(Note) 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.

Corporate Governance Report
Last Update: June 26th, 2024
Tokuyama Corporation
Representative Director., President and Executive Officer: Hiroshi Yokota
Contact: +813-5207-2552
Securities Code: 4043
http://www.tokuyama.co.jp/
The corporate governance of Tokuyama Corporation (the “Company”) is described below.
I.

Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic
Information
1. Basic Views
Amid the major transformations taking place throughout society, the Company has defined its Mission as “To
create a bright future in harmony with the environment, in collaboration with its customers, based on chemistry”
in line with the business environment being faced today. This definition incorporates the Company’s desire tocontinuously conduct business in harmony with the environment and to create the future together with its
customers as a means of contributing to a sustainable society.
This only becomes possible with the trust and support of shareholders, customers, suppliers, employees, local
communities, and all other stakeholders, which the Company believes will connect to sustainable growth andgreater corporate value over the medium- to long-term. The Company recognizes that corporate governance is an
important management issue and must be constantly enhanced in order to achieve the growth and value. This
forms the Company's Basic Concept on corporate governance.
In light of the Corporate Governance Code, as well as the Corporate Governance Policy enacted in April 2024,
the Company’s Basic Policy is to accelerate decision-making, clarify responsibility, maintain the independence of
the Board of Directors and enhance the Board’s oversight function, respect the rights and equality ofshareholders, appropriately cooperate with all stakeholders, achieve a balance between proper disclosure andtransparency, and strive for constructive dialogue with shareholders.
[Reasons for Non-compliance with the Principles of the Corporate Governance Code]
The Company complies with all Principles of the Corporate Governance Code.
[Disclosure Based on the Principles of the Corporate Governance Code]Principle 1-4 [Policy on the Holding of Listed Shares for Purposes Other Than Pure Investment]
The Company holds shares of publicly listed companies on a strategic basis in accordance with the necessities
of its business activities as a part of its overall management strategy.
This includes the need to maintain and bolster transactions, raise funds and stably procure raw materials. As far
as the strategic holding of shares in publicly listed companies is concerned, the Company will limit its holdings to
the minimum level possible taking into consideration the need to ensure efficient corporate management.
In addition, the Board of Directors takes steps to verify the economic rationality of holding shares in publicly
listed companies by comparing capital costs that factor in associated risks with accrued benefits while confirming
the propriety of its holdings based on an outlook of the future each year. As of the end of fiscal 2023, theCompany held shares in 20 publicly listed companies. The Company aims to reduce this number to around 10 infiscal 2024.The Company exercises its voting rights based on the contribution to the corporate value of both theCompany and the portfolio companies.
Principle 1-7 [Transactions with Related-Parties]
To ensure that the common interests of the Company and its shareholders are not compromised, in accordancewith the “Rules for the Board of Directors,” the Company requires the prior approval of the Board of Directors,
as well as subsequent reporting to the same, for any competitive transaction, proprietary transaction, ortransaction that may involve a conflict of interest.
Supplementary Principle 2-4-1 [Ensure Diversity]
In addition to instilling the four values stated in the Tokuyama Vision, Tokuyama is actively engaged indeveloping talent and promoting diversity in a way that ensures every employee can make the most of theirindividuality and abilities.

-1-Tokuyama's diversity promotion activities are aimed at creating a situation in which our employees can workwith energy and succeed as a means of driving the sustainable growth of the Company. Tokuyama values thediversity of "knowledge" (including wisdom) and seeks to improve productivity while pursuing a comfortable
and rewarding work environment through reforming workplace culture. In the “Medium-Term Management Plan
2025,” published in February 2021, we defined the practice of socially responsible management as one of ourpriority issues. We also identified “an emphasis on diversity and job satisfaction” as a material issue that isparticularly important from the perspective of promoting corporate social responsibility. We are working to solve
and achieve materiality by concentrating management resources on these matters.
Moreover, Tokuyama introduced a multiple career-path personnel system in 2020 to accommodate employeeswith diverse value systems and work styles. Along with establishing training systems that correspond to the roleand course of each employee, we are also engaged in developing talent by offering open-enrollment training
programs.
We have set targets regarding in the workplace, including a target ratio for women managers, and are making
efforts to meet those targets. Our current target for women in management is set at 15% (throughout the
Tokuyama Group) by FY2030. This ratio was 8.2% (throughout the Tokuyama Group) at the end of FY2023. We
have not set numerical targets for the promotion of non-Japanese nationals or mid-career hires to management
positions. However, in line with spirit of “fair evaluation and treatment,” which was the objective of thepersonnel system introduced in 2020, the percentage of mid-career hires in management positions increased from
6.8% in FY2018 to 11.5% in FY2023. We will continue to take steps to enable the recruitment and workplace
success of diverse human resources that help enhance corporate value. Details on our human resources
development system and targets regarding the promotion of opportunities for women are available on the
Company's website (https://www.tokuyama.co.jp/eng/csr/employee.html).
Principle 2-6 [Roles of Corporate Pension Funds as Asset Owners]
The Company has established a basic investment policy with the goal of ensuring the income required toreliably provide pension benefits to beneficiaries over the long term. While striving to ensure the expertise andreliability of fund management through the use of management consultants, the Company in accordance with thispolicy also appoints investment trustees, monitors reports from the investment trustees on a regular basis, andconducts appropriate management operations, including quantitative and qualitative evaluations, to avoid any
conflicts of interest. In addition, the Company has established a Pension Investment Committee chaired by theGeneral Manager of the General Affairs and Human Resources Division and composed of pension investment
managers with a high level of expertise in the field and the Chairman of the Labor Union Executive Committee,
who acts as a representative of the beneficiaries. The committee meets on a regular basis to confirm financial
conditions and investment performance, and provides reports directly to management.
Principle 3-1- (I) Corporate Mission (management philosophy, etc.), Management Strategies, andManagement Planning
The Company defined its Mission in recognition of the current historical context of growing environmental
awareness around the globe and rapid advancement of the digital revolution. In addition, the Company declared
the Vision for which it aims in order to achieve its Mission. Each employee continuously moves forward to
realize this Vision with four Values.
MissionTo create a bright future in harmony with the environment, in collaboration with its customers, based on
chemistry
Visions• Be a value-creative company that places first priority on R&D and marketing• Be a company that never stops challenging new domains while refining and exploiting its unique strengths• Be a company with healthy employees who have healthy families and take pride in their work at theircompany• Be a company that fosters bonds with people in communities and societies worldwide
Values• Commitment to customer satisfaction as a profit source• A broader, loftier perspective• Employees who consistently surpass their predecessors-2-• Integrity, perseverance, a playful sprit and boldness
The Management Policy and Medium-term Management Plan are available on the Company’s public website(https://www.tokuyama.co.jp/eng/).
Principle 3-1- (Ⅱ) [Basic Views and Guidelines on Corporate Governance based on Each of the
Principles of the Corporate Governance Code]
Please refer to “I-1 Basic Views” in this report.
Principle 3-1- (Ⅲ) [Board Policies and Procedures in Determining the Remuneration of the Senior
Management and Directors]
For details regarding the policy for determining the remuneration of directors, please refer to the “Disclosure of
Policy for Determining Remuneration Amounts and Calculations Methods” section in the portion dedicated todirector remuneration in the “II-1. Organizational Composition and Operation” section of this report.
Principle 3-1- (Ⅳ) [Policies and Procedures When the Board of Directors Selects/Dismisses Management
Executives and Nominates Director and Auditor Candidates]
To enable the direction of business execution as well as appropriate decision making with regard to theCompany’s business operations, which are centered on chemicals, the selection of executive officers appoints
those with knowledge and experience in each business segment and area. When nominating director candidates,
the Company selects candidates who are believed to have a high level of insight, diverse experience, andexpertise in consideration of the balance and diversity of the Board of Directors in order to ensure the Board
properly supervises and provides advice on important decisions and business execution.
When selecting and dismissing executive officers and nominating director candidates (excluding directors who
are Audit and Supervisory Committee members), discussions are held at a Nomination and Remuneration
Advisory Committee* meeting in advance of the subject appearing on the agenda at a Board of Directors’
meeting. The Board of Directors makes its decisions in response to the Nomination and Remuneration Advisory
Committee ’s report.
In regard to the selection and dismissal of the President and Executive Officer, the President Nomination
Committee* deliberates on these matters, and the details of these deliberations are then presented to the Board of
Directors following a report by the Nomination and Remuneration Advisory Committee, at which point the Boardof Directors makes a decision.
In the case of the nomination of directors who are Audit and Supervisory Committee member candidates, theBoard of Directors makes its decisions after receiving the assent of the Audit and Supervisory Committee.
(*) See Section II-2-3 of this report for more information on the Nomination and Compensation Committee.
The same applies throughout this report.
Principle 3-1- (ⅴ) [Explanations with Respect to Individual Appointments and Dismissals when the
Board of Directors, based on (iv) above, Nominates Director Candidates or Appoints/Dismisses Senior
Management Personnel.
For an explanation regarding the appointment and nomination of individual executive officers, please see theappendix at the end of this report. The nomination of candidates for the Board of Directors is explained in the
General Shareholder Meeting reference materials.
This report also covers matters related to the appointment and independence of outside directors.
Supplementary Principle 3-1-3 [Sustainability Disclosures]
In response to worsening climate change and the trend towards practicing ESG within society, the “MediumTerm Management Plan 2025” raises three priority issues: "transform business portfolio," "contribute to
mitigation of global warming," and "practice socially responsible management." "Transform business portfolio"
aims to transform the Company’s portfolio from its current reliance on energy-intensive businesses to sustainablebusinesses that are energy efficient and serve to solve social issues. "Contribute to mitigation of global warming"raises and aims to steadily achieve the lofty goal of "carbon neutrality by FY2050."As part of practicing socially
responsible management, we have positioned the CSR priority issue of “materiality” as a specific action objective
for achieving the "Vision" included in the “Medium-Term Management Plan 2025,” and will build a solid
foundation for growth by faithfully engaging in these efforts. Tokuyama’s Basic Sustainability Principles were
established in April 2023, and they are a specific example of its core sustainability efforts. Based on these-3-

principles, various policies have been implemented, including the Tokuyama Group Code of Conduct. Together
with the Tokuyama Group Human Rights Policy established in December 2022, these measures serve as afoundation for the Company’s sustainability initiatives.
Basic Sustainability Principles
https://www.tokuyama.co.jp/eng/csr/activities.html
Tokuyama Group Code of Conduct https://www.tokuyama.co.jp/eng/csr/pdf/2023csrpdf_1_e.pdf
Tokuyama Group Human Rights Policy
https://www.tokuyama.co.jp/eng/csr/pdf/human_rights_policy_e.pdf
We are promoting efforts to steadily reduce GHG emissions by 30% in FY2030, compared to FY2019 levels,and to achieve carbon neutrality in FY2050. In February 2021, Tokuyama expressed its support for therecommendations of the Task Force on Climate-related Financial Disclosure (TCFD). Since FY2022, we haveorganized the information we disclose according to the TCFD framework of Governance, Strategy, Risk
Management, and Indicators and Targets. This information is published as the Tokuyama TCFD Report(https://www.tokuyama.co.jp/eng/csr/global_warming.html). Additionally, we committed in March 2023 to the
Science Based Targets (SBT) initiative, an international accreditation body. In May 2023, Tokuyama announced
its participation in the GX League for carbon-reducing companies, promoted by Japan’s Ministry of Economy,
Trade and Industry.
Moreover, the Tokuyama Group aims to be a value-creating company, starting with marketing and R&D. Thisvalue creation is supported by the various intellectual properties accumulated by the Group, and we recognizethat the protection and utilization of these properties, as well as investment in research and development todeepen and acquire new ones, are essential to achieving a business portfolio transformation. The details of these
efforts are outlined in the Tokuyama Report (https://www.tokuyama.co.jp/eng/ir/report/annual_rep.html). In April
2023, the Tokuyama Group Basic Policy on Intellectual Property was established to clarify the Group's approachto this kind of asset. (https://www.tokuyama.co.jp/eng/csr/pdf/basic_intellectual_property_policy_e.pdf)
Furthermore, the Group has identified human resource development as one of its material issues. As people are
the source of our corporate competitiveness, we are implementing measures to further develop and strengthen ourhuman resources, while also nurturing younger employees. The Human Resources Policy, revised in June 2023
(https://www.tokuyama.co.jp/eng/csr/employee.html#Human_Resources_Policy), defines the expectations for
employees and directions for their growth. It serves as the cornerstone for our personnel strategies, and thefoundation for updating and maintaining our human resource system. We promote full-scale adoption of thispolicy by Group companies. This personnel policy was the basis for the approval by the Board of Directors of a
new human resources strategy in April 2024 to accommodate changes in the business environment. With thishuman resources strategy, we express our commitment to “enhancing employee value as we work to achieve
management strategies.” This strategy provides a concrete story that leads to the achievement of our management
strategies and enhancement of our corporate value and aims for a highly diverse and productive pool of talent
with a work style that meets their needs. “Tokuyama Report” provides a more detailed explanation of our humanresources strategy and other aspects of our approach to human capital.
Supplementary Principle 4-1-1 [Duties of the Board of Directors and the Scope of Management
Delegation]
Matters requiring resolutions by the Board of Directors in accordance with laws and regulations or the Articles
of Incorporation, as well as important management matters are resolved by the Board of Directors in accordancewith the “Rules for the Board of Directors" and the "Rules for Decision Making," while matters related tobusiness execution are delegated system specifically designed for the execution of business.
Principle 4-9 [Criteria for Defining the Independence of External Directors]
With regard to its Criteria for Defining the Independence of External Directors, the Company adjudges those
who do not fall into any of the following categories as demonstrating sufficient independence.
A) Persons who are not currently nor in the past 10 years been engaged in the execution of business
operations of the Company or its affiliated companies*1.
B) Persons who are not currently nor in the past three years been engaged in the execution of business
operations of a major trading partner of the Company, or executives thereof. However, the Company's
major trading partners are defined as those that fall into either of the following categories:(1） Financial institutions that have financed more than 2% of the Company's total borrowings.
(2） Trading partners that account for more than 2% of the Company's consolidated net sales.
C) Persons who currently deem or in the past three years have deemed the Company or an executive thereof
to be a major trading partner. However, persons who deem the Company to be a major trading partner are
defined as those cases in which the amounts paid by the Company account for 2% or more of the said
trading partner's consolidated sales.

-4-

D)

E)

Consultants, accountants or legal professionals who currently receive or in the past three years havereceived large financial considerations or other property*2 from the Company besides their compensation
as a director/auditor. (If the entity in receipt of the assets is an organization, such as a legal entity or an
association, the person who belongs to such organization.) However, includes those that fall into either ofthe following categories:(1） Auditors who are responsible for the statutory audit of the Company.
(2） Law firms that serve as legal counsel to the Company.
Spouses or relatives within the second degree of kinship of the relevant persons in the sections above (butlimited to important persons*3.
*1
*2
*3

Pursuant to Article 2, Paragraph 3, Item 6 of the Ordinance for Enforcement of the Companies Act
of Japan.
In the case of an individual, a substantial compensation payment is defined as an annual amount ofcompensation that exceeds ¥10.0 million, and in the case of an organization, an amount of 2% ormore of the annual total income of that organization.
In the case of a company, important persons are defined as those who hold the responsible positionsof director, executive officer, operating officer and positions equivalent to manager; in the case of an
accounting office and audit corporation, certified accountants; in the case of law offices and legal
corporations, lawyers; and in the case of a tax accountant office and tax accountant corporation, tax
accountants. In other organizations, an important person means directors, such as a director or acouncillor.

Supplementary Principle 4-10-1 [Independent Nomination/Remuneration Committee]
To improve independency and objectivity, director and executive officer nominations and remuneration aredeliberated by the Nomination and Remuneration Advisory Committee, of which independent outside directors
make up the majority of members in addition appropriate reports and recommendations are provided to the Boardof Directors.
The Chief Executive Officer (President and Executive Officer) Succession Plan is implemented in a more
focused, professional manner by the President Nomination Committee, which was established within the
Nomination and Remuneration Advisory Committee. The President Nomination Committee is only attended by
one internal director, namely the President and Executive Officer, and independent outside directors account forthe majority of members and serve as the chairperson.
Supplementary Principle 4-11-1 [Concept on the Diversity of the Board of Directors]
The Company considers the composition of the Board of Directors with respect to the number of directors, thebalance of fields in which Directors can be expected to contribute using their individual areas of expertise,
experience, and abilities, and the Board’s diversity in a way that enables the Board of Directors to hold effective
debates in view of the Management Policy and Medium-term Management Plan established by the Company, andto appropriately exhibit the required decision-making and management execution supervising/auditing functions.
Please refer to the General Shareholder Meeting reference materials for the composition of the Board of
Directors, including the skill matrix related to the above.
( https://www.tokuyama.co.jp/eng/ir/pdf/2024_Jun_Notification_e.pdf)
Supplementary Principle 4-11-2 [Status of Directors Concurrently Serving as Officers at Other Listed
Companies]
When a director at the Company assumes the position of director or auditor at another company, the Board of
Directors of the Company is charged with determining whether there is any conflict of interest. For outside
directors, the Board of Directors confirms that individuals serving in concurrent positions have the time andability to fulfill their roles and responsibilities to the Company.
Major concurrent positions held by directors are disclosed in the General Shareholder Meeting referencematerials. Information regarding outside directors is disclosed in the portion dedicated to directors in the “II-1.
Organizational Composition and Operation” section of this report.
Supplementary Principle 4-11-3 [Analysis and Evaluation of Overall Effectiveness of the Board of
Directors]
The Company conducts an annual evaluation of the effectiveness of its Board of Directors. In the fiscal year
ending March 31, 2023, it engaged an external organization to conduct a questionnaire survey of all the directors,
and analyzed their responses. The results were submitted the Board of Directors for review and discussion. The
analysis and evaluation revealed that the effectiveness of Board of Directors is generally good. The evaluation-5-

noted such strengths as fostering and maintaining respect for open and spirited discussion and sharing
information via a variety of channels. It also confirmed that sufficient and effective efforts had been taken toaddress the issues identified in the previous evaluation, specifically substantiating business execution reports andproviding opportunities for focused deliberations on management issues. The evaluation did, however, cite issues
related to continuous improvement of Board of Director operations and contribution to realizing the vision the
Company set out in the Medium-Term Management Plan 2025.
The Board will further strengthen its oversight function by encouraging active involvement, especially byoutside directors, in continuous efforts to improve operations. The Board will also focus on holding more
substantial discussions with the executive management team, seeking to catalyze the achievement of the vision
the Company set out in its Medium-Term Management Plan 2025.
Supplementary Principle 4-14-2 [Policy on Training Directors]
Since the introduction of the executive officer system in 2011, the Company has maintained a policy of also
involving newly appointed executive officers who are candidates to be future directors in external executive
training. The training program must include "legal affairs and corporate governance" and "accounting andfinance" from the perspective of corporate governance The Company also allows participants to attend externalseminars as needed. Outside directors are given the opportunity to learn about the Company when they takeoffice, including through facility visits and in respect to the current condition of operations and the Company’sbusinesses.
Finally, the Company also holds study sessions when needed for all directors in order to better understanddomestic and international economic conditions, legal revisions, and new systems.
Principle 5-1 [Policy on Constructive Dialogue with Shareholders]
In order to gain the understanding and trust of our shareholders and investors, the Company strives to disclose
not only management and financial information, but also non-financial information, including in regard to the
products and services it provides to society, as well as in regard to information related to environmental andsocial subjects in a timely, appropriate, and easy-to-understand manner. For information on the Company’s basic
stance on disclosing information and its timely disclosure system, please see “V-2. Other Matters Concerning toCorporate Governance System in this report.
The section chief of the Corporate Communication and Investor Relations Department will take the role ofpromoting constructive dialogue with shareholders and investors.
The Corporate Communication and Investor Relations Department works closely with other internal
departments, including the Corporate Strategic Planning Department, the Corporate Accounting Department, theFinance and Investment management Department, the Corporate Social Responsibility Planning Department, theGeneral Affairs Department, the Research and Development Division, and business divisions in the planning andpromotion of dialogue.
In regard to IR activities in which executives communicate with shareholders and investors directly, theCompany holds a results briefing session for analysts and institutional investors four times a year, andparticipates in conferences and small meetings held by securities firms whenever necessary. The Corporate
Communication and Investor Relations Department, which is in charge of IR activities, holds interviews withinstitutional investors inside and outside Japan, as well as sessions for introducing the Company to individual
investors. For the details of other IR activities, please see “III-2. IR Activities” in this report.
The opinions and views of shareholders and investors received through dialogue are confirmed and shared at
our IR meetings, which are attended by executives and relevant section chiefs. The subsequent IR report is thendistributed to each section within the Company to provide feedback, and is used to formulate and revise
management and business strategies with the goal of improving corporate value.
In regard to the management of insider information, the Company has formulated in-house rules and ensurescomprehensive management through non-disclosure agreements and other measures.
[Measures to promote management with a focus on capital costs and the stock price] [Disclosure in
English]At Tokuyama Corporation, our mission is “to create a bright future in harmony with the environment, in
collaboration with our customers, based on chemistry.” To fulfill it, we strive to achieve sustainable growth andimprove corporate value over the medium to long term. Under our Medium-Term Management Plan 2025, wehave adopted return on equity (ROE) as one of our management indicators, and we are working to improve
capital utilization and returns for shareholders. Furthermore, we will work to further improve corporate value byenhancing shareholder returns, promoting management using return on invested capital (ROIC), and reducing
cross-shareholdings. For more details use the link below.
https://www.tokuyama.co.jp/eng/news/pdf/2024042604_Release_e.pdf-6-

[Dialogue with Shareholders, etc.]
For information on dialogue with shareholders in fiscal 2023, please see the press release at the URL below.
https://www.tokuyama.co.jp/eng/news/pdf/2024042604_Release_e.pdf
For details on other IR activities, please see “III-2. IR Activities” in this report.

2. Capital Structure
Foreign Shareholding Ratio

More than 20%, but less than 30%[Status of Major Shareholders]Name / Company Name
The Master Trust Bank of Japan, Ltd. (trust
account)
Custody Bank of Japan, Ltd. (trust account)
Nippon Life Insurance Company
The Yamaguchi Bank, Ltd
Meiji Yasuda Life Insurance Company
NORTHERN TRUST GLOBAL SERVICES SE,LUXEMBOURG RE LUDU RE: UCITS CLIENTS
15.315 PCT NON TREATY ACCOUNTBNY GCM CLIENT ACCOUNT JPRD AC ISG(FE-AC)
Tokuyama Corp. employee share ownership
MLI FOR CLIENT GENERAL OMNI NONCOLLATERAL NON TREATY-PB
DFA INTL SMALL CAP VALUE PORTFOLIO

Number of Shares Owned(Shares)

Controlling Shareholder (except for Parent Company)-----

Parent Company

none

Percentage (%)

12,082,500
5,512,040
2,174,958
1,649,252
1,488,425

16.76
7.64
3.01
2.28
2.06

1,442,000

2.00

1,410,649
1,393,590

1.95
1.93

1,081,493
1,045,467

1.50
1.45

Supplementary Explanation
Note: As of March 31st, 2024. The percentage of shares held is calculated after deducting the shares held by theCompany as treasury share (22,468 shares).
3. Corporate Attributes
Listed Stock Market and Market Section
Fiscal Year-End
Type of Business
Number of Employees (consolidated) as of the
End of the Previous Fiscal YearSales (consolidated) as of the End of thePrevious Fiscal Year
Number of Consolidated Subsidiaries as of the
End of the Previous Fiscal YearTokyo Stock Exchange Prime Market
MarchChemicalsMore than 1000
From ¥100 billion to less than ¥1 trillion
From 50 to less than 100

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling
Shareholder
Not applicable-7-5. Other Special Circumstances which may have Material Impact on Corporate GovernanceNot applicable-8-II. Business Management Organization and Other Corporate Governance Systems regarding
Decision-making, Execution of Business, and Oversight in Management
1. Organizational Composition and Operation
Organization Form
Company with Audit and Supervisory Committee[Directors]
Maximum Number of Directors Stipulated in
Articles of Incorporation
Term of Office Stipulated in Articles ofIncorporation
Chairperson of the Board
Number of Directors
Outside Directors
Number of Outside Directors
Number of Independent Directors

20
1 yearPresident
9
Appointed
44Outside Directors’ Relationship with the Company (1)Relationship with the Company*
a
b
c
d
e
f
g

Name

Attribute

Yuzo kawamori

From another company△

Nobuko Mizumoto

From another company△

Hiraku Ishizuka

From another company

Naoki Kondo

Lawyer

*
*
*

△

h

i

j

k

○
○

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 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/kansayaku
g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal
entity)h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) (thedirector himself/herself only)
i. Executive of a company, between which and the Company outside directors/kansayaku are mutually appointed(the director himself/herself only)
j. Executive of a company or organization that receives a donation from the Company (the director himself/herself
only)
k. Others
Outside Directors’ Relationship with the Company (2)Name
Yuzo Kawamori

Membership ofSupervisory
Committee

Designation as
Independent
Director〇〇

Supplementary Explanation of
the Relationship

Reasons of Appointment

Mr. Kawamori has been
appointed as an Independent
External Director. Until 2013,
he served as an operating
officer of Kansai Paint Co.,

Mr. Kawamori brings awealth of practical experience tohis position, including businessdevelopment outside Japan for amajor paint manufacturer, as-9-NobukoMizumoto〇〇

Hiraku Ishizuka〇〇

Ltd., one of the Company's
trading partners. Given that theCompany's transactions withthis trading partner total lessthan 1% of both the Company's
and the trading partner’s
consolidated net sales, it is notclassified as a major trading
partner. Although he owns
Tokuyama shares as of thesubmission date for this report,
the number of shares isinsignificant, and there is no
relationship involving a special
interest between him and theCompany.
Ms. Nobuko Mizumoto has
been appointed as an
Independent External Director.
Until 2020, she served as an
operating officer at IHI
Corporation, one of theCompany's trading partners.
Given that the Company's
transaction status with thistrading partner totals less than
1% of both the Company's andthis trading partner's
consolidated net sales, it is notclassified as a major trading
partner. Similarly, as of the dateof this report, Mizumoto owns
shares of the Company’s stock.
However, she does not own amaterial number of shares andtherefore does not share any
special interest with theCompany.
Mr. Ishizuka has been
appointed as an External
Director. Until 2018, he was an
executive at MUFG Bank, Ltd.,
one of the Company’s business
partners, and up until 2019, wasan executive at that bank's
parent company, Mitsubishi
UFJ Financial Group, Inc.
While the financial institution
concerned is the Company’s
main bank, it has been six years
since he retired from that
institution (and five years sinceretiring from its parent
company). As of the submission
date for this report, Mr.
Ishizuka is also an executive at
Mitsubishi UFJ NICOS Co.,
Ltd. Transactions between thisfirm and the Company accountfor less than 1% of either- 10 -

well as extensive andoutstanding insight based on his
experience as a corporate
executive. The Company judged
him to be suitably qualified as a
Director who will serve on the
Company’s Audit andSupervisory Committee and has
appointed him as such.

Ms. Mizumoto also has
extensive practical experience
gained from positions inresearch and head office
operations at a major heavy
industrial manufacturer as well
as extensive and outstanding
insight based on his experience
as a corporate executive. The
Company judged her to besuitably qualified as a Director
who will serve on the
Company’s Audit andSupervisory Committee and has
appointed her as such.

Given his extensive practicalexperience at a financial
institution and his time as acorporate executive there, Mr.
Ishizuka has considerable
knowledge of finance andaccounting. The Company
judged him to be suitably
qualified as a Director who willserve on the Company’s Audit
and Supervisory Committee andhas appointed him as such.

Naoki Kondo〇〇

company's consolidated sales,
and the two are not considered
to be key business partners. Asof the same date, he does nothold any Tokuyama shares, andthere is no relationshipinvolving a special interest
between him and the Company.
Mr. Kondo has been
appointed as an External
Director. Currently, he is aPartner at Oh-Ebashi LPC &Partners, which has no form ofbusiness relationship with theCompany, including any
advisory contract. As of thesubmission date for this report,
he does not hold any Tokuyama
shares, and there is no
relationship involving a special
interest between him and theCompany.

Although Mr. Kondo has
never been involved incorporate management otherthan serving as an independent
director or independent
corporate auditor, he has legal
expertise and insight based on
his wealth of experience as alaw firm partner. The Company
judged him to be suitably
qualified as a Director who willserve on the Company’s Audit
and Supervisory Committee andhas appointed him as such.

[Audit and Supervisory Committee]
Committee’s Composition and Attributes of Chairperson

Audit andSupervisory
Committee

All Committee
Members

Full-timeMembers

Inside Directors

OutsideDirectors

Chairperson

5

1

1

4

Inside Director

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

Appointed

Matters Related to the Independence of Such Directors and/or Staff from Executive Directors
The Audit and Supervisory Committee Office was established and employees assigned to it so as to assist the
Audit and Supervisory Committee in their duties. The Audit and Supervisory Committee has the right to directthese employees in their actions, and the Audit and Supervisory Committee's consent must be obtained in regard
to any related personnel evaluations, hiring, transfers, or disciplinary actions.
Cooperation among Audit and Supervisory Committee, Accounting Auditors and Auditing Departments
The Audit and Supervisory Committee and the Accounting Auditor hold regular meetings to strengthen mutual
cooperation.
The Audit and Supervisory Committee receives reports from the Accounting Auditor on audit policies, audit
plans, audit implementation status, and audit reviews, and participates in the exchange of opinions related tothose subjects as well as Key Audit Matters.
The Company has established the Auditing Department. The Auditing Department conducts internal audits of
the Company's departments and group companies.
The Audit and Supervisory Committee Chair holds regular meetings with the head of the Auditing Department
to hear audit policies, audit plans, and the status of audit implementations, etc., and to exchange opinions. The
Committee Chair also receives reports on the results of audits conducted by the Auditing Department each time
an audit is conducted.
In addition to making regular audit reports at the Board of Directors, the Auditing Department also ensures thatall directors, including Audit and Supervisory Committee members, can view any of its audit reports at any time.

- 11 -

[Voluntary Establishment of Nomination/Remuneration Committee]
Voluntary Establishment of Committee(s)Corresponding to Nomination Committee or
Established
Remuneration Committee
Committee’s Name, Composition, and Attributes of Chairperson
Name

All
Full-time
Committee
Members
Members

voluntary
The Nomination andcommittee in lieu Remuneration
6of a nomination Advisory Committee
committee
Voluntarycommittee in lieu The Nomination andRemuneration
6of aAdvisory
Committee
remuneration

InsideDirectors

OutsideDirectors

OutsideExperts

0

2

4

0

0

InsideDirector

0

2

4

0

0

InsideDirector

Other

ChairpersonSupplementary Explanation
With a majority of members who are External Directors, the Nomination and Remuneration Advisory
Committee serves as a voluntary advisory committee for the Company that deliberates on personnel matters andcompensation for directors and executive officers, and makes appropriate reports and recommendations to theBoard of Directors.
[Independent Directors]
Number of Independent Directors

4

Matters relating to Independent Directors
For information related to criteria for Defining the Independence of External Directors, please see Ⅰ1[Disclosure Based on the Principles of the Corporate Governance Code] principle 4-9.
[Incentives]
Incentive Policies for Directors

Performance-linked Remuneration

Supplementary Explanation
For details regarding the policy for determining incentive-based compensation for directors, please refer to the“Disclosure of Policy for Determining Remuneration Amounts and Calculations Methods” section in the portion
dedicated to director remuneration in the “II-1. Organizational Composition and Operation” section of this report.
Recipients of Stock Options

Not applicable

Supplementary Explanation[Director Remuneration]
Disclosure of Individual Directors’ Remuneration

Compensation NOT disclosed on an individual basis

Supplementary Explanation
Director remuneration, etc., for FY2023 is listed below.

- 12 -

••¥155 million paid to five Directors (excluding those serving on the Audit and Supervisory Committee)¥29 million paid to one Director serving on the Audit and Supervisory Committee (excluding External
Directors)• ¥56 million paid to six External Directors(Notes)1. The above figures include three directors who retired during the current fiscal year.
2. The above amounts include eight million yen in performance-based stock compensation expenses recorded
during the current fiscal year.
3. The above amounts do not include employee salaries paid to directors with duties in an employee’s
capacity.

Policy on Determining Remuneration Amounts
and Calculation Methods

Established

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods
Policy on Determining Director Remuneration on an Individual Basis
The Company has established a policy for determining the content of remuneration for Directors on an
individual basis (excluding those who serve on the Audit and Supervisory Committee). The following provides
an overview of such, where individual remuneration is determined by the Board of Directors following
deliberations by the Nomination and Remuneration Advisory Committee.
(Basic Policy)
1) The remuneration plan for the Company’s Directors is based on the following views.
・ Ensures that Directors contribute to charting sustainable growth for corporate performance andcorporate value based on the “Vision of Tokuyama”
・ Provides a level of remuneration that secures and retains human resources that can support theCompany’s management
・ Considers the performance of the Company
・ Employs a highly transparent, objective remuneration decision process
2) Remuneration for the Company’s Directors consists of basic remuneration and bonuses*1 in the form ofmonetary remuneration and performance-linked Share-based Remuneration in the form of non-monetary
remuneration*2.
(Policy on Determining Director Remuneration on an Individual Basis)
1) Basic remuneration• The basic remuneration (annual amount) is determined from a comprehensive perspective, taking into
consideration the roles and responsibilities to be undertaken.
• The determined basic remuneration is divided into 12 equal monthly payments.
2) Bonuses• Bonuses are determined on a scale from 0% to 150% of the standard bonus amount pre-determined foreach position. Each bonus is calculated according to the degree of achievement with respect toperformance targets set in advance for each fiscal year.
• The performance targets are established based on the main financial performance targets for the entire
Group.
• The determined bonus is paid at a fixed time of year.
3) Performance-linked share-based remuneration• Performance-linked share-based remuneration is based on the total number of standard points determinedfor each position during the target period, which is the fiscal years covered by the Medium-Term
Management Plan. Tokuyama share options are granted to the individual on a scale of 0% to 150% of thestandard points concerned, according to the level of achievement of the pre-determined performancetargets.
• The performance targets are established based on the main financial targets under the Medium-Term
Management Plan.
• In principle, the share options are only granted after the end of the target period.
4) Level of remuneration• The levels of remuneration are decided using compensation survey data from specialized external
agencies.

- 13 -

(Policy on Determining the Ratio of Remuneration for Directors by Type)The ratio of remuneration for Company Directors by type is determined in consideration of the ideal balance
between the basic standard for the required roles/responsibilities and incentives to stimulate the desire toachieve performance targets.
*1*2

Directors eligible for the bonus plan are those who are executive officers.
All directors, except those who serve on the Audit & Supervisory Committee, Non-executive
Directors, External Directors, and those NOT residing in Japan, are eligible for the performancelinked Share-based Remuneration plan.

(Policy on Determining Director Remuneration on an Individual Basis)
1) The final annual amount of basic remuneration for each individual is calculated and determined by the
Representative Director, President and Executive Officer, having received authorization to do so from theBoard of Directors, based on a standard amount predetermined for each position. The Nomination andRemuneration Advisory Committee deliberates on whether the calculated basic remuneration is appropriate
or not. In addition, as part of the Company’s ESG efforts specific roles and responsibilities regarding
important material issues for the realization of the Company’s CSR management are taken into
consideration when calculating an individual’s remuneration. This is a factor in the calculation of anindividual’s remuneration, and part of the Company’s ESG efforts.
2) Bonuses are determined by the Representative Director, President and Executive Officer, having received
authorization to do so from the Board of Directors, based on performance for the target fiscal year after first
determining the payment ratio in accordance with the standard bonus amounts for each position, theperformance targets for the target fiscal year, and the achievement level for those targets. The Nomination
and Remuneration Advisory Committee deliberates on whether the performance targets, calculation
methods, and calculation results are appropriate or not. The specific performance target for fiscal 2024 is
the target consolidated ordinary income set under the Medium-Term Management Plan. Each remuneration
amount is calculated by multiplying the individual’s standard amount by the performance-linked coefficient(ranging from 0% to 150%) set according to the degree of target achievement.
3) The granting of share options as part of performance-linked share-based remuneration is based on theexecutive share-based remuneration regulations deliberated by the Nomination and Remuneration Advisory
Committee and adopted by the Board of Directors. The number of share options to be granted to eachindividual is calculated by multiplying the total number of standard points determined for the position
concerned by the performance-linked coefficient (ranging from 0% to 150%) set according to the degree oftarget achievement. In addition, the specific performance target is the Company’s target total consolidated
operating income for the target period.
[Supporting System for Outside Directors]
1. The Corporate Planning Division explains the contents of each agenda item to the outside directors in advanceof each Board of Directors meeting and holds a question-and-answer session.
2. Directors and executive officers meet with outside directors individually and respond to inquiries from themregarding management issues, industry trends, business strategies, and the operational status of the internal
controls system.
3. In regard to the auditing plan of the accounting auditor, reviews of quarterly and year-end accounts, and audit
results, an internal director who is a member of the Audit and Supervisory Committee (hereafter Internal
Audit and Supervisory Committee member) and outside directors who are members of the Audit andSupervisory Committee (hereafter outside Audit and Supervisory Committee members) receive related
information directly from the Accounting Auditor.
4. In accordance with the Companies Act, Internal Audit and Supervisory Committee member when auditing
financial statements receive detailed information from the departments in charge of accounting and provide an
outline on this information to outside Audit and Supervisory Committee members.
5. For internal audits, Internal Audit and Supervisory Committee member receives detailed information from the
Auditing Department and provide an outline on this information to outside Audit and Supervisory Committee
members.
6. The Corporate Social Responsible Division reports on the development and operational status of the internal
controls system to the outside directors at the Board of Directors meetings.

- 14 -

[Retired presidents/CEOs, etc. holding advisory positions (sodanyaku, komon, etc.)]
Information on retired presidents/CEOs holding advisory positions (sodanyaku, komon, etc.)

Name

Job title/
position--

Employment
terms(Full/part time,
with/withoutcompensation,etc.)-

Responsibilities-

Number of retired presidents/CEOs, etc. holding
advisory positions (sodanyaku, komon, etc.)

Date whenformer role aspresident/CEO, etc.
ended
-

Term

-

0

OthersNot applicable
2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination and Remuneration Decisions(Overview of Current Corporate Governance System)
The following section outlines the Company’s management structure, its operations, and the status ofaccounting audits.
(1) Board of Directors
In addition to deliberating and making resolutions on important matters relating to the activities of theCompany, the Board of Directors supervises business operations. During fiscal 2023, the Board of Directors met
on 19 occasions.
As of the date this report was submitted, there were nine directors on the Company’s Board of Directors. The
Company is working to strengthen the supervisory function of the Board of Directors through the appointment offour outside directors. With the goal of clarifying management responsibilities and responding quickly to changes
in the business environment, the term of office for directors (excluding directors on the Audit and Supervisory
Committee) is set at one year.
Tokuyama adopted an executive officer system in 2011 with the aim of separating the executive andsupervisory functions for business operations. As of June 26, 2024, the Company had 17 executive officers.
Based on the rules for approval determined by the Board of Directors, authority is delegated to the businessexecutive system.
(2) Audit and Supervisory Committee
Directors who are Audit and Supervisory Committee members attend meetings of the Board of Directors andother important internal meetings in order to gather information on the status of the execution of businesses. They
also conduct audits on how well the executive officers are executing their duties. During fiscal 2022, Audit andSupervisory Committee met on 24 occasions, making reports, participating in consultations, and making
resolutions on important matters. As of the date this report was submitted, the Audit and Supervisory Committee
consists of five directors, including four external directors.
(3) Nomination and Remuneration Advisory Committee
The Nomination and Remuneration Advisory Committee , which has a majority of External Directors,
deliberates on matters relating to personnel affairs and remuneration for officers. It is a voluntary advisorycommittee for the Company and submits reports and recommendations to the Board of Directors as necessary.
For the purpose of implementing the Chief Executive Officer (President and Executive Officer) Succession Planin a more focused, dedicated manner, the Company established the President Nomination Committee within the
Nomination and Remuneration Advisory Committee . The President Nomination Committee is composed of the
President and Executive Officer and the outside directors.
(4) Executive Committee
Members of the Executive Committee are selected by the president and executive officer (hereinafter referredas the president) from among the Company’s other executive officers. The Executive Committee serves as theCompany’s decision-making body with respect to the execution of business operations. In principle, thecommittee meets two times each month. Based on the approval-related rules and regulations determined by the- 15 -

Board of Directors, the Executive Committee deliberates and makes decisions on strategies and other importantmatters.
(5) Strategy Committee
Members of the Strategy Committee are selected by the president from among the Company’s executive
officers. The committee meets once a month and serves as an advisory body to the president. In addition todeliberating on the direction of business execution, the Committee works to confirm the allocation ofmanagement resources with an aim at evaluating conditions relating to the execution of business in respect toimportant matters requiring approval. It also sets the direction of policies related to the execution of business inrespect to specific projects.
(6) CSR Promotion Council
Chaired by the president, the CSR Promotion Council is comprised of all executive officers working in Japan.
The Committee sets CSR(sustainability) policies and goals, while also facilitating activities to achieve thosegoals. The Committee focuses on maintaining appropriate corporate governance and internal controls, which
together form the foundation of the Company’s CSR(sustainability). It also discusses important matters regarding
internal controls as well as sustainability.
(7) Risk Management and Compliance Committee
Tokuyama’s Risk Management and Compliance Committee, chaired by the director supervising the Corporate
Social Responsibility Division, operates under the CSR Promotion Council. The Committee takes the initiative inpromoting risk management and compliance, which are central to effective internal control.
(8) Expert Committees
With regard to areas requiring particular expertise and of great importance in terms of risk management andcompliance, expert committees (Financial Reporting Committee, Antitrust Law Compliance Committee, Security
Export Controls Committee, Cyber and Information Security Committee, Security and Environmental Measures
Committee, Product Safety and Quality Committee and Sustainability Committee) have been established under
the CSR Promotion Council to carry out activities in the areas, separated from the Risk Management andCompliance Committee.
(9) Helpline Committee
The Helpline Committee is responsible for the administration of Tokuyama’s helpline (whistle-blowing)
system, which has been established for the purpose of enabling the internal reporting of legally questionableactions and behavior by Group executives and employees.
(10) Accounting Auditors
Tokuyama has appointed Grant Thornton Taiyo LLC. as its independent accounting auditor. There are no
special interests between the Company and Grant Thornton Taiyo LLC or the executives at that firm engaged in
audits of Tokuyama. The names of the certified public accountants conducting audits for the year under review,and the number of persons providing auditing assistance are shown below.
•
Names certified public accountants
Certified Public Accountant, Designated and Engagement Partner: Tomohiro Ohki (5 year)
Certified Public Accountant, Designated and Engagement Partner: Noriaki Yamauchi (4 years)•
Number of accounting audit assistants
Certified public accountants:4, Other: 10
3. Reasons for Adoption of Current Corporate Governance System
The Company introduced an executive officer system to separate the supervision and execution functions in
April 2011, and in June of the same year an external director was appointed. Subsequently, the Company
increased the number of external directors gradually.
In 2017, the Company transitioned from a company with a Board of Auditors to a company with an Audit andSupervisory Committee.
The Audit and Supervisory Committee, of which four external directors are appointed out of five members,
strives to maintain sound management by ensuring transparency and fairness in management.
As a company with an Audit and Supervisory Committee, Tokuyama seeks to enhance corporate governance at
all times by making the best of its rapid decision making as well as effective supervising/auditing functions.

- 16 -

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting Rights
Supplementary Explanations
Early Notification of General
The Company released the convocation notice for the 160th Ordinary General
Shareholder Meeting
Shareholder Meeting held on June 25, 2024, 33 days prior to the meeting on
TDnet of Tokyo Stock Exchange, Inc., and on the Company's website.
Scheduling AGMs Avoiding the
The Company holds general shareholder meetings on days other than thePeak Day
peak day every year.
Allowing Electronic Exercise of
Voting rights may be exercised electronically via personal computers on the
Voting Rights
website for the exercise of voting rights designated by the Company's
shareholder registry administrator.
Participation in Electronic
The Company participates in the Electronic Voting Platform for Institutional
Voting Platform
Investors provided by ICJ Inc.
Providing Convocation Notice
The Company prepares a notice of convocation (summary) in English andin English
discloses it on its webpage.
Other
Questions were accepted in advance at the 160th Ordinary General Meetingof Shareholders held on June 25, 2024.
2. IR Activities

Preparation and Publication ofDisclosure Policy

Regular Investor Briefings for
Individual Investors

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

Other

Supplementary Explanations

In the Tokuyama Group Code of Conduct, the Company clearlystates its basic stance on information disclosure as a company.
About guidelines and Internal Structure for Timely Disclosure,please see “V―2. Other Matters Concerning to Corporate
Governance System” or on the Company’s webpages.
https://www.tokuyama.co.jp/eng/ir/business_policy/disclosure.ht
ml
The Company holds briefing sessions for individual investors
several times a year. In addition, its websites are dedicated toindividual investors, with the aim of providing easy-to-understandsummaries of materials relating to company briefings andcompany information.
The Company holds online results briefing sessions for analysts
and institutional investors four times a year, when it announces
quarterly results. It also holds briefing sessions and small
meetings on medium-term management plans, factory tours, etc.
for institutional investors from time to time.
The Company posts earnings reports, annual securities reports,
documents related to general shareholder meetings, integrated
reports, presentation materials and summaries of the mainquestions and answers at results briefings, as well as performanceand financial data. The Company also posts English versions of
its IR materials (with some exceptions) at the same time as theJapanese versions.
The Company has a dedicated team for IR activities in
Corporate Social Responsibility Division, Corporate
Communications and Investor Relations Department. In
implementing IR activities, the Company strives to maintaintimely, appropriate and comprehensible disclosure of information
through close coordination between the senior management, theCorporate Planning Division, the business divisions and otherdepartments of the Company.

- 17 -

Explanatio
n byRepresenta
tives of theCompanyNoYes

3. Measures to Ensure Due Respect for Stakeholders
Supplementary Explanations
Stipulation of Internal Rules for
Tokuyama has a mission “to create a bright future in harmony with theRespecting the Position ofenvironment in collaboration with our customers, based on chemistry.” It has
Stakeholders
established the Tokuyama Group Basic Sustainability Principles in order torealize Our Vision, which includes Tokuyama’s vision points and values.
To help turn these basic principles and vision into concrete action, theCompany has established the Tokuyama Group Code of Conduct. It serves as
action guidelines for individual employees, and describes the Group’s
relationships with different types of stakeholders.
Implementation of
The Tokuyama Group Code of Conduct outlines actions to be taken
Environmental Activities, CSR
concerning safety, quality, the environment, the promotion of a sustainable
Activities etc.
society, and operations that are in harmony with society. Solving environmental
issues is a challenge common to all of humankind, and the Company is taking
proactive action as it believes this to be an essential reason for the existence andactivities of companies in general. In researching, developing, andmanufacturing products, as well as in selling and disposing of products andgoods, the Company is always sure to fully recognize the importance ofenvironmental protection and comply fully with all environmental laws andregulations. As a good corporate citizen, Tokuyama is committed to the active
engagement in social contribution activities, and the Company outlines those
activities on its website, in Sustainability Data Book and Integrated Report.
Development of Policies on
As clearly laid out in the basic philosophy of our Corporate Governance
Information Provision to
Policy, we believe that the trust and cooperation of our stakeholders are
Stakeholders
essential to ensuring sustainable growth and enhancing corporate value over the
medium- to long-term. Toward this end, we strive to appropriately disclose
information and establish transparency.
On this basis, the Tokuyama Group Basic Sustainability Principles require
the Company to actively communicate with all types of stakeholders. Moreover,
the Tokuyama Group Code of Conduct outlines how employees and officers
should promote this communication.
Along with timely and appropriate information disclosure for shareholders
and investors, the Company also publicly shares appropriate management,
financial and non-financial information in a timely and accessible way. This
includes details concerning the products and services Tokuyama provides tosociety, as well as information on how its operations impact the environmentand society.

- 18 -

IV. Matters Related to the Internal Control System
1. Basic Views on Internal Control System and the Progress of System Development
At the Board of Directors meeting held on April 21, 2022, the Basic Policy on Establishing the Internal Control
System was revised with an emphasis on Group management. Then, at the Board of Directors meeting on March
23, 2023, the Basic Sustainability Principles were adopted and incorporated into the preamble of the Company’s
Basic Policy.
Views on the Internal Control System
The Basic Sustainability Principles were established to realize Tokuyama’s vision based on its mission “tocreate a bright future in harmony with the environment in collaboration with our customers, based on chemistry.”
The Company is promoting CSR management based on these principles with the aim of improving corporate
value.
The Company recognizes that corporate governance must function effectively within all business activities
performed by the Company and its Group companies (hereafter, Tokuyama Group). The Company therefore
continuously works to establish internal control systems and to make improvements to these in accordance withchanges in the business environment in order to ensure the appropriateness of business and maintain the health ofthe organization.
Basic Policy on Establishing the Internal Control System(1) System for ensuring the legality and efficiency of execution of duties by Directors
1) Directors shall execute their duties based on the division of duties to which they are entrusted under theapplicable laws and regulations, Articles of Incorporation, Rules for the Board of Directors, and otherinternal rules, as well as under Board of Directors’ resolutions.
2) Directors shall make the necessary proposals and reports at the Board of Directors regarding their
execution of duties, and the Board of Directors shall provide oversight for the execution of duties byDirectors. Moreover, the Board of Directors shall include External Directors in order to strengthen the
Board’s oversight function.
3) Directors shall provide mutual monitoring and oversight regarding the legality and efficiency of
execution of duties by other directors via attendance at important meetings in addition to the Board of
Directors.
4) Directors shall efficiently execute their duties pursuant to the stipulated company organization, executive
responsibilities, and division of duties for each organization, and to the delegated authority based on the
Company’s approval rules.
Progress Update: This system has been established as described in "Organizational Composition andOperation, etc."(2) System for retaining and managing information relating to execution of duties by Directors
The Company, in accordance with applicable laws and regulations and the stipulations of the Company’s
management regulations, shall retain information relating to the execution of duties by Directors for thedesignated retention period at the responsible department.
Progress Update: Appropriate information retention and management has been implemented.
(3) Rules and other systems relating to management of risk of loss
1) The Company shall define the responsible department for rules regarding risk management of loss within
the Tokuyama Group, establish management regulations, and work to ensure the thoroughimplementation of these.
2) The Company shall establish a management system that understands important laws and regulations thatare relevant to business execution and that tracks movements in the revision thereof as a means of
reducing compliance risk within the Tokuyama Group.
3) The Company shall respond appropriately when a risk manifests within the Tokuyama Group by
establishing a crisis response headquarters in accordance with the severity of the manifest risk, and shall
rapidly engage in recovery and post-event management efforts.
Progress Status: In addition to establishing rules to reduce compliance risk and rules to address risks that havemanifested, the Company is also undertaking business continuity management in an ongoing manner.
(4) System to ensure that the execution of duties by employees complies with laws and regulations and the
Articles of Incorporation
1) The Company shall establish a Whistle-blowing System contact point (helpline) that allows individuals
to report and consult on compliance violations, or matters that are believed to hold the potential to violate- 19 -

such, in a safe, anonymous manner without receiving disadvantageous treatment, and shall implement
appropriate management and countermeasures according to the report or consultation.
2) The Company shall conduct monitoring and self-assessments led by the responsible party for thebusiness divisions, etc., and management divisions in order to ensure the appropriateness of duties. At
the same time, each Group company shall also be requested to conduct monitoring and self-assessments.
3) The Company shall provide the required guidance, support, and requests regarding important matters toall business divisions, etc., and Group companies through the Corporate Planning Division, theCorporate Social Responsibility Division, and other management divisions.
4) The Company shall conduct internal audits of business divisions, etc., management divisions, and Group
companies via an Auditing Department that is independent of the divisions, etc.
5) The Company shall report any discovery of compliance violation matters to those within and outside theorganization in accordance with the severity of such, and shall immediately correct for the violation anddeploy such horizontally within the Tokuyama group in order to prevent a recurrence.
Progress Update: Past cases regarding compliance within and outside the Company have been compiled andshared within the Tokuyama group using groupware. Moreover, the Company conducts compliance training usinggroup training and e-learning on an ongoing basis.
(5) System to ensure appropriateness of business within the corporate group
1) The Company shall establish the CSR Promotion Council for the purpose of promoting CSR
management within the Tokuyama Group, and shall deliberate and determine important mattersregarding internal control.
2) The Company considers risk management and compliance to be central and equally important to internal
control, and shall therefore establish the Risk Management and Compliance Committee within the CSR
Promotion Council in order to effectively and efficiently carry out internal control within the TokuyamaGroup.
3) With regard to areas requiring specialist expertise and of great importance from the viewpoint of risk
management and compliance (financial reporting, antitrust law compliance, security export controls,
cyber and information security, security and environmental measures, product safety and quality, andsustainability), the Company shall establish expert committees separate from the Risk Management andCompliance Committee.
4) The Company shall evaluate the effectiveness and efficiency of internal control for the Tokuyama Groupthrough the above meeting structure and shall engage in ongoing improvements.
5) The Company shall establish an internal management system for group companies and shall operate andmanage group companies thereby.
6) The Company shall respect the principle of self-responsibility in order for each group company toachieve healthy growth while at the same time providing the required guidance, support, and requests toensure the appropriateness of business.
7) The Company shall dispatch Company Directors and employees as Directors or Auditors for groupcompanies as necessary.
8) The Company shall include group companies as being subject to the Whistle-blowing System andinternal audits.
Progress Update: The Company has entered Basic Operation and Management Agreements with each groupcompany, and requires each group company to report and receive approval on important matters. Moreover, theCompany provides the required guidance, support, and requests to group companies to ensure the appropriatenessof business within the corporate group.
(6) System to ensure effective audits by the Audit and Supervisory Committee
1) The Company shall establish an Audit and Supervisory Committee Office to aid the duties of the Audit
and Supervisory Committee, and shall appoint Company employees for this purpose. Moreover, theCompany shall receive consent form the Audit and Supervisory Committee regarding personnel
evaluations, hiring, transfers, and discipline in regard to such employees.
2) The authority to instruct and provide orders to employees of the Audit and Supervisory Committee
Office shall reside in the Audit and Supervisory Committee.
3) The Company shall immediately report on any cases to the Audit and Supervisory Committee when arequest is made by the Audit and Supervisory Committee for an explanation of matters relating to the
execution of such duties and when a compliance violation matter is discovered by the Company,
including that reported by a group company. Moreover, NO disadvantageous treatment shall be madeagainst the reporting party due to the provision of information to the Audit and Supervisory Committee.
4) The Company shall permit the necessary audit expenses, including those for employing attorneys at law,certified public accountants, consultants, and other external advisors for the purpose of supporting an- 20 -

audit by the Audit and Supervisory Committee, when such is deemed necessary by the Audit andSupervisory Committee.
5) The Audit and Supervisory Committee shall cooperate closely with the Auditing Department andaccounting auditors in order to improve the efficiency of audits.
6) The Company shall establish other systems for the purpose of ensuring that audits by the Audit andSupervisory Committee are carried out effectively.
Progress Update: In addition to the Board of Directors, important matters are reported to the Audit andSupervisory Committee through the Executive Committee and the CSR Promotion Council.
(7) System to ensure the reliability of financial reporting1) The Company shall establish and operate internal controls relating to business processes (including
business processing controls relating to IT) and general controls relating to IT, and shall ensure thereliability of accounting data through the evaluation and improvement of such controls.
2) The Company shall work to standardize and improve the efficiency and quality of accounting andfinancial duties, and shall maintain and operate internal controls relating to financial reporting in order toensure the reliability of financial reporting.
3) The Company shall establish a Financial Reporting Committee that fully ensures the reliability offinancial disclosures through deliberations.
Progress Update: The Company receives appropriate opinions on the internal control and reporting systems
mandated under the Financial Instruments and Exchange Act from an auditing firm on an ongoing basis for the
purpose of ensuring the reliability of financial reporting.
(8) System for blocking ties with anti-social forces
1) The Company shall address unfair demands made by anti-social forces throughout the organization, fromupper management on down. Moreover, the Company shall ensure the safety of Directors and employees
who address such unfair demands.
2) The Company shall prepare for unfair demands made by anti-social forces by building close cooperative
relationships with external expert organizations during normal times.
3) The Company shall NOT maintain any relationships, including transactional relationships, with antisocial forces. Moreover, the Company shall reject all unfair demands made by anti-social forces.
4) The Company shall take legal action from both a civil and criminal standpoint against unfair demands
made by anti-social forces.
5) The Company shall prohibit backroom dealings with and providing funding for anti-social forces, andshall never engage in such.
6) The Company shall establish and maintain a structure for itself and each Group company for the purposeof blocking ties with anti-social forces.
2. Basic Views on Eliminating Anti-Social Forces
The Company has included its basic concept on eliminating anti-social forces as an item in the "Basic Policy
on Establishing the Internal Control System" described above.
Progress Update: The Company has defined internal rules founded on the Basic Policy, and has appointed
individuals responsible for preventing unfair demands, provides internal training, cooperates with external expert
organizations, confirms that new trading partners are NOT anti-social forces, and includes organized crime
exclusion clauses in agreements.

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

Not Adopted

Supplementary Explanation
Summary of the Basic Policy Regarding Persons Who Control the Company’s Decisions on Financial
Matters and Business Policies
Tokuyama aims to emerge as an entity that creates new value that makes peoples' lives healthier, moreconvenient, and more comfortable. Therefore, we defined our mission statement, which outlines our management
philosophy, as “to create a bright future in harmony with the environment, in collaboration with our customers,
based on chemistry.” Moreover, if the Company’s value creation process is not in harmony with the environment,
we will not survive for long. Under this philosophy, Tokuyama established the following "Vision" for which all
employees working at the Tokuyama Group must aim in order to achieve this transformation into a value-creative
company.
1) Be a value-creative company that places first priority on R&D and marketing
2) Be a company that never stops challenging new domains while refining and exploiting its unique strengths
3) Be a company with healthy employees who have healthy families and take pride in their work at theircompany
4) Be a company that fosters bonds with people in communities and societies worldwide
Through initiatives aimed at realization of our Vision, we plan to pursue sustained growth as a company thatkeeps providing value deemed essential even amid drastic societal change.
Therefore, persons who control the Company's decisions on financial matters and business policies must firstand foremost sympathize with and understand the Tokuyama Group mission statement and Vision, and must beable to maintain the trust of our many stakeholders who support the Group, while securing and increasing thecorporate value of the Group and the common interests of the shareholders from a medium- to long-term
perspective.
Mechanisms for Preventing Control by Persons Deemed Unsuitable in Light of the Basic Policy
As a listed company, Tokuyama has accepted the unrestricted transaction of the Company's shares byshareholders, and therefore believes that decisions regarding the need to address Large-Scale purchases of theCompany's shares should ultimately be made based on the will of the shareholders. However, among such LargeScale share purchases, judging from the purpose of such, some actions present the risk of loss to the corporate
value of the target company, and therefore to the common interests of the shareholders.
In order to secure the corporate value of the Tokuyama Group and the common interests of the shareholders,
Tokuyama implements all appropriate countermeasures in accordance with relevant laws and regulations. This
includes requesting any party who intends to conduct a high-volume purchase of the Company’s shares to furnish
all necessary and adequate information, and providing shareholders with pertinent details including the Board of
Directors’ appraisal and opinion of that information, as well as the business features pertaining to any LargeScale purchase.

2. Other Matters Concerning to Corporate Governance System
１．Basic stance on Information Disclosure
In March 2023, the Board of Directors revised the Tokuyama Group Code of Conduct by clarifying theGroup’s basic approach to information disclosure in section 6 of the Code, “Communication.”[Tokuyama Group Code of Conduct]6. Communication
We disclose information in a timely and appropriate manner to a wide range of stakeholders and build
relationships of trust through ongoing dialogue.
1) We actively disclose the status of our corporate activities in a fair way, including financial and nonfinancial information, and strive for good public communication.
2) We maintain sound and highly transparent relationships with politicians and public officials.
3) We never engage in insider trading using confidential information that is not available to the public.
4) We properly handle confidential and personal information belonging to the Group and our customers
and business partners, and implement information security measures to prevent its leakage.

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5)

We strive to maintain good labor-management relations based on mutual trust and dialogue.

２．Internal Structure for Timely Disclosure
Based on its timely disclosure rules and regulations, the disclosure of information pertaining to the Company
and its subsidiary companies with respect to:a) decisions of fact:b) incidents of fact, and:c) financial results:
shall be undertaken in accordance with the following process and flow. In addition, the Auditing Department
conducts audits of the timely disclosure system as necessary.
a) Disclosure of information pertaining to decisions of fact:
The secretariat of the Board of Directors, etc., sends the agenda of important matters to be resolved at theBoard of Directors, etc., to the Corporate Communications & Investor Relations Department in advance. The
Corporate Communications & Investor Relations Department shall determine whether or not the item is a matterthat requires disclosure. In the event that disclosure is deemed necessary, the item shall be presented to the headof the division with jurisdiction over the Corporate Communications & Investor Relations Department anddisclosed after ratification by such decision-making bodies as the Board of Directors. The department governing
subsidiaries shall also follow the same procedure for subsidiary company information.
b) Disclosure of information pertaining to incidents of fact:
Departments involved in major incidents of fact shall report to the Corporate Communications & Investor
Relations Department. The Corporate Communications & Investor Relations Department shall determine whether
or not the item is a matter that requires disclosure. In the event that disclosure is deemed necessary, the item shallbe presented to the head of the division overseeing the Corporate Communications & Investor Relations
Department and disclosed. The department governing subsidiaries shall also follow the same procedure forsubsidiary company information.
c) Disclosure of information pertaining to financial results and other important information:
Before disclosing information on financial results, etc., the contents of disclosure are checked by the Financial
Reporting Committee chaired by the director in charge of Corporate Planning Division. The committee also
ensures internal checks within and between the constituent departments that comprise the committee. The
Financial Reporting Committee Secretariat is charged with the responsibility of seeking approval to the disclosureof financial results and related information from the secretariat of the Board of Directors. While the Financial
Reporting Committee Secretariat puts forward matters for discussion to the Board of Directors, agenda items areforwarded to the Corporate Communications & Investor Relations Department in advance. Items are thenpresented to the officer responsible for the Corporate Communication & Investor Relations Department by
Corporate Communications & Investor Relations Department and disclosed after ratification by the relevant
decision-making body.

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Appendix 1
Principle 3-1- (ⅴ) [Explanations with Respect to Individual Appointments and Dismissals when the Board of
Directors, based on (iv) above, Appoints/Dismisses Senior Management Personnel (as of June 26, 2024).
President and Executive Officer Hiroshi Yokota
Mr. Hiroshi Yokota executes overall corporate business as President and Executive Officer.
He has an abundance of experience in areas such as personnel and labor affairs, as well as in Tokuyama’s traditional
and advanced materials businesses. By demonstrating strong leadership as chief executive officer, he is actively
addressing important goals and issues for the Group, including business portfolio transformation, carbon neutrality
achievement, and CSR management.
Accordingly, he has been appointed to an Executive Officer position so that he can continue enhancing the Group’s
corporate value.
Senior Managing Executive Officer Hideo Sugimura
Hideo Sugimura serves as Senior Managing Executive Officer and Executive Assistant to the President.
Based on a wide range of business experience in many areas including finance and accounting, management ofoverseas subsidiaries, reconstruction of domestic subsidiaries, adoption of new core information systems, and overall
responsibility for corporate departments, he is actively addressing important goals and issues for the Group.
Accordingly, he has been appointed to an Executive Officer position so that he can continue enhancing the Group’s
corporate value.
Managing Executive Officer Fumiaki Iwasaki
Fumiaki Iwasaki serves as Senior Executive Officer, General Manager of the Research & Development Division, andGeneral Manager of the Life Science Division. He has a wealth of experience in research and development as well as
manufacturing technology. As the individual with overall responsibility for R&D, he is expected to actively work on key
goals and challenges for the Group by taking the lead in promoting R&D. Since April 2024, he has also been responsible
for the Life Science Division and is expected to contribute to the development of growth businesses. Accordingly, he has
been appointed to an Executive Officer position so that he can continue enhancing the Group’s corporate value.
Managing Executive Officer Takahide Taniguchi
Mr. Takahide Taniguchi executes his duties as Managing Executive Officer and General Manager of the Cement
Business Division.
His abundant experience lies in areas such as the Cement Business, management planning, special product planning,and overseas project promotion. As the head of the Cement Business Division, he is actively working to address
important goals and issues for the Group.
Accordingly, he has been appointed to an Executive Officer position so that he can continue enhancing the Group’s
corporate value.
Managing Executive Officer Hirotaka Nishihara
Mr. Hirotaka Nishihara executes his duties as Managing Executive Officer and General Manager of the Chemicals
Business Division.
He has a wealth of business experience in sales and purchasing of dental materials, chemical products, vinyl chloride
resins, polysilicon, and other products. As head of the Chemicals Business Division, he is actively addressing key goals
and challenges for the Group.
Accordingly, he has been appointed to an Executive Officer position so that he can continue enhancing the Group’s
corporate value.
Managing Executive Officer Tomohiro Inoue
Mr. Tomohiro Inoue executes his duties as Managing Executive Officer and General Manager of the Corporate
Planning Division. His extensive experience covers overseas operations, business promotion projects, resource recycling,
serving as head of the cement manufacturing department, and managing subsidiaries in Japan. Following concurrent
positions as General Manager of the Eco Business Segment and Deputy General Manager of the Cement Segment, he hasserved as the officer responsible for the Corporate Planning Division since April 2024, and in this capacity he is expectedto actively address important goals and challenges for the Group. Accordingly, he has been appointed to an Executive
Officer position so that he can continue enhancing the Group’s corporate value.

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ManagingExecutive Officer Yasushi Okuno
Mr. Yasushi Okuno is Managing Executive Officer and General Manager of the Tokuyama Factory.
He brings a wealth of experience in engineering operations, overseas project promotion, overseas operations, andoperations at the Tokuyama Factory. He is actively addressing the Group’s key goals and challenges by executing his
responsibilities at the Tokuyama Factory.
He has been appointed an Executive Officer so that he can continue enhancing the Group’s corporate value.
Managing Executive Officer Katsumi Nagase
Mr. Katsumi Nagase serves as Managing Executive Officer, General Manager of the Electronic & Advanced Materials
Business Headquarters, General Manager of the Advanced Materials Business Division, and General Manager of the New
Business Division.
His extensive experience covers a diverse range of operations related to the polysilicon and fumed silica businesses, aswell as overseas operations. He is actively addressing the Group’s key goals and challenges by supervising electronic andadvanced materials operations and overseeing the advanced materials business. Since April 2024, he has been concurrently
responsible for the New Business Division and is expected to contribute to the creation of new businesses.
He has been appointed an Executive Officer so that he can continue enhancing the Group’s corporate value.
Executive Officer Hiroshi Fujimoto
Mr. Hiroshi Fujimoto is an Executive Officer and General Manager of the Purchasing & Logistics Division.
His vast experience includes polypropylene resin sales, chemical product planning, purchasing, and serving as head of
the General Affairs & Human Resources Division. He now oversees the Procurement & Logistics Division and isactively working to address key goals and challenges for the Group. Accordingly, he has been appointed to an Executive
Officer position so that he can continue enhancing the Group’s corporate value.
Executive Officer Naoki Tamura
Mr. Naoki Tamura is Executive Officer and General Manager of the Eco Business Segment. His wealth of businessexperience covers overseas operations as well as sales of functional powders, polysilicon, fine chemicals, and othermaterials. He served as head of the Life Science Division until March 2024. In April 2024, he was appointed as officer
responsible for the Eco Business Segment and is expected to actively address key goals and issues for the Group in thiscapacity.
Accordingly, he has been appointed to an Executive Officer position so that he can continue enhancing the Group’s
corporate value.
Executive Officer Takashi Satou
Mr. Takashi Satou is an Executive Officer and General Manager of the General Affairs & Human Resources Division.
His extensive experience covers areas such as logistics planning, logistics subsidiary management, adoption of newcore information systems, and heading purchasing and logistics. As head of the General Affairs & Human Resources
Division, he is actively addressing key goals and challenges for the Group.
Accordingly, he has been appointed to an Executive Officer position so that he can continue enhancing the Group’s
corporate value.
Executive Officer Michiko Seki
Ms. Michiko Seki executes her duties as Executive Officer and General Manager of the CSR Division.
She has a wealth of experience gained at other companies in fields such as research and development, technology
strategy, quality and environmental management, and CSR promotion. As head of the CSR Division, she is actively
working to address key goals and issues for the Group. She has been appointed to a new Executive Officer position sothat she can continue enhancing the Group’s corporate value.
Executive Officer Kenji Saka
Mr. Kenji Saka executes his duties as Executive Officer, General Manager of Digital Administration & Planning
Division. and Leader of DX Promotion Department..
His abundant experience gained at other companies includes fields such as manufacturing, technology, overseas
operations, business alliances, and ICT strategy promotion. As head of the Digital Administration & Planning Division,
he is expected to proactively address important goals and issues related to digital transformation and other matters
important to the future of the Group. Accordingly, he has been appointed to a new Executive Officer position, effective as
April 2023, so that he can continue enhancing the Group’s corporate value.

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Executive Officer Takeshi Ito
Mr. Takeshi Ito executes his duties as Executive Officer, Deputy Manager of Corporate Planning Division and Leaderof Corporate Planning Division.
He has extensive experience in business planning, overseas operations, overseas business management, and activities
related to joint ventures and M&A. As deputy head of the Corporate Planning Division, he is actively working onimportant goals and issues for the Group. Accordingly, he has been appointed to a new Executive Officer position so that
he can continue enhancing the Group’s corporate value.
Executive Officer Seiji Teranishi
Mr. Seiji Teranishi executes his duties as Executive Officer, Electronic Material Business Division and Chief ofSilicone Sales Department.
His wealth of business experience includes personnel and labor, overseas operations, and sales of thermal management
materials, polysilicon, chemicals for electronics materials, and other materials. As head of the Electronic Materials
Business Division, he is actively working on the Group’s key goals and challenges.
Accordingly, he has been appointed to a new Executive Officer position so that he can continue enhancing the Group’s
corporate value.
Executive Officer Yuji Inoue
Mr. Yuji Inoue executes his duties as Executive Officer and General Manager of Carbon Neutral Strategy Division.
His extensive experience covers overseas operations as well as manufacturing and technology relating to polysilicon andother materials. He is actively working on important goals and issues for the Group as the individual in charge of theGroup’s strategy for carbon neutrality achievement.
Accordingly, he has been appointed to a new Executive Officer position so that he can continue enhancing the Group’s
corporate value.
Executive Officer Etsuji Uchida
Etsuji Uchida serves as Executive Officer and General Manager of the Engineering Center.
He brings a wealth of experience as an engineer at the Tokuyama Factory and overseas manufacturing bases. As head of
the Engineering Center, he is expected to actively address key goals and challenges for the Group, including enhancing
functions at the Tokuyama Factory.
Accordingly, he was appointed to a new Executive Officer position in April 2024 so that he can continue enhancing theGroup’s corporate value.

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- 27 -

Process and Flow for Timely Disclosure（Information regarding facts
relevant to decisions of fact） （Financial Information）
Departments

Business Management Department

Corporate
Communications &Investor Relations
Department
Submission（Information（Information on
major incidents of fact） regarding subsidiaries）
Departments

Financial
ReportingCommittee
Submission

Administrative
department
Report/consultation

Board of Directors/Executive Committee
Decision

Corporate Communications & Investor Relations Department

Timely Disclosure- 28 -

Subsidiary

Report/consultation