Corporate Governance Report
CORPORATE GOVERNANCEULVAC, Inc.

Last Update:

September 30, 2022

ULVAC, Inc.
Setsuo Iwashita, President and Chief Executive Officer
Contact: +81-467-89-2033(Main telephone number)

Securities code: 6728
https://www.ulvac.co.jp/en/
The corporate governance of ULVAC, Inc. (the “Company”) is described below.

I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other
Basic Information
1. Basic Views
Under its Basic Corporate Philosophy that “the ULVAC Group aims to contribute to the development of industries and science bycomprehensively utilizing its vacuum and peripheral technologies through the mutual cooperation and collaboration of the Group
companies,” the Company endeavors to improve its corporate governance with a view toward increasing its corporate value overthe medium to long term. From the aforementioned standpoint, the Company values competitive and efficient management by
ensuring strict compliance with corporate ethics as well as laws and regulations, while respecting the interests of all stakeholders
related to its business activities, including not only shareholders, but also business partners, local communities, and employees.

Reasons for Non-compliance with the Principles of the Corporate Governance Code
The Company implements the principles of the Corporate Governance Code revised in June 2021.

Disclosure Based on the Principles of the Corporate Governance Code Updated[Principle 1.4 Cross-Shareholdings]
1. Policy on cross-shareholdings
The Company may acquire the shares of a business partner, insofar as such acquisition is believed to contribute to its sustainablegrowth and enhancement of its corporate value over the medium to long term from the viewpoint of maintaining andstrengthening the business relationship with such partner.
The appropriateness of cross-shareholdings is verified from various perspectives, including the appropriateness of the holding
purpose, benefits and risks of the shareholding, and the cost of capital, the results of which are reported to the Board of Directors
on an annual basis. As a result, if the holding of a particular stock is determined to be less significant, the Company will consider
reducing the size of its shareholding.
2. Standards for exercising the voting rights of cross-shareholdings
The Company exercises the voting rights of shares held under cross-shareholdings in an appropriate manner, based on acomprehensive evaluation regarding whether it will contribute to maintaining and strengthening the business partner’s corporate
governance structure and to increasing shareholder value, as well as its potential impact on the Company.
[Principle 1.7 Related Party Transactions]
In cases of so-called competitive transactions or conflict-of-interest transactions, while complying with the Companies Act, theFinancial Instruments and Exchange Act, and other relevant laws and regulations, the Company shall perform procedures toobtain approval from the Board of Directors on the details of such transactions in advance pursuant to the Board of Directors
Rules, and subsequently report the results of such transactions to the Board. In addition, such transactions are appropriately
disclosed pursuant to relevant laws and regulations.

1[Supplementary Principle 2.4.1 Ensuring Diversity in the Promotion of Core Human Resources]
In an effort to ensure diversity in the promotion of our core human resources and related personnel management activities, we
strive to implement evaluation and promotion based on individual capabilities, regardless of personal attributes. Furthermore, theselection of human resources is implemented based on the guideline according to employee composition, in an effort to promoteselection and development that excludes attribute-based biases.
The ULVAC Group has been endeavoring to create workplaces that offer job satisfaction regardless of gender, nationality, orrace. As a result, the percentage of female managers in the Group has reached 7.7%.
The ULVAC Group as a whole is aiming to increase the ratio of female managers to 10% by June 2026, based on therecognition that providing female employees with wider opportunities for active participation is an important management
challenge for further growth of its corporate value. To this end, we will remain committed to increasing the ratio of female
managers by endeavoring to develop and expand not only management staff but also candidates for these positions through theactive recruitment of female employees, as well as the enhancement of our training and personnel systems.
Policies for human resource development and development of the internal environment to ensure diversity
The ULVAC Group comprises a large number of Group companies, which operate their businesses globally, and has a broadcustomer base, networks with cutting-edge research laboratories, bases for development, sales, customer support, andmanufacturing bases, and supplier networks primarily across the East Asia region, including Japan, China, South Korea, andTaiwan, where the world’s semiconductor manufacturers, electronic device manufacturers, and panel manufacturers areconcentrated.
In order for the Company to practice and realize the aforementioned Basic Corporate Philosophy that “the ULVAC Groupaims to contribute to the development of industries and science by comprehensively utilizing its vacuum and peripheraltechnologies, through the mutual cooperation and collaboration of the Group companies,” compliance with the two principles of“respect for employees’ personality and individuality” and “respect for human rights and nondiscriminatory treatment” set out in
its Corporate Code of Conduct, respect for individualities of its globally active employees, and embracement and utilization ofdiversity will serve as a major driving force.
We will strive to continue to generate new value that helps respective employees grow, by respecting diversity and promoting
inclusion to develop innovative solutions to the challenges that our customers and society face. Based on this philosophy, we will
endeavor to develop workplaces that offer job satisfaction and relevant personnel systems, and create training opportunities with aview toward strengthening the development of personnel who are capable of adapting to changes in the external environment andplaying active roles globally, in order to survive in a rapidly changing business environment.
[Principle 2.6 Roles of Corporate Pension Funds as Asset Owners]
Considering that the management of corporate pension funds affects not only the stable asset formation of our employees, but also
the financial position of the Company, we have external asset managers who are responsible for the management of the pension
funds report on a quarterly basis to the Asset Management Committee comprising the managers in charge of finance,accounting, management planning, and personnel affairs regarding the status of management of the corporate pension funds,
stewardship activities, and other matters, and based on such report, the Asset Management Committee comprising the managers
in charge of finance, accounting, and personnel affairs regularly monitors and evaluates performance of the asset managers.
Through the aforementioned framework, we work to maximize the benefit for the employees, and to appropriately manage any
conflicts of interest that may arise between the corporate pension and the Company.
[Principle 3.1 Full Disclosure](i) Corporate philosophy, management strategies, and management plan
Our Basic Corporate Philosophy and Management Policy are posted on our website.
Basic Corporate Philosophy: https://www.ulvac.co.jp/en/company/philosophy/index.html
Management Policy: https://www.ulvac.co.jp/en/company/policy/index.html
We formulate and implement management plans based on the Basic Corporate Philosophy and Management Policy.
Management plans are disclosed in the financial results and financial results presentation materials.
(ii) Basic views and policy on corporate governance
The Company will remain committed to enhancing corporate governance, in line with the following principles.
1) We respect and secure the rights and equal treatment of shareholders.

22) We collaborate appropriately not only with shareholders, but also with various stakeholders that are related to our businessactivities, such as business partners, local communities, and employees, while paying due attention to their interests.
3) We disclose corporate information appropriately in a timely manner, thereby ensuring transparency.
4) We operate our Board of Directors, which is the decision-making body of critical importance, in a manner which increases
our corporate value.
5) We conduct constructive dialogue with shareholders.
With a view toward increasing our corporate value over the medium to long term through sustainable growth, the Company
has formulated its basic corporate governance policy based on the resolution of the Board of Directors, in line with the purpose
and spirit of the Corporate Governance Code. The basic corporate governance policy is posted on the Company’s website.
https://www.ulvac.co.jp/en/sustainability/corporate_governance/index.html(iii) Policies and procedures in determining the remuneration of the senior management and directors
For matters concerning the remuneration of directors of the Company, please refer to “Disclosure of Policy on Determining
Remuneration Amounts and the Calculation Methods Thereof” in “Director Remuneration” under “1. Organizational Composition
and Operation,” under “II. Business Management Organization and Other Corporate Governance Systems regarding
Decision-making, Execution of Business, and Oversight in Management.” The remuneration of executive officers of theCompany is determined based on a remuneration standard equivalent to that of internal directors.
(iv) Policies and procedures in the appointment/dismissal of the senior management and the nomination of director and auditor
candidates
In nominating candidates for directors and auditors, as well as appointing executive officers, the Company assumes that all
candidates possess high ethical standards and excellent character as officers. Under the procedure for such nomination andappointment, the Board of Directors shall resolve the nomination and appointment of directors, executive officers, and auditors
based on the recommendations of the Committee for Appointment and Remuneration, etc., which has been established as anadvisory body to the Board of Directors, and additionally subject to the prior consent of the Board of Corporate Auditors for thenomination of auditors. Likewise, the Board of Directors shall resolve the dismissal of directors, executive officers, and auditors,
based on the recommendations of the Committee for Appointment and Remuneration, etc., and additionally subject to the priorconsent of the Board of Corporate Auditors for the dismissal of auditors. In nominating candidates for directors and auditors, wetake into consideration the diversity of the Board of Directors and the Board of Corporate Auditors, in addition to the viewpoint
as to whether individual candidates have sufficient knowledge, capability, and experience to carry out the duties in each position
to be assumed.
(v)

Explanations on the individual appointments/dismissals and nominations when appointing/dismissing senior management
and nominating candidates for directors and auditors
For individual candidates for directors and auditors of the Company, career summaries and the reasons for their nomination arestated in the Notice of the General Meeting of Shareholders.
[Supplementary Principle 3.1.3 Initiatives in Pursuit of Sustainability]
We recognize that the response to sustainability-related challenges, including social and environmental issues, is important for an
increase in our corporate value over the medium to long term and sustainable growth. In pursuit of creating economic, social, andenvironmental value by making full use of our vacuum and peripheral technologies, under the Sustainability Policy establishedbased on the Basic Corporate Philosophy, we have established a framework in which the Sustainability Promotion Committee
chaired by the executive officer in charge of sustainability formulates various policies concerning sustainability management,deliberates and decides issues, and verifies and evaluates the progress of initiatives, and reports to the Board of Directors in viewof the importance of each issue.
Specifically, we have signed and joined the United Nations Global Compact, whereby we observe and practice ten principles
related to the protection of human rights, elimination of unfair labor, response to environmental concerns, and anti-corruption. In
addition, we have set a medium to long term goal of reducing greenhouse gas emissions by 40% by 2030 (compared with 2020)
and achieving net zero greenhouse gas emissions by 2050, and are continuously promoting measures to achieve this goal. In June
2022, we announced our endorsement of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. As
part of the company-wide initiative to achieve this goal by utilizing the TCFD framework, in FY2021 we conducted a scenario
analysis of market opportunities for power devices.

3

Meanwhile, we are aware that human resources and intellectual properties are important management resources for increasing
our corporate value over the medium to long term and achieving sustainable growth. With regard to human resources, we will
enhance the training and development of human resources with diverse personalities and strengths/advantages, so that they stay ingood health, exercise their individual inherent capabilities, look ahead to the future from a broad perspective including the Earth,society, markets and customers, have resistance to change in external environments, and are capable of working globally. With
regard to intellectual properties, we will acquire intellectual properties that contribute to our business, establish group-wide
centralized control thereof, and utilize such properties for the purpose of formulating and implementing management strategies,
while respecting the intellectual property rights of other companies to ensure avoidance of infringement.
For details regarding sustainability initiatives, including those concerning human resources and intellectual property, pleaserefer to the annual ULVAC Value Report and the Company’s website.
ULVAC Value Report: https://www.ulvac.co.jp/en/sustainability/report/index.html
Sustainability: https://www.ulvac.co.jp/en/sustainability/index.html
Initiatives to address climate change based on the TCFD framework:https://www.ulvac.co.jp/en/sustainability/environment/climate_change/index.html
Human resources: https://www.ulvac.co.jp/en/sustainability/human_resources/index.html
Intellectual properties: https://www.ulvac.co.jp/research_development/intellectual_property/index.html (in Japanese)[Supplementary Principle 4.1.1 Scope of the Matters Delegated to the Management]
Under the Board of Directors Rules, the Company specifies the matters to be judged and decided at the Board of Directors
meetings, which are provided as such under the relevant laws and regulations or its Articles of Incorporation, or otherwise forwhich particularly careful deliberation is required in consideration of the nature and importance thereof.
In addition, with a view toward materializing extensive deliberations at the Board of Directors, while enhancing the flexibilityof business execution, judgments and decisions on matters related to business execution other than those to be judged and decided
at the Board of Directors are delegated to the Representative Director as well as the executive officer who is responsible for theconcerned business execution.
[Principle 4.9 Independence Standards and Qualification for Independent External Directors]
The Company requires a candidate for independent external director to retain a level of independence that meets theindependence standards established by the Tokyo Stock Exchange, and to have neither an interest in the Company, nor a risk of
conflicts of interest with its general shareholders, from a practical perspective. In addition, as part of criteria for appointment, we
also take into account the ability of the candidate to make proactive and meaningful recommendations, and fairly point out issues
regarding the management and business challenges of the Company.
[Supplementary Principle 4.10.1 Effectiveness of the Nomination Committee and the Remuneration Committee]
Please refer to the “Supplementary Explanation” in “Directors” under “II. Business Management Organization and Other
Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management.”[Supplementary Principle 4.11.1 Views on the Appropriate Balance between Knowledge, Experience, and Skills of the Board of
Directors as a Whole, as well as its Size and Diversity]
The Company gives consideration to the desirable balance and diversity between the knowledge, experience, and skills of themembers of the Board of Directors, as well as appropriateness of its size, with a view toward enhancing its effectiveness throughmulti-faceted deliberations. Candidates for directors are deliberately selected at the Board of Directors in consideration of theaforementioned aspects. The Company also gives consideration to optimizing the board size for speedy decision-making. The
expertise and experience (skill matrix) that are particularly expected of directors and auditors are described in the Notice of theGeneral Meeting of Shareholders.
[Supplementary Principle 4.11.2 Concurrent Service of Directors and Auditors]
The current status of our directors and auditors who are concurrently serving as directors or auditors at other listed companies is
described in the Notice of the General Meeting of Shareholders.
[Supplementary Principle 4.11.3 Analysis and Evaluation of the Effectiveness of the Board of Directors as a Whole]
In an effort to enhance the functions of the Board of Directors and thus ultimately to increase our corporate value, we ask
individual directors and auditors to assess the Board’s effectiveness annually by themselves, in which each director and auditor

4directly gives replies to an external organization to ensure anonymity. The Board of Directors carries out an analysis andevaluation based on the aggregated results reported by the external organization.
While we determined that, as a result of the analysis and evaluation of the effectiveness of the Board of Directors in FY2021,
the Board’s effectiveness has been maintained, we will continuously strive to improve the Board’s effectiveness by taking into
account the recommendations about the enhancement of deliberations on management strategies and sustainability-related issues.
[Supplementary Principle 4.14.2 Training Policy for Directors and Auditors]
The Company appropriately provides its directors and auditors with opportunities for training that is deemed necessary for themto fully and appropriately fulfill the roles and responsibilities that are expected of them. Newly appointed external directors
receive explanations regarding management strategy, financial standing, management issues, and other important matters, and are
given opportunities to acquire knowledge and insight through tours, etc. of business sites, as appropriate, for the purpose ofobtaining a deeper understanding of the ULVAC Group. For newly appointed auditors, the Company provides training
opportunities equivalent to those for newly appointed directors upon the request of the auditors. After they take office as directors
and auditors, the Board of Directors provides them with opportunities to receive explanations regarding business strategies,
management issues, and related matters of each business every year. The Company also provides them with financial support fortrainings that are deemed necessary for them to fulfill their duties and encourage them to enhance their expertise. These training
opportunities are continually reviewed and updated, as necessary.
[Principle 5.1 Policy for Constructive Dialogue with Shareholders]
We will actively promote constructive dialogue with shareholders and investors with the aim of achieving the sustainable growthof the Company and improving its corporate value over the medium to long term. Our basic IR policy shall involve timely andfair information disclosure and clear communication of accurate information.
1. General dialogue with shareholders and investors
The IR Department is responsible for dialogue with shareholders and investors. The department has established a framework tocooperate with the President and Chief Executive Officer, other directors (including external directors), auditors, and executive
officers, as appropriate.
2. Cooperation with relevant departments
The Company has established a framework in which other relevant departments support the IR Department in conducting
dialogue with shareholders as a point of contact, as appropriate.
3. Enhancement of communication
In addition to periodic financial results briefings, we actively offer opportunities for dialogue by organizing technical seminars,
taking part in conferences sponsored by securities companies both in Japan and overseas as well as seminars for individual
investors, and holding road shows overseas, plant tours, and personal interviews, while striving to introduce ourselves toshareholders and investors in an easy-to-understand manner, by disclosing financial results briefing materials, annual reports, fact
sheets, etc. on our website. English translations of such materials are also disclosed online.
4. Feedback of opinions
Evaluations and opinions obtained through dialogue with shareholders, investors, and analysts are collected and edited on aregular basis and are reported to the Board of Directors or otherwise shared with management, depending on the importance andnature of such opinions.
5. Management of insider information
In our dialogue with shareholders, investors, and analysts, we will not communicate any important and undisclosed insider
information until it has entered the public domain. The Company has established a framework whereby insider information is
managed internally in an appropriate manner.

52. Capital Structure
Foreign Shareholding Ratio

30% or more

Status of Major Shareholders Updated
Name or Company Name

Number of Shares Owned

Percentage (%)

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

6,638,600

13.45

Custody Bank of Japan, Ltd. (Trust account, trust account 4, trust A account,pension specified money trust account, trust B account, pension trust
account)

3,491,700

7.08

Nippon Life Insurance Company

3,241,700

6.57

TAIYO FUND, L.P.

2,552,000

5.17

BBH (LUX) FOR FIDELITY FUNDS-GLOBAL TECHNOLOGY POOL

1,852,740

3.75

TAIYO HANEI FUND, L.P.

1,191,900

2.42

BNP PARIBAS SECURITIES SERVICES LUXEMBOURG/JASDEC
SECURITIES/UCITS ASSETS

1,073,700

2.18

STATE STREET BANK AND TRUST COMPANY 505227

1,038,700

2.10

STATE STREET BANK AND TRUST COMPANY 505038

743,900

1.51

JAPAN SECURITIES FINANCE CO., LTD.

647,500

1.31

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

None

Supplementary Explanation Updated
1. The above information is as of June 30, 2022.
2. The following statements of large volume holdings (statement of changes) have been available for public inspection.
Shareholders that are not registered on the shareholder registry as of the end of the current fiscal year, or those not included in
the top ten shareholders are not stated in the table.
(1) As of February 21, 2022, a total of 2,596 thousand shares (shareholding ratio of 5.26%) were held by Sumitomo Mitsui
Trust Bank, Limited on a joint basis, comprising 312 thousand shares (0.63%) by Sumitomo Mitsui Trust Bank, Limited,
1,553 thousand shares (3.15%) by Sumitomo Mitsui Trust Asset Management Co., Ltd., and 731 thousand shares (1.48%)
by Nikko Asset Management Co., Ltd., according to the statement of large volume holdings that is available for public
inspection.
(2) As of February 22, 2022, a total of 2,685 thousand shares (shareholding ratio of 5.44%) were held by Mizuho Bank, Ltd. ona joint basis, comprising 639 thousand shares (1.29%) by Mizuho Bank, Ltd., 97 thousand shares (0.20%) by Mizuho Trust& Banking Co., Ltd., 1,881 thousand shares (3.81%) by Asset Management One Co., Ltd., and 69 thousand shares (0.14%)
by Asset Management One International Ltd., according to the statement of large volume holdings that is available forpublic inspection.
(3) As of June 8, 2022, 5,097 thousand shares (shareholding ratio of 10.33%) were held by Taiyo Pacific Partners LP, according
to the statement of large volume holdings that is available for public inspection.
(4) As of June 22, 2022, 2,907 thousand shares (shareholding ratio of 5.89%) were held by FIL Investments (Japan) Limited,
according to the statement of large volume holdings that is available for public inspection.

6

3. Corporate Attributes
Listed Stock Exchange and Market Segment Updated

Prime Market, Tokyo Stock Exchange

Fiscal Year-End

June

Business Sector

Electrical Appliance

Number of Employees (Consolidated) as of the Endof the Previous Fiscal Year

1,000 or more

Net Sales (Consolidated) as of the End of thePrevious Fiscal Year¥100 billion or more and less than ¥1 trillion

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

10 or more and fewer than 50

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

5. Other Special Circumstances which May have Material Impact on Corporate Governance—

II. Business Management Organization and Other Corporate Governance Systems regarding
Decision-making, Execution of Business, and Oversight in Management
1. Organizational Composition and Operation
Corporate Governance System

Company with a Board of Corporate Auditors

Directors
Number of Directors Stipulated in Articles ofIncorporation

12

Directors’ Term of Office Stipulated in Articles ofIncorporation

1 yearChairperson of the Board

President

Number of Directors

7

Election of External Directors

ElectedNumber of External Directors

4

Number of External Directors designated as
Independent Officers

47External Directors’ Relationship with the Company (1)Relationship with the Company*
Name

AttributesaHiroyuki Nishi

From another company

Norio Uchida

From another company

Kozo Ishida

From another company

Yoshimi Nakajima

From another company

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/auditor
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 toself 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. Other

External Directors’ Relationship with the Company (2) Updated

Name

Hiroyuki Nishi

Designationas
Independent
Officer○

Supplementary Explanation of the
Applicable Relationship
Mr. Nishi served as a director of Nippon
Life Insurance Company, the Company’s
lender, until July 2018. As of the end ofJune 2022, the ULVAC Group’s
outstanding loans payable to Nippon
Life Insurance Company stood at ¥4,978million. Transactions between Nippon
Life Insurance Company and theCompany include those involving
insurance premiums and other charges,
which, however, account for less than
1% of the Company’s total net sales(actual figures for the fiscal year that
ended June 30, 2022).

8

Reasons for Appointment
Mr. Nishi has a solid track record as acorporate manager of other companies inJapan and overseas. In particular, he has
extensive experience and broad insight,
primarily in risk management. The Company
appointed him as an external director, as it
expects him to utilize his experience andinsight to provide appropriate advice on theoverall management of the Company and toproperly
superviseitsmanagement.
Furthermore, the Company designated Mr.
Nishi as an Independent Officer as he hasretained particularly high level of
independence, posing no risk of conflicts ofinterest with general shareholders, in which
capacity he has been fulfilling his duty ofsupervision and oversight from a moretransparent, fair, and neutral standpoint.

Norio Uchida○—

Mr. Uchida has a solid track record as acorporate manager of other companies inJapan and overseas. In particular, he has
extensive experience and broad insight,
primarily in international sales activities.
The Company appointed him as an external
director, as it expects him to utilize his
experience and insight to provide
appropriate advice on the overallmanagement of the Company and toproperly
superviseitsmanagement.
Furthermore, the Company designated Mr.
Uchida as an Independent Officer as he hasretained particularly high level of
independence, posing no risk of conflicts ofinterest with general shareholders, in which
capacity he has been fulfilling his duty ofsupervision and oversight from a moretransparent, fair, and neutral standpoint.

Kozo Ishida○—

Mr. Ishida has a solid track record as acorporate manager of other companies inJapan and overseas. In particular, he has
extensive experience and broad insight,
primarily in research and development. The
Company appointed him as an external
director, as it expects him to utilize his
experience and insight to provide
appropriate advice on the overallmanagement of the Company and toproperly
superviseitsmanagement.
Furthermore, the Company designated Mr.
Ishida as an Independent Officer as he hasretained particularly high level of
independence, posing no risk of conflicts ofinterest with general shareholders, in which
capacity he has been fulfilling his duty ofsupervision and oversight from a moretransparent, fair, and neutral standpoint.

Yoshimi Nakajima○—

Ms. Nakajima has a solid track record as acorporate manager of other companies inJapan and overseas. In particular, she has
extensive experience and broad insight,
primarily in international sales activities.
The Company appointed her as an external
director, as it expects her to utilize her
experience and insight to provide
appropriate advice on the overallmanagement of the Company and toproperly supervise its management as anexternal director. Furthermore, the Company
designated Ms. Nakajima as an Independent
Officer as she has retained particularly highlevel of independence, posing no risk of9

conflictsofinterest
withgeneralshareholders, in which capacity she has been
fulfilling her duty of supervision andoversight from a more transparent, fair, andneutral standpoint.

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)

Voluntarily
Established
Committee
Equivalent toNomination
Committee
Voluntarily
Established
Committee
Equivalent toRemuneration
Committee

Committee’s
Name

All
Members

Committee for
Appointment
andRemuneration,etc.
Committee for
Appointment
andRemuneration,etc.

Full-timeMembers

Internal
Directors

External
Directors

OutsideExperts

Other

Chairperson

7

0

1

4

0

2

External Director

7

0

1

4

0

2

External Director

Supplementary Explanation Updated
The Company established the Committee for Appointment and Remuneration, etc. as an independent and voluntary advisorycommittee, which provides reports on critically important matters such as the nomination of senior management and directors,
evaluation of their performance, succession planning, and remuneration.
The Committee for Appointment and Remuneration, etc. is composed of seven members comprising one internal director,
four independent external directors, and two independent external auditors, and is chaired by an external director. In order toensure its effectiveness and transparency, at least half of the committee members are independent officers. The committee held six
meetings in FY2021.

AuditorEstablishment of Board of Corporate Auditors

Established

Number of Auditors Stipulated in Articles ofIncorporation

5

Number of Auditors

4

Cooperation among Auditors, Independent Auditors and Internal Auditing Divisions
With a view toward improving audit quality and efficiency, the auditors and the independent auditor strive to work together
closely in areas such as the mutual confirmation of respective annual audit plans, quarterly reporting on each other’s audit results,
exchanges of opinions, and mutual audit attendance, as appropriate.
In addition, the auditors and the Internal Auditing Department are engaged in similar collaborative arrangements in thisregard, including mutual confirmation of respective audit plans and results, as well as exchanges of opinions and exchange of10

information on a regular basis.
Furthermore, similar arrangements are being made between the Internal Auditing Department and the independent auditor,
including the mutual confirmation and reporting of respective audit plans and results, particularly with respect to internal control
audits, as well as exchanges of opinions, as appropriate.

Appointment of External Auditors

Appointed

Number of External Auditors

2

Number of External Auditors designated as
Independent Officers

2

External Auditors’ Relationship with the Company (1)Relationship with the Company*
Name

AttributesaSenshu Asada

From another company

Isao Utsunomiya

From another company

b

c

d

e

f

g

h

i

j

k

l

m

*Categories for “Relationship with the Company”(Use “○” when the auditor presently falls or has recently fallen under the category; “△” when the auditor fell under the category
in the past; “●” when a close relative of the auditor presently falls or has recently fallen under the category; and “▲” when aclose relative of the auditor fell under the category in the past.)
a. Person who executes business of the Company or a subsidiaryb. A non-executive director or an accounting advisor of the Company or its subsidiaries
c. Person who executes business or a non-executive director of a parent company
d. An auditor of a parent company of the Company
e. Person who executes business of a fellow subsidiaryf. Person/entity for which the Company is a major client or a person who executes business for such person/entity
g. Major client of the Company or a person who executes business for such clienth. Consultant, accounting expert, or legal expert who receives large amounts of cash or other assets in addition to director/auditor
compensation from the Company
i. Major shareholder of the Company (in cases where the shareholder is a corporation, a person who executes business of thecorporation)j. Person who executes business for a client of the Company (excluding persons categorized as any of f, g, or h above) (applies toself only)
k. Person who executes business for another company holding cross-directorships/cross-auditorships with the Company (applies
to self only)
l. Person who executes business for an entity receiving contributions from the Company (applies to self only)
m. Other

External Auditors’ Relationship with the Company (2)NameSenshu Asada

Designationas
Independent
Officer○

Supplementary Explanation of the
Applicable Relationship—

Reasons for Appointment
The Company appointed Mr. Asada as anexternal auditor, since he has extensive
experience and expertise as an attorney, andthus is expected to provide appropriate
advice on the overall management of theCompany from his professional viewpoint,
and to properly supervise its overallmanagement, as an external auditor.
Furthermore, the Company designated him

11as an Independent Officer as, in addition tosatisfying the requirements for an external
auditor, he has retained particularly highlevel of independence, posing no risk of
conflictsofinterest
withgeneralshareholders, in which capacity he has been
fulfilling his supervisory function with evengreater effectiveness.
Isao Utsunomiya○—

The Company appointed Mr. Utsunomiya as
an external auditor, since he has extensive
experience and expertise as a certified public
tax accountant, and thus is expected toprovide appropriate advice on the overallmanagement of the Company from his
professional viewpoint, and to properly
supervise its overall management, as anexternal auditor. Furthermore, the Company
designated him as an Independent Officer as,
in addition to satisfying the requirements foran external auditor, he has retained
particularly high level of independence,posing no risk of conflicts of interest withgeneral shareholders, in which capacity hehas been fulfilling his supervisory function
with even greater effectiveness.

Matters Concerning Independent Officers
Number of Independent Officers

6

Other Matters Concerning Independent Officers
The Company requires an Independent Officer to retain a level of independence that meets the independence standards
established by the Tokyo Stock Exchange, and to have neither an interest in the Company nor a risk of conflicts of interest with its
general shareholders from a practical perspective.
In addition, we also consider, as part of the criteria for appointment, the ability of an Independent Officer to make proactive
and meaningful recommendations and to fairly point out issues concerning the management and business challenges of theCompany. We designate the external directors and external auditors who are considered to meet such criteria as independent
officers.

Incentives
Implementation Status of Measures related toIncentives Granted to Directors

Introduction of Performance-linked Remuneration Scheme / Other

Supplementary Explanation for Applicable Items
Part of the remuneration of internal directors is based on the performance-linked remuneration system. Such performance-linked
remuneration system consists of an annual performance-linked remuneration (officer bonus), which is linked to the businessresults for the relevant fiscal year, and stock-based remuneration, etc. through the Board Benefit Trust (BBT), which is a
performance-linked, stock-based remuneration plan determined according to the degree of achievement of annual performancetargets.
- Annual performance-linked remuneration (officer bonus)

12

This remuneration is determined based on criteria determined with reference to performance indicators such as the Company’s
non-consolidated operating profit margin, and taking into account an evaluation of each internal director’s degree of contribution
and achievement of their duties. The annual performance-linked remuneration (officer bonus) is profit-sharing compensation thatis primarily intended to motivate each internal director to work harder to improve the performance in each fiscal year, without
specifying a target indicator as standards. The remuneration standards are determined by the Board of Directors based on thereport received from the Committee for Appointment and Remuneration, etc., and the evaluation of each internal director is also
determined by the same committee.
- Stock-based remuneration, etc.
This remuneration is determined with reference to the standards set for each executive position, based on the degree ofachievement of performance targets in terms of consolidated operating profit for a single fiscal year covered under the mid-term
management plan as a calculation indicator. This stock-based remuneration is primarily intended to motivate each internal
director to contribute more to the performance and increase of corporate value of the ULVAC Group over the medium to longterm. These standards are determined by the Board of Directors based on the report received from the Committee for
Appointment and Remuneration, etc. The Company’s shares acquired through the trust using funds contributed by the Company
are allocated to each director in accordance with the Company’s Rules for Granting Shares to Officers, which establish criteria forallotting shares based on performance for each fiscal year. Each director will, in principle, be paid at the time of retirement
through the trust, the Company’s shares and an amount of cash that is equivalent to the market value of the Company’s shares asof the date of retirement.
The component ratio among basic remuneration, annual performance-linked remuneration, and stock-based remuneration,etc., which comprise the remuneration of internal directors, has not been specifically set, as each component is evaluatedindependently.

Persons Eligible for Stock Options

Supplementary Explanation for Applicable Items—

Director Remuneration
Status of Disclosure of Individual Directors’
Remuneration Updated

Disclosure for Selected Directors

Supplementary Explanation for Applicable Items Updated
The annual total amount of remuneration of all directors of the Company in the Company’s 118th fiscal year (July 1, 2021 – June30, 2022) was ¥411 million, of which the portion for external directors accounts for ¥72 million.
With regard to officers earning an annual remuneration of ¥100 million or more, the respective remunerations are disclosed in
the annual securities report.

Policy on Determining Remuneration Amounts andthe Calculation Methods Thereof

Established

Disclosure of Policy on Determining Remuneration Amounts and the Calculation Methods Thereof
A resolution regarding the policy on determining the content of individual remuneration, etc. of directors was passed at themeeting of the Board of Directors held on February 12, 2021. The Company’s policy on determining the individual remuneration,etc. of directors is that the determination of the remuneration of each director should take into consideration the responsibility ofthat director not only for the Company’s non-consolidated business results for a single fiscal year, but also for the sustainableenhancement of the corporate value of the ULVAC Group. In addition, multiple remuneration elements are evaluated in
combination as described below in order to appropriately reflect the contributions of each director according to their respective
responsibilities, whereby it is ensured that the remuneration, etc. of each director is at an objectively appropriate level.

13

When determining the specific remuneration for individual directors, the Committee for Appointment and Remuneration, etc.,
which consists of external directors, external auditors, and the chairman of the Board of Directors and has been established toensure the management transparency, fairness, and appropriateness of remuneration, etc., analyzes the level of remuneration atother companies of the same size, industry, etc. as the Company. The Committee then evaluates and verifies the aforementioned
responsibilities and contributions of the individual directors from various perspectives, examines the remuneration, etc. of eachdirector to ensure that it is at an appropriate level, and submits resulting recommendations to the Board of Directors. Based onthese recommendations, the amounts of remuneration, etc. of the individual directors are determined by a resolution of the Boardof Directors within the total amount of directors’ remuneration approved by the resolution of the General Meeting of
Shareholders.
With regard to remuneration, etc. of internal directors, in order to reflect not only the appropriate supervisory function for theCompany’s overall management, but also multifaceted evaluations such as the internal directors’ responsibility for the Company’s
non-consolidated performance for a single fiscal year, their responsibility for the sustainable enhancement of the corporate valueof the ULVAC Group, and the degree of contribution of their responsibilities according to their respective positions, theremuneration shall consist of basic remuneration as fixed remuneration paid in a fixed amount every month, annual
performance-linked remuneration (officer bonus) linked to the business results for the relevant fiscal year, and stock-based
remuneration, etc. through the Board Benefit Trust (BBT), which is a stock-based remuneration plan determined according to thedegree of achievement of annual performance targets. In contrast, from the perspective of conducting appropriate supervision of
the Company’s management as a whole from a fair viewpoint, external directors’ remuneration consists only of basic
remuneration, which is fixed remuneration.
Resolutions of the Board of Directors on the remuneration, etc. of directors are adopted within the maximum amount of
aggregate remuneration for directors, which was set at ¥500 million per annum (including a maximum of ¥90 million for external
directors) by a resolution at the 117th Ordinary General Meeting of Shareholders held on September 29, 2021. For internal
directors, remuneration, etc. through the Board Benefit Trust (BBT), which was resolved at the 112th Ordinary General Meetingof Shareholders held on September 29, 2016, is also granted as performance-linked remuneration, which is not included in the
remuneration limit above.
The officer retirement benefits system of the Company was abolished by a resolution at the Ordinary General Meeting of
Shareholders held on September 28, 2006.

Support System for External Directors and/or External Auditors
Materials for the Board of Directors meetings shall be distributed prior to the date of the meeting and a pre-meeting briefing shallbe given in principle, depending on the agenda of the meeting, based on a confirmation of the intentions of each external director.
A pre-meeting briefing for external auditors shall be given at the Board of Corporate Auditors meeting prior to the Board of
Directors meeting in principle.
Moreover, with a view toward further enhancing the Board’s effectiveness, regular meetings are held to exchange opinionswith external directors and auditors regarding necessary matters.
The Management Planning Department serves as a liaison office to provide support to external directors and auditors.

Statuses of Persons who have Retired as President and Chief Executive Officer, etc.
Information on Persons Holding Advisory Positions (Sodanyaku, Komon, etc.) after Retiring as President and Chief
Executive Officer, 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

—

—

14

Term
—

Number of Persons Holding Advisory Positions (Sodanyaku, Komon,0etc.) After Retiring as President and Chief Executive Officer, etc.

Other Related Matters—

2. Matters Concerning Functions of Business Execution, Auditing and Supervision, Nomination, andRemuneration Decisions (Overview of Current Corporate Governance System) Updated(1) The Company’s management structure
The Company has adopted a company with a board of corporate auditors as its management structure. Particularly important
institutional structures include the Board of Directors, the Board of Executive Officers, the Board of Corporate Auditors, and theCommittee for Appointment and Remuneration, etc.
Firstly, the Company has a Board of Directors, which is a decision-making body for important management issues. The Board
holds regular meetings once a month, as well as ad hoc meetings as necessary to ensure flexibility. The Board of Directors
comprises seven members, of whom four are external directors. All the four external directors are designated as independent
external directors. By virtue of this structure, the Company is not only able to make swift and efficient judgments concerning
important management issues, but is also to achieve fair, impartial, and highly transparent deliberation as well as operational
supervision.
Next, with the introduction of an executive officer system, executive officers exercise executive functions, having been
granted a certain degree of responsibility and authority over their designated areas, through delegation by the Board of Directors.
The Company also has a Board of Executive Officers that comprises a total of 18 internal directors and executive officers. The
Board of Executive Officers holds regular meetings once a month, as well as ad hoc meetings as necessary. By virtue of thisstructure, we have achieved more flexible and swifter business operations that are appropriate for a rapidly changing businessenvironment, based on the clarification of the responsibilities and authority of each executive officer.
In addition, the Company has a Board of Corporate Auditors, which performs auditing and supervision of management
decision-making and business operations. The Board of Corporate Auditors comprises four members, of whom two are external
auditors. Both of the external auditors are designated as independent external auditors. We ensure full auditing and supervisory
functions through close cooperation between auditors and the Internal Auditing Department and the independent auditor, whose
independence is ensured, as well as attendance and statement of opinions by auditors at important meetings, such as meetings ofthe Board of Directors and the Board of Executive Officers, and regular meetings with the President and Chief Executive Officer.
By virtue of this structure, each auditor obtains sufficient information and fulfills rigorous, fair, impartial, and transparent auditing
and supervisory functions.
Furthermore, the Company has a Committee for Appointment and Remuneration, etc. to discuss important matters that require
objective determination in particular, such as the appointment and remunerations, etc. of directors and executive officers. The
Committee for Appointment and Remuneration, etc. comprises seven members, of whom six members are independent external
directors and independent external auditors, and the remaining one member is the President and Chief Executive Officer, and ischaired by an external director, Ms. Yoshimi Nakajima. By having these kinds of advisory bodies for the Board of Directors, wehave achieved fair, impartial, and highly transparent deliberations with regard to especially important management decisions andincrease the effectiveness of the Board of Directors.
(2) Accounting audits
Based on an audit engagement with the Company, PricewaterhouseCoopers Aarata LLC conducts accounting audits pursuant to
the Companies Act and the Financial Instruments and Exchange Act. The audit firm engages in the audit work as an independent
third party.
(3) Limited liability agreements
In accordance with the provisions of Article 427, Paragraph 1 of the Companies Act, the Company has entered into agreementswith external directors and auditors respectively to limit their liability for damage stipulated in Article 423, Paragraph 1 of theCompanies Act.

15

3. Reasons for Adoption of Current Corporate Governance System
As a company with a board of corporate auditors, we believe that having both a supervisory function of the Board of Directors
and an audit function of auditors in place is best for the development and enhancement of a highly effective and transparent
corporate governance system.

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Meeting of Shareholders and Facilitate Exercise of Voting Rights Updated
Supplementary Explanation
Early Posting of Notice of the General Meetingof Shareholders

The notice is dispatched 20 days prior to the General Meeting of Shareholders.

Scheduling of the General Meeting of
Shareholders During Non-Peak Days

The Ordinary General Meeting of Shareholders is held in September of eachyear, avoiding the season in which the vast majority of Japanese companies
hold their general meeting of shareholders.

Electronic Exercise of Voting Rights

Shareholders are allowed to exercise their voting rights via the Internet.

Participation in a Platform for the Electronic
Exercise of Voting Rights and Other Initiatives
to Enhance the Environment for Institutional
Investors to Exercise Voting Rights

The Company uses the platform for the electronic exercise of voting rights for
institutional investors operated by ICJ, Inc.

Provision of Notice (or Summary of Notice) of
the General Meeting of Shareholders in
EnglishThe Company prepares English versions for part of the documents included in
the Notice of the General Meeting of Shareholders, namely a summary of the
Notice of General Meeting of Shareholders, Consolidated Financial
Statements, Non-consolidated Financial Statements, and Reference Documents
for the General Meeting of Shareholders, which are posted on the Company’s
website.

Other

In order to assist shareholders in making decisions for exercising their voting
rights at the General Meeting of Shareholders, the Company discloses various
types of information on its website, as appropriate, in addition to theinformation that is statutorily required to be disclosed.

2. Status of IR-related Activities Updated
Supplementary Explanation

Explanation byrepresentative
himself/herself

Formulation and Publication of Disclosure
Policies

Posted on the Company’s website.
https://ir.ulvac.co.jp/en/ir/irpolicy.html

Regular Investor Briefings held for Individual
Investors

From time to time, we hold briefings for individual
investors, while posting the relevant materials on our
website.

Held

Regular Investor Briefings held for Analysts
and Institutional Investors

We organize financial results briefings conducted by the
Representative Director twice per year following theannouncements of the full-year financial results and thesecond quarter financial results, the video footage of
which is released online, while the contents of thebriefings are documented in English and posted on our
website. Meanwhile, an online financial results briefing is
conducted by the General Manager of the IR Department
following the announcement of each quarterly financial
results, the contents of which are documented in Japanese

Held

16

and English and posted on our website. Furthermore, we
actively hold regular meetings with analysts as well asJapanese and foreign institutional investors on both anindividual and group basis, while participating inconferences both in Japan and overseas hosted by
securities companies, conducting road shows overseas,and organizing plant tours and technical seminars.

Posting of IR Materials on the Company’s
WebsiteFor the purpose of providing IR information, we post
financial results, annual securities reports, financial
results presentation materials, annual reports, business
reports, fact sheets, timely disclosure materials, news
releases, etc. on our website.

Establishment of Department and/or Placementof a Manager in Charge of IR

The Company has established the IR Department, staffedby dedicated personnel.

Other

IR information is posted on the Company’s English
website.
https://ir.ulvac.co.jp/en/ir.html

3. Status of Measures to Ensure Due Respect for Stakeholders
Supplementary Explanation
Establishment of Internal Rules Stipulating
Respect for the Position of Stakeholders

The Company recognizes that respect for stakeholders is a critical matter whichforms the basis of its business activities. This principle is reflected in our
Corporate Code of Conduct, training on which is provided throughout theCompany, and distributed in the form of an associated booklet.

Implementation of Environmental Preservation
Activities and CSR Activities, etc.

We have formulated our environmental philosophy and environmental policy,
while posting our activities in this area on our website.
At the same time, our CSR activities as a whole are described in the annual
ULVAC Value Report and are posted on our website.
https://www.ulvac.co.jp/en/sustainability/index.html

Formulation of Policies, etc. on Provision ofInformation to Stakeholders

In addition to information that is statutorily required to be disclosed under the
relevant laws and regulations, we also actively disclose other information thatis useful in assisting shareholders in making investment decisions, including
non-financial information.

Other

—

17

IV. Matters Concerning the Internal Control System
1. Basic Views on Internal Control System and Status of Development Updated
The Company has adopted a resolution at the meeting of the Board of Directors for establishing a system to ensure theappropriateness of business operations, as follows.
(1) A system to ensure that directors and employees execute their duties in compliance with laws and regulations as well as the
Articles of Incorporation
The Company shall, in order to ensure that its directors and employees execute their duties in compliance with laws andregulations as well as the Articles of Incorporation, while fulfilling its corporate social responsibility, establish its Corporate Codeof Conduct to raise the awareness of legal compliance including the exclusion of anti-social forces, and provide education anddistribute booklets thereon, thereby ensuring that the code is thoroughly understood by all. In addition, the Company shallestablish the Compliance Committee, which shall perform its duties by developing compliance-related internal rules, including
those for a whistleblowing system which ensures the protection of whistleblowers from disadvantageous treatment due to theiracts of whistleblowing. Furthermore, the Company shall establish an Internal Auditing Department whose independence isensured, which shall assess internal controls for the purpose of the Financial Instruments and Exchange Act, while conducting
audits of the effectiveness and adequacy of business operations in collaboration with auditors of the Company.
(2) Systems for storing and managing information regarding the execution of duties by directors
With respect to information related to the execution of duties by directors of the Company, the Company shall develop andenhance rules regarding information management, and adopt appropriate management methods for the preparation, inspection,
storage, and disposal of the minutes of various important meetings and other documents.
(3) Rules and other frameworks for managing the risk of loss
The Company shall clearly define the operations conducted by each department and clarify the responsibilities and authority of
the heads of each department. Based on this, the Company shall manage the risk of loss in the execution of its corporate activities
by establishing a framework, in which the department primarily responsible for executing a particular business shall conduct athorough discussion/examination in association with other related departments depending on the nature and impact of thebusiness in question, the results of which shall be reported to the director in charge in accordance with various internal rules, whoshall then make a decision based on the report. In addition, a risk management framework shall be established, in which risks
shall be classified into categories through the development and enhancement of internal rules of the Company regarding risk
management, departments primarily responsible for management of the respective risk categories shall be designated, and thehead of each such department shall assume responsibility for managing these risks.
(4) System to ensure that directors execute their duties efficiently
Business plans shall be established to clarify the goals of the Company as a whole. On such basis, the head of each department
shall formulate performance targets for his/her department, and the director in charge shall evaluate the results in accordance withvarious internal rules, thereby clarifying the responsibility of each department on overall corporate performance. Meanwhile, theCompany shall adopt a framework in which the decision-making process is speeded up by clarifying the responsibilities andauthority of the head of each department, while important matters shall be subject to consultation with the director in charge,
thereby seeking flexible decision making in a prompt and discreet manner.
Auditors shall be guaranteed opportunities to attend the Company meetings on the aforementioned important matters and toobtain relevant information to ensure appropriate judgments.
(5) System to ensure the appropriateness of business operations in the corporate group comprising the Company and its
subsidiaries
We place an emphasis on the maintenance and improvement of the corporate value of the ULVAC Group as a whole. With a view
toward fulfilling the above, we recognize that it should be optimal for the Company to appropriately give instructions to, andengage in the management of all subsidiaries, by comprehensively taking into consideration the circumstances of each subsidiary,
including the country where it is located, and type and scale of business, while respecting their individual autonomy andindependence. As such, the Management Planning Department shall be responsible for selecting and implementing the method
deemed most appropriate for managing subsidiaries.

18Based on the aforementioned policy, with respect to business plans, the Company shall clarify the goals of the ULVAC Group
as a whole first, followed by the formulation of a business plan at each subsidiary by taking into consideration such goals. In
addition, each subsidiary shall raise compliance awareness, and establish and operate a compliance system for the purpose ofmaintaining and enhancing the ULVAC Group’s corporate value.
In order to facilitate the reporting of each subsidiary to the Company on the execution of duties by directors or theirequivalents at each subsidiary, various opportunities shall be exploited, such as important meetings at the Company attended bysubsidiaries, consultation and verification in the process of formulation of business plans and report on progress in theimplementation thereof, and report on important meetings held at each subsidiary.
Next, with a view toward managing the risk of loss at each subsidiary and ensuring the efficiency of the execution of duties
by directors and other officers at each subsidiary, we shall endeavor to establish and operate rules and frameworks for risk
management at each subsidiary. Furthermore, in addition to the establishment of these rules and frameworks, in the event of
actual or potential occurrence of a serious loss, in order to enable the Company to promptly become aware of such fact, theCompany shall select the method and extent deemed most appropriate for the management of the subsidiary through secondmentof a director or auditor from the Company to the subsidiary, hosting/administration of important meetings attended by multiple
subsidiaries, assisting in formulating business plans, evaluation of performance, and inquiries to check on discrepancies between
the business plan and actual performance, and the like.
In addition, the Company shall distribute to all its subsidiaries the Corporate Code of Conduct established by the Company inan effort to raise awareness of compliance to ensure that directors and their equivalents, as well as employees at subsidiaries
execute their duties in compliance with laws and regulations as well as the Articles of Incorporation, while guaranteeing theopportunity of whistleblowing to the Compliance Committee of the Company and treating the whistleblowing appropriately.
Moreover, the Company shall strive to ensure that its auditors and the Internal Auditing Department are allowed to engage inaudits of subsidiaries in a manner deemed most appropriate for the purpose of executing audit work in compliance with laws andregulations in order to ensure the appropriateness of the business operations of subsidiaries.
(6) Matters concerning employees who are requested by auditors to assist them in the performance of their duties, if any, andmatters concerning the independence of such employees from directors and ensuring the effectiveness of instructions given byauditors to such employees
In the event that the Company’s auditors request the Company to appoint employees to assist them in their duties, directors of theCompany shall comply with such request, and offer cooperation as needed. Prior consent of the Board of Corporate Auditors shallbe obtained regarding the transfer, personnel evaluations, or disciplinary actions of such employees.
Furthermore, auditors of the Company shall be allowed to instruct employees in the department that is deemed to be mostappropriate, as needed, to carry out the necessary work for the audit, and the Company shall allow the employees who are givensuch instructions to carry out the work, as instructed.
(7) Systems for directors and employees to report to auditors, systems for directors, auditors and employees of subsidiaries or
persons who receive reports from them to report to auditors, and systems to ensure that persons who make such reports are nottreated disadvantageously on the basis of such reporting
Directors and employees of the Company shall, in the event that they become aware of actual or potential occurrence of an eventthat may cause a serious loss to the Company or its subsidiaries, or of the occurrence of an illegal or wrongful act by directors,
their equivalents, or employees of the Company or its subsidiaries, shall report such occurrence to the auditors of the Company inaccordance with the relevant laws and regulations and internal rules. If the aforementioned event or act specifically concerns therisk management system, each department in charge of risk management shall be responsible for reporting it to the auditors of theCompany on a regular basis or otherwise in accordance with the relevant laws and regulations and internal rules. The Company
also guarantees that the auditors of the Company shall be granted opportunities to attend the company meetings on the
aforementioned important matters, obtain information, and express their opinions. Moreover, the Company guarantees that any
person who has made such reports to auditors of the Company shall not be treated disadvantageously on the basis of suchreporting.
(8) Matters concerning policies on the procedures for advance payment or reimbursement of expenses arising from the executionof duties by auditors, and on the treatment of other expenses or liabilities arising therefrom
If an auditor of the Company makes a request to the Company to bear expenses necessary for the performance of his/her audit
duties, the Company shall promptly take actions to comply with such request, unless such expense is reasonably deemed notnecessary for the performance of such audit duties by the auditor.

19(9) Systems to otherwise ensure that audits by auditors are conducted effectively
The Company guarantees opportunities for auditors of the Company to attend meetings necessary for audit purpose and to obtainrelevant information. On such basis, auditors shall perform audit work in cooperation with the independent auditor and theInternal Auditing Department of the Company, while also obtaining insight from the external auditors of the Company.
In addition, auditors of the Company shall raise awareness regarding audits by auditors through regular exchanges of opinionswith directors of the Company, while enhancing audits and developing the audit environment in an effort to materialize effective
and flexible audits.
The status of operation of the aforementioned system to ensure the appropriateness of business operations during the 118th
fiscal year (July 1, 2021 – June 30, 2022) is as follows.
(1) Progress of initiatives to ensure the legitimacy of the Company’s business activities
The Company has established the Corporate Code of Conduct as behavioral guidelines for its directors and employees to adhere
to, followed by review and adjustments, as appropriate. We have prepared a booklet containing this Corporate Code of Conduct
for distribution to the group companies, while endeavoring to develop internal rules and frameworks in line therewith. We also
provide education on the Corporate Code of Conduct together with laws and regulations that require particularly rigorouscompliance, as appropriate. At the same time, we engage in raising awareness regarding how to handle anti-social forces by
including this issue in the Corporate Code of Conduct, while establishing a framework for quick response in cooperation withexternal specialist organizations in the event that an incident of this nature arises.
Furthermore, in addition to the General Manager of the Internal Auditing Department as the internal point of contact forcompliance-related whistleblowing, the Company has also established an external point of contact for this purpose, which isprovided by a law firm. The Company engages the law firm only for the service as a point of contact for compliance-related
whistleblowing, and has not entered into an advisory contract with the firm. The Company guarantees in its specific internal rulesthat whistleblowers are not to be treated disadvantageously due to the act of whistleblowing by itself, and the contents ofwhistleblowing reports shall be reported promptly to the Compliance Committee, which shall lead the relevant investigation andremedial actions, while obtaining opinions of external specialists, if necessary. This framework is also specified in the Corporate
Code of Conduct.
(2) Progress in initiatives to ensure that directors of the Company execute their duties appropriately and in an efficient manner
The Board of Directors of the Company is composed of seven directors, including four external directors (as of the end of thecurrent fiscal year), and invites the attendance of four auditors including two external auditors. The Board of Directors of theCompany held a total of 13 meetings in the current fiscal year, deliberating and passing resolutions while actively exchanging
opinions on each proposal. The Board of Directors engages in supervision in the form of proper analysis and evaluation of thestatus of business execution, in addition to decision-making concerning important business execution, thereby ensuring theeffectiveness not only of its decision-making function but also of its supervisory function. Furthermore, the Board of Directors
accurately records and prepares minutes of its meetings to ensure the appropriate storage and management of information. In
addition, the Committee for Appointment and Remuneration, etc. has been established as an advisory body to the Board of
Directors, ensuring that management adopts the opinions of external officers including independent officers.
On the other hand, the Company has adopted an executive officer system whereby the Board of Directors grants authority
with respect to certain business execution to executive officers. The Board of Executive Officers held a total of 18 meetings
attended by the executive officers as well during the current fiscal year, thereby achieving flexible decision-making with respect
to business execution.
(3) Progress of initiatives for managing the risk of loss
The Company manages risks by establishing rules and frameworks concerning risk management. Depending on the nature ofpossible risks, the responsibilities and authority of heads of departments in charge of the relevant risk are clarified, and any eventthat arises from such risks is dealt with flexibly via a coordinated response involving concerned departments depending on thenature, impact, and urgency of such event. In the current fiscal year, we held meetings of the Risk Management Committee,
which is responsible for general risk management within the Company, in which overall risk status was reported in the presenceof officers of the Company, and through discussion and review of the risk management system, endeavors to achieve more
effective operation of the risk management system.
In order to implement the ULVAC Group’s response measures against COVID-19 in a timely and appropriate manner, we20

have established the COVID-19 Emergency Response Headquarters headed by the President and Chief Executive Officer, toformulate our COVID-19 response policy across the ULVAC Group and ensure that the policy is thoroughly understood by all.
(4) Progress of initiatives to ensure the appropriateness of the Group’s business operations
For the purpose of grasping the status of business execution at the Group companies, the Management Planning Department of
the Company shall, while making a comprehensive consideration of the circumstances of each Group company, such as thecountry where it is located, and type and scale of business, obtain, analyze, and review information in the most appropriate
method, such as holding regular meetings as well as ad hoc meetings to confirm the progress of business plans.
Meanwhile, the Corporate Code of Conduct formulated by the Company is communicated to all Group companies, and eachGroup company engages in activities to raise awareness of compliance through training on the Corporate Code of Conduct andestablishing a relevant whistleblowing system. In addition, auditors and the Internal Auditing Department of the Company
conduct audits of the Group companies in compliance with the relevant laws and regulations.
(5) Progress of initiatives to ensure the effectiveness of audits by auditors
The Board of Corporate Auditors of the Company consists of four auditors, including two external auditors. The Board of
Corporate Auditors held a total of 19 meetings during the current fiscal year, at which important audit-related matters including
agendas for meetings of the Board of Directors were reported and discussed. Based on the discussions at meetings of the Board of
Corporate Auditors and the expertise of individual auditors, auditors provide recommendations to directors of the Company asappropriate and necessary, including at meetings of the Board of Directors.
In addition, the Company secures opportunities for auditors to regularly exchange opinions with directors, the Internal
Auditing Department, and the independent auditor on wide-ranging matters such as compliance and the status of establishment ofinternal control. The Company ensures that auditors are provided with the information necessary to carry out audits, and that theyattend necessary meetings from the perspective of ensuring the acquisition of such information.

2. Basic Views on Measures for Eliminating Anti-Social Forces and Status of Development
Our basic policy is to stand firm against anti-social forces that threaten the order and safety of civil life, and to have no
relationship whatsoever with anti-social forces.
From the aforementioned standpoint, we have established a framework for cooperating with external experts such as thepolice and attorneys, which allows us to exchange information on a daily basis. In addition, we have incorporated the principle toeliminate anti-social forces into the basic view of our internal control system established by the Board of Directors, while
promoting activities to raise awareness of this issue among employees. As part of such activities, we have established the
Corporate Code of Conduct comprising 18 articles, and organized a briefing session on the Corporate Code of Conduct, which
was summarized as a booklet and distributed to individual employees, as a reminder of their duty as a member of the corporation
to comply with laws and regulations.
The following are the specific details of the basic view on the elimination of anti-social forces in this Corporate Code of
Conduct.
[Corporate Code of Conduct (Excerpt)]
ULVAC shall have no relationship whatsoever with individuals or groups that compromise social order or sound corporate
activities. Management staff, in particular, shall stand firm against such individuals or groups, without fear. We shallsystematically deal with those who attempt to exploit us through racketeering by forcefully interceding in civil disputes with thesupport from the police and attorneys as appropriate, based on the principle of “do not fear,” “do not give money to,” and “do nottake advantage of” anti-social forces, and will never let employees face such troubles alone.

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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
The Company makes disclosures appropriately in compliance with the Financial Instruments and Exchange Act and other laws
and regulations relevant to the disclosure of corporate information, as well as the timely disclosure rules established by the Tokyo
Stock Exchange. Material information with a significant impact on investment decisions, in particular, are disclosed appropriately
on a timely basis.
From this perspective, important information and other information that has a material impact on investors’ investment
decisions (hereinafter, collectively referred to as “insider information”) are managed appropriately according to the internal rules
regarding information management procedures, as separately established. An outline of the information management procedure is
as follows.
(1) Any potential insider information incident in the Company or the Group companies shall be reported promptly to the Insider
Information Management Secretariat (established within the Management Planning Department). Collection and managementof insider information shall, under the responsibility of the Information Handling Supervisor (served concurrently by theGeneral Manager of the Management Planning Department), be controlled centrally by the Insider Information Management
Secretariat to prevent the proliferation of insider information.
(2) The Insider Information Management Secretariat shall, upon the receipt of a report on a potential insider information incident,
promptly convene the concerned departments and verify whether the information in question warrants timely disclosure. The
Insider Information Management Secretariat shall immediately report the results of such verification to the Information
Handling Supervisor. Information that does not warrant timely disclosure but is determined by the Information HandlingSupervisor as information that warrants voluntary disclosure, may be disclosed by an appropriate disclosure method.
(3) Under the instruction of the Information Handling Supervisor, information on decisions made or financial information shall be
disclosed promptly after approval or resolution by the Board of Directors, while information regarding facts that haveoccurred shall be disclosed promptly after approval by the Information Management Officer (served concurrently by the
President and Chief Executive Officer) (through an appropriate method for disclosure, such as via TDnet of the Tokyo Stock
Exchange, mailing of the relevant materials to the Tokyo Stock Exchange, and occasionally by holding a press conference, ordisclosure on the Company’s website).

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A schematic diagram of our corporate governance system is as follows.

General Meeting of Shareholders
Appointment/
Dismissal

Appointment/
Dismissal

Board of Directors

Board ofCorporate
Auditors

Audit

Collaboration

Appointment/
Dismissal

Independent
AuditorRecommendations

Committee for
Appointment andRemuneration, etc.

Risk Management
Committee
Compliance
Committee

Accounting
audit

Audit

President andChief Executive
Officer

Board of Executive
Officers

Collaboration

Collaboration

Sustainability
Promotion
Committee

Divisions of theCompany

Group companies

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Internal Auditing
Department
Audit