Corporate Governance Report
CORPORATE GOVERNANCE

F.C.C. CO., LTD.

Last Update:June 21, 2024

F.C.C. CO., LTD.
Yoshitaka Saito, President and Representative Director
Contact: Corporate Planning Department of the Planning Division
Securities code: 7296
https://www.fcc-net.co.jp/
The corporate governance of F.C.C. CO., LTD. (the “Company”) is described below.

I.

Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other
Basic Information

1.

Basic Views
Based on its corporate philosophy, the Company endeavors to enhance its corporate governance as one of the top management
issues, aiming to build trust of its stakeholders, including shareholders, customers, employees, and local communities, conduct anagile and decisive decision-making in a fair and transparent way and pursue its continuous growth and an increase in corporate
value over the medium- to long-term.

Reasons for Non-compliance with the Principles of the Corporate Governance Code Update[Supplementary Principle 2-4-1] Ensuring diversity in the promotion of core personnel
As the business environment undergoes significant transformation, the Group aims to transform itself into a company that
continues to provide new value in the mobility and non-mobility areas to achieve sustainable growth. We will begin to develop ahuman resources portfolio to identify gaps in our current state and define the human resource requirements we need to develop
new business and expand market share while maintaining the competitiveness of our core business. With this initiative as astarting point, we will implement appropriate measures while identifying the human resources issues to realize our medium-term
strategy. In addition, we will promote the three pillars of “improvement in engagement,” “promotion of diversity,” and “humanresources and skills development” of employees at the core of our policy, in order to develop human resources who can realize
the “brand-new FCC” on their own and to create the foundations for innovation.
1) Improvement in engagement
The Company has identified improvement in employee engagement as a key indicator for “creating the foundations forinnovation” and commenced engagement surveys from FY2024. Based on the survey results, we plan to set targets and determine
policy direction.
2) Promotion of diversity
In terms of “diversity,” the Company has traditionally exhibited a small percentage of female employees in its core workforce.
Therefore, focusing on “women’s activities,” we are targeting having the percentage of female employees promoted up one level
equal to that of male employees by FY2027 and fostering an organizational culture in which women can play an active role.
3) Human resources and skills development
Ensuring that we take account of changes in the business environment, and to develop the human resources required to realize the1

“brand-new FCC,” we have put in place a systematic human resources training system. From FY2025, our goal is to transform thequality of added value, and we will incorporate new company-wide DX training. In addition, to build the human foundations todrive innovation, we will first of all review the evaluation criteria for role behaviors required at management level. We aim tocreate a work environment in which employees are highly motivated to demonstrate their abilities and take on challenges.
We will also in due course consider setting KPIs and targets for the above and other initiatives for the Group as a whole inconnection with the future transformation of the business portfolio.
For more information on human capital, please refer to the Sustainability Report.
URL: https://www.fcc-net.co.jp/en/ir/(in English)[Supplemental Principle 3-1-3] Initiatives to Address Issues Surrounding Sustainability
The Group considers its impact on the environment, society, and the economy and is implementing various initiatives as part ofits long-term corporate strategy to fulfill its social responsibility and resolve social issues.
With regard to the impact of climate change-related risks and revenue opportunities on its business activities, earnings, etc., theCompany will enhance the quality and quantity of disclosures based on the TCFD or an equivalent framework.
For more information on sustainability, please refer to the Sustainability Report.
URL: https://www.fcc-net.co.jp/en/ir/(in English)

Disclosure Based on the Principles of the Corporate Governance Code Update
The Company has established Corporate Governance Guidelines concerning its basic views and policies on corporate governance,
which are disclosed on the Company’s website. Please also refer to the following websites for other disclosure materials, such as
financial results, briefing materials, and materials related to general meetings of shareholders.
IR information URL: https://www.fcc-net.co.jp/en/ir/(in English)[Principle 1-4] Policy on cross-shareholdings, evaluation of suitability of shareholdings, and exercise of voting rights with respect
to cross-shareholdings
Please refer to Article 5 of the Corporate Governance Guidelines, “Policy on Cross-Shareholdings.”[Principle 1-7] Transactions Between Related Parties
Please refer to Article 6 of the Corporate Governance Guidelines, “Conflict-of-Interest Transactions.”[Principle 2-6] Functioning as Asset Owner of Corporate Pension Funds
Given that the management of corporate pension funds affects employees’ stable asset building and the Company’s financial
position, the Company conducts appropriate monitoring, including periodic confirmation of the investment policy, investment
system, and investment performance of the asset management institution of a corporate pension fund.
[Principle 3-1]
(1) Management philosophy, management strategies, and business plans
Corporate Philosophy: Please refer to Article 1 of the Corporate Governance Guidelines, “Basic Views on Corporate
Governance” <Corporate Philosophy>.

2Management strategies and business plans: The Company has established a medium-term management plan, which is published at
events such as financial results briefings.

(2) Basic views and policies on corporate governance
Please refer to the Corporate Governance Guidelines.
(3) Policies and procedures for determining remuneration for officers
Please refer to Article 11 of the Corporate Governance Guidelines, “Policy on Determining Remuneration for Officers.”(4) Policies and procedures for the appointment and dismissal of Directors
Please refer to Article 10 of the Corporate Governance Guidelines, “Policy on Appointment and Dismissal of Directors.”(5) Explanation of individual Director nominations
Please refer to the “Notice of Ordinary General Meeting of Shareholders.”[Supplementary Principle 4-1-1] Matters determined by of the Board of Directors and Scope of Delegation to Management
Please refer to Article 8 of the Corporate Governance Guidelines, “Roles and Responsibilities of the Board of Directors.”[Principle 4-9] Independence Standards for Outside Officers
Please refer to Article 9 of the Corporate Governance Guidelines, “Composition of the Board of Directors.”[Supplementary Principle 4-10-1] Independence, Authority, and Roles of the Nomination Committee and Remuneration
Committee
The majority of the Nomination and Remuneration Advisory Committee consists of independent Outside Directors.
Please refer to Article 8 of the Corporate Governance Guidelines, “Roles and Responsibilities of the Board of Directors.”[Supplementary Principle 4-11-1] View on the Balance Between Knowledge, Experience and Capabilities of the Members of theBoard of Directors as a Whole, and Diversity, and Size
Please refer to Article 9 of the Corporate Governance Guidelines, “Composition of the Board of Directors.”
Please refer to the “Notice of Ordinary General Meeting of Shareholders” for the Skill Matrix.

[Supplementary Principle 4-11-2] Directors’ Concurrent Positions as an Officer at Other Listed Companies
Please refer to the “Notice of Ordinary General Meeting of Shareholders.”[Supplementary Principle 4-11-3] Evaluating the Effectiveness of the Board of Directors
With respect to the effectiveness of the Board of Directors in FY2024, the Company’s Directors (including Audit and Supervisory
Committee Members) have conducted a self-assessment questionnaire, and the results were analyzed and evaluated by theOutside Directors who are Audit and Supervisory Committee Members. We conduct an annual “evaluation of the effectiveness of3

the Board of Directors,” and it is important to evaluate the status of the Board of Directors and recognize issues, and use theevaluation as a basis to identify the direction of the Company’s Board of Directors and make continuous improvements. The
questionnaire results for each of the evaluation items “number and composition of the Board of Directors,” “operation of theBoard of Directors,” and “roles and responsibilities of the Board of Directors (Directors)” indicated generally appropriate
responses and suggested that the Company’s Board of Directors is operating properly and effectively. In FY2024, we established
a forum for informal discussions with Outside Directors and through the exchange of information achieved a better understandingof the business, and evaluation suggested a generally improving trend in “enhancing discussions on medium- and long-term
management strategies and business portfolios,” which had been considered an issue in the previous fiscal year. On the other
hand, it was commented that “further enhancement of discussions is necessary to accelerate commercialization of new projects.”
Therefore, we will strive to improve the effectiveness of the Board of Directors through implementing measures to stimulate
discussion such as organizing theme-based study sessions with external organizations.

[Supplementary Principle 4-14-2] Policy on Training for Directors
Please refer to Article 13 of the Corporate Governance Guidelines, “Training for Directors.”[Principle 5-1] Policy on Constructive Dialog with Shareholders
Please refer to Article 3 of the Corporate Governance Guidelines, “Constructive Dialog With Shareholders.”[Responses to achieve cost-of-capital and stock-price conscious management] (English disclosure available)
Under the business policy of “Second Founding: towards the brand-new FCC,” outlined in the Group’s 12th Medium-Term
Management Plan, with FY2024 as the first year of this plan, we will strive to continuously increase corporate value bytransforming our business structure and strengthening our management base. Please refer to the 12th Medium-Term Management
Plan in the Financial Results Briefing Materials for details including financial strategies and targets.
URL: https://www.fcc-net.co.jp/en/ir/(in English)[State of dialog with shareholders](1) Principal persons who engaged in dialog with shareholders
Financial results briefings are held twice a year, with explanations are provided by the President and Representative Director, theHead Officer of Business Operation, and others. Meetings with analysts and institutional investors are handled by the Corporate
Planning Department of the Planning Division throughout the year.
(2) Summary of shareholders who engaged in dialog
Domestic and foreign institutional investors(3) Main topics of dialog and shareholder interests
Changes in the environment surrounding the automotive industry, performance and progress of core and new businesses andfuture outlook, shareholder returns and capital policy(4) State of feedback to management and the Board of Directors of shareholder opinions and concerns identified through dialog
Shareholder opinions are fed back to the Board of Directors.
(5) Matters incorporated as a result of dialog

4

Progress of the Medium-term Management Plan is explained in the financial results briefing materials.

2. Capital Structure Update
Foreign Shareholding Ratio

20% or more and less than 30%

Status of Major Shareholders Update
Name or Company Name

Number of Shares Owned

Percentage (%)

Honda Motor Co., Ltd.

10,881,288

21.87

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

5,247,800

10.55

Y.A Co., Ltd.

2,556,240

5.14

SMBC Trust Bank Ltd. (Sumitomo Mitsui Banking Corporation Retirement

2,483,600

4.99

Custody Bank of Japan, Ltd. (Trust Account)

2,090,900

4.20

F.C.C. Supplier Stock Ownership Association

884,834

1.78

Ei Yamamoto

800,968

1.61

STATE STREET BANK AND TRUST COMPANY 505223

608,720

1.22

JP MORGAN CHASE BANK 385781

531,553

1.07

Japan Philanthropic Foundation

500,000

1.01

Benefits Trust Account)

Name of Controlling Shareholder, if applicable―――(excluding Parent Company)
Name of Parent Company, if applicable

None

Supplementary Explanation Update
SMBC Nikko Securities Inc. and its joint holders, Sumitomo Mitsui Banking Corporation and Sumitomo Mitsui DS AssetManagement Company, Limited, made the change report for the substantial shareholding report available for public inspection asof May 11, 2022, describing that each of these companies held shares. Since the Company could not confirm the actual number ofshares held by them as of March 31, 2024, they were not included in the above major shareholders.

Mizuho Bank, Ltd. and its joint holders, Mizuho Securities Co., Ltd., Mizuho Trust & Banking Co., Ltd. and Asset Management
One Co., Ltd. made the change report for the substantial shareholding report available for public inspection as of November 8,2023, describing that each of these companies held shares. Since the Company could not confirm the actual number of shares heldby them as of March 31, 2024, they were not included in the above major shareholders.

3.

Corporate Attributes
Listed Stock Exchange and Market Segment

Prime Market

5

Fiscal Year-End

MarchBusiness Sector

Transportation Equipment

Number of Employees (Consolidated) as of the End
1,000 or moreof the Previous Fiscal YearNet Sales (Consolidated) as of the End of the¥100 billion or more and less than ¥1 trillion
Previous Fiscal Year
Number of Consolidated Subsidiaries as of the End
10 or more and fewer than 50of the Previous Fiscal Year

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 Update
Disclosure of Information on Minority Shareholder Protection and Group Management(1) Views and policies on group management at other affiliated companies, etc.
Honda Motor Co., Ltd. falls under the category of an other affiliated company and owns 21.88% of the Company’s voting rights.
In addition, the Honda Motor Group accounts for approximately 38% of the Group’s revenue. While maintaining a capital
relationship with the Company, Honda Motor Co., Ltd. has a policy of respecting the independence of the Company’s
management, giving due consideration to the support of an effective governance structure that effectively utilizes our independent
Outside Directors and the interests of minority shareholders such as by setting trading conditions based on the principle ofcompetition.
(2) Views and measures, etc. necessary from the perspective of protecting minority shareholders with respect to ensuring
independence from other affiliated companies, etc.
The Company continues to have a stable relationship with Honda Motor Co., Ltd. in terms of capital and business relations.
However, in terms of business activities, decisions are made based on the Company’s independent business judgment, by theCompany’s Board of Directors [ten Directors (including five independent Outside Directors, none of whom are dispatched from
Honda Motor Co., Ltd.)]. Thus, the Company ensures a degree of independence from Honda Motor Co., Ltd., and gives due
consideration to the interests of minority shareholders. Also, regarding the approach to determining sales prices to Honda MotorCo., Ltd., prices are negotiated and determined based on economic rationality and estimates taking into account factors such as
market prices and the Company’s production technology.

II.

Business Management Organization and Other Corporate Governance Systems regarding
Decision-making, Execution of Business, and Oversight in Management

1.

Organizational Composition and Operation
Corporate Governance System

Company with Supervisory Committee

6Directors
Number of Directors Stipulated in Articles of
12
Incorporation
Directors' Term of Office Stipulated in Articles of
1 year
Incorporation
Chairperson of the Board

President

Number of Directors

10Election of Outside Directors

ElectedNumber of Outside Directors

5

Number of Independent Directors

5Outside Directors’ Relationship with the Company (1) Update
Relationship with the Company*
Name

AttributesaKunihiro Koshizuka

From another company

Kazunori Kobayashi

From another company

Kazumoto Sugiyama

LawyerMayumi Yamamoto

CPA

Tae Kawashima

Lawyer

b

c

d

e

f

g

h

i

j

k

*Categories for “Relationship with the Company”.
(Use “○” 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; and “▲” when a close
relative of the director fell under the category in the past.)
a. Person who executes business of the Company or a subsidiary
b. Person who executes business or a non-executive director of a parent company
c. Person who executes business of a fellow subsidiaryd. Person/entity for which the Company is a major client or a person who executes business for such person/entity
e. Major client of the Company or a person who executes business for such clientf. Consultant, accounting expert, or legal expert who receives large amounts of cash or other assets in addition to director/Audit
and Supervisory Board Member compensation from the Company
g. Major shareholder of the Company (in cases where the shareholder is a corporation, a person who executes business of thecorporation)h. Person who executes business for a client of the Company (excluding persons categorized as any of d, e, or f above) (applies
to self only)
i. Person who executes business for another company holding cross-directorships/cross-auditorships with the Company (applies
to self only)
j. Person who executes business for an entity receiving contributions from the Company (applies to self only)
k. OtherOutside Directors’ Relationship with the Company (2) Update

Name
Kunihiro

Membership ofSupervisory
Committee

Designation as
Independent
Director〇

Supplementary Explanation of
the Applicable Relationship―――

7

Reasons for Appointment
Kunihiro Koshizuka was electedKoshizuka

as an Outside Director in the lightof his extensive experience andknowledge of technologicalstrategy, new business creation,and digital and scientifictechnology at corporate
management.
No conflict of interest of any
personal, financial, or commercial
nature exists between the
Company and him.
When electing Outside Directors,
the Company gives due
consideration to ensure that noconflict of interest exists between
them and the Company’s ordinary
shareholders and that there isindependence from the Company
in view of the Companies Act, thestandards set by financial
instruments exchanges, and thelike.
In accordance with therequirements of the Tokyo Stock
Exchange, he is designated as
independent officers and areregistered with the said stock
exchange as such.

Kazunori〇―――

Kobayashi

Kazunori Kobayashi was elected
as an Outside Director in the lightof his extensive experience andknowledge related to sales,business planning, and new
business creation at corporate
management.
No conflict of interest of any
personal, financial, or commercial
nature exists between the8Company and him.
When electing Outside Directors,
the Company gives due
consideration to ensure that noconflict of interest exists between
them and the Company’s ordinary
shareholders and that there isindependence from the Company
in view of the Companies Act, thestandards set by financial
instruments exchanges, and thelike.
In accordance with therequirements of the Tokyo Stock
Exchange, he is designated as
independent officers and areregistered with the said stock
exchange as such.
Kazumoto

〇

〇

―――

Sugiyama

Kazumoto Sugiyama was elected
as an Outside Director in the lightof his specialized expertise andextensive experience of corporate
legal affairs acquired as a lawyer.
No conflict of interest of any
personal, financial, or commercial
nature exists between the
Company and him.
When electing Outside Directors,
the Company gives due
consideration to ensure that noconflict of interest exists between
them and the Company’s ordinary
shareholders and that there isindependence from the Company
in view of the Companies Act, thestandards set by financial
instruments exchanges, and the
like.

9

In accordance with therequirements of the Tokyo Stock
Exchange, he is designated as
independent officers and areregistered with the said stock
exchange as such.
Mayumi〇〇―――

Yamamoto

Mayumi Yamamoto was elected
as an Outside Director in the lightof her specialized expertise andextensive experience of corporate
finance and accounting affairs
acquired as a Certified Public
Accountant.
No conflict of interest of any
personal, financial, or commercial
nature exists between the
Company and her.
When electing Outside Directors,
the Company gives due
consideration to ensure that noconflict of interest exists between
them and the Company’s ordinary
shareholders and that there isindependence from the Company
in view of the Companies Act, thestandards set by financial
instruments exchanges, and thelike.
In accordance with therequirements of the Tokyo Stock
Exchange, he is designated as
independent officers and areregistered with the said stock
exchange as such.

Tae Kawashima

〇

〇

―――

Tae Kawashima was elected as an
Outside Director in the light ofher specialized expertise andextensive experience of corporate

10

legal affairs acquired as a lawyer.
No conflict of interest of any
personal, financial, or commercial
nature exists between the
Company and her.
When electing Outside Directors,
the Company gives due
consideration to ensure that noconflict of interest exists between
them and the Company’s ordinary
shareholders and that there isindependence from the Company
in view of the Companies Act, thestandards set by financial
instruments exchanges, and thelike.
In accordance with therequirements of the Tokyo Stock
Exchange, she is designated as
independent officers and areregistered with the said stock
exchange as such.

Supervisory Committee
Composition of Supervisory Committee and Attributes of the Chairperson
All Committee
Members
Supervisory
Committee

Full-time Members
41

Inside Directors

Outside Directors
1

3Committee Chair
Inside Director

Appointment of Directors and/or Staff to Support the
Appointed
Supervisory Committee

Matters Concerning Independence of Said Directors and/or Employees from Executive Officers
The Company shall establish the Internal Audit Division as an organization to assist the duties of the Audit andSupervisory Committee. The Audit and Supervisory Committee shall have responsibility for the Internal Audit Division,and the appointment, dismissal, personnel change, and revision of wages of employees in the Internal Audit Division shallbe determined by the Board of Directors upon consent of the Audit and Supervisory Committee. The Company shall not11have Directors who assist the Audit and Supervisory Committee in its duties.

Status of Coordination between Supervisory Committee, Accounting Auditor, and Internal Audit Department
In accordance with auditing policies, plans and division of responsibility established by the Audit and Supervisory
Committee, each Audit and Supervisory Committee Member participates in meetings of the Board of Directors and otherimportant meetings, and audits and oversees the execution of duties of the Directors and the development and operation of
the Company’s internal control system by examining the status of operations and assets of the Company.
The Audit and Supervisory Committee shall exchange opinions with Representative Director, Directors and Accounting
Auditor regularly or whenever necessary.The Audit and Supervisory Committee shall conduct audits effectively bycooperating closely with the Internal Audit Division.

Voluntary Established Committee(s)Voluntary Establishment of Committee(s) equivalent toEstablished
Nomination Committee or Remuneration Committee

Status of Voluntarily Established Committee(s), Attributes of Members Constituting the Committee and the Committee
Chair (Chairperson)
Committee’s
Name
Voluntarily
Established
Committee
Equivalent toNomination
Committee

Nomination andVoluntarily
Established
Committee
Equivalent toRemuneration
Committee

Nomination andAll
Members

Full-timeMembers

InsideDirectors

OutsideDirectors

OutsideExperts

Other

6

1

1

5

0

0

Inside Director

6

1

1

5

0

0

Inside Director

Chairperson

Remuneration
Advisory
Committee

Remuneration
Advisory
Committee

Supplementary Explanation Update
The Nomination and Remuneration Advisory Committee has been established to strengthen the independence and objectivity of
the Board of Directors’ functions pertaining to the nomination and remuneration of Directors, etc. and the accountability of theBoard of Directors and to enhance its corporate governance.
The Nomination and Remuneration Advisory Committee comprises six Directors, of whom five are Outside Directors and thePresident and Representative Director serves as its chairperson, and deliberates and reports on findings pertaining to thenomination and remuneration of Directors, etc.
In FY2024, the committee convened four meetings to deliberate on the composition the election of Directors and a review of12remuneration for officers.

Matters Concerning Independent Directors
Number of Independent Directors

5

Other Matters Concerning Independent Directors
The company designates all outside officers who meet the qualifications of independent officers as independent officers.

Incentives
Implementation Status of Measures related toIntroduction of Performance-linked Remuneration Scheme,Other
Incentives Granted to Directors

Supplementary Explanation for Applicable Items
Please refer to "Director Remuneration".

Persons Eligible for Stock Options

Supplementary Explanation for Applicable Items―――

Director Remuneration
Status of Disclosure of Individual Directors’

No Disclosure for any Directors

Remuneration

Supplementary Explanation for Applicable Items
The total amount is disclosed in the annual securities report and business report.

Policy on Determining Remuneration Amounts andEstablished
the Calculation Methods Thereof

Disclosure of Policy on Determining Remuneration Amounts and the Calculation Methods Thereof
Policy regarding the determination of details of remuneration, etc. for individual Directors is as follows.
1. Basic policy
The Company’s remuneration for Directors is a remuneration system that is linked to business performance and shareholder
benefit so that it can function as a sound and appropriate incentive for sustainable growth. The Company’s basic policy on
remuneration for individual Directors is to pay reasonable levels based on factors such as work responsibilities. Remuneration for

13

Directors (excluding Outside Directors and Directors who are Audit and Supervisory Committee Members) comprises basic
remuneration, remuneration based on individual assessment, performance-based bonus, and share-based remuneration.
Remuneration for Outside Directors and Directors who are Audit and Supervisory Committee Members comprises only basic
remuneration considering the duties involved in this role.
2. Basic remuneration
Basic remuneration is a fixed monthly remuneration paid in cash and is determined comprehensively taking into account factors
including position, work responsibilities, and levels at other companies.
3. Remuneration based on individual assessment and performance-based bonus
Remuneration based on individual assessment is cash remuneration based on factors such as a qualitative assessment of theindividual Director’s contribution to business performance which is paid monthly as an addition to basic remuneration in thefollowing business year.
Performance-based bonus is cash remuneration that reflect key performance indicators (KPI) aimed at enhancing awarenessregarding improving business performance each business year. An amount calculated in accordance with consolidated businessprofit for each business year is paid as bonus at a fixed time each year. The Nomination and Remuneration Advisory Committee
deliberates on any special factors that should be taken into consideration.
4. Share-based remuneration
Share-based remuneration is the granting of common shares subject to transfer restrictions (“restricted shares”) until the time ofretirement at a fixed time each year with the purpose of promoting shared value with shareholders.
5. Ratio of remuneration
This is considered by the Nomination and Remuneration Advisory Committee using remuneration levels, etc. at companies of asimilar size and that belong in the same sector and business category as the Company as benchmarks. The target ratio of different
types of remuneration, etc. at standard times is basic remuneration : remuneration based on individual assessment :performance-based bonus : share-based remuneration = 65:10:10:15.
6. Method for determining details of remuneration, etc.
Regarding items related to remuneration for officers, remuneration for Directors (excluding Directors who are Audit andSupervisory Committee Members) is decided by resolution of the Board of Directors within the scope of the maximum amountapproved by the General Meeting of Shareholders after receiving recommendations from the Nomination and Remuneration
Advisory Committee, of which Outside Directors form a majority, to ensure appropriateness and the objectivity and transparencyof the decision making process. Remuneration for Directors who are Audit and Supervisory Committee Members is determinedthrough discussions among Directors who are Audit and Supervisory Committee Members within the scope of the maximum
amount approved by the General Meeting of Shareholders.
The determination of the specific amount of remuneration for individual Directors has been entrusted to the President andRepresentative Director by resolution of the Board of Directors and the President and Representative Director makes thesedecisions based on recommendations from the Nomination and Remuneration Advisory Committee.

Support System for Outside Directors
The company provides board minutes and other relevant information to outside directors in a timely manner.
The Company shall establish the Internal Audit Division as an organization to assist the duties of the Audit and Supervisory

14

Committee.

Statuses of Persons who have Retired as Representative Director and President, etc.
Information on Persons Holding Advisory Positions (Sodanyaku, Komon, etc.) after Retiring as Representative Director andPresident, etc.
Name――

Job title/
position――

Responsibilities――

Terms and Conditions of Employment(Full/part time, with/without
remuneration, etc.)

Date when former
role as president/
CEO ended

――

――

Term
――

Number of Persons Holding Advisory Positions (Sodanyaku, Komon, etc.)
0
After Retiring as Representative Director and President, etc.

Other Related Matters――

2.

Matters Concerning Functions of Business Execution, Auditing and Supervision, Nomination, andRemuneration Decisions (Overview of Current Corporate Governance System) Update
The Board of Directors comprises ten Directors, of whom five are Outside Directors, and the President and Representative
Director serves as its chairperson. In addition to making decisions on matters prescribed by laws and regulations and execution ofimportant operations, the Board of Directors oversees the execution of duties of the Directors. The Audit and Supervisory
Committee is composed of four Directors who are Audit and Supervisory Committee Members, of whom three are Outside
Directors, and the Audit and Supervisory Committee Member (full time) serves as its chairperson. In accordance with auditing
policies, plans and division of responsibility established by the Audit and Supervisory Committee, each Audit and Supervisory
Committee Member participates in meetings of the Board of Directors and other important meetings, and audits and oversees theexecution of duties of the Directors and the development and operation of the Company’s internal control system by examining
the status of operations and assets of the Company. As for the Accounting Auditor, the Company has concluded an audit contract
with Yasumori Audit Corporation to undergo accounting audits in compliance with the Companies Act and Financial Instruments
and Exchange Act. In addition, the Nomination and Remuneration Advisory Committee comprises six Directors, of whom fiveare Outside Directors and the President and Representative Director serves as its chairperson, and deliberates and reports on
findings pertaining to the nomination and remuneration of Directors, etc.
In FY2024, the Company convened nine meetings of the Board of Directors, twelve meetings of the Audit and Supervisory
Committee and four meetings of the Nomination and Remuneration Advisory Committee.
In accordance with the provisions of Article 427, paragraph 1 of the Companies Act, the Company has concluded agreements
limiting the extent of any liability for statutory compensation as stipulated in Article 423, paragraph 1 of the said Act with theOutside Directors and the Directors who are Audit and Supervisory Committee Members. The limits on compensation stipulated
in these agreements are the minimum amounts prescribed in Article 425, paragraph 1 of the said Act.

15

3. Reasons for Adoption of Current Corporate Governance System
With the aim of strengthening the oversight function of the Board of Directors, improving the transparency and soundness ofmanagement and accelerating decision-making, the Company has adopted an institutional design of a company with an Audit andSupervisory Committee. The Company has a Board of Directors to oversee the execution of duties of the Directors. The Board of
Directors comprises Directors who are well versed in the operations of the Company and Outside Directors with an objective,
broad-ranging and in-depth perspective. The Nomination and Remuneration Advisory Committee has been established tostrengthen the independence and objectivity of the Board of Directors’ functions pertaining to the nomination and remuneration of
Directors, etc. and the accountability of the Board of Directors. In light of its business contents and scale, the Company considers
its current corporate structure as appropriate.

III.

Implementation of Measures for Shareholders and Other Stakeholders

1. Measures to Vitalize the General Shareholder Meetings and Facilitate Exercise of Voting Rights
Supplementary Explanation
The notice of the general meeting of shareholders is sent earlier than the
Early Posting of Notice of the General

statutory deadline.

Shareholders Meeting

In addition, prior to send, it is posted on our website and submitted to theTokyo Stock Exchange as public documents.

Scheduling

of

the

GeneralShareholders

Meeting During Non-Peak Days

The ordinary general meeting of shareholders is held early in consideration of
the administrative schedule.
It is possible to exercise voting rights via the Internet using PC andElectronic Exercise of Voting Rights
smartphone.
Participation in a Platform for the Electronic

The Company participates in the electronic voting platform for institutional

Exercise of Voting Rights and Other Initiatives

investors operated by ICJ Inc.

to Enhance Environment for Institutional
Investors to Exercise Voting Rights
The Company has prepared a notice of general meeting of shareholders inProvision of Notice (or Summary of Notice) of

English and posted it on the Company’s website.

the General Shareholders Meeting in English

In addition, it has been submitted to the Tokyo Stock Exchange as public
documents.
Since 2022, the Company has been conducting live streaming the generalOthermeeting of shareholders via the Internet for shareholders.

2.

Status of IR-related Activities
Supplementary Explanation

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Explanation by arepresentative
director or arepresentative
executive officerFormulation and Publication of Disclosure

It is announced on the Company’s website.

Policies
Financial results briefings are held twice a year at the end
Regular Investor Briefings held for Individualof the fiscal year and the end of the second quarter, andInvestors

theAvailable
President

andRepresentative

Director

gives

explanations.
The Company posts statutory disclosure materials, timely
Online Disclosure of IR Information

disclosure materials, and other IR materials on the
Company's website.

Establishment of Department and/or Placement
Corporate Planning Department of the Planning Divisionof a Manager in Charge of IR

3.

Status of Measures to Ensure Due Respect for Stakeholders
Supplementary Explanation
Establishment of Internal Rules Stipulating

The basic policy of the Group's corporate philosophy is “F.C.C. Co., LTD. isRespect for the Position of Stakeholders

committed to making a contribution to society by supplying products andservices that make the best of ideas and technology to satisfy customers inevery way,” and The Company shall establish a charter of corporate conductthat is shared by the entire Group and implement it thoroughly.

Implementation of Environmental Preservation

The Group considers its impact on the environment, society, and the economy

Activities and CSR Activities, etc.

and is implementing various initiatives as part of its long-term corporate
strategy to fulfill its social responsibility and resolve social issues.

Formulation of Policies, etc. on Provision of

We have created a sustainability report and posted it on our website.

Information to Stakeholders

IV. Matters Concerning the Internal Control System
1. Basic Views on Internal Control System and Status of Development
Basic policy regarding the internal control system
The Company resolved the following basic policy regarding the systems to ensure the proper execution of operations prescribedin the Companies Act at a meeting of the Board of Directors.
•System to ensure that the execution of duties by Directors and employees of the Company and Group companies complies withlaws and regulations and the Articles of Incorporation
The Company shall establish a charter of corporate conduct that is shared by the entire Group and implement it thoroughly toensure that the execution of duties by Directors and employees complies with laws and regulations and the Articles ofIncorporation and earns the trust of society.
Apart from appointing the Compliance Officer, who is in control of compliance, the Company shall establish an internal reporting
system to promote compliance.

17•System for storing and managing information on the execution of duties by the Company’s Directors
The Company shall establish the information management policy and various regulations, and appropriately store and manage
information regarding the execution of duties by the Directors.
•Regulations and other systems for managing risk of losses of the Company and Group companies
The Company shall appoint a Risk Management Officer, who is in control of risk management, identify risk in the Group’sbusiness activities and develop a system for the appropriate management of the identified risk.
The Company’s Board of Directors shall evaluate the management risk of important matters for the entire Group and determine
the response.
•System to ensure the efficient execution of duties by Directors of the Company and Group companies
A meeting of the Board of Directors of the Company shall be held once or more in three months and on an extraordinary basis
whenever necessary to take decisions on legally required matters and important operations, and oversee the execution of duties by
the Directors.
The Company shall expedite and increase the efficiency of the management decision-making process using meetings such as
management meetings and the executive officer system.
The Company shall draw up a medium-term management plan and annual business plan to manage the progress of operations andpromote the effective use of management resources of the entire Group.
The Company shall establish segregation of duties, reporting lines, and other organizational standards in the regulations for
executing duties, etc.
•System for reporting from Group companies to the Company and other systems to ensure the proper execution of operations
within the corporate group comprising the Company and Group companies
The Company shall establish the charter of corporate conduct, group policies, group guidelines and various regulations with theaim of properly managing Group companies in accordance with their scale of business and significance, etc.
The Company shall oblige Group companies to report to it on a regular basis and develop a system for having them reportspecified important matters promptly.
The Internal Audit Division of the Company shall audit the Company and Group companies regularly or whenever necessary.
•Matters concerning Directors and employees who assist the Audit and Supervisory Committee of the Company in its duties
The Company shall establish the Internal Audit Division as an organization to assist the duties of the Audit and Supervisory
Committee. The Audit and Supervisory Committee shall have responsibility for the Internal Audit Division, and the appointment,
dismissal, personnel change, and revision of wages of employees in the Internal Audit Division shall be determined by the Boardof Directors upon consent of the Audit and Supervisory Committee. The Company shall not have Directors who assist the Audit
and Supervisory Committee in its duties.
•System for reporting to the Audit and Supervisory Committee of the Company
Audit and Supervisory Committee Members shall attend meetings of the Board of Directors and other important meetings, and beallowed to request Directors and employees of the Company and Group companies to report to them whenever necessary.
Upon receiving a request from the Audit and Supervisory Committee for a report, the Director or employee shall report to it
promptly and appropriately.
The Company shall establish an internal reporting system to ensure an appropriate system for reporting to the Audit andSupervisory Committee.

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The Company shall develop a system to prohibit unfavorable treatment of a reporting party in its operation rules for the internalreporting system.
•Matters regarding the policy for handling expenses and debts incurred for executing duties by the Audit and Supervisory
Committee Members of the Company
If the Audit and Supervisory Committee requests payment of expenses needed for executing its duties, the Company shall pay
such expenses promptly.
The Audit and Supervisory Committee shall factor expenses deemed necessary for executing its duties into the budget in advance.
Provided, however, that the Audit and Supervisory Committee shall be allowed to request reimbursement of emergency or
extraordinary expenses after the fact.
•Other systems to ensure audits by the Audit and Supervisory Committee of the Company are conducted effectively
The Audit and Supervisory Committee shall exchange opinions with Representative Director, Directors and Accounting Auditor
regularly or whenever necessary.
The Audit and Supervisory Committee shall conduct audits effectively by cooperating closely with the Internal Audit Division.

2. Basic Views on Measures for Eliminating Anti-Social Forces and Status of Development
The Company recognizes that taking a resolute stance against antisocial forces is an extremely important issue from theperspective of corporate social responsibility.
The Company has taken appropriate measures to prevent damage caused by antisocial forces through the operation of its internal
control system and will continue to strengthen its internal system and cooperation with external specialized organizations.

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

Not Adopted

Supplementary Explanation for Applicable Items――

2. Other Matters Concerning the Corporate Governance System
Overview of timely disclosure system
・The Company has established its Disclosure Policy. The basic policy of disclosure and the method of information disclosure areas follows:
Basic policy of disclosure
In addition to disclosing information to shareholders and investors in accordance with the Companies Act, the Financial
Instruments and Exchange Act, and the Timely Disclosure Rules stipulated by the Tokyo Stock Exchange, the Company strives topromptly provide information that it judges may be effective in helping understand the Company, in a transparent, fair andongoing manner.
Method of information disclosure

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Information subject to the Timely Disclosure Rules is disclosed through the Timely Disclosure Network (TDnet) system provided
by the Tokyo Stock Exchange in accordance with those rules. Publicly disclosed information will be posted promptly on the
Company’s website.
・Information on financial results, decisions, and facts which occurred
The Company discloses information on financial results, decisions, and facts which occurred as determined by the Board of
Directors. The Audit and Supervisory Committee and the Internal Audit Division conduct monitoring as appropriate.

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