and discuss next actions.
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, businessactivities, 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. Our investor
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
regularly. We manage information carefully in accordance with our Regulations for Preventing Insider Trading to prevent inside
information from being disclosed during these dialogues.
(Implementation status of dialogue with shareholders)
For the specific details on the status of activities related to IR and their implementation, please refer to “2. IR Activities” in section
III Implementation of Measures for Shareholders and Other Stakeholders below in this report and see the following website.
https://www.nagase.co.jp/assetfiles/uploads/20240122_IR_01.pdf(Actions towards achieving management that is conscious of capital costs and stock prices)
Please refer to ACE 2.0 medium-term management plan. For the specific details, please see the following website.
ACE 2.0 medium-term management plan
https://www.nagase.co.jp/english/company/management-policy/
https://www.nagase.co.jp/english/ir/library/pdf/results_brief/20231225-4.pdf

2.

Capital Structure
Foreign Shareholding Ratio

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

UpdatedNumber of Shares Owned

No. of Shares Held (%)

The Master Trust Bank of Japan, Ltd. (Trust Account)
Sumitomo Mitsui Trust Bank, Limited
Custody Bank of Japan, Ltd. (Trust Account)

14,233,200
4,776,000
4,731,100

12.42
4.17
4.13

Sumitomo Mitsui Banking Corporation

4,377,000

3.82

3,784,000

3.30

3,589,133

3.13

Reiko Nagase

3,503,249

3.06

NAGASE & CO., LTD. Own Share Investment Association

3,499,793

3.05

Nagase Shunzo Co., Ltd.

2,688,000

2.34

MUFG Bank, Ltd.

1,836,000

1.60

NORTHERN TRUST CO. (AVFC) RE SILCHESTERINTERNATIONAL INVESTORS INTERNATIONAL VALUEEQUITY TRUST
Nippon Life Insurance Company

Controlling Shareholder (except for Parent Company)―――

Parent Company

None

Supplementary Explanation
1.

Name/Company Name
BlackRock Japan Co., Ltd.

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 Institutional Trust N.A.
2.

On February 6, 2023, 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 ofCompany stock. However, we have not been able to confirm beneficial ownership status as of September 30,2023.
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

1.52

Mitsubishi UFJ Trust and Banking Corporation

3,022

2.50

583

0.48

Mitsubishi UFJ Kokusai Asset Management Co., Ltd.
3.

UpdatedOn 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.
However, we have not been able to confirm beneficial ownership status as of September 30,2023. Accordingly, BlackRock
Japan Co., Ltd. is not included in the Status of Major Shareholders above.

On July 6, 2023, 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. However, we have not been able to confirm beneficial ownership status as of September 30,2023. 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

4,776

4.05

Sumitomo Mitsui Trust Asset Management Co., Ltd.

3,035

2.57

Nikko Asset Management Co., Ltd.

1,412

1.20

4.

On September 29, 2023, Silchester International Investors LLP submitted the following information to the Director-Generalof the Kanto Finance Bureau in connection with a substantial shareholding report (change report) concerning holdings ofCompany stock. However, we have not been able to confirm beneficial ownership status as of September 30,2023.
Accordingly, Silchester International Investors LLP is not included in the Status of Major Shareholders above.
Number of Shares Held (Thousands)(%)
Name or Trade Name
Silchester International Investors LLP

3.

4.

8,022

Corporate Attributes
Listed Stock Market and Market Section

Tokyo Stock Exchange Prime Market

Fiscal Year-End

MarchType of Business

Wholesale trade

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

More than 1000

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

From ¥100 billion to less than ¥1 trillion

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

From 50 to less than 100

Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder
－－－

5.

6.80

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
a company with an Audit and Supervisory Board

Organization Form
[Directors]
Maximum Number of Directors Stipulated in Articles of Incorporation

12

Term of Office Stipulated in Articles of Incorporation

1 YearChairman

Chairperson of the Board

Excluding cases when serving concurrently as president

Number of Directors

8

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

a
b

b
b

Relationship to the Company*c Relationshipde tof the Company*ghi

Ritsuko Nonomiya

From another company

Noriaki Horikiri

From another company〇

Toshiaki Mikoshiba

From another company

△

j

k

* Categories for “Relationship with the Company”* ”〇” 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/Audit & Supervisory Board Member
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/Audit & Supervisory Board Members 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)NameRitsukoNonomiya

NoriakiHorikiri

Toshiaki
Mikoshiba

Designation as
Independent Director

〇

〇

〇

Supplementary Explanationof the Relationship－

Reasons of Appointment
Having experience in auditing and similar areas at
KPMG Group, and in M&A and business development
at UBS Group and GE Group, Ms. Nonomiya has highlevels of financial and accounting knowledge, together
with ample insight into and experience in corporate
management. She has been appointed as an outside
director so that she can use this knowledge andexperience to make proposals concerning theCompany's overall management, and she is expected tostrengthen Group corporate governance as we conduct
an increasing amount of business 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.

Mr. Horikiri is serving as a
Chairman and Chief
Executive Officer at
Kikkoman Corporation, oneof our business partners.
Although the Company
conducts business
transactions with Kikkoman
Corporation, our purchasesfrom Kikkoman Corporation
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 2023.

Mr. Horikiri has been involved in management ofKikkoman Corporation for many years and possesses
advanced knowledge and extensive experience
regarding corporate management. He will use thisknowledge and experience to make proposals
concerning the Company’s overall management
including overseas development and manufacturing
activities, and is expected to enhance the Group’s
corporate governance. He is a chairman and chief
executive officer at Kikkoman Corporation, with whom
the Company conducts business transactions. However,
we do not believe any significant special interests exist
when considering the scope of these business
transactions. In addition to the preceding, He has no
personal relationships, equity relationships, business
relationships, or other interests in the Company.
Therefore, we consider him to be an outside director
having no potential conflicts of interest with our generalshareholders.

Mr. Toshiaki Mikoshiba
served as the chairman of theBoard of Directors for Honda
Motor Co., Ltd., a business
partner of the Company.
Although the Company
conducts business
transactions with Honda
Motor Co., Ltd., sales to said
company amounted to lessthan 0.1% of Company net
sales for the fiscal year ended
March 2023.

Mr. Toshiaki Mikoshiba has been involved in the
management of Honda Motor Co., Ltd. for many years
and possesses advanced knowledge and extensive
experience regarding corporate management. We expect
him to use this knowledge and experience to makeproposals concerning the Company’s overallmanagement, including overseas business development
and sales activities, and we believe his participation will
enhance NAGASE Group corporate governance.
Accordingly, we have appointed Mr. Mikoshiba as an
outside director. Mr. Mikoshiba has served as chairmanof the Board of Directors of Honda Motor Co., Ltd.,
with whom the Company conducts business
transactions. However, we do not believe any
significant special interests exist when considering thescope of these business transactions. In addition to thepreceding, Mr. Mikoshiba has no personal relationships,
equity relationships, business relationships, or otherinterests in the Company. Therefore, we consider him to
be an outside director having no potential conflicts ofinterest with our general shareholders.

Voluntary Establishment of Committee(s) Corresponding to Nomination
Committee or Remuneration Committee

Established

Committee’s Name, Composition, and Attributes of Chairperson
Committee’s

All Committee

Full-time

InsideOutsideOutsideName

Members

Members

Directors

Directors

Experts

Other

Committee

Chairperson
Internal

Corresponding

Nominating

to Nomination

Committee

5

0

2

3

0

0

Committee

member of
the Managing
Board

Committee

Internal

Corresponding

Compensation

to Remuneration

Committee

4

0

1

3

0

Committee

0member of
the Managing
Board

Supplementary Explanation
The Nominating Committee consists of the majority of outside directors. 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 another company

Relationship to the Company*
a

b

c

d

e

f

g

h

i

j

k

l

m

△

Gan Matsui
Lawyer* Categories for “Relationship with the Company”* ”〇” 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 accounting advisor of the Company or its subsidiaries
c. Non-executive director or executive of a parent company of the Company
d. Audit & Supervisory Board Members of a parent 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 amount of monetary consideration or other property from theCompany besides compensation as an Audit & Supervisory Board Member
i. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)
j. Executive of a client or supplier company of the Company (which does not correspond to any off, g, or h)(the Audit & Supervisory Board Member himself/herself only)
k. Executive of a company, between which and the Company outside directors/Audit & Supervisory Board Members are mutually
appointed (the Audit & Supervisory Board Member himself/herself only)
l. Executive of a company or organization that receives a donation from the Company (the Audit & Supervisory Board Member
himself/herself only)
m. Others

Outside Audit & Supervisory Board Members’ Relationship with the Company (2)Name

Designation as
Independent
Director

Nobuyuki
ShirafujiGan
Matsui〇〇

Supplementary Explanation of
the Relationship

Reasons of Appointment

In the past, Mr. Shirafuji worked for
the Sumitomo Mitsui Banking
Corporation, one of the Company’sbanks. Although the Company
maintains an outstanding loan fromthe bank in question, the loanbalance was less than 5.0% ofCompany’s total assets as of the endof the fiscal year ended March
2023.

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 theability to appropriately execute the duties of an
outside member of the Audit & Supervisory Board
and we have therefore appointed him to this role. In
the past, Mr. Shirafuji worked for the Sumitomo
Mitsui Banking Corporation, one of the Company’sbanks; however, Mr. Shirafuji did not manage
Company accounts during his service at the bank inquestion. Furthermore, the Company maintains ahigh shareholder’s equity ratio and a soundfinancial structure. We do not rely heavily on
borrowings from financial institutions, resulting inminimal impact of financial institutions on
Company management. In addition to thepreceding, 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 tobe an outside director having no potential conflictsof interest with our general shareholders.

－Mr. Matsui has a wealth of experience andknowledge in legal matters. Accordingly, it is ourjudgment that Mr. Matsui has the ability to executethe 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 other interests in the
Company. Therefore, we consider Mr. Matsui to be
an outside director having no potential conflicts ofinterest with our general shareholders.

[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

Performance-linked Remuneration

Supplementary Explanation
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. Here, the target ratio for each remuneration type is monetary fixed (basic)
remuneration between 50% and 70% to monetary performance-linked remuneration between 25% and 40% to non-monetary
performance-linked remuneration between 5% and 10%, presuming 100% achievement of performance targets.
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 have also selected return on equity (ROE) as an incentive toimprove capital efficiency. We calculate performance-linked remuneration based on profit attributable to owners of the parent bydetermining the basic 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 performancecompared with the consolidated earnings forecast at the beginning of the fiscal year, adjusted by individual assessments. Net
income for the fiscal year ended March 2023 amounted to 23.6 billion yen. Remuneration based on ROE is calculated based on
the degree of achievement of each fiscal year's target, with targets set for each fiscal year toward achieving the final target values
in the medium-term management plan. ROE for the fiscal year ended March 2023 was 6.6%.
Recipients of Stock Options
Supplementary Explanation―――[Director Remuneration]
Disclosure of Individual Directors’ Remuneration

The Company disclose partial individual compensation.

Supplementary Explanation
・Compensation paid to directors and members of the Audit & Supervisory Board in service as of the fiscal year ended March
2023
The Company paid ¥536 million in compensation to ten directors and ¥80 million in compensation to four members of the Audit& Supervisor Board. Of this amount, a total of ¥67 million in compensation was paid to six outside officers. Payments todirectors include accrued bonuses for directors in the amount of ¥278 million for the year ended March 2023, recognized as an
expense for the period. In addition, the Company paid the equivalent of ¥23 million as employee bonuses for individuals serving
concurrently as directors and employees. The aforementioned compensation includes payments to a director who retired upon
the conclusion of the 107th Annual Shareholders’ Meeting held June 20, 2022.
Name, position and amount of compensation paid to Directors receiving compensation of ¥100 million or more during fiscal
year ended March 2023, are as follows.

Name

Title

Fixed(basic)
remuneration

Performance-linked
Remuneration

Performance-linked
Remuneration(Non-Monetary)

Total

Kenji Asakura

Director¥52 million¥84 million¥9 million¥146 million

Hiroshi Nagase

Director¥52 million¥50 million¥6 million¥109 million

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. Here, the target ratio for each remuneration type is monetary fixed (basic)
remuneration between 50% and 70% to monetary performance-linked remuneration between 25% and 40% to non-monetary
performance-linked remuneration between 5% and 10%, presuming 100% achievement of performance targets. Compensation foroutside directors and members of the Audit & Supervisory Board reflects the individual’s responsibilities and consists only of
fixed (basic) compensation.
The Company pays the annual amount of fixed (basic) remuneration in equal monthly installments for performance-linked
remuneration, monetary remuneration is paid in a lump sum at the end of June, and for non-monetary remuneration, we haveintroduced a performance-linked stock-based compensation plan. In the latter, shares are delivered through a trust set up by theCompany equivalent to the number of points granted in proportion to position, achievement of performance targets, and otherfactors.
[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.)―――

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

Date of retirement aspresident, etc.
―――

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 eight directors (including three outside directors), 19
executive officers (including three 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 decisionmaking, as well as the body that oversees business execution. The board meets regularly on a monthly basis, resolving importantmatters, 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 fromsubsidiaries 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 ofcompensation 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 consistsof five individuals (a majority of 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 andtransparency in the Company’s nominations of senior managers. The Company has also established the following voluntarycommittees and committee structures: The Group Management Committee comprises executive officers appointed by the boardof directors, and in principle, this meets regularly once a month to discuss management strategies, investment projects, and otherimportant matters, and to support management decision-making. This serves as an advisory body that discusses matters resolvedby the board of directors. The Conflict of Interest Management Committee, which consists of three individuals (chaired by theoutside director), determines in advance with objectivity and transparency that the transaction does not apply to conflict ofinterest in the Group's business operations, reporting to and advising the board of directors. The Sustainability Committee ischaired by the President and comprises executive officers and senior management of Group companies. This formulates policies
for promoting sustainability throughout the Group, establishes and maintains the promotion system, monitors measures andpolicies, and conducts educational activities within the Group. The Risk Management & Compliance Committee serves as anadvisory body to the board of directors to strengthen mechanisms not only for legal compliance, but also for risk management andcompliance, including risks associated with corporate ethics. The Internal Control Committee deliberates basic policy for internal
controls and monitors the structure and operation of mechanisms determined under the internal controls system to ensure theappropriateness of business 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 andForeign 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 andunbiased 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
Takuya Suzuki
Ernst & Young ShinNihon LLC

3.

The Company has executed limited liability agreements with outside directors Ritsuko Nonomiya, Noriaki Horikiri and Toshiaki
Mikoshiba 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 anincident, a certain amount is to be borne by the individual directors and members of the Audit & Supervisory Board to ensurethat the appropriate
Reasons
for Adoption
conduct
ofofCurrent
their respect
Corporate
duties isGovernancenot impaired.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

2.

Early notices of convocations ofgeneral shareholders’ meetings

Notices are sent about 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 when numerous
other companies hold their meetings.

Allowing Electronic Exerciseof Voting Rights

The Company allows shareholders to exercise voting rights electronically through anelectronic 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 inEnglishThe 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 about 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.

IR Activities
Explanations

Supplementary Explanations

by theRepresentative
Himself /Herself

Preparation and Publication ofDisclosure Policy

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

Regular Investor Briefings for
Individual Investors

The Company conducts investor online briefings roughly twice a year.

No

Regular Investor Briefings forAnalysts and Institutional
Investors

The Company conducts investor briefings in May and November. The
president of NAGASE & CO., LTD. provides an explanation of financial
results and mid-term management plans, etc. These briefings are tended
by approximately 60 persons, including analysts and institutional
investors.

Yes

Posting of IR Materials on Website

The Company publishes investor relations communications on our
corporate website. These communications include disclosures related tofinancial information, timely disclosure materials other than financial
information, the Company’s annual securities report and quarterly
reports, shareholder meeting convocation notices (including English
translations), presentation materials used in briefings for analysts andinstitutional 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/or Manager 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 to analysts
and institutional investors on an appropriate basis.

3.

Measures to Ensure Due Respect for Stakeholders

Stipulation of Internal Rules for
Respecting the Position of
Stakeholders

Supplementary Explanation
The Company’s Management Philosophy states that we recognize our responsibility tosociety and offer beneficial products and services while maintaining the highest standardsof integrity. Through our growth, we will contribute to society and enrich the lives of ouremployees. 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 forenvironmental management systems). We conduct ongoing activities to improve ourenvironmental management systems, including measures to achieve goals for reducing
energy usage and general waste in our business processes.
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 reporthttps://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 fair disclosure of corporate
information to stakeholders to ensure transparency.

Other

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 source of 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 2020, the Company had 22 women in managerial roles*. As of March 2023,
the Company had 24 women in managerial roles. The number has risen gradually over time,
and the Company plans to continue to hire and promote women in these roles. The Company
created a guidebook defining systems supporting maternal care and 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 and a
representative of the human resources department Upon returning to work from childcare
leave, official assistants and other 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. During the fiscal
year ended March 2023, the Company updated our general employer action plan based on
the Act on Promotion of Women's Participation and Advancement in the Workplace. Our
plan calls for increasing the percentage of women in career-track positions to at least 30%
and the percentage of women in managerial roles to at least 6% by the end of March 2026.
We are introducing several measures to ensure the success of this plan. As of March 2023,
women accounted for 17% of career-track hires and 4% of managerial roles.
* Managerial role is defined as an individual who oversees subordinates as part of their 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 base and facilitating work
styles that balance work and life these two benefits for both company 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 theresults of workplace and work environment surveys in ongoing dialogue with employees tocreate 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 ofIncorporation and Other Systems Specified by Ministry of Justice Ordinance Necessary for Ensuring the Proper Implementationof Business by a Stock Corporation and the Corporate Group Comprising that Corporation and its Subsidiaries.” Details of thepolicy are set forth below. Based on this basic policy, the Company will ensure the appropriateness of its business operations andconduct ongoing reviews and continuous improvement in order to appropriately reinforce governance systems even further inlight of changes in the Company’s business environment.
Furthermore, the company has established an Internal Control Committee in order to establish, maintain, and improve theinternal control system. The Internal Control Committee deliberates basic policy for internal controls and monitors the structure
and operation of 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 Articl esof Incorporation
1. Based on the concept that we recognize our responsibility to society and maintain the highest standards of integrity, we havetaken several actions to establish and maintain a compliance system. These actions include formulating the Basic Compliance
Policy and working to make the system one that ensures all officers and employees, including those of Group companies,
conduct corporate activities in accordance with the NAGASE Group Code of Conduct.
2. We established the Risk Management and Compliance Committee, which is composed of directors and employees who makeall decisions related to risk management and compliance. When necessary, we appoint outside experts to prevent violations oflaws, regulations, and the Articles of Incorporation.
3. For individual cases, decisions are made for each after a multifaceted assessment from a professional perspective, includingfrom the perspective of legality, and based on pre-established internal rules and regulations.
4. In the event that the Company or a Group company becomes aware of a problem, such as a violation of laws or regulations,a process of prompt reporting, communication, and consultation is commenced with supervisors and relevant departments andthen reported to the Risk Management and Compliance Committee, which immediately reports the matter to the board of
directors and the Audit & Supervisory Board (or its members). In addition, the Risk Management and Compliance Committee
has established a contact point so officers and employees, including those from Group companies, can directly issue reports
and engage in consultations using the internal reporting system. This system is in place to prevent the neglect of or inaction
against violations of laws, regulations, and the Articles of Incorporation arising from director or employee duties.
5. The Company strives to raise awareness of legal compliance among officers and employees, including those at Group
companies, through training sessions conducted by outside experts and other means, and to ensure the permeation of theCompany's Management Philosophy of said officers and employees.
6. The Company's Audit Office conducts internal audits of the execution of director and employee duties in accordance with
the Internal Audit Regulations.
b) Systems for retaining and managing information relating to the execution of duties by Directors.
In accordance with internal rules and regulations, information related to the execution of director duties is recorded, eithe r in
writing or electronically, and stored and managed. Directors and Audit & Supervisory Board members have access to thesematerials at all times.
c) Rules relating to management of loss-related risks and other systems
1. The Risk Management and Compliance Committee has been established as an organization for the comprehensive
management of risk of loss for the Company and Group companies, and a system has been created defining the committee'sfunctions and authority, clarifying roles and responsibilities.
2. With regard to individual risks related to the Company and its Group companies’ business activities, the respective
departments in charge are responsible for establishing rules and guidelines, conducting training programs, preparing anddistributing manuals, and etc.
3. For any newly arising risk, the Risk Management and Compliance Committee promptly appoints a responsible department
for addressing the risk, and establishes an emergency response system ensuring prompt and appropriate communication of
information in the event of an emergency within the Group.
d) Systems for ensuring the efficient execution of duties by Directors
1. The Company has defined the clearly defined the board of directors as the body that determines management policies andstrategic decision-making, as well as the body that oversees business execution. The board meets regularly on a monthly basisand holds other meetings on an ad-hoc basis as necessary.
2. The Group Management Committee consists of executive officers appointed by the board of directors, and in principle, meetsregularly twice a month to discuss management strategies, investment projects, and other important matters to support businessdecision-making. Directors and Audit & Supervisory Board members may attend meetings of the Group Management
Committee.
3. Under the executive officer system, organizational operations rules and divisions of work responsibilities stipulate therespective responsible persons, their responsibilities, and procedures for execution.

e) Systems for ensuring the proper implementation of business by the corporate group comprising a stock corporation and its
subsidiaries
1. Systems for reporting to the Company on matters pertaining to the execution of duties by directors, etc., of subsidiaries
a. Operating standards have been defined between the Company and Group companies, creating a system that requires
approval or reporting to the Company after decisions are made by the Group companies regarding certain matters.
b. In principle, the Company dispatches officers to Group companies to ensure proper operations.
2. Rules and other systems to manage the risk of loss by subsidiaries
The Company's Risk Management and Compliance Committee serves as the core driver for managing risks across the entire
Group, working in cooperation with the Risk Management and Compliance Committees at major subsidiary companies todeliberate and make determinations on issues and measures related to the promotion of risk management, and deliberate andmake determinations on important matters related to compliance for the entire Group. In addition, to further enhance thereliability of financial reporting, the Company is promoting efforts on a consolidated basis to document, evaluate, and improve
the status of Group-wide internal controls and the process of preparing financial statements in accordance with the Financial
Instruments and Exchange Act.
3. Systems to ensure subsidiary directors execute duties efficiently
Based on the medium-term management plan and fiscal year budget system, clear targets are assigned, and budget performance
management is implemented for the Company and each Group company.
4. Systems for ensuring the execution of duties by subsidiary directors and employees complies with laws, regulations, andarticles of incorporationa. The Company has established a system to ensure that all officers and employees of Group companies conduct theirbusiness activities in accordance with the NAGASE Group Code of Conduct by providing education to raise awarenessabout the code.
b. The Company's Audit Office conducts internal audits at the Company and its Group companies in accordance with theInternal Audit Regulations.
c. The Risk Management and Compliance Committee has established a contact point so that officers and employees,
including those from Group companies, can directly issue reports and engage in consultations using the internal reporting
system. This system is in place to prevent the neglect of or inaction against violations of laws, regulations, and the Articles
of Incorporation arising from director or employee duties.
f) Matters pertaining to employees when Audit & Supervisory Board members request the appointment of employees to assist
them in the 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 andensuring the effectiveness of instructions from Audit & Supervisory Board members
1. On the transfer, evaluation, etc. of these employees, the Company consults with Audit & Supervisory Board members andseeks their opinions.
2. The Company gives due consideration to the selection of these employees, the duration of their assignment to assist in theduties of Audit & Supervisory Board members, etc., striving to ensure the effectiveness of directions given to these
employees.
h) Systems for Directors and employees to report to Audit & Supervisory Board members and other systems for reporting to
Audit & Supervisory Board members
1. The Company has established a system that enables Audit & Supervisory Board members to constantly monitor theoverall management of the Company and its Group companies by attending meetings of the board of directors and otherimportant meetings, exchanging information with management, and inspecting approval requests, reports, and otherdocuments.
2. The rules of the Risk Management and Compliance Committee stipulate that directors and employees of the Company and
its Group companies shall report the following matters promptly to an Audit & Supervisory Board member, either via the
Risk Management and Compliance Committee or separately.
a. Incidence and reporting of compliance issues, such as misconduct or violation of laws, regulations, or the Articles ofIncorporation, in connection with the execution of director duties
b. Incidence and reporting of facts that may cause significant harm to the Company
c. Incidence and reporting of material disclosure items.
i) Systems to ensure that a person who makes a report under the preceding item is not subject to any disadvantageous treatment
for making such a report
The Company prohibits any disadvantageous treatment of any Group company director, employee, etc. who makes a report
directly to the Company's Audit & Supervisory Board members, and ensures that the entire Group is aware of this prohibitionand clearly states this in its internal reporting system.

j) Policy on matters regarding expense prepayments, redemptions, other expenses, or disposition of debt resulting from theexecution of duties by members of the company’s Audit & Supervisory Board
When the Audit & Supervisory Board or the board of directors, in the course of an audit, requests necessary expenses such as
for requesting advice from attorneys at law, certified public accountants, or other outside specialists, or outsourcing
investigations, appraisals, or other administrative work, such request may not be denied unless the expenses involved are
deemed unnecessary or the performance of duties by the Audit & Supervisory Board or its members.
k) Other systems to ensure that audits are conducted effectively by Audit & Supervisory Board members
1. Members of the Audit & Supervisory Board hold regular meetings with the representative director and outside directors to
exchange opinions.
2. The Company’s full-time members of the Audit & Supervisory Board also serve as members of the Audit & Supervisory
Boards of major Company subsidiaries in Japan.

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 with individuals
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 aid of 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 sponsoredby 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 andmanage information about anti-social forces. The Company’s basic trade agreements include terms regarding the eliminationof anti-social forces. The Company endeavors to cancel agreements with any 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 the Preventionof 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
to timely 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 andsubsidiaries to the individual designated to handle such information. The individual designated to handle information
coordinates with the relevant 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 atimely 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

Attachment (2)Timely Disclosure System