(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: September 5th, 2022
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.
Corporate governance comprises a priority issue for management in order for the Company to realize its
Mission. The Company therefore recognizes the need to constantly make enhancements. This forms theCompany'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 FY2021, resulting in a total of 21 listed issues of shareholdings as of March 31,
2022.
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.
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 sustainable growth of the Company. Tokuyama values-1-diversity of knowledge and intelligence, and seeks to create workplaces that are pleasant and motivating, whileaiming to improve productivity, by reforming the workplace culture. 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.
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 8.7% in FY2021. At the current time, noforeign nationals have been promoted to management positions, but the Company will revise the promotion
screening process to include a greater awareness of ensuring diversity as a means of advancing the appointmentof foreign nationals to management positions.
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 directors and executive officers,
please see the appendix at the end of this report.
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.
The company’s disclosures based on ‘Taskforce on Climate related Financial Disclosure’ (TCFD)
recommendations are available on the company’s website.
（https://www.tokuyama.co.jp/eng/csr/pdf/2022_tokuyama_tcfd_e.pdf）-3-

Moreover, Tokuyama aims to be a company that creates value and provides solutions which places first priority
on R&D and marketing, and recognizes that investing in intellectual property is essential for realizing this goal.
In addition, we have raised developing human resources as a materiality, under which we aim to develop andstrengthen those human resources that will serve as a source of corporate competitiveness, and to enrich thosehuman resources that will be responsible for future generations. Similarly, we have clarified the types of
personnel and skills required for each occupation, and are engaging in efforts to improve and enrich the education
system. Tokuyama also introduced a multiple career path personnel system, and has established a framework for
implementing rotations and assignments that realize employee career plans. Information regarding the Company's
intellectual property and human resources development has been disclosed in the integrated report (Tokuyama
Report).
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.
Supplementary Principle 4-1-3 [Chief Executive Officer Succession Plan]
In August 2021, Tokuyama newly established the "President Nomination Committee," which serves toformulate, implement, and deliberate on the Chief Executive Officer (President and Executive Officer)
Succession Plan, and functions to report to the Human Resources Committee.
The actions of the President Nomination Committee are regularly reported to the Board of Directors by the
Human Resources Committee, and are appropriately audited by the Board, in order to ensure that sufficient timeand resources are invested in the systematic training of succession candidates based on the Mission, Vision andmanagement strategies of the Company.
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 operationsof the Company or its affiliated companies*1.
B) Persons who are not currently nor in the past three years been engaged in the execution of business
operations of a major trading partner of the Company, or executives thereof. However, the Company's major
trading partners are defined as those that fall into either of the following categories:(1) Financial institutions that have financed more than 2% of the Company's total borrowings.
(2) Trading partners that account for more than 2% of the Company's consolidated net sales.
C) Persons who currently deem or in the past three years have deemed the Company or an executive thereof to
be a major trading partner. However, persons who deem the Company to be a major trading partner are defined as
those cases in which the amounts paid by the Company account for 2% or more of the said trading partner's
consolidated sales.
D) 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 adirector/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 of the 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.
E) Spouses or relatives within the second degree of kinship of the relevant persons in the sections above (butlimited to important persons*3.
*1 Pursuant to Article 2, Paragraph 3, Item 6 of the Ordinance for Enforcement of the Companies Act of Japan.
*2 In the case of an individual, a substantial compensation payment is defined as an annual amount ofcompensation that exceeds 10.0yen million, and in the case of an organization, an amount of 2% or more of theannual total income of that organization.
*3 In the case of a company, important persons are defined as those who hold the responsible positions of
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; andin 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 a councillor.

-4-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/2022_Jun_Notification_e.pdf)
Supplementary Principle 4-11-2 [Status of Directors Concurrently Serving as Officers at Other Listed
Companies]
When a director at the Company assumes the position of director or auditor at another company, the Board of
Directors of the Company is charged with determining whether there is any conflict of interest. For outside
directors, the Board of Directors confirms that individuals serving in concurrent positions have the time andability to fulfill their roles and responsibilities to the Company.
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]
Amid the major transformations taking place throughout society, the trust and support of stakeholders isessential for the Company to continuously conduct business in harmony with the environment and to continue tocreate the future together with its customers as a means of contributing to a sustainable society in line with thebusiness environment being faced today. In order to realize this trust and support, the Company has positioned
corporate governance as a material issue for management, and has determined to evaluate the effectiveness of theBoard of Directors every year as a part of this effort.
[Evaluation Process]In regard to the Board’s effectiveness evaluation for the period ended March 2022, the Company conducted aquestionnaire survey and interview of all directors, after which the Board members held discussions based on the
results of the interviews.
Along with verifying those matters considered to be of material importance to the Board's ability to effectively
fulfill its roles and responsibilities (composition and operations of the Board of Directors, discussions involving
strategies, etc.), during the year under review the Company also confirmed the ways in which the Board should
contribute to advancing "Medium-Term Management Plan 2025," and the related perspectives and measures. In
order to objectively ascertain the opinions of each director, the evaluation utilized an external organization to
conduct the questionnaire survey and interviews. In addition, the Company requested the external organization tofacilitate the discussions in order to objectively organize the issues and to obtain opinions that will enhance theBoard’s effectiveness.
[Overview of Evaluation Results]
The evaluation results confirmed that the Company's Board of Directors consists of a diverse range ofmembers and comprises a character that respects free and open discussions against the background of a corporate
culture with a positive atmosphere. The results also confirmed that the Board functions effectively owing to theconcrete accumulation of initiatives intended to improve the effectiveness of corporate governance.
One future issue for the Board of Directors of which the Board members share a common awareness is theneed to hold deeper discussions regarding the two management challenges of carbon neutrality initiatives andbusiness portfolio transformation, in particular, as raised in the Medium-Term Management Plan. The Company
has confirmed that backing self-deprecating and self-reforming management, as well as deepening discussions
from a strategic and overarching perspective, are important responsibilities of the Board in regard to how the
Company addresses these management challenges.

-5-In order to engage in these issues, the Company's Board of Directors will advance initiatives to enhance its
effectiveness, including (1) deepening insight regarding changes in the business environment in which theCompany is situated and creating opportunities to debate measures for handling the important management
challenges of carbon neutrality initiatives and business portfolio transformation, (2) effectively monitoring the
progress of priority measures, including human capital strategies and technology development strategies, in orderto support the achievement of "Medium-Term Management Plan 2025," and (3) rationalizing the Board's
operation method, including Board meeting agendas, materials, and presentations, etc., in order to fulfill these
responsibilities.
Supplementary Principle 4-14-2 [Policy on Training Directors]
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)

13,487,500-6-Percentage (%)
18.71

Custody Bank of Japan, Ltd. (trust account)
Nippon Life Insurance Company
The Yamaguchi Bank, Ltd
Meiji Yasuda Life Insurance Company
Sojitz Corporation
Tokuyama Corp. employee share ownership
Sumitomo Metal Mining Co., Ltd.
Tokyo Marine & Nichido Fire Insurance Co., Ltd.
NORTHEN TRUST GLOBAL SERVICES SE,LUXEMBOURG RE LUDU RE: UCITS CLIENTS
13.315 PCT NON TREATY ACCOUNT
Controlling Shareholder (except for Parent Company)-----

Parent Company

none

3,993,700
2,174,958
1,649,252
1,488,425
1,296,840
1,292,840
1,180,800
1,104,449

5.54
3.02
2.29
2.07
1.80
1.80
1.64
1.53

1,008,000

1.40

Supplementary Explanation
Note: As of March 31st, 2022. The percentage of shares held is calculated after deducting the shares held by theCompany as treasury share (14,275 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 applicable-7-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
Number of Outside Directors
Number of Independent Directors

20
1 yearPresident
944Outside Directors’ Relationship with the Company (1)Relationship with the Company*
a
b
c
d
e
f
g

Name

Attribute

Shin Kato

LawyerYuzo kawamori

From another company

Naoki Matsumoto

From another company

Nobuko Mizumoto

From another company

*
*
*

h

i

j

k
〇

△
△

△
△

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
Shin

Kato

Membershipof Supervisory
Committee〇

Designation as
Independent
Director〇-8-

Supplementary
Explanation of
the RelationshipMr. Shin Kato
has been appointed
as an Independent
External Director.
He is an attorney at
law affiliated with

Reasons of Appointment
Although he has not been
involved in corporate
management other than in his
capacity as External Director orExternal Auditor, given his
wealth of expertise andthe Kato Law
Office. There are no
special interests
between Mr. Katoor the Kato Law
Office and theCompany.
Yuzo Kawamori〇〇

Naoki Matsumoto〇〇

Mr. Kawamori
has been appointed
as an Independent
External Director.
Until 2013, heserved as an
operating officer of
Kansai Paint Co.,
Ltd., one of theCompany's trading
partners. Given that
the Company's
transactions withthis trading partner
total less than 1%of both theCompany's and the
trading partner’s
consolidated net
sales, it is notclassified as amajor trading
partner. Moreover,nine years havealready passed
since his retirement.
The Company
therefore judged his
independence as an
Independent
External Director to
be satisfactory.
Mr. Naoki
Matsumoto has
been appointed asan Independent
External Director.
Until 2007, heserved as an
operating officer at
The Bank of TokyoMitsubishi UFJ,
Ltd. (currently,
MUFJ Bank, Ltd.),a trading partner of
the Company.
Although thistrading partner isthe Company's socalled main bank,fifteen years havepassed since his-9-outstanding insight as an
attorney at law, the Company
judged him to be suitably
qualified as an External Director
who will serve on the
Company’s Audit andSupervisory Committee and has
appointed him as such.
Given his outstanding insight
as a manager of an industryleading company and wealth ofexperience in overseas businessdevelopment, the Company
judged him to be suitably
qualified as an External Director
who will serve on the
Company’s Audit andSupervisory Committee and has
appointed him as such.

Given his wealth ofexperience as a manager in awide variety of businesses in thefinance industry and outstanding
insights into finance andaccounting, the Company
judged him to be suitably
qualified as an External Director
who will serve on the
Company’s Audit andSupervisory Committee and has
appointed him as such.

Nobuko Mizumoto〇

retirement. The
Company therefore
judged his
independence as an
Independent
External Director to
be satisfactory. He
also served as
President and CEO
of MST Insurance
Service Co., Ltd.,
until 2019. Given
that the Company's
transactions withthis trading partner
are minor and total
less than 1% of
both the Company's
and this trading
partner's
consolidated net
sales, it is notclassified as amajor trading
partner, and wastherefore judged tohave NO impact on
his independence asan Independent
External Director.
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 this trading
partner totals lessthan 1% of both theCompany's and thistrading partner's
consolidated net
sales, it is notclassified as amajor trading
partner and wastherefore judged tohave NO impact on
her independence asan Independent
External Director.

〇- 10 -

Given her wide range ofoutstanding knowledge based onher experience as a researcher
and as a manager in major postsin the head office divisions of amajor heavy industry company,
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.

[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.
The Company has established the Internal Audit Department as internal auditing department.
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.
[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 Human7of a nomination Resources Committee
committee
Voluntarycommittee in lieu The Human7
of aResources Committee
remunerationcommittee

InsideDirectors

OutsideDirectors

OutsideExperts

0

3

4

0

0

InsideDirector

0

3

4

0

0

InsideDirector

Supplementary Explanation- 11 -

Other

ChairpersonThe Human Resources Committee is composed of Representative Directors and Outside Directors. The
Committee was established to discuss the nomination, appointment, and remuneration of Directors (excluding
those who are Audit and Supervisory Committee members) and Executive Officers prior to the Board of Directors
meetings.
[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 principle 4-9
in the Corporate Governance Code.
[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 FY2021 is listed below.
¥223 million paid to five Directors (excluding those serving on the Audit and Supervisory Committee)¥27 million paid to one Director serving on the Audit and Supervisory Committee (excluding External
Directors)•¥52 million paid to four External Directors(Notes)1. The above amounts include one Director who retired during the fiscal year under consideration.
2. The above amounts include performance-linked stock remuneration combining the total of [1] provisions forshare-based remuneration disclosed during the past fiscal year that were deducted from the amount calculated inaccordance with the achievement level for the performance targets covering the period from FY2018 to FY2020
and [2] the amount recorded as expenses during the fiscal year under consideration.
3. The above amounts do not include employee salaries paid to directors with duties in an employee’s capacity.
••

Policy on Determining Remuneration Amounts
and Calculation Methods

Established

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods
Policy on Determining Director Remuneration on an Individual Basis
The Company has established a policy for determining the content of remuneration for Directors on an
individual basis (excluding those who serve on the Audit and Supervisory Committee). The following provides an
overview of such, where individual remuneration is determined by the Board of Directors following deliberations
by the Human Resources Committee*1.
(Basic Policy)
1) The remuneration plan for the Company’s Directors is based on the following views.

- 12 -

・ Ensures that Directors contribute to charting sustainable growth for corporate performance and corporate
value based on the “Vision of Tokuyama”
・ Provides a level of remuneration that secures and retains human resources that can support the Company’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 in the form ofmonetary remuneration and performance-linked Share-based Remuneration in the form of non-monetary
remuneration*2.
(Policy on Determining Director Remuneration on an Individual Basis)
1) The content (annual amount) of basic remuneration is determined from a comprehensive perspective thattakes into account the roles and responsibilities of each Director. Further, the determined basic remuneration isdivided into 12 equal parts and paid on a monthly basis.
2) The content of bonuses is determined in accordance with the achievement level of the predetermined
performance targets for each fiscal year in respect to the standard amount for bonuses determined separately foreach position. The performance targets are established based on the main financial targets for Tokuyama’s overall
performance. Further, the determined bonuses are paid at a specific period each year.
3) Performance-linked Share-based Remuneration is based on the fiscal years covered by the Medium-termManagement Plan as the target period, and is provided in the form of Company shares in accordance with theachievement level for the predetermined performance targets. The performance targets are established based on
the main financial targets in the Medium-term Management Plan. Further, as a general rule, this form of
remuneration is provided at the completion of the target period.
4) The level of remuneration takes into consideration remuneration survey data provided by external expert
organizations.
(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 to achieve
performance targets.
(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 the Boardof Directors, based on a standard amount predetermined for each position.
The Human Resources Committee deliberates on whether the calculated basic remuneration is appropriate ornot.
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, the performancetargets for the target fiscal year, and the achievement level for those targets.
The Human Resources Committee deliberates on whether the performance targets, calculation methods, andcalculation results are appropriate or not.
3) Performance-linked Shared-based Remuneration is calculated by the Board of Directors using points granted
to Directors on an individual basis based on the established executive remuneration share delivery regulations
following deliberations by the Human Resources Committee.
*1 The Human Resources Committee is composed of a majority of External Directors and deliberates mattersrelated to human resources and remuneration regarding officers. This Committee also serves as a voluntary
advisory committee for the Company that makes appropriate reports and recommendations to the Board of
Directors.
*2 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 performance-linked Share-based
Remuneration plan.
[Supporting System for Outside Directors]
1. The Corporate Planning Division explains the contents of each agenda item to the outside directors inadvance of 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.

- 13 -

3. In regard to the auditing plan of the accounting auditor, reviews of quarterly and year-end accounts, andaudit results, internal directors who are members of the Audit and Supervisory Committee (hereafter internal
Audit and Supervisory Committee members) 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 members 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 members receive detailed information fromthe Auditing Department and provide an outline on this information to outside Audit and Supervisory Committee
members.
6. The Corporate Social Responsible Division reports on the development and operational status of the internal
controls system to the outside directors at the Board of Directors meetings.
[Retired presidents/CEOs, etc. holding advisory positions (sodanyaku, komon, etc.)]
Information on retired presidents/CEOs holding advisory positions (sodanyaku, komon, etc.)

Name

Masao
Kusunoki

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

Job title/
position

Responsibilities

Corporate
Advisor・Industry association and otherpublic facing activities
・Advice in response to requests
from the current management

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

Date whenformer role aspresident/CEO, etc.
ended

Term

・Part-time・With
compensation(term-limited)

June 21,2019

Indefinite

1

OthersThe Company, by resolution of the Board of Directors, may appoint those with experience as chairman orpresident/CEO to Corporate Advisor. The term, compensation, and other benefits are stipulated in the Company’s
internal rules. Corporate Advisor engages in public facing activities and provides advice when requested by theCompany’s management.
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 2021, 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 12
executive officers.
Based on the rules for approval determined by the Board of Directors, authority is delegated to the businessexecutive system.

- 14 -

(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 2021, 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 consists of representative directors and external directors. This committee
holds discussions on such matters as the remuneration for directors (excluding those on the Audit andSupervisory Committee) and executive officers, and the selection of director and executive officer candidates
before Board of Directors meetings take place.
For the purpose of implementing the Chief Executive Officer (President and Executive Officer) Succession
Plan in a more focused, dedicated manner, the Company established the President Nomination Committee within
the Human Resources Committee. The President Nomination Committee is composed of the President andExecutive Officer and the outside directors.
(4) Executive Committee
Members of the Executive Committee are selected by the president and executive officer (hereinafter referredas the president) from among the Company’s other executive officers. The Executive Committee serves as theCompany’s decision-making body with respect to the execution of business operations. In principle, thecommittee meets two times each month. Based on the approval-related rules and regulations determined by the
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) Eight Committees
With regard to areas requiring specialist expertise and of great importance from the viewpoint of risk
management and compliance, the Company has set up and is developing the activities of seven committees.
Additionally, the Company determined to newly establish the “Sustainability Committee” to address new risks
and issues.
These committees cover accounting, antitrust law and competition law compliance, trade control, information
security, environmental measures, safety measures, and product safety and quality. They operate under the CSR
Promotion Committee and are separate from the Risk and Compliance Committee.
The existing seven committees implement the required measures based on an awareness of each of their issues.
The new committee has begun activities starting in FY2022.
(9) Helpline Committee- 15 -

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 (3 year)
Certified Public Accountant, Designated and Engagement Partner: Noriaki Yamauchi(2years)•
Number of accounting audit assistants
Certified public accountants:4, Other: 11
3. Reasons for Adoption of Current Corporate Governance System
The Company introduced an executive officer system to separate the supervision and execution functions. It
has appointed four external directors as of June 2021.
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 is comprised of five directors, including four
outside committee members. They attend Board of Directors meetings and other important meetings to monitor
the execution of business by executive officers.
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 158th Ordinary General
Shareholder Meeting
Shareholder Meeting held on June 24, 2022, 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 the158th Ordinary General Meeting of Shareholders held on June 24, 2022 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
Supplementary Explanations

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
WebsiteThe Company took steps to put in place Tokuyama Group
Guidelines for Business Activities, which were ratified by the
Board of Directors in March 2012. Turning to Part IV of theseguidelines, the Company identified certain stipulations governing
its relationships with shareholders and investors and clarified its
basic stance toward the disclosure of information.
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/dis
closure.html
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- 17 -

Explanatio
n byRepresenta
tives of theCompany

No

Yes

Yes

Establishment of Department
and/or Manager in Charge of IR

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
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.

Other
3. Measures to Ensure Due Respect for Stakeholders
Supplementary Explanations
Stipulation of Internal Rules for
Tokuyama’s basic philosophy in regard to CSR management is to improve
Respecting the Position of
corporate value, enhance the trust of our various stakeholders, and contribute to
Stakeholders
the resolution of social issues by continuously carrying out activities that
contribute to the building of a sustainable future for society.
In line with the basic philosophy on CSR management, the Company has
established the Tokuyama Group Guidelines for Business Activities to serve as a
guide to action for all group companies and to stipulate acceptable relationships
with each of the Company’s stakeholders.
Implementation ofEnvironmental Activities, CSR
Activities etc.

Development of Policies on
Information Provision to
Stakeholders

The Company stipulates the protection and conservation of the environment
as key points in the Tokuyama Group Guidelines for Business Activities.
Solving environmental issues is a challenge common to all of humankind, andthe Company is taking proactive action as it believes this to be an essential
reason for the existence and activities of companies in general. In researching,developing, and manufacturing products, as well as in selling and disposing ofproducts and goods, the Company is always sure to fully recognize theimportance of environmental protection and comply fully with allenvironmental laws and regulations. As a good corporate citizen, Tokuyama iscommitted to the active engagement in social contribution activities, and theCompany outlines those activities on its website and in the annual CSR report.
The Company also stipulates the disclosure of information to stakeholders
as a key point in the Tokuyama Group Guidelines for Business Activities. The
Company discloses not only management and financial information, but also
non-financial information, including in regard to the products and services it
provides society, as well as information related to environmental and social
subjects in a timely, appropriate, and easy-to-understand manner.
In addition, the Company has established rules for the internal managementof information, as well as a system to ensure compliance with all relevant rules
and regulations, with this system including in-house educational activities
aimed at preventing insider trading.

Other- 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 Board resolved to revise the “Basic Policy on
Establishing the Internal Control System” into a policy that places a greater focus on Group Management. The
Company has established and operates a suitable internal control system in accordance with the Basic Policy.
Views on the Internal Control System
Tokuyama’s basic philosophy in regard to CSR management is to improve corporate value, enhance the trust of
our various stakeholders, contribute to the resolution of social issues, and continuously carry out activities that
contribute to the building of a sustainable future for society.
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 other internal
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 executionof duties, and the Board of Directors shall provide oversight for the execution of duties by Directors. 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 executionof 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 thorough implementation of these.
2) The Company shall establish a management system that understands important laws and regulations that are
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 establishinga crisis response headquarters in accordance with the severity of the manifest risk, and shall rapidly engage inrecovery 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 toreport and consult on compliance violations, or matters that are believed to hold the potential to violate such, in asafe, 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 the businessdivisions, etc., and management divisions in order to ensure the appropriateness of duties. At the same time, eachGroup company shall also be requested to conduct monitoring and self-assessments.

- 19 -

3) The Company shall provide the required guidance, support, and requests regarding important matters to allbusiness divisions, etc., and Group companies through the Corporate Planning Division, the Corporate 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 and deploy
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 matters regarding 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 Tokuyama Group.
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 andinformation security, security and environmental measures, product safety and quality, and sustainability), theCompany shall establish expert committees separate from the Risk Management and Compliance 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 to achieve
healthy growth while at the same time providing the required guidance, support, and requests to ensure theappropriateness 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 and internal
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 andSupervisory Committee, and shall appoint Company employees for this purpose. Moreover, the Company shallreceive consent form the Audit and Supervisory Committee regarding personnel evaluations, hiring, transfers, anddiscipline in regard to such employees.
2) The authority to instruct and provide orders to employees of the Audit and Supervisory Committee Officeshall 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 executionof such duties and when a compliance violation matter is discovered by the Company, including that reported bya group company. Moreover, NO disadvantageous treatment shall be made against the reporting party due to theprovision 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 audit by the
Audit and Supervisory Committee, when such is deemed necessary by the Audit and Supervisory 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.

- 20 -

(7) System to ensure the reliability of financial reporting1) The Company shall establish and operate internal controls relating to business processes (including businessprocessing controls relating to IT) and general controls relating to IT, and shall ensure the reliability ofaccounting data through the evaluation and improvement of such controls.
2) The Company shall work to standardize and improve the efficiency and quality of accounting and financial
duties, and shall maintain and operate internal controls relating to financial reporting in order to ensure thereliability of financial reporting.
3) The Company shall establish a Financial Reporting Committee that fully ensures the reliability of financial
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 anti-social
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 madeby anti-social forces.
5) The Company shall prohibit backroom dealings with and providing funding for anti-social forces, and shallnever engage in such.
6) The Company shall establish and maintain a structure for itself and each Group company for the purpose ofblocking 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.
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 their company
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
The Company took steps to put in place Tokuyama Group Guidelines for Business Activities, which were
ratified by the Board of Directors in March 2012. Turning to Part IV of these guidelines, the Company identified
certain stipulations governing its relationships with shareholders and investors and clarified its basic stancetoward the disclosure of information.
Part IV of the Tokuyama Group Guidelines for Business Activities
IV. Relationships with Shareholders and Investors
１．The Proper, Timely and Easy-to-understand Disclosure of Information
The Company shall make every effort to ensure the proper, timely and easy-to-understand disclosure of
information to society at large beginning with its shareholders and investors. Extending beyond the Company's
operations, performance, and financial standing, this information will cover such wide-ranging fields as theCompany's products and services as well as non-financial data including contributions to the environment andsociety.

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２．Insider Trading Prevention
The Company shall make every effort to prevent the purchase and sale of marketable securities including
shares as well as the granting of gains, favors, or benefits to a third party on the basis of undisclosed information
obtained either within or outside the Group pertaining to business operations and transactions.
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:
The Financial Reporting Committee, which is chaired by the director overseeing the Corporate Planning
Division, is charged with the responsibility of carrying out operations relating to the Company's financial
reporting. This committee is made up of members from various areas within the Company including departments
and divisions. In this manner, steps have been taken to put in place a framework under which the Company
undertakes both internal and mutual reviews within and between 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. Item
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.
Meanwhile, members of the Audit and Supervisory Committee, independent auditors, and the Auditing
Department are responsible for ensuring that financial reporting operations are conducted in a proper manner
while undertaking audits during each period.

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Appendix 1
Principle 3-1- (ⅴ) [Explanations with Respect to Individual Appointments and Dismissals when the Board of
Directors, based on (iv) above, Appoints/Dismisses Senior Management Personnel.
President and Executive Officer Hiroshi Yokota
Mr. Hiroshi Yokota executes overall corporate business as President and Executive Officer.
He has extensive management experience in the wide range of business sectors engaged in by the Company, and has
also served in the human resources management and information systems business sectors.
He was reappointed as Executive Officer for the purpose of driving change in the Company's organizational culture
and structure, leading the reorganization of the business strategy, and sustainably growing the Company in the future.
Senior Managing Executive Officer Hideo Sugimura
Mr. Hideo Sugimura executes his duties as Senior Managing Executive Officer and General Manager of both
Corporate Planning Division and New Business Center.
Following his involvement in corporate business management, as well as in management of domestic operatingcompanies and overseas sales subsidiaries, he was handed overall responsibility for corporate management as the General
Manager of the Corporate Planning Division.
He was reappointed as Executive Officer as a driver for further growth in the future.
Senior Managing Executive Officer Hiroshi Nomura
Mr. Hiroshi Nomura executes his duties as Senior Managing Executive Officer and General Manager of the Electronic
Materials Business Division.
Following his many years of involvement in the silicone products manufacturing technology sector, one of theCompany’s core Business Domains, he launched the Company's China production site.
He was reappointed as executive Officer under the judgement that he was essential to the further growth of thebusiness due to his in-depth understanding of overseas business development.
Managing Executive Officer Fumiaki Iwasaki
Mr. Fumiaki Iwasaki executes his duties as Managing Executive Officer and as General Manager of the Research &Development Division, and serves as the keyperson for "Transform Business Portfolio" as the primary issue in theMedium-Term Management Plan.
He was reappointed as executive officer given his outstanding knowledge beyond research and development,
particularly in the areas of manufacturing technology and business development.
Managing Executive Officer Takahide Taniguchi
Mr. Takahide Taniguchi executes his duties as Managing Executive Officer and General Manager of the Cement
Business Division.
Following his many years of engagement in the Company’s business management, he became involved in businessplanning aspects of the Specialty Products Business Division and thus has an in-depth understanding of the Company's
wide range of business domains.
He was reappointed as executive officer given the expectation that he will transfer his knowledge to the Cement
Business Division for the purpose of further developing this traditional business for the Company.
Executive Officer Yutaka Tarutani
Mr. Yutaka Tarutani has executed his duties as Executive Officer and General Manager of the Corporate Social
Responsibility Division.
He was reappointed as executive officer given the expectation that he would effectively apply his knowledge for the
purpose of practicing socially responsible management as one of the issues in the Company's Medium-Term
Management Plan and of realizing materiality as a priority point.
Executive Officer Hiroshi Fujimoto
Mr. Hiroshi Fujimoto executes his duties as Executive Officer, and General Manager of the General Affairs & Human
Resources Division.
With experience in chemicals and resins sales in addition to procurement and human resources, he has an in-depth
understanding of both business divisions and management divisions.
He was reappointed as executive officer under the judgement that he is suitably qualified to manage divisions in chargeof general affairs and human resources.
Executive Officer Naoki Tamura- 24 -

Mr. Naoki Tamura executes his duties as Executive Officer and General Manager of the Life Science Business
Division.
Following his involvement in the sale of semiconductors, fine chemicals, and other advanced materials, he took
responsibility for the Company's China sales subsidiary.
He was reappointed as Executive Officer under the judgement that he is suitably qualified to manage divisions thatplay a role in driving the Company towards its goal of becoming a global leader in advanced materials.
Executive Officer Hirotaka Nishihara
Mr. Hirotaka Nishihara executes his duties as Executive Officer and General Manager of the Chemicals Business
Division.
For many years he was responsible for sales of chemicals at the Company, after which he acquired experience inelectronic materials sales, procurement, and other duties.
He was appointed as executive officer under the judgement that he is suitably qualified to increase the competitivenessof the Company's chemicals business.
Executive Officer Tomohiro Inoue
Mr. Tomohiro Inoue executes his duties as Executive Officer, General Manager of Environmental Business Division
and Deputy General Manager of the Cement Business Division.
In addition to his primary responsibilities for new business development in the Company’s Research & Development
Division, he also has experience as the General Manager of the Recycling and Environment Promotion Department andhas an in-depth understanding of various aspects of many different businesses.
He was appointed as executive officer under the judgement that he is suitably qualified to promote the recycling
business, improve energy efficiency, and reduce environmental impact, all of which are key to strengthening thecompetitiveness of the Company's cement business.
Executive Officer Takashi Satou
Mr. Takashi Satou executes his duties as Executive Officer and General Manager of the Procurement & Logistics
Division.
He was responsible for logistics duties for many years at the Company and was responsible for upgrading its Core
Information System.
He was appointed as executive officer under the judgement that he is suitably qualified to take responsibility forpromoting efficiency improvements in procurement and sales logistics duties.
Executive Officer Yasushi Okuno
Mr. Yasushi Okuno executes his duties as Executive Officer and General Manager of the Tokuyama Factory.
Following his many years engaged in duties as a mechanical engineer at the Company, he was appointed as the plant
manager for Tokuyama Malaysia.
After returning from his duties at Tokuyama Malaysia, he was assigned the task of overseeing management at the
Tokuyama Factory. More recently, he was appointed as executive officer under the judgement that he is suitably qualified
to serve as the General Manager of the Tokuyama Factory.

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