(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, 2023
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 redefined 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 redefinition 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, the Company’s Basic Policy is to respect the rights and equality ofshareholders, appropriately cooperate with all stakeholders, achieve a balance between proper disclosure andtransparency, maintain the independence of the Board of Directors and enhance the Board’s oversight function,
accelerate decision-making, clarify responsibility, 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. It soldall shares of one listed issue in FY2022, resulting in a total of 20 listed issues of shareholdings.
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.
The Company exercises its voting rights based on the contribution to the corporate value of both the Company
and the portfolio companies.
Principle 1-7 [Transactions with Related-Parties]
In accordance with the “Rules for the Board of Directors,” the Company requires the prior approval of theBoard of Directors, as well as subsequent reporting to the same, for any competitive transaction, proprietarytransaction, or transaction 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.
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 susta

1inable growth of the Company. Tokuyama values diversity of knowledge and intelligence, and seeks to create
workplaces that are pleasant and motivating, while aiming to improve productivity, by reforming the workplaceculture. In March 2019, we included prioritizing diversity and motivation as one item of materiality that was
extracted and identified as a very important issue from the perspective of practicing CSR. In the "Medium-Term
Management Plan 2025," published in February 2021, we defined the practice of socially responsible
management as one of our priority issues, and are working to solve and achieve materiality by concentrating
management resources on this matter. In addition, under its Basic Sustainability Principles established in April
2023, Tokuyama respects human rights, individuality, and diversity. The principles also require the Company topursue job satisfaction for employees by promoting human resource development and health management.
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.
Although Tokuyama has not set numerical targets related to foreign nationals and mid-career hires appointed to
management positions, the Company employs these individuals in accordance with the spirit of "Fair Evaluation
and Treatment" as a goal of the personnel system introduced in 2020. The ratio of management positions
accounted for by mid-career hires increased from 6.8% in FY2018 to 9.2% in FY2022. The Company willcontinue to implement initiatives that promote the recruitment and active participation of diverse humanresources, which in turn will 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
In recognition of greater environmental awareness around the globe and the rapid advancement of the digital
revolution as the current historical context, the Company redefined its Mission in 2021.
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• Integrity, perseverance, a playful sprit and boldness

2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 Human Resources Committee meetingin advance of the subject appearing on the agenda at a Board of Directors’ meeting. The Human Resources
Committee is an entity that comprises representative directors and external directors. The Board of Directors
makes its decisions in response to the Human Resources 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 Human Resources Committee, at which point the Board of Directors makes adecision.
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.
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," published in February 2021, raises the three priority issues of "transform businessportfolio," "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 energyintensive businesses to sustainable businesses 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 "Practice 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, 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 ofits core sustainability efforts. Based on these 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 a foundation for the Company’s sustainability initiatives.

3

Basic Sustainability Principles https://www.tokuyama.co.jp/eng/csr/activities.html
Tokuyama Group Code of Conduct https://www.tokuyama.co.jp/eng/csr/policies.html
Tokuyama Group Human Rights Policy https://www.tokuyama.co.jp/eng/csr/society.html
In February 2021, Tokuyama expressed its support for the recommendations of the Task Force on Climaterelated Financial Disclosure (TCFD). In fiscal 2022, the Company accelerated its investigation of specificclimate-related measures based on a risk and opportunity analysis as outlined in the TCFD recommendations.
Details are provided in “Disclosures Based on TCFD Recommendations.”(https://www.tokuyama.co.jp/eng/csr/tcfd_information.html) In May 2023, Tokuyama announced its participationin the GX League for carbon-reducing companies, promoted by Japan’s Ministry of Economy, Trade andIndustry.
Moreover, Tokuyama aims to be a company that creates value and provides solutions which places first priority
on R&D and marketing. The Tokuyama Group aims to be a value-creating enterprise that leverages, first andforemost, marketing and R&D. This value creation begins with the protection and utilization of the intellectual
property the Group has already developed. Building upon that, the Group is working to transform its businessportfolio by investing in research and development to expand this knowledge and acquire new technology. The
details of these efforts are outlined in the Tokuyama Report 2023.
(https://www.tokuyama.co.jp/eng/ir/report/annual_rep.html) In April 2023, the Tokuyama Group Basic Policy onIntellectual Property was established to clarify the Group's approach to this kind of asset.
(https://www.tokuyama.co.jp/eng/csr/policies.html)
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/policies.html), defines the expectations for employees and directions
for their growth. It serves as the cornerstone for our personnel strategies, and the foundation for updating andmaintaining our human resource system. We promote full-scale adoption of this policy by Group companies.
Specific elements of this policy include clarification of the aptitudes and skills required for each job type, and theintroduction of a multi-track personnel system involving training program development and enhancement. It alsoestablishes a system that offers personnel rotation and placement to help individuals achieve their career plans.
Refer to the Tokuyama Report 2023 for more information on our human resources approach.
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.
C)D)(2） Trading partners that account for more than 2% of the Company's consolidated net sales.
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.
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.

4

E)

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 Human Resources Committee, of which independent outside directors make up the majority ofmembers in addition appropriate reports and recommendations are provided to the Board of 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 Human
Resources Committee. The President Nomination Committee is only attended by one internal director, namely the
President and Executive Officer, and independent outside directors account for the majority of members andserve 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/2023_Jun_ResolutionNotification_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 evaluation revealed that the effectiveness of Board of Directors is generally good. It showed that efforts toaddress the issues identified in the previous evaluation had achieved a certain level of results overall. A high scorewas given for the board’s monitoring and oversight of management team selection, evaluation, and compensation,
while the score for communication with stakeholders was relatively low, making it a high-priority issue.
Additionally, the board needs to remain focused on effective monitoring concerning progress made on
initiatives to address the priority issues identified in the Medium-Term Management Plan 2025. The Board of
Directors will continue to monitor and oversee the executive management team as it steadily implements the
Medium-Term Management Plan 2025 to achieve its goals.
Supplementary Principle 4-14-2 [Policy on Training Directors]

5

The Company has maintained a policy of requiring newly appointed directors to participate in external
executive training since 2001. 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.
The content of the training program can be based on the experience and knowledge of the individual, but withcorporate governance in mind, required content includes "legal affairs and corporate governance" and"accounting and finance." The Company also allows participants to attend external seminars related to theircorporate responsibilities on their own.
Outside directors are given the opportunity to learn about the Company when they take office, including
through facility visits and in respect to the current condition of operations and the Company’s businesses.
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.

2. Capital Structure
Foreign Shareholding Ratio

From 20% to less than 30%[Status of Major Shareholders]Number of Shares Owned(Shares)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
GOLDMAN SACHS INTERNATIONAL
Meiji Yasuda Life Insurance Company
Tokuyama Corp. employee share ownership
Sojitz Corporation
Sumitomo Metal Mining Co., Ltd.
DFA INTL SMALL CAP VALUE PORTFOLIO

12,213,300
5,149,400
2,174,958
1,649,252
1,544,420
1,488,425
1,398,097
1,296,840
1,180,800
1,064,858

6

Percentage (%)
16.95
7.14
3.02
2.29
2.14
2.07
1.94
1.80
1.64
1.48

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

Parent Company

none

Supplementary Explanation
Note: As of March 31st, 2023. The percentage of shares held is calculated after deducting the shares held by theCompany as treasury share (16,271 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
5. Other Special Circumstances which may have Material Impact on Corporate GovernanceNot applicable7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

8

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. Moreover, ten years
have already passed since hisretirement. 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 and was therefore
judged to have NO impact on
her independence as an
Independent External Director.
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 five
years since he retired from that
institution (and four 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
company's consolidated sales,
and the two are not considered

9well 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

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 Internal Audit 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 Internal Audit Department. The Internal Audit 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 Internal Audit
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 Internal Audit
Department each time an audit is conducted.
In addition to making regular audit reports at the Board of Directors, the Internal Audit Department also
ensures that all directors, including Audit and Supervisory Committee members, can view any of its audit reports
at any time.

10[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

voluntarycommittee in lieu The Human6of a nomination Resources Committee
committee
Voluntarycommittee in lieu The Human6
of aResources 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 Human Resources Committee serves as avoluntary advisory committee for the Company that deliberates on personnel matters and compensation for
directors and executive officers, and makes appropriate reports and recommendations to the Board 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 FY2022 is listed below.
¥176 million paid to four Directors (excluding those serving on the Audit and Supervisory Committee)

11•¥29 million paid to one Director serving on the Audit and Supervisory Committee (excluding External
Directors)•¥56 million paid to four External Directors(Notes)1. The above amount includes performance-linked share-based remuneration. This includes a deduction of 25
million yen as an adjustment to recorded expenses in consideration of the degree of achievement concerning
performance evaluation indicators (total consolidated operating income, etc.) for fiscal 2021 and 2022, theperiod covered by the program. It also includes expenses for fiscal 2022.
2. 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 Human Resources Committee*1.
(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*2 in the form ofmonetary remuneration and performance-linked Share-based Remuneration in the form of non-monetary
remuneration*3.
(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.

12

(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
*3

The Human Resources Committee is composed of a majority of External Directors and deliberates
matters related to human resources and remuneration regarding officers. This Committee also serves
as a voluntary advisory committee for the Company that makes appropriate reports andrecommendations to the Board of Directors.
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 Human Resources
Committee deliberates on whether the calculated basic remuneration is appropriate or not. As of fiscal
2023, each individual’s specific roles and responsibilities regarding important material issues for therealization of the Company’s CSR management are taken into consideration. This is a factor in thecalculation of an individual’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 Human
Resources Committee deliberates on whether the performance targets, calculation methods, and calculation
results are appropriate or not. The specific performance target for fiscal 2023 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% to150%) 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 Human Resources Committee andadopted by the Board of Directors. The number of share options to be granted to each individual iscalculated by multiplying the total number of standard points determined for the position concerned by theperformance-linked coefficient (ranging from 0% to 150%) set according to the degree of target
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.

13

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.
[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

Others
Masao Kusunoki, formerly Corporate Advisor to the Company, retired on March 31, 2023. The advisor
position has since been eliminated.
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 2022, the Board of Directors met
on 17 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 the date this report was submitted, the Company had 16
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) Human Resources Committee
The Human Resources Committee, which has a majority of External Directors, deliberates on matters relating
to personnel affairs and remuneration for officers. It is a voluntary advisory committee for the Company andsubmits reports and recommendations to the Board of Directors as necessary. For the purpose of implementing
the Chief Executive Officer (President and Executive Officer) Succession Plan in a more focused, dedicatedmanner, the Company established the President Nomination Committee within the Human Resources Committee.
The President Nomination Committee is composed of the President and Executive Officer and the outside
directors.

14(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
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 policies and goals, while also facilitating activities to achieve those goals. The
Committee focuses on maintaining appropriate corporate governance and internal controls, which together form
the foundation of the Company’s CSR. It also discusses important matters regarding internal controls.
(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 and Product Safety and Quality Committee) have been established under the CSR Promotion Council
to carry out activities in the areas, separated from the Risk Management and Compliance Committee.
In addition, the Sustainability Committee was newly established in FY2022 to address new risks and issues.
Together with the existing committees, the Company is implementing necessary measures based on an awarenessof the respective issues.
(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) Department Responsible for Internal Auditing
Tokuyama established the Internal Audi Department, which are responsible for internal auditing. This
department perform internal audits of individual divisions and departments of the Company as well as of Group
companies.
(11) 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 (4 year)
Certified Public Accountant, Designated and Engagement Partner: Noriaki Yamauchi (3 years)•
Number of accounting audit assistants
Certified public accountants:4, Other: 915

3. Reasons for Adoption of Current Corporate Governance System
The Company introduced an executive officer system to separate the supervision and execution functions. It
appointed external directors as of June 2021. 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 159th Ordinary General
Shareholder Meeting
Shareholder Meeting held on June 23, 2023, 29 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 to ensure that as many shareholders as possible can attend the meeting.
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
The main content of the Company’s Business Report and important issues
were presented in a point format using video materials to shareholders at the159th Ordinary General Meeting of Shareholders held on June 23, 2023 toprevent further spread of COVID-19.
The Company also held a participatory virtual General Meeting of
Shareholders for those shareholders who could NOT attend, and broadcasted theevent live. Questions were also accepted in advance.
2. IR Activities

Preparation and Publication ofDisclosure Policy

Regular Investor Briefings for
Individual Investors

Regular Investor Briefings forAnalysts and Institutional
Investors

Regular Investor Briefings forOverseas Investors

Posting of IR Materials on
WebsiteSupplementary Explanations

In 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 results briefing sessions or conference
calls via the telephone network for institutional investors fourtimes a year when it announces the 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 holds interviews with foreign investors several
times a year on an irregular basis to explain its strategies, etc. andto exchange views. In addition, it participates in conferences forforeign investors hosted by securities companies several times ayear and holds similar interviews on those occasions
The Company posts earnings reports, annual securities reports,
documents related to general shareholder meetings, annual
reports, presentation materials and videos for results briefing
meetings and the main questions and answers, and businessresults and financial data on Excel, etc. In addition, IR materials

17

Explanatio
n byRepresenta
tives of theCompany

No

Yes

Yes

Establishment of Department
and/or Manager in Charge of IR

Other

in English (with the exception of certain materials) are posted at
the same time as the Japanese 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.

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
The Tokuyama Group Basic Sustainability Principles require the Company
Information Provision toto actively communicate with all types of stakeholders. Accordingly, theStakeholders
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 to society, as well as information on how its operations
impact the environment and 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, it was revised again based on the newly adopted Basic Sustainability Principles. The Company has
established and operates a suitable internal control system in accordance with the 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.
When promoting CSR management, the Company recognizes that corporate governance must function
effectively within all business activities performed by the Company and our Group companies (hereafter,
Tokuyama Group). The Company therefore continuously works to establish internal control systems and to make
improvements to these in accordance with changes in the business environment in order to ensure theappropriateness of business and maintain the health of the 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 Internal Audit 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.

21

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 redefined our mission statement that 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.

22

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.
a) Disclosure of information pertaining to decisions of fact:
Departments that put forward important matters for ratification by such decision-making bodies as the Board of
Directors shall forward the item in advance to the officer responsible for the handling of information. The officer
responsible for the handling of information shall determine whether or not the item is a matter that requires
disclosure. In the event that disclosure is deemed necessary, the item shall be presented to the officer responsiblefor information disclosure and disclosed 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 officer responsible for the handling of
information. The officer responsible for the handling of information shall determine whether or not the item is amatter that requires disclosure. In the event that disclosure is deemed necessary, the item shall be presented to theofficer responsible for information disclosure and disclosed. The department governing subsidiaries shall also
follow the same procedure for subsidiary 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 Board of Directors and Management Committee Secretariat.
While the Financial Reporting Committee Secretariat puts forward matters for discussion to the Board of
Directors, agenda items are forwarded to the officer responsible for the handling of information in advance. Items
are then presented to the officer responsible for information disclosure by the officer responsible for the handlingof information and disclosed after ratification by the relevant decision-making body.

23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.
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 is Senior Managing Executive Officer and General Manager of the Corporate Planning Div.
He has a wide range of business experience in many areas including finance and accounting, management of overseas
subsidiaries, reconstruction of domestic subsidiaries, adoption of a new backbone information system, and corporate
business management. By drafting plans and strategies as the head of the corporate divisions, 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 is Managing Executive Officer and General Manager of the Research & Development Div. and New
Business Div.
He has a wealth of experience in research and development as well as manufacturing technology. As the individual in
charge of R&D, he is actively working on important goals and issues for the Group, while taking on the challenge ofbusiness creation and development by promoting new research and development.
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, General Manager of Environmental Business
Division and Deputy General Manager of the Cement Business Division.
His extensive experience covers overseas operations, business promotion projects, resource recycling, and serving ashead of the cement manufacturing department. As the individual in charge of the Eco Business Segment and as thedeputy head of the Cement Segment, he is promoting a wide range of businesses, while working to establish new ones
that will support the Group in the future. Through these efforts he is actively working to address the Group’s key goals
and challenges.
Accordingly, he has been appointed to an Executive Officer position so that he can continue enhancing the Group’s
corporate value.

24

Executive Officer Hiroshi Fujimoto
Mr. Hiroshi Fujimoto is an Executive Officer and General Manager of the Purchasing & Logistics Div.
His vast experience includes polypropylene resin sales, chemical product planning, purchasing, and human resources.
After serving as head of the General Affairs & Human Resources Division until March 2023, he is now in charge of the
Procurement & Logistics Division, and is expected to actively 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 an Executive Officer and General Manager of the Life Science Div. and of TS Sales Dept.
His wealth of business experience covers overseas operations as well as sales of functional powders, polysilicon, finechemicals, and other materials. As head of the Life Science Segment, he is actively addressing key 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.
Executive Officer Takashi Satou
Mr. Takashi Satou is an Executive Officer and General Manager of the General Affairs & Human Resources Div.
His extensive experience covers areas such as logistics planning, logistics subsidiary management, and adoption of a
new backbone information system. Until March 2023, he was in charge of the Procurement & Logistics Division, and is
now in charge of the General Affairs & Human Resources Division. He is expected to actively address key goals andchallenges 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 Yasushi Okuno
Mr. Yasushi Okuno executes his duties as Executive Officer and General Manager of the Tokuyama Factory.
His experience is vast and covers engineering projects, overseas project promotion, overseas operations, and operationof the Tokuyama Factory. As head of the Tokuyama Factory, he is actively working on key goals and issues for theGroup.
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 Div.
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. Going forward, she is expected to actively workon key goals and issues for the Group as the individual in charge of promoting CSR.
Accordingly, she has been appointed to a new Executive Officer position, effective as April 2023, so that she cancontinue enhancing the Group’s corporate value.
Executive Officer Katsumi Nagase
Mr. Katsumi Nagase executes his duties as Executive Officer, General Manager of Electronic & Advanced Materials
Business Headquarter and Chief of Advanced Materials Business Div.
His experience is extensive and includes technology, development, sales, planning, overseas operations, andmanufacturing of polysilicon, dry silica, and other materials. Going forward, as the individual overseeing electronic andadvanced materials and as head of the Advanced Materials Business Division, he is expected to proactively address
important goals and issues for the Group.
Accordingly, he has been appointed to a new Executive Officer position, effective as April 2023, so that he cancontinue 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 Div.
and Leader of DX Group.
His abundant experience gained at other companies includes areas such as manufacturing, technology, overseas
operations, global business, and ICT strategy promotion. He has also been leading Tokuyama’s activities for digitaltransformation. As head of the Digital Administration & Planning Division, he is expected to proactively address
important goals and issues for the Group going forward.

25

Accordingly, he has been appointed to a new Executive Officer position, effective as April 2023, so that he cancontinue enhancing the Group’s corporate value.
Executive Officer Takeshi Ito
Mr. Takeshi Ito executes his duties as Executive Officer, Deputy Manager of Corporate Planning Div. and Leader ofCorporate Planning Group.
He has extensive experience in business planning, overseas operations, overseas business management, and activities
related to joint ventures and M&A. Going forward, as deputy head of the Corporate Planning Division, he is expected toactively work on important goals and issues for the Group.
Accordingly, he has been appointed to a new Executive Officer position, effective as April 2023, so that he cancontinue enhancing the Group’s corporate value.
Executive Officer Seiji Teranishi
Mr. Seiji Teranishi executes his duties as Executive Officer, Electronic Material Business Div. and Chief of Silicone
Sales Dep.
His wealth of business experience includes personnel and labor, overseas operations, and sales of heat-dissipationmaterials, polysilicon, chemicals for electronics materials, and other materials. As head of the Electronic Materials
Business Division, he is expected to actively work on important goals and issues for the Group going forward.
Accordingly, he has been appointed to a new Executive Officer position, effective as April 2023, so that he cancontinue 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 Div.
His extensive experience covers overseas operations as well as manufacturing and technology relating to polysilicon,
and other materials. He has also led activities to promote carbon neutrality at the Tokuyama Factory. Going forward, he isexpected to work vigorously on important goals and issues for the Group, as the individual in charge of the Group’s
strategy for carbon neutrality achievement.
Accordingly, he has been appointed to a new Executive Officer position, effective as April 2023, so that he cancontinue enhancing the Group’s corporate value.

26

27

28

29

30