Corporate Governance Report[TRANSLATION]
This document has been translated from the Japanese original for reference purposes only. In the event of any
discrepancy between this translated document and the Japanese original, the original shall prevail.
Last Update: June 29, 2022

Takara Bio Inc.
Koichi Nakao, President & CEO
Contact: Takuya Kakemi, Executive Officer,
Head of Corporate Management Division
Securities Code: 4974
https://www.takara-bio.com/
The corporate governance of Takara Bio Inc. (the “Company”) is described below.

I.

Basic Views on Corporate Governance, Capital Structure, Corporate Profile andOther Basic Information

1. Basic Views
Guided by Takara Bio corporate philosophy of “Contributing to the health of humankind through thedevelopment of revolutionary biotechnologies such as gene therapy,” we are promoting the development ofplatform technologies for biologics through the core businesses of Reagents and Instruments and CDMO
business, and aiming to become a biologics development company* that continuously creates new modalities.
Going forward, we will continue to create new value through proactive business activities, achieve sustainablegrowth, and contribute to society. To this end, it is necessary to strengthen its corporate governance system inorder to constantly promote honest and fair corporate activities. We will work to ensure managementtransparency, improve efficiency, and make swift decisions.
[Reasons for Non-compliance with the Principles of the Corporate Governance Code] Updated(Supplementary Principle 4-1[3] Succession Plan)
Establishment of a process (succession plan) for the development of the next generation of management
executives, who will be the successor to us, such as the Chief Executive Officer (CEO), is recognized as animportant management issue for achieving sustainable growth and increasing corporate value over the
medium to long term. Executive Officers who are not concurrently serving as Directors also attend meetingsof the Board of Directors as management team, and participate as observers in our goals and specificmanagement strategies. The Board of Directors will consider the requirements and policies required of the
CEO and others, referring to the advice and recommendations of the Nomination and Compensation
Committee in light of the business environment surrounding us and our corporate culture.
(Supplementary Principle 4-2[1] Stock-based Compensation System)
We have introduced a cash-based compensation system that is linked to medium- to long-term performance,
but do not have a stock-based compensation system in place. Going forward, we recognize that Director
incentives for sustainable growth are an important management issue, and the Board of Directors will consider
the ratio of remuneration between cash and stock, including the method of determining overall remuneration,with reference to advice and recommendations provided by the Nomination and Compensation Committee.

-1-[Disclosure Based on the Principles of the Corporate Governance Code] Updated(Principle 1-4 Cross-Shareholdings)
We do not currently hold shares of other listed companies as strategic cross-share stockholdings, and our basic
policy is not to have in the future.
(Principle 1-7 Related Party Transactions)
We have established the Regulations Governing the Management of Related Party Transactions as amechanism to properly check transactions between related parties. We conduct transactions after examining
the necessity of transactions and the appropriateness of the terms and conditions of transactions.

Each year, we regularly request each Director to submit a confirmation document on transactions
between related parties, and investigate whether or not we have a majority of voting rights held by its
Directors and their relatives, or by which they are represented.

New transactions with related parties shall be approved by the Board of Directors in accordance with theRegulations Governing the Management of Related Party Transactions.

In accordance with the Regulations Governing the Management of Related Party Transactions, relatedparty transactions in which transactions continue at the end of each fiscal year are reviewed and approvedby the first Board of Directors meeting held after the commencement of the new fiscal year to determine
the reasonableness of the continuation of transactions (business necessity) and the appropriateness of theterms and conditions of transactions.
Competitive transactions and conflict of interest transactions of Directors are implemented with theapproval of the Board of Directors in accordance with laws and regulations and the Regulations of theBoard of Directors, and the results of these transactions are reported to the Board of Directors on a regularbasis each year.
(Supplementary Principles 2-4[1] Ensuring Diversity)
Based on the concept of promoting the active participation of diverse human resources as stated in the
Takara Bio Group's “Basic Policies for Promoting Sustainability Management”, we are promoting theactive participation of diverse human resources, including the promotion of women's active participation.
The status of such activities is disclosed on our website and other media. In addition, as we expand andgrow our business overseas, we have appointed foreign officers and executives at overseas Group
companies. As a result of the promotion to date, new hires and appointments of women and mid-career
recruits to managerial positions, as well as the appointment of foreign employees to executives andexecutives at overseas Group companies, we will continue to work to ensure the diversity of internal
human resources.
To further enhance our corporate value, we have developed a human resource development program
aimed at improving the skills of each and every employee. We are also working to create a system thatenables all employees to work with enthusiasm while balancing work and personal life in accordancewith their individual lifestyles. The status of implementation is disclosed on our website.

(Principle 2-6 Corporate Pension)
We operate a defined benefit corporate pension plan based on our code. In the investment of the defined
benefit corporate pension plan, we have established a policy asset composition ratio from a medium-to longterm perspective based on the basic policy and investment guidelines, and presents this ratio to investment
managers. The investment status is monitored regularly and reviewed as necessary. In addition, employees
engaged in corporate pension affairs shall be assigned with due consideration given to their knowledge andexperience. The exercise of voting rights in shares held as part of the plan assets is subject to the judgment
criteria of the trustee, and there are no conflicts of interest.
(Principle 3-1 Enhancement of Information Disclosure)
From the perspective of ensuring transparency and fairness in our decision-making and realizing effective
corporate governance, we will disclose and disseminate information as follows.
(i) Business strategies are disclosed in the Annual Securities Report and the Medium-Term ManagementPlan.
(ii) We disclose our basic corporate governance policies on our website, annual reports, and securities
reports.
-2-

(iii) We disclose our policy on remuneration for Directors and Auditors in our annual securities report.
(iv) Our policies and procedures regarding the nomination of candidates for Directors and Auditors and theappointment and dismissal of Executive Officers are described below.
[1] Policies and procedures for board nominations
We pay attention to ensuring diversity from the perspectives of gender, internationality, career and age. In
light of the following standards, the Nominations and Compensation Committee deliberates and examines theissue, and the Board of Directors resolves the issue based on the advice and recommendations of theCommittee.

Having the ability to recognize and resolve management issues from the perspective of superior
personality and insight and overall management.
Internal Directors shall have sufficient knowledge, experience, and track record in specialized fields andhave a high level of organizational management capability.

External Directors shall have extensive experience in their respective fields of origin, and shall have thequalities to give advice and recommendations from an independent standpoint to ensure theappropriateness of decision-making by the Board of Directors.
[2] Policies and Procedures for the Board of Directors to appoint candidates for Auditors
We pay attention to ensuring diversity from the perspectives of gender, internationality, career and age. In
light of the following standards, the President & CEO proposes to the Board of Directors with the consent of
the Board of Auditors after consultation with other Directors and resolves the proposal.
Having the ability to recognize management issues and make recommendations to management teamfrom the perspective of superior personality and insight and overall management.
Internal Auditors shall have sufficient knowledge, experience, and track record in specialized fields.
External Auditors shall have extensive experiences in their respective fields of origin and abilities to give
advice and recommendation from an independent standpoint to ensure the appropriateness of decisionmaking at the Board of Directors.
[3] Policies and procedures for the appointment and dismissal of Executive Officers by the Board of
Directors(Appointment Policy and Procedures)
We pay attention to ensuring diversity from the perspectives of gender, internationality, career and age. In
light of the following standards, the President & CEO makes proposals to the Board of Directors after
consultation with other Directors and resolves the proposals.

Having the ability to recognize and resolve management issues from the perspective of superior
personality and insight and overall management.

Having sufficient knowledge, experience, and track record in assigned tasks and having a high level oforganizational management capability.
(Policies and Procedures for Dismissal)
In light of the following standards, the President & CEO submits a proposal to the Board of Directors throughconsultation with other Directors and makes a resolution.
Any violation of laws, regulations, the Articles of Incorporation, or any other internal regulations may
cause us to suffer a significant loss or significantly hinder our business.
It is found that there was a considerable hindrance to the execution of its duties.

There is a relationship with an anti-social force that should be criticized socially.

It is found obviously that each of the requirements of the above-mentioned standards of appointment is
not met.
(Supplementary Principle 3-1[3] Sustainability Initiatives, etc.)
Our efforts for sustainability, such as human resource development and environmental measures, are disclosed
in the Takara Bio Group “Basic Policy for Promoting Sustainability Management”.
In addition, in order to achieve sustainable growth and increase corporate value over the medium to long term,
we regard the development of human resources capable of supporting global business growth and the next
generation of the Group, and the further improvement of our technological capabilities and quality as
extremely important management issues. Accordingly, we will allocate and invest appropriate management
resources to develop human resources and improve our technological capabilities and quality.

-3-In accordance with the framework of the Climate Related Financial Information Disclosure Task Force(TCFD), the Group reviews and responds to the impact of climate change-related risks and profit opportunities
on our business activities and profits, and discloses related information on our website and other media.
(Supplementary Principle 4-1[1] Roles and Responsibilities of Directors and the Board of Directors)In the Regulations Governing Meetings of the Board of Directors, we primarily set the followings asmatters to be resolved at meetings of the Board of Directors, and delegate such matters that do not fallunder the following to the management team (Directors and Executive Officers). (Supplementary
Principle 4-1[1])(i) Matters concerning the general meeting of shareholders(ii) Personnel affairs of Directors, Executive Officers, and important employees(iii) Matters concerning the accounting of the Company(iv) Matters concerning the disposition and acceptance of important assets that fall under the specific criteria
for amounts(v) Other matters stipulated by laws and regulations or the Articles of Incorporation and important businessmatters, as well as the determination or occurrence of material facts that may affect our group's
operations, operations, financial position, and results of operations(Principle 4-9 Evaluation Criteria for Appointment and Independence of External Directors and Auditors)
We have established “Judgment Criteria for the Assignment and Independence of External Officers”. In
accordance with these criteria, the Board of Directors deliberates and examines the matters and selects
candidates for independent External Directors.
(Supplementary Principle 4-10[1] Utilization of Voluntary Mechanism)
In order to ensure the independence and objectivity of the functions of the Board of Directors with respect tonomination of Director candidates and compensation of Directors, we have established a Nomination andCompensation Committee under the Board of Directors, which consists primarily of independent External
Officers, to obtain appropriate advice and recommendations. The committee is composed of three or moremembers, the majority of whom are External Directors, and the chairperson of the committee is to be selectedfrom among External Directors. Therefore, the independence of committee is ensured. The committee
deliberates and examines the nomination of Director candidates and the individual remuneration of Directors
prior to the resolution of the Board of Directors, and advises and suggests the results thereof to the Board of
Directors.
(Supplementary Principle 4-11[1] Concept on the versatility of the Board of Directors)
The Board of Directors is composed of Directors with advanced expertise and experience in each business,and independent External Directors who possess a wealth of experience and broad insight and provide advice
and recommendations from the perspective of all stakeholders, including shareholders, based on theirextremely high level of expertise. We believe that at the present time, Directors are an appropriate combinationof skills in the execution of management strategies, and that this is the optimal structure.
We believe that the roles and responsibilities of the Board of Directors to achieve sustainable growth andincrease corporate value over the medium to long term are extremely important. In order to continuously
improve its effectiveness, it is important to continuously examine the composition of the Board of Directors.
We will continue to consider the composition of the Board of Directors in response to management strategies
and changes in the environment. Skill matrices are disclosed in the notice of general meeting of shareholders.
(Supplementary Principles 4-11[2] Concurrent Duties as an Officer of a Listed Company)
When External Directors, External Auditors and other Officers serve concurrently as Officers of other listedcompanies other than our group, we disclose brief history annually in our securities report.
(Supplementary Principle 4-11[3] Evaluation of the Effectiveness of the Board of Directors)
We evaluate the effectiveness of the Board of Directors with a focus on its operational aspects. An overview
of this is available on our website.
(Supplementary Principles 4-14[2] Executive Training)
As a training policy for Directors and Auditors, including External Directors and External Auditors, andExecutive Officers, we will encourage and support participants in academic conferences and seminars in-4-

accordance with their respective experiences and knowledge, provide the necessary information to fulfill theirrespective roles and responsibilities, and provide support for the acquisition of knowledge, as well as support
for the expenses required for these activities on an ongoing basis.
(Principle 5-1 Constructive Dialogue with Shareholders)
We appoint a person in charge of information management and appoint the Public & Investor Relations
Department as the department in charge of IR. For analysts and investors, we hold a financial results briefing
once every six months and hold a series of individual investor briefings sequentially in an effort to improvethe understanding of us.
We have established the Takara Bio Corporate Governance Policy and posted it on our website about our basic
approach to corporate governance and the status of initiatives, including the above.
■ Takara Bio Inc. "Corporate Governance"
Website: https://ir.takara-bio.co.jp/ja/sustainability/governance.html

2. Capital Structure
Foreign Shareholding Ratio

UpdatedLess than 10%[Status of Major Shareholders] Updated
Name / Company Name
Takara Holdings Inc.
The Master Trust Bank of Japan, Ltd. (Trust
Account)
The Japan Custody Bank, Ltd. (Trust Account)
THE BANK OF NEW YORK MELLON SA/NV 10
STATE STREET BANK WEST CLIENT-TREATY
505234
JP MORGAN CHASE BANK 385781
J.P. MORGAN BANK LUXEMBOURG S.A. 384513
STATE STREET BANK AND TRUST COMPANY
505001The Bank of Kyoto, Ltd.
The Dai-ichi Life Insurance Company, Ltd.
Controlling Shareholder (except for Parent
Company)
Parent Company

Number of Shares Owned
73,350,000
7,320,600

Percentage (%)
60.91
6.08

3,311,500
1,100,000
661,700

2.75
0.91
0.55

602,417533,700
501,886

0.50
0.44
0.42

500,000
482,200

0.42
0.40

Takara Holdings Inc. (Listing : Tokyo) (Code 2531)

Supplementary Explanation-

3. Corporate Attributes

Fiscal Year-End

Tokyo Stock Exchange
Prime
March

Type of Business

Chemicals

Listed Stock Market and Market Section

Updated-5-

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

More than 1000
From ¥10 billion to less than ¥100 billion
Less than 10

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling
Shareholder
UpdatedWe are engaged in business operations which maintain our uniqueness and independence in the Takara
Holdings Group. We do not conduct transactions with the parent company which benefit the parent company
and harm us or minority shareholders. With its parent company, we have transactions including their license
for use of trademarks, outsourcing of computer-related services and lease of information related equipment.
We also have transactions with other parent group companies, including the sale of products and leasing ofreal estate (their office buildings). However, we maintain a basic policy of deciding transaction details,
including monetary sums, after discussing and negotiating based on the individual case and market values, as
it does when conducting transactions with other companies.
To protect the interests of minority shareholders, we seek the advice and recommendations of the Special
Committee, which is a voluntary committee, on matters relating to significant transactions and acts in which
the interests of our parent company or its subsidiaries conflict with those of our minority shareholders.

5. Other Special Circumstances which may have Material Impact on Corporate Governance
UpdatedAs of March 31, 2022, Takara Holdings Inc. (listed on the Prime, Tokyo Stock Exchange; securities code2531) is the parent company of us, owning 60.93% of the voting rights in us. The relationship between us andTakara Holdings is as follows:
1. Position of Takara Bio Inc. 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 alcoholic beverage and foodbusiness, and the biotechnology business with the aim of making the most of the special characteristics ofeach respective business as well as creating a business environment for increasing growth potential andcompetitiveness in both. On this basis, Takara Shuzo and we were established on April 1, 2002, through a
corporate split, with each company becoming a fully owned subsidiary of Takara Holdings. Since then, Takara
Holdings decreased the ownership of voting shares in the Company to 60.93%, through a third-party allotmentof new shares by private and public offering.
The Takara Holdings Group consists of Takara Holdings Inc., which is a holding company, and 61 affiliatedcompanies (59 subsidiaries and 2 associated companies). Within the Group, we are positioned as a subsidiaryspecializing in the biotechnology business, and it promotes the biotechnology business along with its 9
affiliated companies (subsidiaries).
2. 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 the corporate
value of the entire Takara Holdings Group. The rules are also applicable to us, and we report on the decisions
made at the meetings of its Board of Directors to Takara Holdings. However, we are not required to gain priorapproval from Takara Holdings for the resolutions of its Board of Directors, and runs its business operations
independently.
-6-

Furthermore, various meetings have been established within the Group. Those pertinent to us are the “Group
Strategy Meeting”, “the Biotechnology Business Report Meeting”, and the “Takara Group Business Plan
Meeting” These meetings are intended to foster reporting between Group companies. In their current form,
they do not impede the independence and autonomy of us.
The current Officers who hold positions in both we and Takara Holdings are as follows:
Koichi Nakao (President & CEO of Takara Bio Inc., Director of Takara Holdings Inc.)
Mutsumi Kimura (Director of Takara Bio Inc., President of Takara Holdings Inc.)
As for the above-mentioned additional duty relationship, Koichi Nakao was invited to this company fromthe perspective of consolidated management in the holding company structure of Takara Holdings, Inc. In thepast, Mutsumi Kimura had a wealth of experience and achievements in the areas of corporate planning,finance, accounting, public relations, general affairs, human resources, etc. and demonstrated leadership as
our Executive Vice President. As a result, Mutsumi Kimura has been invited to our company based on the
judgment that it will strengthen our corporate functions and realize our sustainable growth and increase incorporate value over the medium term. The purpose of this appointment is not for Takara Holdings, Inc. tocontrol us.

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

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

Articles of

10
1 yearChairperson of the Board

President & CEO

Number of Directors

9

Number of External Directors

3

Number of Independent Officers

3

External Directors’ Relationship with the Company (1)NameAttribute

Relationship with the Company*
a

b

c

d

e

f

g

h

i

j

Nobuko Kawashima Academic
Kazuko Kimura
Academic
Noriomi Matsumura Academic*
Categories for “Relationship with the Company”* ”○” when the director presently falls or has recently fallen under the category;“△” when the director fell under the category in the past
* “●” when a close relative of the director presently falls or has recently fallen under the category;“▲”when a close relative of the director fell under the category in the past-7-k

a. Executive of the Company or its subsidiaries
b. Non-executive director or executive of a parent company of the Company
c. Executive of a fellow subsidiary company of the Company
d. A party whose major client or supplier is the Company or an executive thereof
e. Major client or supplier of the listed company or an executive thereof
f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or otherproperty from the Company besides compensation as a Director/Auditor
g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is alegal entity)
h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f)(the director himself/herself only)
i. Executive of a company, between which and the Company External Directors/Auditors are mutually
appointed (the director himself/herself only)
j. Executive of a company or organization that receives a donation from the Company (the director
himself/herself only)
k. Others

External Directors’ Relationship with the Company (2)Name

Nobuko Kawashima

Kazuko Kimura

Designation as
Independent
Officer

Supplementary
Explanation of
the Relationship
Concurrently holds a
positions as:
Professor, Faculty of
Economics at Doshisha
University
External Director at
TOKAI Holdings, Inc.

○○

Concurrently holds a
positions as:
Professor,
Graduate
School of Medicine andPharmaceutical Health,Kanazawa University,
National
University
Corporation
Representative Directorof the Pharmaceutical
Security
Research
Association
External
Director,
Mitsubishi Warehouse
Co., Ltd.

-8-

Reasons of Appointment
Ms. Kawashima has been conducting
research on the themes of creative
economics and corporate social
responsibility for many years, and wehave judged that her expertise will beutilized to strengthen our management
system. In addition, as she is not a personwith a potential conflict of interest withgeneral shareholders based on the
Judgment Criteria for Independence ofExternal Directors and Auditors (see"Independent Officers Relationship" and"Other Matters Concerning Independent
Officers" below), she is considered to be
independent. Accordingly, she has been
designated as an Independent Officer.
Ms. Kimura specializes in quality control
inpharmaceutical
distribution,
eradication of low-quality drugs andcounterfeit drugs, development oftechnology to prevent counterfeiting,and specialist training. We judged that
this expert's knowledge could be utilizedin our management. In addition, as she is
not a person with a potential conflict ofinterest with general shareholders basedon the Judgment Criteria for
Independence of External Directors andAuditors (see "Independent Officers
Relationship" and "Other Matters
Concerning Independent Officers"
below), she is considered to beConcurrently holds a
position as:
Professor of Obstetrics
and Gynecology, Kinki
University School of
Medicine

Noriomi Matsumura○

Voluntary Establishment of Committee(s)Corresponding to Nomination Committee orRemuneration Committee

independent. Accordingly, she has been
designated as an Independent Officer.
Mr. Matsumura has extensive experienceand expertise in all aspects of medicine,including obstetric and gynecologic
sciences, and are particularly familiar
with the fields of genomic analysis oftumors, molecular targeted therapy, andimmunotherapy. We believe that thisexpertise will be utilized in ourmanagement. In addition, as he is not a
person with a potential conflict ofinterest with general shareholders basedon the Judgment Criteria for
Independence of External Directors andAuditors (see "Independent Officers
Relationship" and "Other Matters
Concerning Independent Officers"
below), he is considered to be
independent. Accordingly, he has been
designated as an Independent Officer.

Established

Committee’s Name, Composition, and Attributes of Chairperson

UpdatedAll Committee Members

Committee
Corresponding
toNomination Committee
Nomination and Compensation
Committee
5Committee
Corresponding
toRemuneration Committee
Nomination and Compensation
Committee
5

Full-time Members

00Internal Directors

22

External Directors

3

3External Experts

0

0

Other

0

0

Chairperson

External Director

External Director

Committee’s Name

Supplementary Explanation

UpdatedSupplementary Explanation
We have established a voluntary Nominations and Compensation Committee under the Board of Directors tostrengthening the independence, objectivity and accountability of the functions of the Board of Directors.
The Committee is composed of three or more members, the majority of whom are External Directors. The
chairperson of the Committee is selected from among External Directors.
<Committee Members>
Nobuko Kawashima (External Director and Chairman)
Kazuko Kimura (External Director)-9-Noriomi Matsumura (External Director)
Koichi Nakao (President & CEO)Yoh Hamaoka (Director)<Matters to be deliberated>Matters concerning candidates for Directors to be proposed to the general meeting of shareholders

Matters concerning the revision of the remuneration limit for Directors to be proposed to the general
meeting of shareholders

Matters concerning individual remuneration of Directors[Auditors]
Establishment of the Supervisory Board Meeting
Maximum Number of Auditors Stipulated in
Articles of Incorporation

Established55

Number of Auditors

Cooperation among Auditors, Accounting Auditors and Internal Audit Departments
Our Auditors work with the Internal Audit Department (four full-time Internal Auditors) and verify theeffectiveness of Internal Control System. Further, we meet with the Accounting Auditors, 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 Audit Department makes the audit of us and its subsidiaries with Auditors from standpoint oflegality and law compliance. The results are reported to the Board Directors and President & CEO, and areshared with Takara Bio Compliance Committee and Internal Management Department such as Finance
Department and others to operate the Internal Control System.
Appointment of External Auditors

Appointed

Number of External Auditors

3

Number of External Auditors appointed as
Independent Officer

3

External Auditor’s Relationship with the Company (1)NameAttribute

Relationship with the Company*
A

b

c

d

e

f

g

h

i

j

k

Kunihiko Kamada
LawyerYasuo Himeiwa
CPA
Masaaki Makikawa
Academic*Categories for “Relationship with the Company”* ”○” when the director presently falls or has recently fallen under the category;“△” when the director fell under the category in the past
* “●” when a close relative of the director presently falls or has recently fallen under the category;“▲”when a close relative of the director fell under the category in the pasta. Executive of the Company or its subsidiaryb. Non-executive director or accounting advisor of the Company or its subsidiaries
c. Non-executive director or executive of a parent company of the Company
d. Auditor of a parent company of the Company- 10 -lm

e. Executive of a fellow subsidiary company of the Company
f. A party whose major client or supplier is the Company or an executive thereof
g. Major client or supplier of the Company or an executive thereofh. Consultant, accountant or legal professional who receives a large amount of monetary consideration orother property from the Company besides compensation as an Auditor
i. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is alegal entity)
j. Executive of a client or supplier company of the Company (which does not correspond to any of f, g, or h)(the Auditor himself/herself only)
k. Executive of a company, between which and the Company External Directors/Auditors are mutually
appointed (the Auditor himself/herself only)
l. Executive of a company or organization that receives a donation from the Company (the Auditor
himself/herself only)
m. Others
External Auditor’s Relationship with the Company (2)NameKunihiko
KamadaYasuo Himeiwa

Designationas
Independent Officer

UpdatedSupplementary
Explanation of
the Relationship
Concurrently holds a
position as:
A member of Daiichi
Legal
Professional
Corporation○○

Concurrently holds a
positions as:
Director of Himeiwa
CPA Office
External Director (Audit
andSupervisory
Committee Member) of
Sharp Corporation
External Director (Fulltime
Audit
and
Supervisory Committee
Member)of
IDEC
CORPORATION- 11 -

Reasons of Appointment
Mr. Kamada possesses abundant
experience and knowledge as an
attorney-at-law. He is expected to apply
his expert knowledge to the managementof us and express his opinions at theBoard of Directors meetings and theBoard of Auditors from an independentand objective standpoint, thereby
ensuring
effective
management
oversight. We consider that he maintains
the attributes of neutrality and fairness asan Independent Officer who is without
any fact itemized by the Tokyo Stock
Exchange as facts that could cause
conflicts of interest against commonshareholders, and who satisfies ourcriteria for independence of External
Directors. Therefore, we designated him
serving as an Independent Officer.
Mr. Himeiwa possesses abundant
experience and knowledge in subjects
includingfinancialaffairsandaccounting as a certified public
accountant. He is expected to apply hisexpert knowledge to the management of
us and express his opinions as tomanagementtransparency
andobjectivity. We consider that hemaintains the attributes of neutrality andfairness as an Independent Officer who is
without any fact itemized by the Tokyo
Stock Exchange as facts that could cause
conflicts of interest against commonshareholders, and who satisfies ourcriteria for independence of External

Masaaki
Makikawa○

Concurrently holds a
positions as:
Deputy Director, The
Ritsumeikan Trust
Visiting
Professor,
Research Organizationof
ScienceandTechnology,
Ritsumeikan Univ.
President of Osaka
Hatsushiba Gakuen.

Directors. Therefore, we designated him
as an Independent Officer.
Mr. Makikawa engages in research
operation of the government projects anda number of contracted research andacademic-industry
collaborative
research in the field of medical
engineering and biomedical engineering.
He is expected to apply his expert
knowledge to the management of us.
Company considers that he maintains theattributes of neutrality and fairness as an
Independent Officer who is without any
fact itemized by the Tokyo Stock
Exchange as facts that could cause
conflicts of interest against commonshareholders, and who satisfies ourcriteria for independence of External
Directors. Therefore, we designated him
as an Independent Officer.

[Independent Officer]
Number of Independent Officer

6

Matters relating to Independent Officer
Based on the purpose of the Corporate Governance Code, our basic policy is to appoint at least one-third of
Independent External Directors, in principle, in comprehensive consideration of the characteristics of ourbusiness and the environment surrounding us. In accordance with this basic policy, we currently have three
Independent External Directors, two of whom are women, who are appointed in multiple positions. We haveestablished a system to communicate and coordinate with the management team and to cooperate with the
Auditors or the Supervisory Board Meeting, and to exchange and share information.
We have established the following criteria for the independence of External Officers.
<Independence Criteria for External Officers>
External Officers who do not fall under any of the following criteria shall be deemed to be independent
Officers.
(1) Currently a Director, Auditor or Manager or other employee of our parent company.
(2) Any person who was in the past a Director, Auditor or Manager or other employee of our parent company.
(3) Currently a Director, Auditor or Manager or other employee of our sister company.
(4) Any person who was in the past a Director, Auditor or Manager or other employee of our sister company.
(5) A person who is our customers or any of our subsidiaries as its principal customers (a person who hasreceived from us or any of our subsidiaries payment of 2% or more of their annual consolidated total
sales in the most recent fiscal year), or an Executive Director, Executive Officer, Operating Officer,
Manager or any other employee of the parent company or any significant subsidiary company thereof,
or in the case where any of them is a company.
(6) Any person who, in any of the three fiscal years preceding the most recent fiscal year, had us or any of
our subsidiaries as its principal customers (any person who had received from us or any of our
subsidiaries payment of 2% or more of the annual consolidated total sales for the most recent fiscal yearof such person), or any of its parent companies or significant subsidiaries, or in the case where any ofthem is a company, the Executive Directors, Executive Officers, Operating Officers, Managers or other
employees of such company.
(7) A person who is a major business partner of us (a person who makes payment to us of not less than 2%of our annual consolidated total sales in the most recent fiscal year), or an Executive Director, Executive- 12 -

Officer, Operating Officer, Manager or other employee of the parent company or a significant subsidiaryof us, or in the case where such a person is a company.
(8) Any person who was our principal business partner in any of the three fiscal years preceding the mostrecent fiscal year (any person who has paid us 2% or more of our annual consolidated total sales in themost recent fiscal year of our target business year) or any of its parent companies or significant
subsidiaries, or in the case where any of them is a company, an Executive Director, Executive Officer,
Operating Officer or Manager or any other employee of such company.
(9) Directors (limited to those who execute the business) of organizations that have received an average ofover 10 million yen over the past three years from us or our subsidiaries (for example, public interest
incorporated associations, non-profit corporations, etc.), other Executives (meaning Officers, partners,
or employees who execute the business of such organizations).
(10) A person who is or was a Director, Auditor, Accounting Advisor, Executive Officer or Executive Officerof the Company or its parent company or subsidiary that accepts Directors (whether full-time or parttime) from us or its subsidiaries.
(11) Directors, Auditors, Accounting Advisors, Executive Officers, Operating Officers, Managers, and other
employees of financial institutions and other large creditors (hereinafter referred to as "Large Creditors")that are indispensable for our financing and rely on a degree that is not substitutable (hereinafter referred
to as "Large Creditors") or of their parent companies or significant subsidiaries.
(12) Any person who has been a Director, Auditor, Accounting Advisors, Executive Officer, Operating
Officer, Manager or other employee of our present large creditors or their parent company or significant
subsidiaries in the last three years.
(13) Any person who is presently an Accounting Auditor or Accounting Advisor of us or its subsidiaries, acertified public accountant (or tax accountant), or a partner, partner or employee of an auditing firm (ortax accountant corporation).
(14) Any member, partner or employee of a certified public accountant (or certified tax accountant) or an
auditing firm (or tax accountant corporation) who was an Accounting Auditor or Accounting Advisor ofus or any of our subsidiaries in the last three years and who was in actual charge (but excluding any
ancillary involvement) of the auditing services of us or any of our subsidiaries (including any person
who is currently retired or resigned).
(15) Any attorney, certified public accountant or tax accountant or other consultant not falling under (13) or(14) above who has, in addition to Directors' fees, obtained from us or any of our subsidiaries any
monetary or other proprietary benefits averaging 10 million yen or more over the past three years.
(16) Any employee, partner, associate or employee of any law firm, auditing firm, tax accountant firm or
consulting firm or other professional advisory firm not falling under (13) or (14) above whose main
customer is the Company or any of its subsidiaries (the firm received from us or any of its subsidiaries
on average over the last three fiscal years a payment of not less than 2% of the consolidated gross salesof such firm).
(17) A person whose spouse or relatives within the second degree of kinship fall under any of (1) to (16)above.
(18) A person who is likely to have a substantial conflict of interest with all of our general shareholders on apermanent basis due to circumstances other than those considered in (1) to (17) above.
[Incentives]
Incentive Policies for Directors

Performance-linked Remuneration

Supplementary Explanation
For details, refer to “Disclosed Details of Policy on Determining Remuneration Amounts and Calculation
Method” mentioned below.
Recipients of Stock Options-

Supplementary Explanation- 13 -

[Director Remuneration]
DisclosureofIndividual

Directors’

Remuneration
Supplementary Explanation

No Individual Disclosure

UpdatedTotal remuneration for the year ended March 31, 2022
Total amount of remuneration, etc. 10 Directors, 296 million yen (including 3 External Directors, 19 million
yen)(Including 10 Directors with fixed remuneration 180 million yen [including 3 External Directors, 19 million
yen])(Including performance-linked remuneration 7 Directors, 115 million yen [for Directors other than External
Directors])(Note 1) The amount of remuneration, etc. for Directors does not include the amount of salary for employeesof Directors who are concurrently serving as employees.
(Note 2) Includes one Director who resigned at the conclusion of the 19th Ordinary General Meeting of
Shareholders held on June 24, 2021
Policy on Determining Remuneration Amounts
and Calculation Methods

Established

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods

UpdatedMatters concerning policy on determining remuneration amounts and calculation method
1. Basic concept
The basic concept related to remuneration to Directors is based on a remuneration system with annual scheme,
aimed at appointing competent personnel resources to management, motivating implementation ofmanagement strategy and maximizing corporate value.
Based on the performance evaluation method approved by the Board of Directors held on December 16, 2019,the amount of remuneration to Directors is determined within the limit of remuneration resolved in the
Ordinary General Meeting of Shareholders by the President & CEO authorized in the Board of Directors
taking account of their position and individual contributions to the financial results and others, in response to
the advice and recommendations of the Nomination and Compensation Committee, which we voluntarily
establish.
2. Remuneration system
The remuneration to Directors comprises the fixed remuneration and the variable performance-linked
remuneration reflecting the financial results, in order to take account of the responsibility of Directors andcontributions to the financial results. The fixed remuneration is set at 50% of amount of remuneration for theprevious fiscal year, and the variable performance-linked remuneration is determined by us-level performance
evaluation and the unit-level performance evaluation on the basis of 50% of remuneration for the previous
fiscal year on determining the variable performance-linked remuneration.
Further, the fixed compensation system is employed to Directors being independent from business execution
and Auditors within the limit of remuneration resolved in the Ordinary General Meeting of Shareholders.
3. Calculation method of the variable performance-linked remuneration
The calculation method of the variable performance-linked remuneration to Directors in charge of businessexecution is based on the evaluation of company-level performance (at the ratio of 25%) and unit-level
performance (at the ratio of 25%) on the basis of comparison to budget and previous year of operating income.
Company-level performance evaluation is set between lower limit of 90% and upper limit of 110%.
The unit-level performance evaluation is set within a range of 80% to 120%.
4. Resolution of the Ordinary General Meeting of Shareholders on remuneration to Directors- 14 -

An overview of resolution of the Ordinary General Meeting of Shareholders on remuneration to Directors areshown as below.
(i) Resolution date of the Ordinary General Meeting of Shareholders
June 23, 2017(ii) Directors
Fixed remuneration
Annual amount is within 184.8 million yen (including within 30 million yen to External Directors)
Performance-linked remuneration
It is the amount within 5% of consolidated operating income on a yearly basis in the previous fiscal year.
[Supporting System for External Directors and/or Auditors]
Upon the convocation of a Board of Directors meeting, External Directors will be given proposals, otherrelated materials before, and briefings from Directors in charge as needed. In this system, External Directors
monitor the execution of duties of Directors.
In this system, our External Auditors 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 theexecution of duties. Furthermore, Internal Auditing Department shall provide supplemental explanations asneeded, including collaborating with the Internal Auditing Department (four full-time members).

2.Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration
Decisions (Overview of Current Corporate Governance System)
The Company has adopted an Audit & Supervisory Board system, and three of the five Auditors are external.
In this system, Auditors shall attend the Board of Directors meetings and other important meetings, receive
reports on execution of duties by Directors, etc., review important documents, and audit the execution ofduties.
The Board of Directors consists of nine Directors (of whom three are External Directors including two
women) 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, 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 executionof duties and allows for timely mutual understanding and confirmation of intentions of management.
To protect the interests of minority shareholders, we have established a special committee under the Boardof Directors to provide appropriate advice and recommendations. The committee is composed of three ormore independent members, including External Officers, and the chairperson is to be selected from among its
members, ensuring the independence of the committee. The Committee deliberates and examines mattersrelating to significant transactions and practices that conflict with the interests of our parent company or its
subsidiaries and our minority shareholders, and advises and recommends the results to the Board of Directors.
<Members of the Special Committee>
Nobuko Kawashima (External Director), Kazuko Kimura (External Director), Noriomi Matsumura (External
Director), Kunihiko Kamada (External Auditor), Yasuo Himeiwa (External Auditor), and Masaaki Makikawa(External Auditor)
Deloitte Touche Tohmatsu LLC conducts accounting auditing for us. The audit for the fiscal year ended in
March 2020 was conducted by Takashi Iwabuchi and Minobe Yuya, certified public accountants of DesignatedUnlimited Liability Partner, Deloitte Touche Tohmatsu LLC. Twelve certified public accountants and twelve
other people assisted in these auditing activities.
We also receive advice as needed from attorneys regarding company management and day to day operations.
Pursuant to the provision of Article 426, paragraph 1 of the Companies Act, we stipulate in our Articles ofIncorporation to exempt the liabilities of damages of Directors and Auditors (including former Directors andAuditors) due to neglect of duties to the scope of the legal limit allowed by laws and regulations by a resolutionof the Board of Directors meetings. The objective for this provision is to ensure that Directors and Auditors- 15 -

can fully enact their expected roles. Furthermore, based on provisions of its Articles of Incorporation pursuant
to the provisions of Article 427, paragraph 1 of, we have entered into an agreement with External Directors
and External Auditors which limits their liabilities of damages to the legal minimum set in Article 425,
paragraph 1.

3. Reasons for Adoption of Current Corporate Governance System
As a company based in highly specialized research and development, we have determined that the mostappropriate 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 a clear awarenessof 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 Supervisory Board Meeting to monitor and audit business execution.

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting Rights
UpdatedEarly Notification of General
Shareholder Meeting
Scheduling AGMs Avoiding
the Peak Day

Allowing Electronic Exerciseof Voting Rights
Participation in Electronic
Voting Platform
Providing Convocation Noticein English
Other

2. IR Activities

Supplementary Explanations
The notice is sent at least three weeks prior to the day of the meeting.
The General Meeting of Shareholders is scheduled through avoiding peakday, allowing many shareholders to be participable.
The 16th Ordinary General Meeting of Shareholders: June 22, 2018
The 17th Ordinary General Meeting of Shareholders: June 21, 2019
The 18th Ordinary General Meeting of Shareholders: June 23, 2020
The 19th Ordinary General Meeting of Shareholders: June 24, 2021
The 20th Ordinary General Meeting of Shareholders: June 24, 2022
The shareholders have been able to exercise voting rights by electronic means
since the 16th General Meeting of Shareholders.
We participate in the platform for electronic exercise of voting rights for
institutional investors operated by ICJ, Inc.
English translation (summary) of the convocation notice is disclosed on our
website on the same day as Japanese.
The convocation notice and matters disclosed on the Internet are disclosed on
our website ahead of sending the printed notice.
Materials available at https://ir.takara-bio.co.jp/ja/stock/meeting.html
We convene the General Meeting of Shareholders to present material toshareholders utilizing the large screen to explain performance and businessplan (Long-Term Management Plan and Medium-Term Management Plan),and posts results of the voting rights on the extraordinary report available on
our website.

UpdatedPreparation and Publication ofDisclosure Policy

Supplementary Explanations
The policy is provided via our website.
Takara Bio “Disclosure Policy”
Materials in Japanese available at https://ir.takara-bio.co.jp/ja/policy.html- 16 -

Regular Investor Briefings for
Individual Investors

Regular Investor Briefings forAnalysts and Institutional
Investors
Regular Investor Briefings forOverseas Investors
Posting of IR Materials on
WebsiteEstablishment of Department
and/or Manager in Charge of
IR
Other

Materials in English available at https://ir.takara-bio.co.jp/en/policy.html(Timing) We hold briefings several times a year.
(Description) We provide the explanation of the detailed financial results andbusiness measures for approximately 1 hour, and thereafter has a Q&A
session.
(Participants) It is aimed at 50-100 individual investors. Briefings are also
held on the website as necessary.
We hold financial results briefings twice a year (November of the interim
period and May of the full fiscal year). In addition, we provide video
explanations of financial results and conduct individual meetings every
quarter (including interim and full-year periods). In addition to this, we also
conduct interviews and seminars whenever there is a request.
Currently, foreign shareholding ratio is not necessarily high, however, event
conferences for foreign investors to be interviewed by securities company andconference calls are given as needed.
We, on the Website, hold 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 athttps://ir.takara-bio.co.jp/ja/library.html
Materials in English available athttps://ir.takara-bio.co.jp/en/library.html
Department: Public & Investor Relations Department
Manager in charge of IR: Akira Kawamura, General Manager-

3. Measures to Ensure Due Respect for Stakeholders
Stipulation of Internal Rules
for Respecting the Position of
Stakeholders
ImplementationofEnvironmental Activities, CSR
Activities etc.

Development of Policies on
Information
Provisionto
Stakeholders

Other

Supplementary Explanations
We stipulate respect for the position of stakeholders in the Takara Group Codeof Conduct for Compliance.
Based on the Takara Group Code of Conduct for Compliance, we engage inenvironmental protection activities, resource conservation and energy
conservation in compliance with environmental laws and regulations, as a
crucial part of the ongoing efforts for well-balanced global environmental
issues and business activities. Also, we work on reducing environmental
burdens in all operational procedures including R&D, material procurement,
manufacturing, distribution, sales and consumption.
Based on the Takara Group Code of Conduct for Compliance, we disclose
corporate information such as financial description and business activities ina timely and appropriate manner, provides corporate philosophy and policy
in fairly and adequately, and strives for better communication by facing withcritical opinions and sincerity thereof. The basic policy on information
disclosure is available from our website at https://ir.takarabio.co.jp/en/policy.html.
Also, the policy on appropriate information disclosure and ensued
transparency is available athttps://ir.takara-bio.co.jp/ja/sustainability/governance.html-- 17 -

IV. Matters Related to the Internal Control System
1. Basic Views on Internal Control System and the Progress of System Development
Based on Article 362, paragraph 4, item 6 of the Companies Act and Article 100, paragraphs 1 and 3 of theOrdinance for Enforcement of the Companies Act, we made the following determinations regarding thedevelopment of the systems necessary to ensure proper operations of a corporation and ensure that theexecution of duties of Directors complies with law and regulations, and the Articles of Incorporation.
Systems to ensure that the execution of duties of Directors and employees complies with laws andregulations, and the Articles of Incorporation, as well as ensure the properness of operations in us andthe corporate group comprised of the parent company and its subsidiaries.
(i) Takara Bio Compliance Committee, chaired by the President & CEO, is established and operated as theorganization which supervises compliance activities for our Group.
(ii) This committee falls under the compliance committee (which includes committee members and working
members dispatched from us) established in the parent company, Takara Holdings Inc. The committee
determines the Compliance Action Guidelines, which stipulates the action guidelines related to laws andsocial ethics with which each and every Officer and employee of the Group should comply, and also
educates Officers 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 withsuch 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 Group has been
informed that any employee who reports a problem will not receive disadvantageous treatment due tothis action.
(v) We conduct internal auditing based on the Internal Audit Regulations. We will strive to ensure proper
execution of duties by taking necessary actions based on the results of internal audits. Furthermore, theresponsible departments conducting internal audits shall be independent to ensure proper oversightfunctions for Auditing Departments, etc.
(vi) Our group shall comply with the rules for listed companies set by related laws and regulations and theTokyo Stock Exchange, and establish company-wide systems to ensure the reliability of financial reports.
Our group also shall consistently enhance the systems through its assessment and improvement.
(vii) In terms of the relationship between us and its parent company, Takara Holdings Inc., a holding company
has been established from the standpoint of consolidated business management. Its objective is tomaintain the independence and autonomy of Takara Holdings Group companies, including us, while
seeking to maximize the corporate value of the entire Takara Holdings Group. The Takara HoldingsGroup Company Management Rules are also applicable to us, and we regularly report on the decisions
made at the meetings of our Board Directors and the status of business activities of subsidiaries to Takara
Holdings.
(viii)In terms of the relationship between us and its subsidiaries, we shall receive regular reports on businessactivities while maintaining the independence and autonomy of the subsidiaries. In principle, importantmatters shall be discussed beforehand. Our Auditors 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.
1.

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 andEmployees, we shall set internal rules related to drafting guidelines, storage period limits, andmanagement systems (including information security systems) of records of execution of duties,
including minutes of General Meetings of Shareholders, minutes of the Board of Directors meetings,
approval documents (documents of decisions made by the President, etc.), and other documents related
to decision making.
- 18 -

Rules and other systems to manage the risks of loss
The Takara Bio Compliance Committee supervises overall “crisis management” in our group. Under thesupervision 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, we shall respond based on the “Takara Group Emergency Response Manual” andestablish an emergency response headquarters as needed, centered around the President and Officers incharge of compliance matters.
3.
(i)Systems to ensure the effective execution of duties of Directors
We shall hold a regular Board of Directors meeting once a month, and other meetings as needed, as partof the system to ensure the execution of duties of Directors is conducted efficiently.
(ii) We establish a system for Directors and Employees to execute duties and make decisions properly andpromptly 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 of roles 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 pertinentinternal audits, we shall take necessary measures and strive to ensure the efficiency of the execution ofduties.
(v) We shall establish a management system along the standards of us in its subsidiaries.
4.
(i)

5.

Matters concerning the Employees to assist the Auditors in their duties when the Auditors request theassignment thereof and matters concerning the independence of the employees from the Directors.
When an Auditor requires an employee to assist the duties of the Auditor, 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.

Systems for Directors and Employees to report to Auditors and other systems to ensure Auditors conduct
audits effectively(i) Auditors shall, in addition to the Board of Directors meetings, attend important meetings, such as thestrategy meetings of the business unit, in order for them to grasp the status of important decision making
processes and business execution. They may view minutes of the Board of Directors meetings, approval
documents (documents of decisions made by the President, etc.), and other important documents related
to business 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
Auditors in order to conduct effective and efficient audits.
(ii) If Directors discover a fact which may cause significant damage to us, they must report this to Auditors
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 Auditors through the department that is in charge ofmanaging the pertinent subsidiary.
(iii) Directors and Auditors shall ensure that persons reporting matters described above shall not receive
disadvantageous treatment due to the report.
6.

7.

Matters concerning guidelines related to the processing of expenses or obligations arising from theexecution of duties by Auditors
When an Auditor requests to make an advance payment or reimbursement of the expenses arising fromthe execution of duties, we 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 Auditor.

Please refer to “Schematic Diagram of Corporate Governance System” at the end of this document.

- 19 -

2. Basic Views on Eliminating Anti-Social Forces
We take a firm stand against anti-social forces which threaten social order and the corporate soundness, anddoes not have any relationships with them. Even in the event of an unreasonable request, we do not attempt
to resolve this issue by engaging in contact with them with a firm stance and business partners with whom wehave relationships with anti-social forces and anti-social forces do not conduct any business. Our basic viewis clarified in the Compliance Action Guidelines described above, which stipulates the action guidelines
related to laws and social ethics with which each and every Officer and employeeshould comply. We are
spreading awareness of these guidelines. We have distributed a portable manual booklet indicating theguidelines to each Officer and employeeso that they can access them whenever needed. Furthermore, we havedesignated 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.
We take such measures to respond with close collaboration with the pertinent organizations upon occurrenceof such an event.

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

Not Adopted

Supplementary Explanation-

2. Other Matters Concerning to Corporate Governance System
UpdatedThe Internal Systems related to timely disclosure of our information is as follows:
We are providing timely and appropriate disclosure of company information to investors based on the laws
and regulations related to securities exchanges, regulations of the Tokyo Stock Exchange, and the internal
rules “Rules for Management of Significant Information”.
The creation, gathering, and disclosure of information is conducted as follows:
1. In accordance with the guidebook on the timely disclosure of company information, the department
which oversees information (including our subsidiaries) shall promptly report to the Public & Investor
Relations department (excluding financial information), and Finance (financial information) departments
when there is information which requires disclosure.
2. After receiving this report, Public & Investor Relations department or Finance departments shall verify
the pertinent information and promptly report to General Affairs department, where information for theentire company is compiled.
3. The Officer in charge of handling internal information (Officer in charge of General Affairs Department)
shall receive the report from General Affairs department, and deliberate on the need, content, and methodfor disclosing the information alongside Officers in charge of Public & Investor Relations department,
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 resolvedby the Board of Directors, the Board of Directors shall resolve the matter and determine the need fordisclosure. If the pertinent information is not a matter to be resolved by the Board of Directors, it becomesa 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 President & CEO.
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 our website. As needed, we will also hold a press
conference or posting of materials to the press club.
- 20 -

Please refer to “Schematic Diagram of Disclosure of Corporate Information” at the end of this document.

- 21 -

<Structure of Corporate Governance System>- 22 -

< Schematic Diagram of Disclosure of Corporate Information >- 23 -