Corporate Governance Report
Last update：December 17, 2018

Takara Bio Inc.

Koichi Nakao, President
Contact: Shuichiro Matsuzaki,
Executive Vice President
Securities Code Number: 4974
http://www.takara-bio.com

The current status of the Takara Bio (The Company)’s corporate governance is as follows.

I. Basic Concept of Corporate Governance and Basic Information including Capital Structure andCorporate Attributes
1. Basic Concept
Guided by Takara Bio’s corporate philosophy of “contributing to the health of humankind through the development of revolutionary
biotechnologies such as gene therapy,” the Company recognize a basic policy of achieving sustainable growth and increasing corporate value
over the medium- to long-term by fulfilling its corporate social responsibility and living up to the expectations of all stakeholders including
shareholders. The Company works to strengthen corporate governance to undertake honest and fair business activities with ensured transparency,
improved efficiency and agility of management.

[Reasons for Non-compliance with the Principles of the Corporate Governance Code] Update(Supplementary Principle 4.1.3, Supplementary Principle 4.3.2 and Supplementary Principle 4.3.3)
The Company recognizes that the establishment of processes for the selection of the successor of the CEO and other positions and the development of thenext generation of senior management are an important business topic in order to boost medium-to-long-term corporate value and achieve sustainable growth.
Executive Officers who are not Directors shall attend the Board of Directors meetings as management in order to participate as observers in the crafting ofcompany visions and specific business strategies.
Requirements for and the selection of a development plan of CEO, etc., procedures related to appointment or dismissal of members, and the supervisory
functions of the Board of Directors shall be comprehensively discussed based on the business environment surrounding the Company and corporate culture
and other factors.
(Supplementary Principle 4.2.1)
The Company has implemented a cash remuneration system linked to medium-to-long-term earnings. However, it has not implemented a company stock
remuneration system. The Company acknowledges that incentives to Directors for sustainable growth is an important business topic. The Company willcomprehensively consider issues related to remuneration determination methods, including the balance of cash and company stock remuneration.
(Supplementary Principle 4.10.1)
Upon the Board of Directors deliberating about important matters, especially matters related to the nomination of senior management and candidates for
Directors, as well as related party transactions, the Company will seek the appropriate participation and advice of independent External Directors. This system
is expected to maintain the independence and objectivity of the functions of the Board of Directors at a set level. The Company shall consider other measures
as needed, including voluntary measures, in order to further strengthen the independence and objectivity of the Board of Directors meetings.

[Disclosure Based on the Principles of the Corporate Governance Code]

The Company has formulated the “Corporate Governance Policy” with respect to fundamental policies and situation of efforts to corporate governanceincluding disclosure based on the principles of the Corporate Governance Code and posted it on the website (available in Japanese only)
Takara Bio “Corporate Governance”
URL: http://ir.takara-bio.co.jp/ja/management/governance.html

2. Capital Structure
Foreign Shareholding Ratio

From 10% to less than 20%[Status of Major Shareholders] Update
Name

Number of Shares Held

Ratio (%)

Takara Holdings, Inc.

73,350,000

60.91

Japan Trustee Services Bank (trust account)

4,226,500

3.51

The Master Trust Bank of Japan, Ltd. (trust account)

2,396,500

1.99Japan Trustee Services Bank, T5

1,020,200

0.85

STATE STREET LONDON CARE OF STATE STREET BANK AND TRUST, BOSTONSSBTC A/C UK LONDON BRANCH CLIENTS-UNITED KINGDOM

1,006,300

0.84Japan Trustee Services Bank, T2

820,300

0.68

Japan Trustee Services Bank, T1

762,400

0.63

BBH/SUMITOMO MITSUI TRUST (UK) LIMITED FOR SMT TRUSTEES (IRELAND)
LIMITED FOR TOKIO MARINE JAPANESE EQUITY FOCUS CLT AC

707,500

0.59

JP MORGAN CHASE BANK 385151

676,644

0.56

GOVERNMENT OF NORWAY

629,500

0.52

Controlling Shareholders (excluding Parent Company)
Parent Company―――
Takara Holdings Inc. (Listing : Tokyo) (Code 2531)

Supplemental Information―――

3. Corporate Attributes
Listed Stock Exchanges and Market Segment

First Section of the Tokyo Stock Exchange

Fiscal Year-End

MarchBusiness Sector

Chemicals

Number of Employees (Consolidated) at the End of thePrevious Fiscal YearNet Sales (Consolidated) for the Previous Fiscal Year
Number of Consolidated Subsidiaries at the End of thePrevious Fiscal Year

1,000 or more
¥10 billion or more and less than ¥100 billion
10 or more and less than 50

4. Policy on Measure to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholders Update
The Company is engaged in business operations which maintain its uniqueness and independence in the Takara Holdings Group. The Company does notconduct transactions with the parent company which benefit the parent company and harm the Company or minority shareholders. With its parent company,
the Company has transactions including the Company’s license for use of trademarks, outsourcing of computer-related services and lease of information
related equipment. The Company also has transactions with other parent group companies, including the sale of products and leasing of real estate (theCompany’s office buildings). However, the Company maintains a basic policy of deciding transaction details, including monetary sums, after discussing andnegotiating based on the individual case and market values, as it does when conducting transactions with other companies.

5. Special Circumstances Which May Have Material Impact on Corporate Governance Update
As of September 30, 2018, Takara Holdings Inc. (listed on the First Section, Tokyo Stock Exchange; securities code 2531) is the parent company of theCompany, owning 60.92% of the voting rights in the Company. The relationship between the Company and Takara Holdings is as follows:
1. Position of the Company in the Takara Holdings Group (Takara Holdings and its associated companies)
The extraordinary general meeting of shareholders of Takara Shuzo Co., Ltd. (now Takara Holdings Inc.), held on February 15, 2002, approved the proposal
to spin off the operations of the company’s alcoholic beverage and food business, and the biotechnology business with the aim of making the most of thespecial characteristics of each respective business as well as creating a business environment for increasing growth potential and competitiveness in both. On
this basis, Takara Shuzo and the Company were established on April 1, 2002, through a corporate split, with each company becoming a fully owned subsidiaryof Takara Holdings. Since then, Takara Holdings decreased the ownership of voting shares in the Company to 60.92%, through a third-party allotment of
new shares by private and public offering.
The Takara Holdings Group consists of Takara Holdings Inc., which is a pure holding company, and 65 affiliated companies (63 subsidiaries and 2 associatedcompanies). Within the Group, the Company is positioned as a subsidiary specializing in the biotechnology business, and it promotes the biotechnology
business along with its 11 affiliated companies (subsidiaries).
2. The food business of the Takara Holdings Group
Takara Healthcare Inc., which specializes in marketing and sales of functional foods of Takara Holdings Group companies, was founded on September 7,
2006, as a 100%-owned subsidiary of Takara Holdings Inc. Following the establishment of Takara Healthcare, the Company appointed Takara Healthcare
as its sales agent for functional foods on October, 1, 2006. Since then, the Company’s functional foods were sold to customers through Takara Healthcare,but the type of transactions changed to the outsourcing and contracting of manufacturing and R&D in April 2016. For the fiscal year ended March 31, 2018,
the Company’s transactions with Takara Healthcare amounted to ¥845 million.
3. Management of Group companies by Takara Holdings Inc.
Takara Holdings Inc. has established and operates the Takara Holdings Group Company Management Rules from the standpoint of consolidated business
management. However, its objective is to maintain the independence and autonomy of Takara Holdings Group companies while seeking to maximize thecorporate value of the entire Takara Holdings Group. The rules are also applicable to the Company, and the Company reports on the decisions made at themeetings of its Board of Directors to Takara Holdings. However, the Company is not required to gain prior approval from Takara Holdings for the resolutionsof its Board of Directors, and runs its business operations independently.
Furthermore, various meetings have been established within the Group. Those pertinent to the Company are the Group Strategy Meeting and the
Biotechnology Business Report Meeting. These meetings are intended to foster reporting between Group companies. In their current form, they do not impede
the independence and autonomy of the Company.
The current officers who hold positions in both the Company and Takara Holdings are as follows:
Hisashi Omiya (Chairman of the Company, Representative Director and Chairman of Takara Holdings Inc.)
Koichi Nakao (Representative Director and President of the Company, Director of Takara Holdings Inc.)
As a Director of Takara Shuzo Co., Ltd, Hisashi Omiya contributed to the management of the biotechnology business before the Company was established.
The experience and knowledge developed in this role was determined to be useful for the Company. Koichi Nakao was also appointed Director from aperspective of consolidated management in the holding company structure of Takara Holdings Inc. These appointments were not intended to give Takara
Holdings Inc. control over the Company.

II. Status of Business Management Organizations Concerning Business Decision-making,Execution and Supervision, and Other Corporate Governance Systems
1. Organizational Composition and Operation
A company with Board of Auditors (Audit & Supervisory Board)

Form of Organization【Matters Related to Members of the Board】
Number of Members of the Board Stipulated in Articles
of Incorporation

10

Term of Office for Members of the Board Stipulated in
Articles of Incorporation

1 yearChairman of the Board of Directors

President

Number of Members of the Board

8

Appointment of External Members of the Board
Number of External Members of the Board
Number of External Members of the Board
Designated as Independent Executive

Appointed
22

Relationship with Company (1)NameAttribute

Jawahalal BhattaRelationship with Company (※)
b c d e f g h i jkFrom other Company

Nobuko Kawashima
Academic* Category for the relationship with the Company* “○” is put if the principal presently satisfies or has recently satisfied the condition, and “∆” is put if the principal satisfied the condition in thepast.
* “●” is put if a close relative presently satisfies or has recently satisfied the condition, and “▲” is put if a close relative satisfied the condition in the
past.
a person who executes business in a listed company or a subsidiary of a listed companyb A person who executes business or a non-executive director in the parent company of a listed companyc A person who executes business in a sister company of a listed company
d A supplier of which a listed company is a major customer, or, if the supplier is a corporation, a person who executes
business in the corporatione A major customer of a listed company, or, if the customer is a corporation, a person who executes business in the corporationf A consultant, professional accountant or lawyer who receives a large amount of money and other economic benefits otherthan officers’ compensation from a listed company
g A major shareholder of a listed company (if the major shareholder is a corporation, a person who executes business in the corporation)h A person who executes business (limited to the principal) in a corporation that is a customer of a listed company other thancustomers falling in either category of d, e and f above
i A person who executes business (limited to the principal) in a corporation at which an External officer of the company
concurrently has a position of External officer
j A person who executes business (limited to the principal) in a corporation to which a listed company offers donationk Others

Relationship with Company (2)Name

Jawaharlal Bhatt

Independent
Director○

Supplementary Explanation
to Corresponding Item

Independent Director

Reason for Appointment
Jawaharlal Bhatt possesses abundant experience andknowledge gained through his involvement with business
operation and corporate management in medical andhealthcare-related companies overseas. He meets the criteria
for candidates for External Director established by theCompany, and is expected to apply his expert knowledge tostrengthen the management system of the Company. The
Company considers that Bhatt maintains the attributes ofneutrality and fairness as an independent director who is
without any fact itemized by the Tokyo Stock Exchange asfacts that could cause conflicts of interest against commonshareholders, and who satisfies the Company’s criteria for
independence of External Members of the Board. Therefore,

the Company nominated him as a candidate to continue serving
as an independent Director.

○

Nobuko Kawashima

Nobuko Kawashima has extensive research experience insubjects including creative economy and corporate social
responsibility. She meets the criteria for candidates for External
Director established by the Company, and is expected to apply
her expert knowledge to strengthen the management system of
the Company. The Company considers that Kawashima
maintains the attributes of neutrality and fairness as anindependent director who is without any fact itemized by the
Tokyo Stock Exchange as facts that could cause conflicts ofinterest against common shareholders, and who satisfies theCompany’s criteria for independence of External Membersof the Board. Therefore, the Company nominated her as a
candidate to continue serving as an independent Director.

Independent Director

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

None【Matters Related to Audit & Supervisory Board Members】
Establishment of the Audit & Supervisory Board

Established

Number of Audit & Supervisory Board Members
Stipulated in Articles of Incorporation

5

Number of Audit & Supervisory Board Members

5

Cooperation among Audit & Supervisory Board Members, Accounting Auditor and Internal Auditing Department Update
The company’s Audit & Supervisory Member
Members work with the Internal Auditing Department (three full-time Internal Auditors) and verify the effectiveness of Internal Control System. Further,
the Company meets with the Accounting Auditor, Deloitte Touche Tohmatsu LLC several times a year, in order to make the mutual report concerning audit
plan, results, etc., coordinated audit and exchange information.
The Internal Auditing Department makes the audit of the Company and its subsidiaries with Audit & Supervisory Board Members from standpoint oflegality and law compliance. The results are reported to President & Representative Director, and are shared with Takara Bio Compliance Committee andInternal Management Department such as Finance Department and others to operate the Internal Control System.

Appointment of the External Audit & Supervisory Board

Appointed

Number of External Audit & Supervisory Board Members
Stipulated in Articles of Incorporation

3

Number of External Audit & Supervisory Board
Members who are Independent Auditors

3

Relationship with Company (1) Update
Name

Attribute

Kunihiko Kamata

Attorney

Yasuo Himeiwa

Certified public accountant

Relationship with Company (※)
a b c d e f g h i j k lmMasaaki Makikawa
Academic* Category for the relationship with the Company* “○” is put if the principal presently satisfies or has recently satisfied the condition, and “∆” is put if the principal satisfied the condition in thepast.
* “●” is put if a close relative presently satisfies or has recently satisfied the condition, and “▲” is put if a close relative satisfied the condition in the
past.
a. A person who executes business in a listed company or a subsidiary of a listed company
b. A non-executive director or an accounting advisor in a listed company or a subsidiary of a listed company
c. A person who executes business or a non-executive director in the parent company of a listed company
d. A company Auditor of a parent company of a listed company
e. A person who executes business in a sister company of a listed company
f. A supplier of which a listed company is a major customer, or, if the supplier is a corporation, a person who executes business in the corporation
g. A major customer of a listed company, or, if the customer is a corporation, a person who executes business in the corporationh. A consultant, professional accountant or lawyer who receives a large amount of money and other economic benefits other than officers’
compensation from a listed company
i. A major shareholder of a listed company (if the major shareholder is a corporation, a person who executes business in the corporation)
j. A person who executes business (limited to the principal) in a corporation that is a customer of a listed company other than customers falling in either

category of f, g and h above

k. A person who executes business (limited to the principal) in a corporation at which an External officer of the company concurrently has a positionof External officer

l. A person who executes business (limited to the principal) in a corporation to which a listed company offers donation
m. . Other

Relationship with Company (2) Update

Name

Kunihiko Kamata

Yasuo Himeiwa

Masaaki Makikawa

Independent Supplementary Explanation
Director
Corresponding Item

○

○

○

Reason for Appointment
Kunihiko Kamata possesses abundant experience andknowledge as an attorney-at-law. He meets the criteria forcandidates for External Director established by theCompany, and is expected to apply his expert knowledge tothe management of the Company and express his opinions at
the Board of Directors meetings and the Board of Auditors froman independent and objective standpoint, thereby ensuring
effective management oversight. The Company considers that
Kamata maintains the attributes of neutrality and fairness as
an independent director who is without any fact itemized by
the Tokyo Stock Exchange as facts that could cause conflictsof interest against common shareholders, and who satisfies
the Company’s criteria for independence of External
Members of the Board. Therefore, the Company nominated her
as a candidate to continue serving as an independent Director.

Independent director

Yasuo Himeiwa possesses abundant experience andknowledge in subjects including financial affairs andaccounting as a certified public accountant. He meets thecriteria for candidates for External Director established by
the Company, and is expected to apply his expert knowledge
to the management of the Company and express his opinions
as to management transparency and objectivity. The
Company considers that Himeiwa maintains the attributes ofneutrality and fairness as an independent director who is
without any fact itemized by the Tokyo Stock Exchange asfacts that could cause conflicts of interest against commonshareholders, and who satisfies the Company’s criteria for
independence of External Members of the Board. Therefore,
the Company nominated her as a candidate to continue serving
as an independent Director.

Independent director

Masaaki Makikawa engages in research operation of thegovernment projects and a number of contracted research andacademic-industry collaborative research. in the field of
medical engineering and biomedical engineering. He meets thecriteria for candidates for External Director established by
the Company, and is expected to apply his expert knowledge
to the management of the Company. Company considers that
Makikawa maintains the attributes of neutrality and fairness
as an independent director who is without any fact itemizedby the Tokyo Stock Exchange as facts that could cause
conflicts of interest against common shareholders, and who
satisfies the Company’s criteria for independence ofExternal Members of the Board. Therefore, the Company
nominated her as a candidate to continue serving as anindependent Director.

Independent director【Independent Executives】
Number of Independent Executives

5

Other Items Related to Independent Executives
The Company has elected all External Directors who meet these criteria as Independent Directors.

【Matters Related to Incentives】
Provision of Incentives to Members of the Board
Supplementary Explanation Relating to the Relevant Item

Not adopted

The resolution is made at meeting of the Board of Directors to determine amounts of remuneration for Board Members within amount limit of remuneration
based on resolution at the General Meeting of Shareholders, considering the relevant position and business performance comprehensively.

Recipients of Stock Options
Supplementary Explanation Relating to the Relevant Item―――

【Matters Related to Remuneration to Members of the Board】
Disclosure Status

Note disclosed

Supplementary Explanation Relating to the Relevant Item Update
The total amounts of remuneration for Directors for fiscal year 2018 are 242 million JPY.

Policy for Determining Amount and Calculation
Method of Remuneration

Not Established

Disclosure of Policy on Determining Remuneration Amounts and Calculation Method―――【Supporting System for External Directors and/or the Audit & Supervisory Board Members】 Update
Upon the convocation of a Board of Directors meeting, External Directors of the Company will be given proposals, other related materials before, and direct
briefings from leading Directors as needed. In this system, External Directors monitor the execution of duties of Directors.
In this system, the Company’s External Audit & Supervisory Board Members shall attend the Board of Directors meetings and other important meetings,
receive reports on execution of duties by Directors, etc., view important documents, and audit the execution of duties. Furthermore, Internal Auditing
Department shall provide supplemental explanations as needed, including collaborating with the Internal Auditing Department (three full-time Auditors).

2．Matters on Functions of Business Execution, Audit and Supervision, Nomination, Remuneration Decisions (Overview ofCurrent Corporate Governance System) Update
The Company has adopted an Audit & Supervisory Board system, and three of the five Audit & Supervisory Board Members are external. In this system,
Audit & Supervisory Board Members shall attend the Board of Directors meetings and other important meetings, receive reports on execution of duties byDirectors, etc., view important documents, and audit the execution of duties.
The Board of Directors consists of eight Directors (including two External Directors) who meet whenever necessary in addition to the regular monthly
Board of Directors meetings. The Board makes decisions on management policies, matters stipulated by laws and regulations, and important issues concerning
the management of the Company, as well as oversees the execution of duties by Directors. Furthermore, by Executive Officers (nine persons, excluding
Directors who are also Executive Officers) participating as observers in the Board of Directors meetings, this system strengthens the reporting function for
the execution of duties and allows for timely mutual understanding and confirmation of intentions of management.
Deloitte Touche Tohmatsu LLC conducts accounting auditing for the Company. The audit for the fiscal year ended in March 2018 was conducted by
Hiroshi Yamaguchi and Seiichiro Nakashima, certified public accountants of Designated Unlimited Liability Partner, Deloitte Touche Tohmatsu LLC. Seven
other certified public accountants and eight other people assisted in these auditing activities.
The Company also receives advice as needed from an attorney regarding company management and day to day operations.
Pursuant to the provision of Article 426, paragraph 1 of the Companies Act, the Company stipulates in its Articles of Incorporation to exempt the liabilities
of damages of Directors and Audit & Supervisory Board Members (including former Directors and Audit & Supervisory Board Members) due to neglect of
duties to the scope of the legal limit allowed by laws and regulations by a resolution of the Board of Directors meetings. The objective for this provision isto ensure that Directors and Audit & Supervisory Board Members can fully enact their expected roles. Furthermore, based on provisions of its Articles ofIncorporation pursuant to the provisions of Article 427, paragraph 1 of the Company Act, the Company has entered into an agreement with External Directors
and External Audit & Supervisory Board Members which limits their liabilities of damages to the legal minimum set in Article 425, paragraph 1 of theCompany Act.

3．Reasons for the Adoption of the Current Corporate Governance Structure
As a company based in highly specialized research and development, the Company has determined that the most appropriate corporate governance system
would be the current one, in which Directors who are deeply knowledgeable about these businesses would be able to actively make decisions based on aclear awareness of being related to results and the need for swift choices while monitoring business execution. Furthermore, highly independent External
Directors who possess knowledge and experience related to these businesses would work with the Audit & Supervisory Board to monitor and audit businessexecution.

Ⅲ. Implementation of Measures for Shareholders and Other Stakeholders
1．Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting Rights Update
Supplementary Explanation

Scheduling of General Shareholder
Meeting Avoiding Peak Day

The General Meeting of Shareholders is scheduled through avoiding peak day, allowing many
shareholders to be participable.
The 13th Ordinary General Meeting of Shareholders was held on June 23, 2015
The 14th Ordinary General Meeting of Shareholders was held on June 24, 2016
The 15th Ordinary General Meeting of Shareholders was held on June 23, 2017
The 16th Ordinary General Meeting of Shareholders was held on June 22, 2018

OthersThe notice is released electronically on TDnet and disclosed on the Company’s website aheadof sending printed version of shareholders. The Company allows the exercise of the voting right
via the website designated by the Company. The Company participates in electronic voting
platform, allowing institutional investors for exercise of voting rights by electronic means. Also,
the Company convenes the General Meeting of Shareholders to present material to shareholders
utilizing the large screen to explain performance and business plan, and posts results of the voting
rights on the extraordinary report available on its website.

2．IR Activities Update

Supplementary Explanation

Preparation and Publication ofDisclosure Policy

Periodic Briefings to Individual
Investors

Periodic Briefings for Analysts andInstitutional Investors

Periodic Briefings for Overseas
Investors

Publication of IR Materials on theWebsiteEstablishment of a Division(Appointment of an Officer) in
Charge of IR

Explanationby therepresentativein person

The policy is provided via the Company’s website.
Takara Bio “Disclosure Policy”
Materials in Japanese available at http://ir.takarabio.co.jp/ja/policy.html
Materials in English available at http://ir.takarabio.co.jp/en/policy.html(Timing) The Company holds briefings three or four times between
December and January every year.
(Description) The Company provides the explanation of the detailed
financial results and business measures for approximately 1 hour, andthereafter has a Q&A session.
(Participants) It is aimed at 50-100 individual investors.
The Company holds Financial Results Briefings twice a year when it
announces its 2Q and 4Q business results. Conference is individually
held when quarterly results (including full-year and half term) arereleased. In addition, interview and seminar are given in response torequests.
Currently, foreign shareholding ratio is not necessarily high, however,
event conferences for foreign investors to be interviewed by securities
company and conference calls are given as needed.

Yes

Yes

No

The Company, on the Website, holds IR information including Financial
Statements, Annual Securities Reports/Quarterly Securities Reports,
Presentation Materials for Financial Results, Annual Report,
Timely/Voluntary Disclosure Materials
Materials in Japanese available at http://ir.takarabio.co.jp/ja/library.html
Materials in English available at http://ir.takarabio.co.jp/en/library.html
Department in charge: PR and IR Department
Manager in charge of IR: Akira Kawamura, General Manager of PR
and IR Department

3. Status of Efforts to Respect the Standpoint of Stakeholders
Supplementary Explanation
Stipulation of Internal Rules for
Respecting the Position of
Stakeholders

The Company stipulates respect for the position of stakeholders in the TaKaRa Group Code of
Conduct for Compliance.

Implementation of Environmental
Activities, CSR Activities etc.

Based on the TaKaRa Group Code of Conduct for Compliance, the Company engages inenvironmental protection activities, resource conservation and energy conservation in compliancewith environmental laws and regulations, as a crucial part of the ongoing efforts for well-balanced
global environmental issues and business activities. Also, the Company works on reducing
environmental burdens in all operational procedures including R&D, material procurement,
manufacturing, distribution, sales and consumption.

Development of Policies on
Information Provision to
Stakeholders

Based on the TaKaRa Group Code of Conduct for Compliance, the Company discloses corporate
information such as financial description and business activities in a timely and appropriatemanner, provides corporate philosophy and policy in fairly and adequately, and strives for better
communication by facing with critical opinions and sincerity thereof.

IV. Matters Related to the Internal Control System
1．Basic Views on Internal Control System and the Progress of System Development Update
Based on Article 362, paragraph 4, item 6 of the Companies Act and Article 100, paragraphs 1 and 3 of the Ordinance for Enforcement of the Companies
Act, the Company made the following determinations regarding the development of the systems necessary to ensure proper operations of a corporationand ensure that the execution of duties of Directors complies with law and regulations, and the Articles of Incorporation.
1. Systems to ensure that the execution of duties of Directors and employees complies with laws and regulations, and the Articles of Incorporation, as
well as ensure the properness of operations in the Company and the corporate group comprised of the parent company and its subsidiaries.
i) Takara Bio Compliance Committee, chaired by the Company’s President, is established and operated as the organization which supervises complianceactivities for the Company Group.
ii) This committee falls under the compliance committee (which includes committee members and working members dispatched from the Company)
established in the parent company, Takara Holdings Inc. The committee determines the Compliance Action Guidelines, which stipulate the action
guidelines related to laws and social ethics with which each and every officer and employee of the Company Group should comply, and also educatesofficers and employees in the Group through group training sessions and everyday workplace instruction.
iii) These guidelines take a firm stand against anti-social forces and strictly prohibit any association with such groups.
iv) In case that an officer or employee discovers any violation of laws and regulations or illegal act within the operations of the Group, and standard
operational methods and procedures are unable to solve or prevent the problem, helplines are installed and operated as communication portals in the
Compliance Promotion Department of Takara Holdings Inc. and external third-party institutions. The overall Group has been informed that any
employee who reports a problem will not receive disadvantageous treatment due to this action.
v) The Company conducts internal auditing based on the Internal Audit Regulations. The Company will strive to ensure proper execution of duties bytaking necessary actions based on the results of internal audits. Furthermore, the responsible departments conducting internal audits shall be
independent to ensure proper oversight functions for Auditing Departments, etc.
vi) The Company Group shall comply with the rules for listed companies set by related laws and regulations and the Tokyo Stock Exchange, and establish
the company-wide systems to ensure the reliability of financial reports. The Company Group also shall consistently enhance the systems through its
assessment and improvement.
vii) In terms of the relationship between the Company and its parent company, Takara Holdings Inc., a holding company has been established from thestandpoint of consolidated business management. Its objective is to maintain the independence and autonomy of Takara Holdings Group companies,
including the Company, while seeking to maximize the corporate value of the entire Takara Holdings Group. The Takara Holdings Group Company
Management Rules are also applicable to the Company, and the Company regularly reports on the decisions made at the meetings of its Board of
Directors and the status of business activities of subsidiaries to Takara Holdings.
viii) In terms of the relationship between the Company and its subsidiaries, the Company shall receive regular reports on business activities while
maintaining the independence and autonomy of the subsidiaries. In principle, important matters shall be discussed beforehand. The Company’s Audit& Supervisory Board Members and the responsible departments conducting internal audits shall work together to conduct audits on a regular basis
from a perspective of ensuring proper execution of operations.
2. Systems to store and manage information related to the execution of duties of the Directors
In order to appropriately and subsequently confirm the status of the execution of duties of Directors and employees, the Company shall set internal
rules related to drafting guidelines, storage period limits, and management systems (including information security systems) of records of execution ofduties, including minutes of General Meetings of Shareholders, minutes of the Board of Directors meetings, approval documents (documents ofdecisions made by the President, etc.), and other documents related to decision making.
3. Rules and other systems to manage the risks of lossi) The Takara Bio Compliance Committee supervises overall “crisis management” in the Company Group. Under the supervision of this committee,
initiatives are conducted in each responsible department to prevent or mitigate risks facing this group, including matters of “laws and social ethics,”“safety and quality of products and merchandises,” and “safety and health.”ii) In case of emergency, the Company shall respond based on the “Takara Group Emergency Response Manual” and establish an emergency response
headquarters as needed, centered around the President and officers in charge of compliance matters.
4. Systems to ensure the effective execution of duties of Directorsi) The Company shall hold a regular Board of Directors meeting once a month, and other meetings as needed, as part of the system to ensure the executionof duties of Directors is conducted efficiently.
ii) The Company establishes a system for Directors and employees to execute duties and make decisions properly and promptly through the creation of
the “Rules for Dividing Roles and Responsibilities” and the “Rules for Authority” in order to clarify the internal line of command and the division ofroles and responsibilities.
iii) Under the supervision and instruction of the Board of Directors or individual Directors, each responsible department or, as needed, cross-department
project team, shall consistently take measures for the streamlining, acceleration, and electrification of operations which aim to ensure the efficiency ofmanagement.
iv) Internal audits shall be conducted from an efficiency perspective. Based on the results of pertinent internal audits, the Company shall take necessary
measures and strive to ensure the efficiency of the execution of duties.
v) The Company shall establish a management system along the standards of the Company in its subsidiaries.
5. Matters concerning the employees to assist the Audit & Supervisory Board Members in their duties when the Audit & Supervisory Board Members
request the assignment thereof and matters concerning the independence of the employees from the Directors.
When an Audit & Supervisory Board Member requires an employee to assist the duties of the Audit & Supervisory Board Member, the pertinent
employee shall only be enlisted into this role after ensuring their independence from Directors in terms of their position, benefits, and chain of command.
6. Systems for Directors and employees to report to Audit & Supervisory Board Members and other systems to ensure Audit & Supervisory Board Members
conduct audits effectivelyi) Audit & Supervisory Board Members shall, in addition to the Board of Directors meetings, attend important meetings, such as the strategy meetings ofthe business unit, in order for them to grasp the status of important decision making processes and business execution. They may view minutes of theBoard of Directors meetings, approval documents (documents of decisions made by the President, etc.), and other important documents related tobusiness execution. They also possess the right to request explanations from Directors or employees if necessary. Furthermore, responsible departments
conducting internal audits shall work closely with Audit & Supervisory Board Members in order to conduct effective and efficient audits.
ii) If Directors discover a fact which may cause significant damage to the company, they must report this to Audit & Supervisory Board Members according
to laws and regulations. If Directors of subsidiaries discover a fact which may cause significant damage to the subsidiary, they shall report to the Audit& Supervisory Board Members of the Company through the department that is in charge of managing the pertinent subsidiary.
iii) Directors and Audit & Supervisory Board Members of the Company shall ensure that persons reporting matters described above shall not receive
disadvantageous treatment due to the report.

7. Matters concerning guidelines related to the processing of expenses or obligations arising from the execution of duties by Audit & Supervisory Board
Members
When an Audit & Supervisory Board Member requests the Company to make an advance payment or reimbursement of the expenses arising fromthe execution of duties, the Company shall promptly process the expenses or obligations, excluding cases where the costs are deemed not to be necessary
for the execution of duties of the Audit & Supervisory Board Member.
Please refer to “Reference Material: Figure 1” in “Attached Material” at the end of this document.

2. Basic Views on Eliminating Anti-Social Forces and Progress of Related Efforts
The Company takes a firm stand against anti-social forces which threaten social order and the corporate soundness. The Company strictly prohibit any
association or transaction with such forces and any company, organization, or individual who is connected with such forces. The Company’s basic viewis clarified in the Compliance Action Guidelines described above, which stipulates the action guidelines related to laws and social ethics with which eachand every officer and employee should comply. The Company is spreading awareness of these guidelines. The Company has distributed a portablemanual booklet indicating the guidelines to each officer and employee so that they can access them whenever needed. Furthermore, the Company has
designated the General Affairs Department as the department overseeing the response and has been working to gather information from local companies
and external specialized organizations, such as the local police. The Company takes such measures to respond with close collaboration with the pertinentorganizations upon occurrence of such an event.

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

Not Adopted

Supplementary Explanation―――

2．Other Matters Concerning to Corporate Governance System Update
The status of Internal Systems related to timely disclosure of the Company’s information is as follows:
The Company is providing timely and appropriate disclosure of company information to investors based on the laws and regulations related tosecurities exchanges, regulations of the Tokyo Stock Exchange, and the internal rules “Rules on Internal Information and Insider Trading Management.”
The creation, gathering, and disclosure of the Company’s information is conducted as follows:
1. In accordance with the guidebook on the timely disclosure of company information, the department which oversees information (including theCompany’s subsidiaries) shall promptly report to the PR and IR (excluding financial information), and Finance (financial information) Departments
when there is information which requires disclosure.
2. After receiving this report, the PR and IR or Finance Departments shall verify the pertinent information and promptly report to the General Affairs
Department, where information for the entire company is compiled.
3. The officer in charge of handling internal information (officer in charge of General Affairs Department) shall receive the report from the General
Affairs Department, and deliberate on the need, content, and method for disclosing the information alongside officers in charge of the PR and IR, or
Finance departments, or other Supervisory Departments.
4. Each Director will see the results of these deliberations and after hearing opinions, the determinations will be reported to the Board of Directors
meeting. If the pertinent information is a matter to be resolved by the Board of Directors, the Board of Directors shall resolve the matter and determine
the need for disclosure. If the pertinent information is not a matter to be resolved by the Board of Directors, it becomes a matter to be reported.
Depending on the case, based on the mindset of timely disclosure, the information may be disclosed with the approval of the Representative Director
and President.
5. This information shall be regularly disclosed through the means set by the Tokyo Stock Exchange by the person responsible for the handling of
information, who is notified the Tokyo Stock Exchange beforehand. This information is also posted on the Company’s website. As needed, theCompany will also hold a press conference or posting of materials to the press club.
Please refer to “Reference Material: Figure 2” in “Attached Material” at the end of this document.